CIO — We may never know what killed the dinosaurs. Comets crashing to earth? Ice creeping down from the poles? Smart little mammals running circles around them? But we will know what killed the giant enterprise application suites that ruled the last years of the 20th century: smart, little point applications. They’ve already begun to eat the lunch of those lumbering enterprise suites, and if the trend continues (and there’s no reason it shouldn’t now that Web services is here), in a few years CIOs won’t be buying any more tightly coupled, multimillion-dollar enterprise systems from just one vendor.

Case in point: When FleetBoston Financial last summer decided it wanted to automate the process of identifying potential customers for new products, the $13.3 billion Boston-based financial services company received two proposals. One came from CRM giant Siebel Systems, from which Fleet had purchased millions of dollars’ worth of software licenses in 2000. The other was from MarketSoft, a smaller $100 million vendor whose product focuses solely on the kind of lead management FleetBoston was looking to do. And despite the fact that Fleet had scores of unused Siebel licenses, the bank went with MarketSoft’s more targeted product, opting for a best-of-breed lead management solution.

"We evaluated the two systems for functionality, cost and speed of implementation,’’ explains Ann Christensen, the former executive vice president of customer and sales management in FleetBoston’s consumer banking group, who made the decision. "We found that Siebel had, as you would expect, a broader set of functionality than we needed and didn’t go nearly as deep as we needed."

Many companies are making similar choices by seeking out specific point applications and backing away from enterprise application suites. This is a major shift from two years ago when everyone was investing in ERP and CRM packages -- the bigger the better. There are numerous reasons for this sea change. Point applications cost considerably less than enterprise suites and often offer more flexibility and deeper functionality. They are easier to implement and upgrade. And, paradoxically, it is sometimes easier to integrate a point app with an already installed suite than it is to integrate new components from the same vendor’s suite. For example, Fleet found that the MarketSoft application, according to Christensen, "integrated with Siebel systems better than Siebel systems integrated with Siebel systems."

Siebel and the other big software vendors dispute that contention. They argue that the long-term cost of ownership will actually be higher if a company goes with point applications because of the cost of integration and managing the multiple vendor relationships.

Continue Reading