When it comes to investing in enterprise software, organisations have many options allowing them to choose whatever technology or consumption method best suits their business requirements…
When it comes to investing in enterprise software, organisations have many options allowing them to choose whatever technology or consumption method best suits their business requirements. Despite this, there remains a tendency within the industry to categorise software purchases into two opposing camps: suites and stacks.
Suites are often seen as the territory of the traditional
software vendor looking to supply everything a customer may need in a suite of
applications. These suites today are usually defined by industry or vertical,
and typically include ERP, SCM, financial and other key modules.
On the other side are software stacks. Built on an open,
API-based approach to software and employing a best of breed methodology,
stacks use a cloud platform to ensure access and integration. They also aim to
break any release cycle issues as they use a software ecosystem that provides a
flexible, open and future-proof architecture.
Working in symbiosis
Pitting one methodology against each other in this way isn’t
new. However, today we see a blurring of lines between the two – a situation
made more complex as many large, established vendors known for being suites
players now also offer software stacks.
Integrating these sources of information is the cloud provider’s, not the customer’s problem.
Claus jepsen / unit 4
Claus Jepsen, CTO at Unit4, believes it is a simple case of evolution.
“Over 20 years ago, suites came along
to remove the pain of integration that existed in an ERP world dominated by
disparate best-of-breed applications that lacked cohesion. At that point, the
idea of everything running in one application was appealing,” he said.
“Now, the dynamic has changed. Digital
business platforms require immediacy to access information from across an
entire organisation and from an ERP perspective the value lies in being able to
integrate it with other IT solutions. As we move to a cloud-based world
integrating these sources of information is the cloud provider’s, not the
customer’s problem. Technically, it is more easily done outside the ERP
application, rather than having to go through the laborious process of logging
on to a complex ERP environment.”
Jepsen notes that as ERP is only 25
percent of an organisation’s IT environment, companies are turning to stacks as
a more efficient and productive way to access information. Microservices and
open APIs make it easier to break down silos between different sources of
information in complex IT environments. This approach means customers don’t
have to go through the pain of building a ‘megasuite’ to address all their
requirements.
“The truth is, and especially when we
are talking about digital transformation, that enterprises need to use both
suites and stacks in symbiosis,” said Dan Matthews, chief technology officer at
IFS.
The truth is….Enterprises need to use both suites and stacks in symbiosis
Dan matthews / ifs
Matthews believes customers’ success lies in the ability to build innovation into specific industry use cases in its solutions, whilst also embracing stack principles and making sure it provides an open and ‘stack friendly’ suite.
“Organisations need to move quickly
and put themselves in a position to challenge expectations and grow with exciting
new offerings, radically more efficient processes, and completely new ways of
thinking,” he said. “Just in the last year I have been in a rapidly increasing
number of discussions with our customers who want to do just this – implement
or upgrade our suite to enable and drive digital transformation, and at the
same time develop additional capabilities on top using stacks.”
Foot in both camps
Dependency is not great for pricing, speed or service… a business can only run the technology that the vendor decided to develop
Sonja kotrotsos / contentstack
It could be argued, therefore, that pitting one approach over the other is reductive and unhelpful for the customer looking to select the right software solution. Instead of positioning stacks and suites at opposite ends of the spectrum, surely it would be more valuable to consider the customer’s specific business requirements, and then where on that spectrum they fit?
“The argument of suites versus stacks
is nonsensical,” said Steve Brooks, senior analyst, Synonym Advisory.
“Software vendors need to ensure that
their software is open enough to seamlessly integrate with other systems of
record. Vendors need to ensure that the core functionality provides a
differentiation in the marketplace, whether that is the simple functionality of
part of a larger stacks approach or deep industry functionality as a suite.”
We wrap all this as a single service via the cloud and use standard apis to ensure connectivity
Phil lewis / infor
Phil Lewis, VP solution consulting, EMEA, at Infor said the firm has “a foot in both camps, and we have already borrowed liberally from the stacks approach.”
He explained: “We develop industry
specific suites of apps but we build on Infor OS – our own digital stack – so
the capabilities of deploying additional, enterprise scale elements such as
AI/ML, data science or IoT projects, are there already as well. Like a stacks
player, we wrap all this as a single service via the cloud and use standard
APIs to ensure connectivity with other technologies, so we have borrowed
heavily from the stacks approach.”
Again, Lewis points out that this has
been as much in response to customer demands as it has been driven by the
possibilities of new technologies.
Perhaps this shift stems from years of
customer frustration with technology suites that make too many demands on the
business. However, Lewis contends that the main source of customer ire has been
the delivery of this technology; customers ultimately don’t want to buy a box
or software – they want to buy a capability.
“As a result, enterprise software
vendors have focussed on ensuring they deliver better processes for the
customer. The next logical evolution was to deliver better processes as a
service – totally removing the need for customers to take on huge implementation
projects of their own. Regardless of the ‘stacks’ or ‘suites’ legacy of a given
vendor; this is the context against which a customer will judge the
technology.”
Weighing the options
Of course, alongside the benefits, there are also downsides
to both approaches. With suites there remains issues of lock-in, customisation,
and even with modern cloud delivery options, the lingering preferences for
being on-premise.
“Historically some enterprises have
perceived suites to be a bit too closed and slow-moving,” said Matthews.
However, he says this viewpoint is
changing fast: “Today new development in suites are built stack-friendly,
leveraging exciting tech from the beginning. We have entire product teams
dedicated to things like AI and extensibility. We have our own internal IFS
Labs department to spearhead new innovations and show us and our customers how
they can be applied in real industry and business scenarios. Large investments
are done to open up areas that might have been more closed before – for example
we have recently completed our undertaking to provide 100 percent open API
access to all data and functionality in our application.”
