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Standard vs Best-of-Breed

Introduction

Choosing the right business intelligence software for an enterprise is a complex job. BI solutions range from data management to BI tools and applications with varying feature sets and user groups. Mixing and matching software packages from several vendors is referred to as the best-of-breed approach. The alternative is to choose a single strategic vendor that provides adequate coverage of all the functional areas required.

Each approach has its advantages and disadvantages. For the best product for each functional area, best-of-breed solutions usually provide richer functionality. Typically, there are disparate cases to be addressed and no single solution will be able to deal with them all. Furthermore, users of existing tools often have a vested interest in keeping them, which makes the introduction of a suite of standard tools for the entire enterprise difficult. This is important because, as The BI Survey shows, satisfying users is a key to successful business intelligence projects.

However there are several arguments in favor of buying a tool suite from a single vendor including price, administration effort and effective data sharing between users. The promise of integrated systems is to provide multiple applications with common infrastructure elements such as user administration, and data management tools as well as a consistent user interface to reduce training costs. The risk is that some pieces of the combined offering may not be very good, which will discourage users from adopting them, increase implementation and maintenance costs, or slow down change management.

There is no practical way to make an exact cost calculation for a business intelligence project. There are simply too many variables. But when attempting to calculate the costs of software it is important to keep issues such as training and implementation costs in mind. Unfortunately, these costs are difficult to know in advance without detailed information about the project. In many cases this information is not available in the earliest phases of the selection process. It is also important to keep in mind that software maintenance can be expensive, so calculations of total cost of ownership have to include some estimation of how long the product will be used and how the number of applications and users might develop.

Best-of-breed systems, which lack the coverage of all the use cases but are designed to excel in one or a few application areas, can also pose challenges. These include increased training and support costs, difficulties integrating with other systems and data management issues caused by redundant data storage.

At the same time, nearly all suites are the result of larger companies acquiring several best-of-breed systems. As a result, it is often the case that customers are sold a set of incompatible products which have been relabeled to appear to be parts of the same product. In this case, the more technical arguments in favor of a suite do not apply, although organizational arguments (see below) may.

There is no simple answer to the question of whether to choose best-of-breed or an integrated system. However, there are some basic criteria to be considered and applied to individual cases.

Purchasing and Licenses

License fees and the subsequent maintenance fees are an important issue in choosing business intelligence software. The BI Survey shows that costs are a common argument against wider deployment.

Systems provided by a single vendor tend to have lower licensing costs. However, they also tend to have more complex licensing schemes, making the true costs harder to analyze. The price advantage of a suite is partly driven by the suite vendors’ common practice of throwing in extras to sweeten the deal, or bundling the product with other offerings such as transactional applications. In most cases, this option is not available to best-of-breed vendors. On the other hand, customers only looking for a subset of all the features a suite offers may find a best-of-breed solution cheaper.

Best-of-breed systems with specific feature sets and more focused product management offer the customer more. However, they tend to be more expensive. A cost justification may be needed to show that the advantages of the system compensate for higher up-front costs and the additional expense of maintaining it. This is often difficult for BI products.

Having fewer products means less effort for the purchasing department. It is easier for the purchasing department to keep track of existing contracts when there are fewer vendors. This argument is probably fairly weak in most cases because the major costs of business intelligence software are not created in the purchase cycle itself. But the purchasing department may have an unduly large influence in the selection process.

Choosing a product to replace several best-of-breed products with a single corporate standard can be problematic. It can be difficult for a company to analyze the requirements of its employees if they are satisfied with the product they are currently using. Business users tend not to have much interest in participating in software projects they do not see as bringing benefits.

Vendor Relationship

Many companies find that they are operating too many different software packages from different vendors and see the need to reduce both the number of products in use and the number of vendors they talk to. There are several advantages in having a small number of vendors.

Suite providers often enjoy a good negotiating position with their established customers. The more different products from the same vendor that are present on a single site, the more tightly the customer is locked into the system. This affects negotiations when the customer needs new modules for an existing system and the customer chooses to replace part or all of the system with a competing tool. However, best-of-breed solutions can sometimes provide an antidote to this problem by allowing the customer to replace a complete system piecemeal.

Large customers are more important to each of the remaining vendors and have an advantage in negotiations as a result. Negotiating with BI vendors on price often leads to significant reductions from the list price, and large customers are usually in a better position to apply pressure to the sales team to cut the price.

Training

In a best-of-breed environment, IT will require additional training to administrate each system. This could also mean supporting separate platforms — operating systems, databases, Web servers and programming languages. The same applies to the end-users, who may find it more convenient to have the same interface for separate functions. This offers another strong argument in favor of an integrated solution.

