Business Application Implementation

This article will review the current options for companies implementing business applications to support overall organizational objectives. Three primary options exist for business application implementation: custom-built applications, build-and-buy applications, and buy applications. The pros and cons of the buy vs. build question will be reviewed, along with the implications for IT support, cost benefit, and long-term business objectives. The business case and benefits associated with each of these application deployment options, including SOA (service-oriented architecture) and ERP (enterprise resource planning), will also be explored in the context of enterprise-wide business application adoption. The evolving role of information technology departments in supporting and shaping overall business strategy through business application deployment will be analyzed within the framework of the modern business climate, specifically in relation to mergers and acquisitions, industry consolidation, and the rise of global corporations.

Keywords Business Applications; Commoditized Applications; Core Applications; Enterprise Applications; Legacy Systems

Information Technology > Business Application Implementation

Overview

The options for third-party business applications available to organizations have never been greater. Organizations large and small have unprecedented access to cost-effective, out-of-the-box applications that can be deployed via the web with little or no development time or in-house expertise to support them. The ubiquitous acceptance by users of web applications has spawned a whole generation of ready-made business applications that are not only user friendly but also surprisingly familiar in their look and feel to many common web-based (non-business-specific tools).

In the 1990s, IT departments were integral in supporting networks, computer hardware, software installation, and business applications such as e-mail. IT departments also provided access to organizations' databases and other company data via password accounts. Because of the perception of IT as gatekeeper and protector of company data, IT departments were sometimes regarded as inhibitors of progress. Over time, IT departments naturally segmented into areas that support specific company needs, an important one being the installation and support of business application software. Outside the realm of IT, software-application developers create custom business applications that support day-to-day operations. IT support for business applications tended toward standard out-of-the-box applications that were available to users on their desktop, but in many cases, IT departments supported both third-party (vendor) applications and custom-build applications (legacy applications) in tandem.

In the early twenty-first century, IT departments began to manage and administer multi-layered, service-based architectures that require a much more global overview of business application interaction. The proliferation of web-based applications has changed the role of IT within organizations as well as the relationship between IT staff and the end users of business applications. Many web-based applications require little or no IT support for installation, maintenance, or support. At the same time, the role of IT personnel has changing to a more strategic one, as IT departments shift focus to assess the interoperability of business applications across organizations.

Applications

Evolution of Business Applications Implementation

Custom-Built Applications

Before organizations had access to cost-effective and readily available digital networks, organizations operated in more geographically specific markets and segments of a supply chain. Electronic inventory control systems and other internal business applications and databases were proprietary in nature and were built to serve the specific needs of an individual organization. The implementation of this type of application required large amounts of internal IT and developer support for deployment and problem fixing. The lifecycle of design, development, testing, and deployment was most often the sole responsibility of internal company support functions, namely IT and engineering. The quality control of applications was also the responsibility of the organization that owned the application, usually associated with the relatively high maintenance costs of development and problem fixing. The cycle of in-house development and deployment was often tedious, expensive, and frustrating for end users.

Many custom-built applications are designed around core functional areas in a business. These core areas are likely to be the most strategic and specific for a given business's operations and may not have an existing commercial application available to replace its functionality. Such was the case with MCI, which became part of Verizon in 2006, and any of the applications that touched its telecom network. MCI's custom-built system and user applications were a strategic advantage to the company and its customers. The following set of questions and answers is an example of the decision tree that MCI used when investigating whether to buy or build a system to track a third-party services inventory. These questions allowed the company to logically and deliberately analyze what the best option was when deciding whether to build or buy the new software application. The following questions represent the MCI decision tree to help decide whether or not to build applications (Traylor, 2006, p. 23):

Q: Is there competitive advantage in building?

A: No competitive advantage.

Q: Is the project covering core or generic business processes?

A: Generic.

Q: Is there business expertise in-house to build something world-class?

A: Yes, but resources are tight and this is not a priority.