Nevertheless, there are many reasons
to avoid a single vendor set-up, according to Sonja Kotrotsos who heads up the
EMEA go-to-market for Contentstack.
The CMS vendor is a founding member of non-profit MACH Alliance, which was formed in June 2020 to show how businesses
can benefit from open tech ecosystems that are ‘microservices based, API-first,
cloud-native SaaS and headless’.
Perhaps the most important reason, she
says, is dependency on the vendor. “Dependency is not great for pricing, speed
or service. With specific reference to the technology available and access to a
single vendor’s roadmap, dependency means a business can only run the
technology that the vendor decided to develop. What if a business needs to
change quickly and an existing suite supplier does not provide for it? For
many, this has been one of the painful lessons of COVID.”
Kotrotsos argues that large scale suite
players “plan standard products that generally fit the general needs of many.
This is in stark contrast to the need to be able to adapt both technology and
business processes quickly.”
But conversely, it could be argued
that the more integrations you have, the greater the level of complexity. Of
course, you avoid the vendor lock-in but often each application or service is
inter-dependant on other loosely coupled apps and services, and something like
a simple update can have much wider implications.
It is about finding the future technology capability of a customer and being ready for them at that point
Simon carpenter / sap uk centres of expertise
“Driven by Moore’s law and the consumerisation of technology, storage, memory, compute, user interfaces and bandwidth capabilities are now a far cry from what they were,” said Simon Carpenter, head of SAP UK Centres of Expertise.
“A new approach, exploiting modern
technologies like in-memory computing, machine learning and cloud deployments
is needed, and this is partly what’s driving the emergence of stacks. But,
while cloud-served microservices and APIs offer agility and flexibility they
are only part of the answer for an enterprise. Furthermore, whilst the move to
the cloud is massive and the preferred deployment model, there are still
situations in regulated industries and countries where data sovereignty is an
issue, so we foresee hybrid models existing for the next decade or so.”
However, Carpenter says the stack also
plays an important role alongside the suite in ensuring that end-to-end
processes can run efficiently and with integrity across these hybrid estates.
It is also where SAP does extensibility and innovation rather that customising
the source code.
“If there is one lesson we have
learned over the last two decades when it comes to application suites it is
‘keep the core clean’. Stacks enable us to do this; we can utilise the data and
processes of the suite and build new innovations and integrate them at will on
the stack,” he says.
Additionally, microservices architectures are
increasingly seen as the right path and if you’re designing your IT landscape
from scratch, with the enterprise likely choosing cloud, SaaS and microservices
are clear winners. But many enterprises are not designing from scratch and it
is no simple process to completely re-architect your landscape.
Indeed, Carpenter says that it is
important to acknowledge that companies embarking on digital transformation
face significant challenges when it comes to “overcoming technical debt and
transforming the enterprise without throwing the baby out with the bath water.”
“At SAP we’d argue that there are
significant transformational benefits (such as standardisation, best practices,
fast time-to-value and lower risk) that flow from adopting a suite at the same
time that you leverage the stack for integration, differentiation and
innovation. That is why our strategy is to provide both an intelligent suite of
applications and a business technology platform (stack) and to do so adhering
to openness and standards so that our customers and partners can utilise
existing and non-SAP assets to best effect.”
Further acquisitions ahead
Fundamentally all enterprise software companies are having to
rethink how they engage with a customer – moving from looking at improving or
accelerating today’s processes, into anticipating tomorrow’s markets and
opportunities.
For some, this could mean making
acquisitions to plug any gaps. “It demands looking beyond just the applications
and the related processes,” said Lewis. “It is about finding the future
technology capability of a customer and being ready for them at that point. If
there are acquisitions that fit these criteria, then we would consider them.”
It is unlikely Infor will be alone in
this strategy, and we should expect to see M&A activity from traditional
software vendors looking to build out their portfolios.
“At SAP whilst much of our application
suite has been built through acquisitions (such as ARIBA, SuccessFactors,
Concur, hybris and others),” said Carpenter. “When it comes to the stack this
is of such paramount importance to our strategy and such a great opportunity to
leverage our decades of business process know-how that we are driving this
largely through organic R&D.”
Ultimately, any application suite
vendor that is not already making the effort to embrace the suite and stack
paradigm is going to find themselves at a significant disadvantage – and of
limited relevance to their customers.
“It is a real threat to the suite
players if they don’t recognise the potential of stacks,” said Jepsen. “There
is a view that everything should originate within the suite, but this is
designed to keep the customer in the ERP vendor’s world. Technology is now
enabling very different, loosely coupled environments, where customers can use
the tools they want to use. Vendors who don’t recognise this change will
perish.”
Those with skin in the game may try to convince customers that their approach is best. But as we’ve seen, the large software firms are adopting and incorporating a stack mentality when it comes to their portfolio. And there are lessons to be learned from both ends of the spectrum. Ultimately it is not an either/or scenario for the customer, but rather ‘where on the spectrum is the solution that best suits your business?’
The enterprise software landscape is evolving, with a growing trend towards integrating both suites and stacks to meet diverse business needs, rather than choosing one over the other.
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The importance of open APIs and microservices is emphasized, as they facilitate better integration and allow organizations to leverage the strengths of both suites and stacks while avoiding vendor lock-in.
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Customers are increasingly valuing capabilities over traditional software purchases, prompting vendors to adapt by ensuring their offerings are flexible and capable of rapid integration with existing systems.
When it comes to investing in enterprise software, organisations have many options allowing them to choose whatever technology or consumption method best suits their business requirements…
