What's the value in enterprise software?

Why should companies and organizations deploy enterprise software? Many software vendors claim their platform provides customers with competitive differentiation. Some vendors make vague promises about the unique and positive qualities associated with their product. As an example, see SAP's advertisements, which promise that "the best run businesses run SAP." Given these claims, it's fair to question whether a software platform alone can accomplish such magic.

Barry Wilderman, Vice President of Business Strategy at Lawson Software and formerly a high-profile analyst at the Meta Group, makes a succinct point. He refers to ERP software, but we'll generalize and apply his words more broadly to enterprise software as a category:

Does ERP, by itself, provide a sustainable competitive advantage to companies that deploy it? Not really. If an ERP vendor is really proficient at a vertical (e.g., consumer packaged goods, health care), customers will flock to that vendor’s ERP software. Then, if 10 companies are all running the same software, where is the competitive advantage?

Since the platform is differentiation-neutral, does customizing offer a method to unlock unique value from off the shelf products? Unfortunately, many observers, such as ZDNet's Paul Murphy, strongly discourage customizing packaged software due to the associated "costs and traumas," as described by Paul.

There's the conundrum. When packaged software is used across an industry, differentiation seems to disappear. And while customization may hold the promise of differentiation through unique features and capabilities, the risks are just too high. Damned if you do and damned if you don't.

So why should organizations deploy enterprise software? There are at least two excellent reasons. First, if the platform contains important features, which is generally why companies buy software in the first place, it's worth considering. Second, the very act of deploying enterprise software forces an organization to evaluate processes from a fresh perspective. Done well, the resulting business transformation yields positive change, and this represents the real value in enterprise software.