When it comes to selecting an Enterprise Software Solutions, one of the major factor facing CIOs and IT departments is Risk.

The risk of overspending, the risk of integrations with existing and other solutions, the risk of nevercompleting the implementation, the risk of delivering a solution which will not meet the business requirements, the risk of forever depending on a vendor, a System Integrator or other IT resources to modify, update and maintain the application, the risk of the user rejecting the solution because it is either too complex to use or not intuitive (or user friendly), The risk of requiring too much change management, etc…

There are thousands of risks factors and RFI processes no matter how long, often cannot provide answers to all of these. Reference calls to other customers or users can also prove misleading as a vendor will only give refer the prospect to their champion within a successful implementation and will therefore only provide one view of the challenges in implementing or using their systems.

In this context, CIOs and their teams are usually left with 3 choices, go for the cheapest solution, go for the giant (Oracle, SAP, IBM,…) or homegrown. Although homegrown seems to be the least expensive solution at first sight will almost always end up being the most inflexible, unmaintainable and most expensive solution. I will discuss homegrown development in another article so let’s focus on the other 2 choices and their alternatives.

The cheapest solution is often selected based on a limited business case or very limited funding capacity at a moment in time and the inability to budget for a Strategic rather than Tactical solution. There are situations where this could be inevitable but IT should always look for ways of expending the business case or negotiating a “pay-as-you-grow” deal with a system that actually ticks all the boxes and will be proven to become a strategic investment for the organization. Tactical investments almost always become Strategic by default and the costs stated during the RFP process are often exponentially increased during implementation, not to mention that such solutions are very hard to maintain and might cripple the IT landscape of an organization for years to come, replacing these will require further change management, migrations and hundreds of other nightmares that could have been avoided in the first place.

The second “lesser risk” approach for a CIO or an IT department is to select a software giant based on the fact that they are the best in what they do and they can pretty much do everything else; after all, no one ever got fired for buying Oracle or IBM. This often results in an unnecessary gigantic up front investment and an even bigger spend on change management. SAP for instance was created by the World’s leading accountants and SAP does not adapt to a company’s ways and procedures, the whole company has to change their approach and procedures to match those of SAPs; of course, in the long run they would gain in efficiency by adopting best practices and changing their business but the short to mid term might prove very painful.

I have personally been involved in many organizations which decided to extend their Siebel CRM solutions to cater for order capture, online self-service, order configuration and even order management. In all of these cases the end results were approaching 10 digits implementation costs and years of effort to produce a system that was heavily customized, therefore impossible to upgrade (one customer had to pay a bill of $20,000,000 to upgrade from version 7.5 of the CRM solution to version 7.8) and in almost all cases faced complete rejection by the user community on the basis of ergonomics and bad user experience.

I am not saying here that the software giant should not be considered, they became giant based on the strengths and robustness of their core competencies but companies should very much stick to these and look at complementing and enhancing these with other best of breed software packages.

The problem is that best of breed software vendors are facing unfair lobbying and competition from the giants and their SI partners who are feasting on the immense implementation revenue opportunities of customization and extension. A best of breed vendor cannot afford to buy rounds of golf for its prospect’s top executives, to fly the same executives business class to a conference in Paris, London, New York or Barbados and also struggle in getting access to the right people within their prospect organizations. An IBM director will have much easier access to a CIO than the CEO of a best of breed software vendor.

However, it is worth making the effort to search for what is available out there and look beyond the obvious big names. No one ever got fired for buying Oracle or IBM, in an economy still scarred by the recession, how long can this hold true?

Has anyone ever become a CIO because of buying Oracle or IBM? I very much doubt so, can one become a CIO or a CEO by identifying the niche best of breed software that will make his or her CFO, CIO and the business happy delivering the required functionality on or close to budget and timelines? Maybe.