Q: Is there technical expertise in-house or available on the market to build something world-class?

A: Same as previous answer.

Q: What is the total cost of ownership?

A: Low to medium.

The following questions represent the MCI decision tree to help decide whether or not to buy a particular application (Traylor, 2006, p. 23):

Q: Do capabilities exist that meet or nearly meet our needs?

A: There are two packages that meet our needs.

Q: Can our business processes fit those imposed by the package?

A: Yes.

Q: Is the vendor going to be around for a long time? Many of the best solutions come from smaller vendors, so it is necessary to review their financials.

A: Both vendors are viable.

Q: Does the vendor fit into our cornerstone technology stack? (For MCI: Microsoft .Net on the portal side, IBM Websphere on the back-office OSS side.)

A: Yes, for both vendors.

Q: Does the vendor have a vision that is compatible with our vision of future growth needs for the package?

A: Excellent vision; better than we have in this area.

Q: Does the vendor have a demonstrated ability to deliver releases on time?

A: Yes, based on reference checks.

Q: What is the TCO (total cost of ownership)? Is it less than building and maintaining this ourselves?

A: An RFP [request for proposal] was conducted and significant concessions were obtained. TCO is favorable.

The outcome of working through the decision-tree questions allowed MCI to make the determination to buy the software application that was needed. This series of logical and linear questions helped take the guesswork out of the buy vs. build decision for this particular software application.

Build & Buy Applications

Since the early 1990s, the business applications space has become crowded with out–of-the-box business applications that can be deployed quickly and easily across organizations. One of the most widely used and ubiquitous applications is Microsoft Office, with its spreadsheet, word processing, database, and presentation applications. Business applications for customer-relationship management (CRM), document-control systems (DCS), and inventory asset tracking entered the marketplace and helped further revolutionize the individual workspace. Desktop applications allowed for the quick rollout to individual users, and some, like Microsoft Office applications, initiated the era of application compatibility. For instance, a user creating a document in Microsoft Word could easily share Word documents with any other user who was running the same application software on his or her computer.

Even as organizations began to rely on a core of desktop applications, they continued to build custom applications to support more specific internal processes. Out of necessity, companies developed large, complex, and costly systems and applications to help automate core business processes. As a result, most organizations maintain a mix of vendor (bought) and legacy (custom built) applications. As the need to access business analytics increases, so does the necessity for organizations to build connectivity between disparate systems and business applications. Legacy systems and applications often contain and track a company's most valuable internal knowledge and intellectual assets, and the need to create an internal connection between systems is critical for business processes to function.

Even with the wide variety of third-party business applications that are available, the question about build vs. buy is not easily answered. The thorough evaluation of the business goals of a firm is critical in determining what avenue to take in the deployment of key business applications. The role IT has is an important one in making such decisions. IT departments have much expertise in handling vendors, contracts, service-level agreements, and the integration of new software with existing software that is already running in-house.

Buy Applications

The purchase of business application software needs to be made from a global perspective. Multinational organizations are involving IT in strategic discussions about how to select and assess business applications that will serve a workforce that is more diverse and dispersed than ever before. For many global organizations, business applications will need to serve employees in multiple continents, time zones, and office settings (traditional offices vs. mobile workers). Business applications delivered via the web have negated the need for internal systems architecture to support the hosting of the software. Internet applications are platform independent and allow users easy access through familiar interfaces. Users can easily install these applications with little or no IT support.

Software as a service (SaaS) is a hot topic in business applications. The applications most in demand are those that offer functionality that is fairly standardized and commoditized, such as customer-relationship databases (CRMs). SaaS offers what is known as a tenancy model for the application. All users access the same web-based layers, including the database, server, and applications. Because all tenants are accessing the same basic code, there is more input from users about how to improve functionality. This collaboration benefits all tenants and speeds up the innovation process. In many cases, vendors support sites allow developers to access code and best practices. In the spirit of true social networking, users can connect with other users and developers for support and collaboration through forums and discussion groups.

