#3 Death of the suite; long live best-of-breed and even best-of-feature For most of the last two decades, major software vendors such as SAP, Oracle, People- Soft, Microsoft, JDA, and others have pushed the concept of an “integrated” software suite on the market. With Cloud Computing, the pendulum is swinging back forcefully in favor of best-of-breed applications. The high level message from suite vendors to prospective customers was the idea that purchasing all of your primary business software from a single vendor had significant benefits to the end customer in the form of system interoperability, consistent archi- tecture, common look and feel of applications for end users, and deeper vendor com- Rob Reid mitment. There was some real appeal in this positioning, and in the 1990’s the client- CEO, Intacct server applications and infrastructure stacks from these vendors were state-of-the-art, so customers embraced these “integrated” solutions en masse. “With a suite, if the vendor falls behind you Unfortunately however, there were some real downsides associated with selecting a are locked into subpar business performance. suite strategy, because no single vendor was a leader in every application category. As With best-in-class, if a a result, the customer was often forced to accept second tier applications for many of solution falls behind you their business needs. In companies where the finance team drove the evaluation, Oracle can always replace it, was thrust upon other departments which then suffered through weak HR, operations, and achieve optimal performance. The Cloud and CRM. If Human Resources drove the decision, they would buy PeopleSoft (which allows open and seam- apparently wasn’t as often, because Oracle won), and if the company was in Germany less integration so our or deep in manufacturing, then SAP was often the preferred choice. Of course superior customers often work with best-of-breed options were often available in many of the functional areas, but the suite Salesforce.com for CRM, Cornerstone OnDemand vendors did their best to spread fear, uncertainty, and doubt (F.U.D.) into the market for HR, and Eloqua for around these offerings and integrations between systems were often quite painful. Marketing and pick Intacct as the very best Finance Therefore, for the better part of the last two decades the job of the CTO in major cor- and Accounting solution available.” porations has centered around this complex decision of where and when to use a suite versus best-of-breed solutions. Should they buy a suite, with easier integration but limited functionality, or best-of- breed, with optimal performance but higher integration costs? This decision was made even more complex by the horror stories from many large corporations attempting to integrate large suite offerings across their companies with staggering costs and implementation times. Software licenses frequently ran into the millions of dollars (or tens of millions!), professional services would ultimately be another ~3x the software license costs, and the more you cus- tomized and configured the product to fit your needs, the more expensive it would be and the harder it would be to implement the next version. Many companies publicly disclosed spending upwards of $100M and 5+ years attempt- ing to deploy systems, often cancelling the entire project midway through and throwing it away or trying to unwind the initiative, leaving a trail of fired IT executives along the way. A large part of the momentum around Cloud Computing today is because IT departments now realize they can avoid Bessemer Venture Partners 7