Sourcing Strategies: Single
Source Or Best In Breed?
Despite all the news about the telecom downturn, businesses
continue to spend on communications. For example, the Telecommunications
Industry Associationï¿½s 2002 Telecommunications Market Review &
Forecast predicts that spending by enterprises on voice and data
communications equipment will advance at a 15.1 percent compound annual
rate, reaching $289 billion in 2005. In the coming year, the replacement
cycle will kick in for voice equipment, and large increases in voice system
purchases are expected. That level of spending in a flat market puts
enterprises in the driverï¿½s seat ï¿½ itï¿½s a buyerï¿½s market for most
telecom gear and services. In light of the temporary reduction in growth
opportunities in the service provider space, businesses have more buying
power to demand solutions that can easily be integrated into their existing
infrastructure and support their business processes.
As CIOs and CTOs mull over their choices in new equipment, they are
concerned about meeting return on investment (ROI) mandates from the CEOï¿½s
office and meeting usersï¿½ needs. While these needs are foremost in the
minds of decision team members, CIOs and CTOs can provide additional benefit
to their organizations by stressing the importance of the overall sourcing
strategy. They must step back from individual decisions to consider which
strategies are best for the organization and how the ecosystem of suppliers,
vendors, and integrators best delivers. Today, businesses expect to have
their requirements understood and accounted for in solutions. Businesses
must balance their needs (such as reducing total cost of ownership, easing
the burden of integration and configuration, satisfying business
requirements that create competitive advantage, and using integrated
management capabilities) to define what vendors are expected to deliver.
Solution decisions are integral to business strategies and the right
decisions will eventually translate to capturing additional market share.
Messaging solutions, for instance, better enable the sales force and
executives to easily access crucial business information. Customer
relationship management solutions can help companies gain competitive
advantage by more efficiently serving customers.
SINGLE SOURCE VS. BEST IN BREED
Many executives choose to buy vendor solutions and ï¿½in-houseï¿½ or ï¿½insourceï¿½
the technology, processes, and operations of a call center. Executives who
follow an in-house sourcing strategy should carefully select either a single
source or a best-in-breed approach for integrated applications, deployment
platforms, and peripheral hardware. Enterprise communications systems
including PBX, voice mail, e-mail, and fax messaging could be purchased as
either three disparate systems or a unified system all from one vendor.
Voice-data convergence allows companies to select software-based telephone
switching (PBX) systems that run on industry-standard hardware platforms.
PBX and voice mail systems still require either the staff or the
outsourcing dollars to install and maintain both and ensure their
interoperability. Call center managers have a broad set of choices ranging
from combinations of a dozen vendors to all-in-one call center packages.
Many IT decision makers do not develop a purchasing strategy and end up
with best in breed by default. Prudent selections involve macro-level
considerations of the single source versus best in breed strategy before the
CIO or CTO engages in discussions with vendors and integrators on how to
best get access to a sophisticated telephone system at an affordable price.
(See table below for the major arguments typically accompanying each
Will it work?
with other systems depends on integration ability.
standards help ensure
compatibility, some reliance on integrator.
How are our dollars spent most efficiently?
best up-front price.
integrator, which can involve significant costs depending on
installation size. Over time, can build in more power and support on
the platform and easily scale up to grow with business.
How easily can we get answers?
single point of contact, making it easier to determine responsible
maintains multiple relations.
How do I get the best results?
easier to deploy the solution as designed, but may be harder to find
a package that specifically meets all of a businessï¿½s specific
select best option ï¿½ not wed to a single product line or
proprietary protocols. Can select most appropriate features.
Will it work with existing solutions?
(Not important for greenfield
source, only a single integration is required.
vendors, multiple integrations may be necessary. It is more likely
that some consideration has been given to delivering open standard
Many of the factors in a sourcing strategy choice are dependent on the
particular installation. Installation size, for example, helps determine the
impact of the integrator costs. In smaller installations, the integrator
costs can be a large factor in total cost while in larger installations,
integration costs may meld in the background or may balloon uncontrollably.
Integrator costs are a significant factor in small call centers. Channel
companies place a high value on the ï¿½peace of mindï¿½ they provide to
customers, who know service will be performed if necessary.
Greenfield starts (in a new entity or location) and forklift upgrades (as
equipment reaches the end of its economic life or when the infrastructure is
not meeting the business needs) also affect the choice between single source
and best-in-breed strategies. For those cases and small installations, it is
usually more efficient to select an all-in-one install. Conversely,
businesses with an existing infrastructure may find that the best-in-breed
strategy does not add to the cost and difficulty of installing and
maintaining the system. In cases where a lot of equipment is already
installed, adding a piece such as a fax server on top of the traditional
infrastructure may be the best choice in terms of expense. Each end-user
decision boils down to a balancing act between cost, difficulty of
installation, and management on the one hand, and the ability to fully meet
all business process needs on the other.
As CIOs and CTOs and their decision teams make selections, they will
consider how to meet their needs with the products available from equipment
manufacturers and software vendors. The decision to go with single source
versus best-in-breed is complex, but careful consideration will lead to
happier users and customers.
Henry Dewing is a product marketing principal at Intel Corporation, a
TIA member company. The Telecommunications Industry Association (TIA) is a
leading trade association serving the communications and information
technology industry. Through its worldwide activities, the association
facilitates business development opportunities and a competitive market
environment. The association provides a market-focused forum for its more
than 1,100 member companies that manufacture or supply the products and
services used in global communications. Visit them online at www.tiaonline.org.
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