While each company may have its own reasons for being at risk of developing digital silos, there is one silo-creating trend that seems more common and widespread than all others – purchasing “best-of-breed IT systems”. These systems normally focus on optimizing specialized functions, which is why most organizations often use several “best of breed” systems from different vendors to (fully?) meet their needs.
The reasons why companies opt for this approach vary, and typically include one or more of the following:
- Digital initiatives and individual tech decisions are driven by the needs of individual departments, rather than the company as a whole.
- Companies get a ready-made solution very quickly, and don’t need to wait for a custom solution to be built.
- Operating a well-known, branded system makes the company and the departments “look good”, internally and externally.
- Even if digital initiatives are led in an integrated, company level approach, companies too easily buy into the “best of breed” marketing. This comes from the mistaken thinking that systems which are “best”, in the sense of being better than competing systems, are also best in terms of meeting the company’s specific needs. Lack of awareness of other options (i.e. developing bespoke solutions) plays into this weakness as well.
While off-the-shelf systems of this kind are perfectly fine as point solutions for non-differentiating business functions, they fall short when it comes to being able to provide streamlined end-to-end business value scenarios or innovation.
The risk is that sticking to best-of-breed system implementations without an accompanying digital integration strategy precludes the value of digital initiatives, which is greater access to information, smoother collaboration, and customer-specific processes. Here’s how the common errors in thinking about digital transformation cited above ultimately cause the process to defeat its purpose:
- The goal of transformation should be to increase the productivity of the company as a whole, not individual departments. Short-sided department-level KPIs only lead to local optimizations, therefore the company is serving the department goals and not the other way around.
- If a system is considered “best of breed”, that tells us nothing about how well it matches scenarios that make a company unique – usually, it only matches the happy path and leaves processes that generate value underserved in terms of data access and communication.
- If needs are dictated by departments, and if departments are concerned only with their internal KPIs, buying a best of breed system will not only support the existing siloed structure, but will rather solidify it – i.e. it will make it even more difficult to make the case for digital integration.
- Nothing makes a company look good as increased productivity and seamless delivery, which is not made possible by implementing digital initiatives based solely on “best of breed”. Clients and customers ultimately care about their total experiences, not which systems are used to get there. Prioritizing appearances over functionality leaves all problems DT is supposed to address unresolved (or creates new ones, as described above).
How do we fix this? In short, developing bespoke technology solutions on top of or side-by-side with these commoditized business applications. It is the only approach that eliminates digital silos, since it proceeds from understanding specific company needs in a holistic way. Taking anything else as the starting point literally misses the mark, leaving the root cause of problems that digital transformation was supposed to address intact. To make the most out of it, however, some typical pitfalls need to be avoided.
In the next article, I’ll discuss crucial differences between integrating at the data layer (wrong), rather than on top of existing solutions (right). In other words, innovation doesn t happen without investment closer to where business processes take place.