by Thomas Wailgum

You May Fear Packaged App Lock-In, But Your CEO Doesn’t Care

Feb 11, 20093 mins
Enterprise Applications

It’s not often that we get to hear business executives’ unfiltered and honest perspectives on important technology topics. But for IT, that business exec perspective is, of course, the most important perspective to have, understand and keep in the back of your mind as you go about working with the business on their enterprise applications—such as ERP, CRM, BI and supply chain apps.

So I wanted to bring up this point about business execs and where they think “IT solutions” should come from today.

The data is from a 2008 Forrester Research survey of 600 North American business executives, and is detailed in “The Business-IT Expectation Gap.” (We combined this Forrester data with our 2009 State of the CIO survey data, which paints a detailed picture of where IT is achieving success and where it’s falling down.)

The 600 executives were asked: “Please rate each of the following sources which you might consider for addressing business needs in terms of how important are they to you today on a scale of 1 to 5.”

According to the execs, the primary source they’d consider (which received the highest rank) was packaged applications from traditional enterprise software vendors, such as Oracle and SAP. That received 33 percent of the executives’ vote. The second-highest-rated source, at 24 percent, was business applications developed by IT staff.

I’m extrapolating here, but clearly business leaders have an entrenched view that packaged apps are better than internally developed IT software. It also speaks to the importance that Oracle, SAP and the like have achieved.

This point was drilled home to me the other day, during SAP’s Business Suite 7 announcement.

Ed Toben, SVP of GIT & Business Services for Colgate-Palmolive, described to the audience (and those of us on the Webcast) how much large companies, such as his, rely on SAP these days: “We want SAP to be as, quite frankly, all inclusive as possible [with their applications],” Toben said. “Our strategy is first to go to SAP.”

In other words, Toben was saying that for basically all of the business’s enterprise application needs, Colgate-Palmolive and IT would first go to SAP and check out what they offered or were planning on offering in the near future.

Talk about vendor lock-in.

Perhaps that view is not surprising to some of the readership. Perhaps it is. But it is telling nonetheless: Executives feel that packaged-app vendors’ products have value that trumps anything that IT can do internally.