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Author's profile photo Ido Shamgar

Companies Beware! Business processes are not a competitive advantage anymore.

In the past decades successful companies from all industries have spent billions defining their processes and implementing software to run their business in an optimized and cost-effective manner. They used big amount of resources over the years to heavily customize their enterprise software environment and apply all their industry knowledge into it.
In return, they not only got a good return on investment but, more importantly, a tremendous competitive advantage. Their knowledge, processes and IT solutions became a barrier to entry to other companies willing to compete in their field, who did not necessarily have the financial means to reach the level of competency that took years for the incumbent to acquire.
This situation is about to change. Business processes are losing their differentiator factor and are on the verge of becoming commoditized. This new reality has emerged from a combination of three main forces:
  • Industry cloud applications: due to major advancements in cloud technologies, most of the strategic applications that are running on premise today are available on the cloud. The recent HANA Enterprise Cloud announcement from SAP is a pretty significant example of the revolution that is happening.

Think about it: we are talking here about core strategic applications that you can get up and running with all your data in a few weeks.

The adoption of cloud by small and large companies is a trend that is not going to stop and the number of available applications is exponentially growing. In a short future, if not already today, all the industries will have their own strategic applications running on the cloud that incorporate all the processes, best-practices and knowledge that individual companies need to have. And with cloud the entry point becomes really cheap.

  • Challenging economic times: in all industries today, companies have no choice but to become growth engines. In uncertain times more than ever, investments should be focused on innovation and on developing the next generation of products. All other costs are being reduced and organizations have to do more with less.

The value of having highly customized applications is therefore decreasing in favor of more standard applications that are more agile, more transportable, and meet the requirements to run the business.

  • Pace of the business: To survive, businesses need to adapt quickly to new realities, new trends and new consumer behaviors. What is a best-practice today can become obsolete in two years-time. Companies do not have the luxury anymore to go through lengthy implementation cycles that consume resources and are not in synch with the business models of today.
The emergence of rapid deployment solutions has allowed companies to adopt new technologies in a matter of a few weeks by embedding standard processes into the packages. High level of software customization is reduced in favor of speed and accelerated time to value.
We entered a world where industry standards replace customized processes. To win companies should rely on other competitive advantages like their capacity to innovate, bring to market outstanding products, the quality of the people they employ and their unique ability to predict consumer trends.
I would love to hear from you. Have you found your new competitive advantages?

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