Typical SaaS services are sold through subscription with different options for contracts, usually monthly, quarterly, or term licenses. Charges are typically per user, with some vendors offering volume discounts or discounts for signing long contracts or paying up front. The initial costs for SaaS solutions are typically lower than in-house software applications solutions. Some of the cost savings gained though purchasing SaaS are:

• Applications are not widely customizable.
• The applications are easily set up and utilized.
• Administration and implementation costs are contained.

Issues

Global Organizations/Mergers & Acquisitions

Many organizations have been forced to consolidate and streamline business applications that were acquired as a result of mergers. Industry consolidation is seen by many shareholders as a way to combine and leverage key business applications and increase corporate value. Mergers have forced many organizations to make decisions about which legacy business processes to keep from which organization and which to replace. Faced with costly data and systems integration, many newly merged organizations are receptive to implementing best (legacy) practices and applications or turning to vendor solutions.

Another option is to collaborate or partner with competitors to build vertical software. Some of these applications have been so commercially successful that venture capital (VC) money has allowed for further development and eventually the option to license the applications. Collaboration between competitors and partners helps develop and deploy applications that serve multiple organizations. Regardless of the reasons—industry consolidation, merger, or acquisition—global enterprises are here to stay as business processes and global supply chains become more integrated.

Operational challenges abound for many organizations in terms of aligning corporate culture, business processes, and business applications. Many organizations are beginning to look holistically at the management of data and business applications as a competitive advantage with the potential to increase innovation while shortening product time to market. Some of the pivotal issues and trends associated with global business application implementation will be discussed hereafter.

Enterprise-Wide Architecture

Service-oriented architecture (SOA) is the broader architectural or structural design around which global applications are being deployed. It relies on aligning assets and processes with overall business objectives while reducing application and data integration costs. The strategic alignment of IT investments and services around SOA implementation has the potential to add value. "From a business perspective, it is no longer a technology issue; it is a matter of developing an architecture and framework within which business problems can be defined and solutions can be implemented in a coherent and repeatable way, exploiting reusable services" ("SOA to transform," 2007, p. 158).

Enterprise-Integration Standards

Coordinating the deployment of business applications across globally dispersed organizations presents significant challenges and requires consistent, defined standards in order to achieve success. Enterprise architecture (EA) standards can be defined as the rules that integrate business applications and define strategic directions for managing the applications portfolio and technologies for integrating applications. EA standards also specify the logical organization of corporate IT infrastructure, enterprise data, information, and applications that support core business processes (Boh & Yellin, 2006).

The benefit of standardizing multiple IT initiatives, including application architectures, is that organizations can potentially reduce the complexity of maintaining multiple IT systems and save resources by reusing IT components and services, thus reducing waste and the replication of tools and reducing the overall skills complexity for IT staff. Properly documented, communicated, and applied standards can control the growth of technical diversity within an organization. "Without effective coordination across business units, individual applications tend to be developed to optimize the local unit's business needs without consideration for overall enterprise goals. Over time, applications become independent silos on multiple technology platforms with their own defined sets of data" (Boh & Yellin, 2006, p. 175).

Open Source as Application Advantage to Build

Collaborative software applications are very popular components of the build-and-buy strategy of application development and deployment. Open-source applications allow developers easy access to source code and tools that might otherwise not be sanctioned by their organization. Open-source software is similar to build applications in that it is highly customizable and, by its very nature, will require customization. Many developers look at open source as a means to augment in-house resources; reusing and building on existing components is much easier than starting from scratch. Open-source applications are one way to address a given business need, and many feel that the investment of time and effort is easy to justify from a cost-benefit standpoint. Still, customizing open-source applications can prove to be a slippery slope. "There's a danger of customizing third party applications to such a degree that they are essentially home-grown—the cost benefit can easily be lost" (Traylor, 2006).

