Best of Breed or One-Stop Shop
The Road Best Traveled?
By Steve Lundergan
Vision Commerce, Inc.
With the improving economic conditions, Equipment Lessors are making significant investments in technology. There is an ongoing debate in the Equipment Leasing Industry regarding the selection of Best of Breed components from multiple Vendors or a single suite from a one-stop shop. These divergent strategies have emerged as some Vendors have opted to focus on part of the lease lifecycle (i.e. origination, lease accounting, asset management, risk management, etc.) while others have sought to offer end-to-end solutions. Some buyers believe that selecting a single vendor is the most sensible choice, especially from the standpoint of simplicity and accountability. But are there disadvantages of locking your company into a single product?
Some solution providers believe that through acquisition, they can marry solutions to create an end-to-end solution. While, on the surface, that is a very logical approach to offering a suite of products, if the underlying technologies are not compatible, marrying the incongruent pieces assembled by acquisitions can be a challenge. This could take more time and ultimately cost more to the client in licensing and support. Every time an enhancement or change is made to any piece of the incongruent suite, the other components must also be modified in order to function as designed.
Other Vendors believe they can integrate multiple best of breed components to build a virtual single solution suite. In order to be effective, the provider requires specialists in each of the product offerings to oversee the integration, development, and delivery. While this is possible, the fixed expense base of the provider has just increased resulting in an increased cost to the client. You will often find a best of breed provider is able to deliver and address a client’s daily needs more completely than a single source who provides an end-to-end solution and has to divide their resources on all the above.
A final and crowning drawback of a single source is that of “putting all of your eggs in one basket.” If a single Vendor is selected to provide one end-to-end solution, that Vendor’s destiny could very well become the Client’s nightmare.
Relating to the Equipment Leasing Industry
While these general considerations previously outlined are consistent across many industries, the Best of Breed vs. one-stop-shop debate is even more compelling when we look at the leasing industry. The leasing industry and the associations have worked diligently to keep the industry unregulated by government agencies. This has bred a unique mix of entrepreneurial endeavors to be creative and innovative. This philosophy is omnipresent in the industry. One can simply look at the associations that constantly challenge the industry to continue to be innovative, adaptive, flexible and resilient. In doing so, Equipment Lessors throughout history have built their own Best of Breed business practices. And the best Lessors are continually changing their product offerings to react to business opportunities. As a Lessor builds a unique Best of Breed business practice, can a single Vendor deliver one standard solution that will accommodate their unique needs? Can a single vendor deploy an end-to-end product that will accommodate thousands of Best of Breed business practices?
Based on our experience at Vision Commerce and my twenty-five years in the Equipment Leasing industry, it would be extremely difficult to find two Equipment Leasing companies who maintain identical business processes. Because of this diversity and variability, I do not believe any Vendor can offer a complete end-to-end solution that will accommodate all Lessors. The business processes we have seen in the Equipment Leasing industry are too diverse and complex. This is why Vision Commerce chose to only deliver a Best of Breed front-end solution that can be configured to accommodate any Best of Breed origination process.
Integration is Key. We can integrate our Best of Breed front-end, Vision, with any other systems or accounting software.
Many consultants will advise large companies to purchase Best of Breed applications and then utilize integrators to install, customize and implement the system. A great example of this is Volkwagon Credit. According to the company’s CIO, Mr. Jack Klosterman at the 2003 ELA convention, VW Credit has integrated 70 different Best of Breed solutions to help manage their business. According to Mr. Klosterman, integration was critical to effectively use these systems in their complex business model.
Some customers prefer a Best of Breed origination product that more completely addresses a specific business process like vendor or manufacturer programs. Lessors may also prefer a time-to-market and productivity advantage by going with the market-leading, Best of Breed product while the One-Stop-Shop providers are in catch-up mode to integrate new capabilities across their end-to-end solution.
While the integration of 70 different Best of Breed solutions may be necessary for a global corporation like Volkswagon Credit, in most cases Lessors are only primarily integrating a front-end system with a backend lease accounting system.
It is no secret that the back-end providers want their customers to standardize on their total solution. Who would blame them for wanting that kind of control of the Client account? However, if the customer prefers, a good back-end solution should provide interfaces that help integration with third party solutions providers. In some cases, these are the same tools used by the provider to tie their own components together. If the back-end provider does not provide an integration interface, the client will need to wait for the provider to develop the tool, pay the third-party integrator to write it, or write one on his own.
Needless to say, those Lessors selecting Best of Breed front-end solutions can be greatly affected by back-end providers that do not make integration with third party providers an easy task. It is a simple but important rule to follow when selecting a back-end provider. Make certain they have good integration tools that will not limit or your selection of other providers or create problems integrating with Best of Breed solutions.
If integration is that great of a dilemma, then why not choose the One-stop-shop? There are good reasons for suffering through the pain of integration. Best of Breed specialists are usually the companies that pioneered a segment and have more feature-rich and adaptable products. Logic suggests that the best-of breed business processes created from this innovative, adaptive, flexible and resilient Equipment Leasing industry would be best served with Best of Breed solutions. Lessors investing in new technology should simply weigh the cost of integrating Best of Breed against the cost and risk of using a single source provider.