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Fragmented applications? In this economy?

Rod Johnson Profile picture for user Rod Johnson Oracle April 13, 2023
Summary:
Can one size fit all? Rod Johnson of Oracle considers the cost of a disparate applications strategy for core business processes.

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(© Andrey Suslov - Shutterstock)

Business units don’t exist in isolation, so why do we treat business applications as if they do? Many organizations invest in disparate line of business applications under the guise of agility and time to value, but then struggle to derive the expected value while creating a more complex, fragile, and maintenance-heavy application environment.

For many organizations, a ’best-of-breed’ applications strategy means integration cost and complexity, which impacts decision-making at the highest levels and slows down innovation.

Cost, productivity, and insights left off the table

It’s not cheap to keep disparate applications updated and talking to each other, and the constant need for integration maintenance creates regular business disruptions and hampers efforts to introduce more intelligent process automation and AI.

The CIO at one of our customers recently told me that switching from a collection of different application vendors to a single platform provider will save 70% of IT costs. That’s a huge cost saving in an economy where organizations are trying to reduce costs in any way that they can.

There’s also a significant impact on productivity. A recent HBR article showed that workers in disparate application environments toggled between various apps and websites 1,200 times in a day to do their jobs. That equates to just under four hours a week, or nine percent of their annual time at work.

In addition, game changing technologies like AI and machine learning live in business processes, not in single line of business applications. If limited to a single application, AI can help to improve siloed tasks, but greater value comes from the ability of this technology to act across business processes that touch on multiple lines of business.

Finally, disparate systems make it difficult for the C-suite to get a clear, single view of key organizational data to help make better strategic decisions. A 'best-of-breed' strategy makes it harder for the C-suite to make timely decisions based on accurate and trustworthy data.

Over the past few years, organizations running disparate applications realized some of these limitations when they couldn’t respond fast enough to sudden disruptions in their industry. When the business environment made it necessary to change on a dime, many couldn’t and fell further behind their competitors that could.

Doing more with less

As economic conditions change, business leaders will be looking to do more with less. We’ve already seen significant layoffs across multiple industries as organizations prepare for harder times ahead. In this environment, businesses can (and should) question the value they are getting from their application investments. Are they helping to control costs, improve productivity, accelerate decision making, and drive revenue?

This is where the value proposition for integrated application suites starts to make more sense. Managing end-to-end business processes on a single integrated platform with a common data model reduces cost and complexity, improves accuracy and speed of insights, removes inefficiencies, and enables organizations to embrace automation and do more with less.

In addition, the co-ordinated update cycle of application suites gives organizations access to new quarterly innovation without downtime of business disruption, and without the need for constant maintenance and testing of hundreds of disparate applications. As one CTO recently told us, “With all the systems I have to interact with, it feels like the ‘T’ in my title stands for ‘testing’ instead of ‘technology’".

The new era of agility and efficiency

Business leaders are looking for a new model of innovation that allows them to be more agile in response to market changes while improving overall efficiency. We realize that one vendor is not the answer for an entire business. But the more a business can standardize on a common data platform for core business processes, the greater potential for automation and AI-driven innovation. Take for example Grupo Bimbo, the world’s largest baking company. As much as its strategy relies on innovation, the company realized it was limited by multiple disparate systems. As Juan Pajon, Grupo Bimbo’s Global Vice President of Information Technology, explains:

We want to take advantage of new technologies like artificial intelligence and data analytics and use all the information that the systems are producing. But having different systems and technologies meant different master data, coding, and naming conventions. Leveraging information to get business insights wasn’t impossible, but it was difficult and complicated.

Moving to a unified suite is a key part of their strategy, helping to speed innovation. As Pajon notes:

The transformation we are doing in our end-to-end value chain and the Oracle applications that we are deploying have a central role in the success of our vision.

Centralizing finance and HR data, eliminating workarounds, and applying automation also helped TrueBlue — a leading staffing, recruiting, and workforce management company — to reduce the company’s close processes from nine days down to five days. Derrek Gafford, CFO of TrueBlue, says:

We used to have 20 different on-premise systems, which have now been consolidated on to one system with Oracle Cloud ERP. Instead of people transferring data from one system to Excel and then to another system, we now have one source of data for all our information. This helps improve accuracy and efficiency and significantly reduces manual effort.

Not all our customers buy the full Fusion suite of applications, although a significant number do. But most of our customers buy more than one application and continue to expand from there. When investing in ERP applications, for instance, customers find it often makes sense to add Enterprise Performance Management or extend into HCM applications from the same suite. 

We realize every business is different and there might be very specific reasons for why a company would choose a 'best-of-breed'/fragmented applications strategy. But those reasons are not growing in number and are becoming more exceptional as companies compete on product offerings and customer experience as opposed to core business processes. We continue to see Fusion Applications customer growth because of the value the suite delivers to the world’s biggest and most complex organizations. 

All that to say, can your organization afford to continue maintaining a fragmented applications environment?

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