Boutique software v's big consulting and internal IT

Is your corporate IT shop set up as a fortress, with a policy of owning all IT projects but failing to actually deliver fast or frequently enough?

I recently spent some time talking to a prospect at a big corporation about a small software project that would bring great efficiency to his team. He was looking for business case to justify going outside the internal IT shop AND the preferred supplier, one of the big consultancy players.

This got me thinking that Corporate or large SME business people have a tough decision when it comes to having a small or even mid-sized business software project run. They have three choices - ask the internal IT team, hire a big software consultancy, or hire a boutique software team.

Breaking this down, the first question is ‘internal or external’.

Don't get me wrong it you are a hard pressed internal IT guy – the issues are fundamentally out of your hands. The facts are that you can't scale the internal IT operation to meet all of the requirements of the business, so you have to form an orderly queue.

But it's a fact that the guy at the back of the queue knows a guy who knows a gal who's a whiz with Excel macros and forms and they just aren't going to wait 12 months until you finish that OraSap Version 36 upgrade and the other 25 priority projects ahead of them in the queue. And why would they dare step outside the policy of centrally controlled, in-house development? It’s simply because they can see a means, via this new system, to improve their output right now in a way that will impact their appraisal next year. Would you wait?

So if it's not the internal IT team then the options are for one of the Big Software Consultancies, or a boutique IT shop. You may think that the best option is the Big Software Consultancies because they represent a safe pair of hands, a backside to kick when things go wrong, and no-one ever got fired for hiring...you know how it goes.

But let's examine the case for boutiques - they generally specialise in some niche, they usually have a real interest in the success of the project, they are almost all owner-run so their decision making layers are few, they can turn on a sixpence when your needs change mid-stream, they commit totally to the success of the project, and they generally stay available after the project goes live to keep the system running and updated. Put it another way – they’re interested in the people and the success of the project because their future depends upon it.

Look back at the Big Software Consultancies - their staff are on a conveyer belt, your system requirement will be a big deal to you but a small one to them, they will want to document everything to the point of standstill and deliver against the document you signed off, their fees will mean you have to escalate the decision to start the project, and you will never meet anyone higher than your account manager.

This has been a tongue-in-cheek look the options, and there are other pros and cons in all of these cases, but actually the likelihood of initial and ongoing success for your project hinges on none of these ideas.

Instead, the outcome of a small project depends on the development team. That's right, the people. If you've been lucky enough to see a good software project succeed then you will know that the team was instrumental in the success.

But people do not scale. And you are most likely to find the people that will make your success happen now and be there to support and extend the system into the future, working in your corporate IT department and in those boutique software houses.

So, if you’re sitting wondering how to get that system built - the one that will make all the difference, don’t rule out boutique software houses on company size or history - your success just might be in their hands.

Single print supplier relationships put core operations in jeopardy

In a healthy general economy a single print supplier relationship can yield benefits in the form of reduced costs, high brand consistency, print quality, and time to market and so on, so it is a low-risk proposition.

However, when the economy declines, various inherent aspects of the print manufacture business conspire to magnify the risks associated with this strategy.

Print suppliers, working on a low gross margin, must accommodate considerable investment in large equipment, have significant material and resource costs, typically operate 90+ days credit terms, rely on loan facilities for operating capital and have low credit ratings. This gearing means that they are highly susceptible to recession in the general economy.

Though print has been commoditised over recent years, it remains a critical operational component for many businesses. Without print you cannot effectively drive marketing, billing, point-of-sale and many internal operations.

The failure of a print supplier can therefore be a critical business issue. But because of some of its specialist considerations, sourcing a new supplier may not be very easily or quickly achieved.

How then to insure against these risks? In this climate, it is absolutely crucial to adopt a multiple overlapping supplier strategy, never allowing yourself to represent more than 25% of the suppliers’ turnover, and to use an e-commerce purchasing management system to route requirements and orders to suppliers. In this way, if a print supply business fails, the print requirements usually routed to that failed business can be routed to another with little disruption to your core business activities.

In terms of e-commerce systems, businesses should particularly be wary of reliance on a system that has been developed internally and provided by a print supplier, for the following reasons: firstly, because the implementation of such systems across your business is a significant disruption to day-to-day operations and to have to repeat it would be costly; and, secondly, the failing print supplier will usually take the system down with them, resulting in the loss of important operational and analytical information that will be very costly and time-consuming to replace.

A best practice approach is to review print supplier relationships, identify reliance on single suppliers, implement an e-commerce print procurement system and expand the print supplier base to ensure overlap in identified critical areas. A business case for the investment in the e-commerce system would also include a host of benefits – beyond the offsetting of the risk of single-supplier failure.

James Evason is Business Development Director at marketingunity, a software company specialising in B2B ecommerce systems for marketing collateral development, production, procurement, fulfilment and supply chain management.

www.marketinguntiy.com