Beginner’s Guide to Vertically Integrated vs. Best-of-Breed Software

vertical integration zoho

In my last post, I wrote about the concept of end-to-end solutions which home run business processes from beginning to end in one, integrated application. End-to-end software from a single provider is relatively a new phenomenon.

End-to-end software from a single provider is relatively a new phenomenon.

In the early days, the only way to get end-to-end software to run your business was to build it yourself, stitching in best-of-breed solutions from different software vendors to fill the gaps.

Over the course of time, best-of-breed vendors got really good at their niche. One company got good at making accounting software, another at project management software and another at human resources software.

They developed their products to a stage where employees became dependent on their products to get their jobs done.

Today, most business leaders put more value on software that supports individual departments than software that improves collaboration. Sales has their CRM. Marketing has their automation stack. Accounting has their package. And ops has theirs.

As a silo, each department works faster. But as a company, since cross functional collaboration relies on email and analog work arounds, business processes are often interrupted by analog work arounds.

The simplest of interdepartmental tasks, like setting up a new customer in the accounting system or creating a project plan from a scope of work document are redundant processes that slow organizations down.

If sales executives can transfer new customer contacts directly from their CRM to your accounting package, or if operation can automatically convert a scope of work document into a manageable project plan, the result is velocity.

When you integrate best-of-breed (or point) solutions, you’re mapping how data gets transferred from one system to another. Each best-of-breed or point solution in your stack has its own database, which needs to be told manually where to put or get data from other systems.

If you integrate niche, best-of-breed solutions manually, you’re on the hook for maintaining those integrations when employees come and go, when a best-of-breed provider deprecates a solution in your stack or changes their API call limits?

Is the added functionality of a best-of-breed solution really worth the cross connectivity, maintenance and integration challenges? Or is it better to have a vertically integrated stack from a single CRM/ERP provider?

For nearly a decade, major CRM/ERP providers like Microsoft, Oracle and Salesforce have been acquiring and integrating best-of-breed providers in a race to assemble end-to-end, interoperable business software.

These guys may not always have the best niche solutions, but by focusing on integration, they enable companies to increase their velocity.

Relying on stand alone best-of-breed solutions like Quickbooks and HubSpot, which do some things really well, is becoming riskier because those providers that haven’t been acquired by one of the end-to-end CRM/ERP providers and could eventually get deprecated, since they’re competing against whichever of their best-of-breed competitor’s gets acquired and integrated by the CRM/ERP.

Today’s alliance partner is tomorrow’s deprecated integration.

Once the CRM/ERP providers have fully integrated their best-of-breed acquisitions, will they still support the same integrations they do today? Stacks that rely on integration platforms like Zapier and Mulesoft are even riskier because, as we already learned, stitched applications offer fewer options together than they do individually, and if it doesn’t integrate, the breadth and depth that niche software soltuions provide become impediments to cross functional collaboration.

Plus, maintaining all those integrations manually is a gargantuan task.

Common Infrastructure

Sridhar and Eric at Zoholics.

Sridhar Vembu, CEO of Zoho, the emerging CRM/ERP leader Zoho for small and medium sized businesses is developing a Unified Virtual Database to enable tighter integration between applications and give clients an easier way to build custom applications on a common database.

One database means fewer dependencies, because information doesn’t need to be passed from one database to the next, resulting in fewer fields to be mapped and fewer processes to be maintained.

More importantly, however, if all your data is in one place, it’s easier to leverage artificial intelligence to drive business velocity, and AI is set to divide the winners from the losers as we move into the future of information technology.

When all your data is in one place, it’s much easier to pinpoint actionable business intellignce because meaning is found at the intersection of multiple data sets. Technology is constantly advancing. Staying ahead of the curve requires transformational marketing strategies, seamless customer experiences and smarter, faster, more flexible organizations.

One important key to survival in the age of disruption is ease-of-use, for the customer and the employee, because easier means faster.

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