It is all about execution

A minor confession from one of my client’s has been nagging me the entire Christmas holiday. Naturally, I want to share it with you J. I asked one of my contacts in an engagement whether they ever modify the source code in the standard applications that they acquire. He admitted and added that they modify almost all of their Common Off The Shelf applications (COTS). As a seasoned consultant, I tried to comfort him by telling him that most financial institutions that I have worked with are more or less as guilty. He laughed and asked me if I know about any other company that has modified Adobe Reader. My initial reaction was that this was a funny anecdote, but that changed when I remembered my own comment that many other companies in the financial sector show the same symptoms. I will argue in this blog post that the ramifications of modifying COTS are far greater than the loss of support and future enhancements from the vendor of the standard application.

In another engagement, we were supposed to help a client in establishing a target system architecture and road map on how to replace one of their core systems. The client had a strong tradition in building their own custom built solutions but realized, rather reluctantly, that they have to consider COTS, especially considering that high transaction costs were one of the main drivers for the imminent “heart transplantation”. We used the following simple model to challenge them on the multimillion dollar question on custom built vs. standard systems. They agreed to the model and to the definition of an IT leader as someone that tend to leverage the latest technology, invest more in IT and have a higher share of transformational IT projects in their portfolio than their peers. They even agreed to the general guidelines that IT followers are best served with standard applications where the development costs are shared with other companies. The fact that we distinguished between companies pursuing a differentiation and cost leadership strategy caused many nods. It was the next step, when we asked the client to plot themselves to the model, which caused agony. It was evident to everyone in the room that they were in the lower left corner. We had to revisit this model several times during the project when the client started talking about how to improve the future integrated standard system that we recommended.

I am not implying that the IT-strategy of these companies is poorly aligned with the business strategy. On the contrary, they are very clear on their strategy and on what role IT should take in supporting it. No, my nagging concern is about to the execution of the IT-strategy. Many companies have guidelines in their IT-strategy saying that they should try to solve the demands from the business side firstly by looking for ways to re-use existing applications, secondly to look at standard applications and then, as a last resort, develop custom built solutions. So, what ruined my Christmas spirits was the question whether the decisions to modify these standard applications were well considered and done in the spirit of the IT-strategy or merely shortsighted decisions from rogue project teams looking for fast solutions. No one should be fooled that a modified standard application is anything but a custom built solution. The vendor ends the support and you assume sole responsibility for the maintenance the same time as you change the first line of code in the system. So, I certainly hope that the decisions were well considered because the impact of a scenario where the IT-strategy is not enforced will in the long run be more severe than the loss of support and future enhancements from the vendor. The old saying that strategy is all about execution applies to IT-strategies as well.

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