CIO Role in Becoming a Strategic Partner

The discussion of business application implementation needs to address the changing role that IT departments, their personnel, and leadership are taking related to this topic. IT, like many other business units within organizations, is playing a greater role in defining strategic goals of organizations, as selection and deployment of the right business applications is now a very strategic decision.

Technology has become such a pervasive part of business that a company's technology strategy and business strategy are now linked. IT is not thought of as supporting and automating business as much as helping to innovate it. IT leaders are being tasked with integrating the IT function, mission, and vision into the overall business strategy for success. Chief information officers (CIOs) hold C-level positions in many organizations and are responsible for aligning IT goals and strategies with the overall business goals of their company. Gartner research predicts that 40% of CEOs will make CIOs responsible for business-model innovation in the future. CIOs will realign their departments and staff and have greater accountability for the overall success of business processes, not simply the technology that supports the processes.

Today's CIO expects his or her staff to be well versed in business processes and the applications that support them. In some organizations, IT staffers are required to spend time in the field with application users. Firsthand knowledge of business processes and the applications that support the core business helps IT staff gain a better understanding of all systems in all business areas. Still, from a cultural and historical perspective, the challenge remains to enhance and change roles and perceptions from both sides, IT and business. "IT is a highly technical field; people who traditionally excel in IT are more technically capable than business savvy. In contrast to the traditional corporate vocabularies of finance, marketing, and sales, IT technical jargon and lingo do not resonate with the syntax and lexicon of the boardroom, and this culture gap between IT and business has been shown to be an impediment to aligning the IT function with the rest of the business" (Huang, 2007, p.174).

Further Insights

Technology and business are closely linked by the systems, tools, and applications that support daily decision making and operational processes. The synergy between technology and business is most obvious in the business applications that are present (and necessary) in many people's daily work lives. The procurement of appropriate business applications is both a strategic challenge and a strategic opportunity to many organizations. The correct selection and deployment of reliable, cost-effective, robust applications has proven to be a clear competitive advantage to many organizations.

Knowledge is the new competitive advantage, and gaining access to accurate and timely business knowledge requires the right tools. Selecting effective business tools for analysis and knowledge management has helped many organizations successfully navigate corporate mergers and the entry into global economies.

Conclusion

This discussion has shown that many organizations continue to support internal proprietary applications to run day-to-day operations, either out of necessity or for operational advantage. In some cases, such as with MCI's telecommunication infrastructure, proprietary tools and applications are the best operational strategy. Other companies limp along with outdated and unsupported legacy applications in the hopes that new applications (built in house, or vendor supplied) will be procured. Corporate IT departments have increasing influence on the direction that global technology architectures will take and can serve as important resources in directing a company's technology strategy.

With the breadth, depth, and variety of business application tools that many companies support and use at their organizations, the need for defined enterprise standards is critical. EA standards help a company define the overall technology vision and tie that vision directly to business strategy. "EA standards for business applications describe the core applications required to successfully run the business, along with an appraisal of their strategic value and impact on the business. The standards also define the interdependencies and interoperability needs that are required between business applications and identify new applications that will be required to satisfy up-and-coming business needs" (Boh & Yellin, 2006, p. 175).

Once a company has developed an overall business application strategy that supports a company's information and technology architecture, stakeholders (managers, senior staff, developers, and IT staff) will be better prepared to make decisions about what mix of business applications will best serve the needs of the organization. Companies have many choices when deciding on a portfolio of business applications. Most companies will continue to maintain a mix of vendor and proprietary applications, but for many non-core functions, vendor applications are an attractive alternative. Vendor applications can save costs up front and free up in-house development resources to work on more strategic tool development. "Software as a Service has democratized the software industry from request for proposal (RFP) to purchase to rollout, empowering business units by enabling them to buy, deploy and run software without IT involvement" (Herbert, 2007, p. 53).

Terms & Concepts

Business Intelligence (BI): The comprehensive analysis of company data to improve decision making. The technology that makes this process possible takes vast stores of information and organizes it into readable, usable data reports.

