I second everything Frank said.
My company- one of the largest plumbing/hvac wholesalers in the country,
has very successfully developed almost all back office processing systems
(Payroll, GL, AP, Cash Mgmt, Securities Mgmt, etc) in house over the past 3
decades (2 of which I've been a part of).
While "everyone and their third cousin" may indeed be using packaged
software, I believe the ones who can figure out how to cost effectively
*not* be part of the pack, are the ones who will rise above the pack. If
you have strong IT, Finance, and Executive Management all working hand in
hand, you can develop custom systems which will give your company a
competitive advantage.
Nearly every time we've done a make vs buy analysis it has not even been
close. There are a few exceptions- Fixed Assets, for example, where the
frequent and sometimes complex tax law changes made it a better option to
buy a package that is maintained by experts. And a few other add-on
enhancement products, such as an OCR scanning solution as a front end to
our AP system, to replace hand-keying 800,000 paper invoices a year. No way
could we develop and maintain that kind of special software. But for our
core business processing, outsourcing or packages just ain't gonna cut it.
Bill
Frank Swarbrick
<frank.swarbrick@
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>>> On 7/14/2009 at 5:11 PM, in message
<a3a2b85f0907141611v32ced8ebl7b44ce513b35a...@mail.gmail.com>, Tony Harminc
<tz...@attglobal.net> wrote:
> 2009/7/12 Chris Craddock <crashlu...@gmail.com>:
>
>> Pick just about
>> any piece of non-core business processing (i.e. stuff other than what
your
>> company does to make a living) and you will find the same thing. A whole
>> slew of outsiders willing to solve the problem for a buck and a half
less
>> than you can do it yourself. "Building your own" is pretty much
guaranteed
>> to take longer, cost more and be less reliable than buying it from
somebody
>> else who does it for a living. The outside providers get to leverage
their
>> work across multiple customers so their costs are lower, their quality
and
>> profits higher. That's why everyone and their third cousin uses packaged
>> software now. That trend is only ever going to accelerate.
>
> I'm sure you are right. But the piece that puzzles me is that there
> seem to be so many companies whose core business is really just moving
> bytes from place to place, who nonetheless think outsourcing is a Good
> Idea. I'm speaking most obviously of banks, but pretty much all
> financial services businesses, insurance, and so on are in the same
> place. Sure, it doesn't make sense for each bank to write their own
> operating system, web browser, etc. etc., but the actual applications
> *are* the core of their business. What they can and typically do [try
> to] outsource is precisely the things that benefit least from
> leveraging work across multiple customers, i.e. operations and
> helpdesk.
I can testify that we are one bank that has written all of our core banking
applications. Not to mention our Internet banking site.
We actually have our own homegrown Human Resources and General Ledger
systems, but are in the process of migrating those to packaged applications
since they are in need of updating and not part of our core business.
In my opinion both of these are "good things". I can't imagine how our
business would function if we had packaged core applications. Our users
want too many special customizations, and they want them now! :-)
As for outsourcing totally, we'll have none of that!
Frank
--
Frank Swarbrick
Applications Architect - Mainframe Applications Development
FirstBank Data Corporation
Lakewood, CO USA
P: 303-235-1403
F: 303-235-2075
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