On the menu is ‘Vanilla’ - generic solutions based on economy of scale - or ‘Neapolitan’ - bespoke solutions for a tailored applications portfolio.
But before you start tasting, it is important to decide if you want dessert at all. There are a number of parameters that should be considered when examining IT estates before changing or adding applications. Are they:
- fit for purpose;
- delivering value for money;
- future-proof for up to ten years;
- needing total change or just requiring rationalisation or upgrade.
For globalised businesses there is the added examination of regional or local integration for language, financial compliance, operating styles and business processes. However, once satisfied that application development is definitely on the menu, the next decision is which flavour.
Vanilla solutions are based on standard products and are typically high volume applications with generic functionality. Flexibility is limited in adapting these applications - whether in-house or outsourced - without incurring large re-design costs. They are also likely to require significant business culture change to fit the technology.
While this may be possible in a single country, it is significantly more difficult across a globalised business. Vanilla systems score well for business process outsourcing (BPO) such as HR, general finance, back office administration and standardised manufacturing processes where data security is not an issue.
However, the vanilla option starts to melt as soon as there is a need for bespoke applications or where regionalisation is required. Accounting standards or sales processes are rarely globalised as, for example, the US rebate system is very different from that of Europe.
Generally, in a global context, the vanilla applications market is being driven by the implementation of large regionalised systems within one organisation, particularly for enterprise resource planning (ERP) apps, which can deliver significant economies of scale but still require regional elements.
For vanilla applications to work effectively, there has to be global process alignment. Trying to seek agreement on a single process from multiple regions is fraught with political and process difficulties and discussions even in organisations which act as a single global entity let alone those who operate a federated model. In essence, pure vanilla only really works for a truly global model and that is a rare commodity.
The bespoke, Neapolitan, option allows creativity and a completely tailored apps portfolio which can strengthen the company’s differentiation from its competitors. It is also easier to adapt for local or regional elements of a global system. However, there is a price to pay.
As with its more sophisticated ice cream namesake, this approach to IT apps involves significantly greater time to produce and cost to purchase than the vanilla option. In considering the Neapolitan route, it helps to recognise and organise both the project lifecycle and regional variance needs at the outset, making as many elements of the application as repeatable as possible to avoid re-inventing the wheel.
In our experience, the best solution to the flavour challenge is almost certainly a mixed dish, using vanilla apps where genuine economies of scale can be leveraged, but Neapolitan where any kind of competitive or geographical differentiation is required.
An often-cited example of this kind of approach is in the credit card industry, and Barclaycard in particular, which has used bespoke, ‘contactless’ technology to help grow its business and compete in a saturated market, but use more vanilla-type solutions for call centre, fulfilment and card processing applications.
Top tips for full flavoured satisfaction
- Check the ingredients - Be sure of what you are buying. Vanilla may seem a relatively easy, plug-and-play option, but what service and security levels will be delivered once you sign up? If using a third party supplier, will they guarantee isolation of critical data for example? Neapolitan may provide a more exact fit, but can your supplier guarantee delivery on time and on budget?
- Prix fixe or a la carte - Read the menu carefully and read between the lines. Look at the total cost of both options before deciding. Vanilla may seem an obvious low-cost choice on the surface, but there are likely to be hidden costs related to significant operating and business culture changes. Neapolitan may mean higher up-front costs in terms of IT development and maintenance, but may be more economical in the longer-term for business and process change.
- Service with a smile - Consider the human resource costs of both options. Vanilla solutions may allow you to recruit people from a large global market with standard application skills regardless of region. Neapolitan solutions generally require specialist training and, therefore, increased costs. However, this will also provide you with a better-skilled workforce and potentially better customer service.
Paul Gardner is Head of Applications Practice, James Cockroft is Head of Sourcing Practice, and Stuart Gibson is Applications Practice CTO. All three work for Xantus Consulting.
Xantus is an independent management consultancy, specialising in IT-enabled business change - focusing on changing business through IT and making IT run more effectively. Xantus’ experience is gained through working with leading UK and global enterprises across the public and private sector.