Business Process Software (BPS): Software designed to aid in the analysis of business processes, specifically for use by managers to determine analytics surrounding day-to-day business operations.

C-Level Executive: C-level (also C-suite) refers to "chief" or highest-level executives in an organization (CFO, CIO, CTO).

Enterprise Resource Management (ERP): Software designed to cover all the basic functions of an organization. The goal of an ERP is to create a unified database that has resulted from the integration of all processes and data in an organization. Examples of components of an ERP are a customer-relations database (CRM) and supply-chain management (SCM).

Enterprise Architecture (EA) Standards: Rules outlining the structure and behavior of an organization's processes and information systems to ensure alignment with the organization's core goals and strategic direction.

Integration-as-a-Service (IaaS): A rapid cross-enterprise integration that can be implemented on demand. IaaS delivers a single hub, or point of connection, that enables an enterprise to quickly connect with customers and suppliers.

Middleware: Software implemented to connect two legacy applications or a legacy application to a vendor application within the SOA environment.

Open-Source Software: Software that has been collaboratively developed and encourages users to use, change, share, and modify the freely available source code.

Service-Oriented Architecture (SOA): Software designed to connect business processes and users. Its architecture is transparent to the user as it provides independent services.

Software as a Service (SaaS): Various Internet-based software applications that are accessed through subscription rather than purchased outright.

Supply-Chain Management (SCM): Refers to the operations of the supply chain, including sourcing, procurement, and logistics of goods or services. SCM interacts with suppliers and customers through partnerships and collaboration.

Bibliography

Benlian, A., Koufaris, M., & Hess, T. (2011). Service quality in software-as-a-service: Developing the SaaS-qual measure and examining its role in usage continuance. Journal of Management Information Systems, 28, 85-126. Retrieved November 22, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=70989253&site=ehost-live

Boh, W., & Yellin, D. (2006). Using enterprise architecture standards in managing information technology. Journal of Management Information Systems, 23, 163-207. Retrieved July 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=23725660&site=ehost-live

Citrano, V. (2007). Business process management: Getting work in order. Baseline, , 66-67. Retrieved July 20, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=25432517&site=ehost-live

Herbert, L. (2007). When software-as-a-service makes sense. Supply & Demand Chain Executive, 8, 52-54. Retrieved July 20, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24524294&site=ehost-live

Kalita, M. M., & Bezboruah, T. T. (2012). Investigations on implementation of web applications with different techniques. IET Software, 6, 474-478. Retrieved November 22, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=82762811&site=ehost-live

Keith, M., Demirkan, H., & Goul, M. (2013). Service-oriented methodology for systems development. Journal of Management Information Systems, 30, 227-260. Retrieved November 22, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=89799101&site=ehost-live

King, J. (2007). Reimagining the IT department. Computerworld, 41, 24-25. Retrieved July 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24126154&site=ehost-live

SOA to transform the way IT and the organization interact. (2007). MarketWatch: Global Round-Up, 6, 157-158. Retrieved July 20, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24012735&site=ehost-live

Traylor, P. (2006). To buy or to build? InfoWorld, 28, 18-23. Retrieved July 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=19736002&site=ehost-live

Suggested Reading

Huang, C., & Hu, Q. (2007). Achieving IT-business strategic alignment via enterprise-wide implementation of balanced scorecards. Information Systems Management, 24, 173-184. Retrieved July 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24654645&site=ehost-live

Lohmeyer, M. (2007). Application-performance tools for SOA. Network World, 24, 21-21. Retrieved July 20, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24926778&site=ehost-live

Pavaloaia, V. (2013). Methodology approaches regarding classic versus mobile enterprise application development. Informatica Economica, 17, 59-72. Retrieved November 22, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=88803504&site=ehost-live

Scott, R. (2007). Paying for IT. Accounting Technology, 23, 14-18. Retrieved July 20, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24315106&site=ehost-live