If there are fewer software packages in use, there is less need for training. This applies to end-users, programmers and administrators. Training costs can be very high, and a lack of proper training can also incur significant costs.

If the same product is reused across the enterprise, existing skills can be redeployed on new projects. This reduces the time required to carry out individual software projects. As The BI Survey 9 clearly shows, short project times lead to better results. Software that is more widespread in the company also reduces dependencies on the skills of individuals. In some cases, departmental business intelligence projects are carried out on a shoestring budget without temporary outside support.

Support

An environment in which multiple vendor offerings are being used side-by-side can be more difficult to maintain if the various vendors do not cooperate or point fingers at each other when problems arise. In practice, however, the potential problems caused by conflicts between vendors have little impact in the BI industry. The BI Survey 9 shows that large vendors with broad suites consistently underperform in the area of support. As a result, the argument that a single product offers better support is not strong.

Shared Data and Metadata

With a truly integrated system developed by one company, it is easier and faster to access shared data. However, it is doubtful that the BI tools themselves are the best place to focus on creating a unified data structure. As a general rule, the best way to provide shared data is at the data warehouse level, not the level of the data mart or reporting system. On the other hand, there are situations in which data warehouses are just too cumbersome to keep up with the needs of a rapidly changing company. In these situations, a semantic layer with direct access to source systems or smaller scale but more flexible departmental solutions might be feasible.

Furthermore, metadata management with an exchange of objects and information between different tools and layers of the architecture can be of benefit to developers and end-users. Since metadata standards are rarely available, or followed by the vendors, it is usually much easier (but not always possible) to exchange metadata between components of one vendor’s suite.

Functionality

The strongest case for the best-of-breed solutions is richer functionality. Some areas of business intelligence are becoming commoditized, which reduces this argument, but it still exists. This is especially true of planning and other content rich CPM applications.

Best-of-breed vendors are more likely to provide timely updates of customer-specific features. Specialized systems may be technologically advanced since it takes longer for companies to re-write a whole suite of applications. But the best Web interfaces come from larger companies, and smaller vendors have difficulty providing highly scalable solutions, either in terms of quantities of data or in terms of the number of users.

It is difficult to find a single vendor that meets all the needs of the enterprise. This reduces the number of choices a company has when it is selecting a strategic partner.

Just because a suite is good in one area, it does not mean it is good in another area. In fact it is quite common for vendors to have functional “sweet spots” with their tools while other BI application areas might be rather cumbersome. Choosing a single vendor to fulfill all company requirements runs the risk of having second rate software in certain areas.

Administration and Maintenance

Suites can reduce the complexity of maintenance, as they usually have centralized administration tools and fewer internal interfaces.

  • IT requirements are reduced when a single vendor is used because there are fewer servers to maintain. Each application has its own specific overhead.
  • Upgrading to new versions of the software is easier if there are fewer products involved. Upgrading is always an expensive and difficult process, and one that can be risky. Many software vendors recommend several upgrades per year. By keeping the number of different products level, companies can reduce the costs incurred by upgrades.
  • Collaboration between separate departments is easier if the same software is being used.
  • If all employees are using the same software, it is easier to define a single point of truth and to avoid multiple definitions and calculations of the key performance indicators.
  • Most vendors who offer wide-ranging products have gotten so big by buying other companies that their software is not very well unified.

However, it is worth noting that all of these arguments apply to situations when more than one application or more than one tool is being used. For smaller scale solutions, best-of-breed products tend to be easier to administer, and in many cases the business users can maintain their own installations. The problems arise when large numbers of such solutions are in use in the same company.

Conclusions

The following table gives an overview of the advantages and disadvantages of each approach.

Best-of-breed

Company standard

Purchasing

More precise feature selection

Low price, but lack of transparency. More leverage for the customer

Training

Tends to be more expensive, and support a smaller community

Knowledge tends to be more widespread, and can be reused in other projects

Administration & maintenance

Simpler, and often more accessible to end-users

Better suited for enterprise-wide applications

Functionality

The best available, but usually missing some application types

Wide-ranging, but often missing key features in particular areas

Figure 1: Comparing standard software with best-of-breed

There is no general recommendation as to whether to use a best-of breed solution. The final decision will depend on the customer’s size, culture and management style. Decentralized organizations or organizations that often change their structures will find it difficult to maintain a single vendor over a longer period. In stable highly centralized organizations, suites are easier to maintain.

The current market situation for larger customers is that many are beginning to adopt an integrated systems strategy and are filling in the gaps with best-of-breed systems. But the systems they are buying are often the cobbled-together suites that were created in the wave of takeovers that peaked around 2007 and has continued to affect the market. In fact, there are very few options on the market today for truly unified suites so, at least to some extent, best-of-breed specialists are to be found in nearly every company.