Brain Tease: Open Source Software…Will it Catch on in Shared Services? ...or…

SSON News and Analysis
Posted: 07/09/2012

While there are a wide array of software products in the marketplace from which companies can choose to meet their shared services business needs, and many organizations outsource to cheaper overseas locations such as India, China and the Philippines as a way to cut costs; is it little wonder those organizations have not really jumped on the bandwagon to utilize open-source software, or just common sense in recognizing that the additional risks involved may not be worth the free ride?

Organizations that utilize shared services need support and less risky software that they can buy from a dependable company, says Nari Kannan, chief executive officer and co-founder of Ajira Technologies Inc. (www.ajira.com), a provider of service process management solutions.

Open-source software, such as the Apache Web server, was introduced into the marketplace during the peak of the dot-com era. When the bubble popped, open-source software lost a substantial number of active adopters, but it gradually became a staple for enthusiastic clients who had nothing to lose and found the free resource attractive. Today, it boasts a large database of users globally, who network, troubleshoot and problem-solve amongst themselves using Google. Nonetheless, it seems hardly likely open-sourcing would pick up steam amongst shared services and outsourcing providers and clients…or could it?

The main reason for companies not becoming bullish on open-sourcing states Kannan is that open-source software has not yet fully evolved with respect to support. Furthermore, it would only compound the risks already associated with shared services and outsourcing, such as security and privacy concerns when operating across countries. On the other hand, however, the adoption of similar open-source software, such as IBM and BEA’s Web server software that companies currently utilize are very likely in the near future, to spiral growth of the open-sourcing process altogether, he says. Meanwhile, proprietary software may be the only alternative if a company declines taking additional risks, adds Kannan.

Overall, the shared services IT processes are very challenging. Multiple backend IT systems are necessary to provide shared services, so it becomes a measurement problem when you have five backend IT systems that have the data. Measuring and reporting, and continuously improving it is critical. If you do not measure, you cannot tell that you’ve improved. "When you have shared services, you need to find common ways to do things!" Kannan declares.

On the upside, utilizing open-source software could help integrate a company’s IT system with remote systems, shared services or with third-party outsourcing providers. Open source software levels the playing field onto which all vendors can step and compete, openly and fairly on value, quality, and security processes.

...will traditional software applications such as xApps be the driving force behind shared services prominence in the future?

Conversely, vice president at SAPtips.com, Jon Reed, said that SAP xApps, the suite of small web-based applications that keeps pace with business innovation, and can be built on specific function areas of a business’ platform to deliver cross-functional, end-to-end processes, is likely to become ‘the’ powerful source in the shared services industry. The SAP xApps application provides the flexibility necessary to respond quickly and profitably to business change, which can greatly enhance the value of a company, he says.

According to the SAP company’s Web site, "the family of SAP xApps composite applications also includes cross-industry applications that enable critical business processes to help companies gain insight for more effective strategy and action, comply with regulations while controlling costs and risk, and extend their data and processes to the mobile workforce."

The comprehensive suite of SAP xApps applications delivers a series of capabilities including performance management, business analytics, and the creation and modification of analytical applications. That capacity is expected to leverage the value of a company’s core business investments and help maximize returns.

Nicholas Gledich, chief operating officer at Orange County, Fla. Public Schools said his school system has been using SAP software for its HR and business management functions such as payroll, logistics, tracking and construction for a few years. Since the integration, the school system has been able to quickly generate reports, and has reduced year-end down time (man hours) from 12 hours to about 3-5, he says. Additionally, SAP makes it possible for the school district to achieve executive alignment, stakeholder mapping and program objectives.

"SAP solutions help integrate information, automate business processes, and enable visibility across business operations – so companies can achieve operational excellence," claims Reed. Organizations can do embedded reporting, customization, procurement transactions, and can also set up e-commerce functions into SAP’s back-end.

Bob Oldrati, controller and director of information technology at Pa.-based Powell Electronics (PE), a SAP user, said some of PE clients also use SAP software, so by both systems communicating with each other, the company has been able to achieve reduced cost (without compromising quality). He said SAP also speeds up time and efficiency for clients 99 percent and has increased business, and helps to generate new business for the firm.

Although SAP boasts more than 12 million users and nearly 80,000 installations as the leading provider of software business solutions, it is not immune to competition. In fact, SAP is feeling the pinch from outsourcing, which offers companies a cheaper way to staff projects through a global labor pool.

…Therefore, the question remains…which would it be…open-sourcing or SAP xApps?

SSON News and Analysis
Posted: 07/09/2012

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