Software as a Service and the End of the Systems Integrator

The bloated implementation projects – the ones that cost anywhere from two to ten times the software license cost – are clearly on the way out. And none too soon.
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If software as a service takes hold in a big way, it will spell the beginning of the end of what has become in many cases a necessary evil that the world of enterprise software may be finally able to do without: the systems integrators and the high-priced, and failure-prone, implementation projects that have been their calling card since the early 1990s.

It will be, for many, the end of a error that has too often wrongly cast software vendors in the role of evil perpetrators of bad technology, while sucking billions of dollars out of IT budgets and frustrating attempts at deriving cost-effective value out of enterprise software. In that role, the SIs won’t be missed by anyone. But their exit from the enterprise applications scene, or a least a diminution of their role, will also be the end of a major channel for big software vendors like SAP and Oracle, and a major source of revenue for everyone’s favorite coopetitor: IBM.

In other words, SaaS promises to upend one of the time-honored fixtures of the enterprise software world, and do so in a way that will be highly disruptive for the vendors. But as disruptive as it might be for vendors, the demise of the SIs would spell a great day for the end-user community. As long as SaaS is there to take their place.

Don’t get me wrong, we will still need the expertise in integration and customization that only SIs can bring to the table. With vendor products still more generic than specialized, the added competitive edge that customization can bring will still require some intervention on the part of SIs. But the classic big implementation project – the ones that cost anywhere from two to ten times the software license cost – are clearly on the way out. And none too soon, in my book.

The fact is that the money trail that leads to these big SIs is so deep in hooey that you need hip waders to sort out legitimate costs from padded expenses. This is where the cost overrun, scope creep, and the school bus syndrome (where an army of very junior programmers show up –hence the school bus metaphor – to take on the work that the customer had assumed would be done by senior, experienced SI employees) all became firmly rooted in the day-to-day frustrations of CIOs, CEO, and the few honest vendor executives who actually gave a hoot about how these so-called partners were mucking things up in the customer base.

What is ironic about the whole mess is how laissez-faire – laissez screw-up, really – most vendors have been about what SIs have been up to lo these many years. This despite the fact that every ERP failure lands the vendor’s name in the headlines, while the real culprit is the implementation partner’s mismanagement, greed, and incompetence (often in cahoots with IT and business management at the customer site, to give bad credit its due.)

Next page: Am I being too harsh?


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