Spring 2010

 

Thinking "Out-of-the-Box:" The Case for Standard Software vs. Customized Software

Lower costs by using standard software

 
Speaking of best practices…Business processes evolve in many different ways and vary from company to company.  But when change occurs, there is often a discussion about how to fill that need. Best practices around a particular business process often take time to evolve and since companies are all evolving independently they inherently diverge in processing procedures.

Over time, there is often a culture that develops around these processes that they provide a significant advantage in the market. The thought is “our processes are better than our competitors, and so we have an advantage that makes us more successful and profitable.”  Additionally, once a process becomes ingrained in the culture it is often thought of as the industry standard or only approach to address a particular issue.   Because of these cultural forces, companies will either develop software internally to cement the processes, or pay development companies to add custom functionality to standard software.

On the surface, this might make sense. But this is an opportunity that needs to be carefully examined.

Take the economic view. It may not seem intuitive, but it has been proven, that overtime, customizations are very expensive to maintain, and thus, it needs to be clearly articulated what the benefits are for the customization. Consider:

• The cost of developing the customization
•  The cost of supporting the customization
• The cost of patching the customization when the next version of the software arrives.

Beyond that, consider the cost of not being able to take upgrades as quickly, or not being able to  leverage new functionality when released. This happens as the market  - and your competitors - continues to evolve. You’re stuck with a particular solution that you now need to fully fund.

The chart below reflects the relative difference between configuration, which is a data driven process that is selectable within the software, extensions, which are unique processes that do not impact the existing product code or processes and thus are not impacted when users upgrade products, and customizations which are considered direct manipulation of the product’s code and is impacted through upgrades to the productized code.

With standard software (like Excalibur and the other solutions P2 offers) you essentially share the development cost with many other clients. P2 can be the glue that brings the divergent paths of individual companies together. With 200 upstream oil and gas companies in the mid market relying on Excalibur, many user groups forming and a focus on developing solutions that provide the industries best practices, the out-of-the-box Excalibur solution can be the basis of the core business processes of all oil and gas companies.

The long term benefit is significantly reduced cost of ownership while also providing deep functional software. This approach provides a clear advantage over other competitors by lowering your costs.