Innovator’s dilemmas: best of breed vs. end to end?
“Is there such a thing as products that are best of breed, that is, provide greater value and ROI than other, lesser products? (…) In the real world, putting together complex products is almost always a difficult task, and integration tends to degrade utility (…) With the all-in-one approach you don’t have to spend money on integration, staff training and all the other costs that go along with getting a load of parts to work together.”
Read Mark Gibb’ article, “Any value in buying best of breed,” on NetworkWorld.
“One of the central tenets of Web 2.0 thinking is that lightweight “point solutions” that can be stitched together by the consumer are preferable to end to end solutions that are stitched together by the service provider (…) early adopters (geeks) of the web 2.0 world prefer to stitch together point solutions, but that the mainstream web user will prefer an end to end solution.”
Read Fred Wilson’s post, “Point solutions vs. end to end solutions,” on A VC.
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Most innovators working on high tech products need to figure out whether to build point solutions or end to end systems. Frankly speaking, my experience is that there isn’t a straightforward answer.
Focusing on developing a best of breed product can lead to breakthrough innovations and, therefore, a clear competitive differentiation.
- However, many customers will factor additional integration costs in their purchasing decisions, which might led them to settle for inferior competing products.
- Some deployments of best of breed and point solutions can involve hidden costs. This would be due to dependencies on features and products developed by third party vendors the point solution eventually integrates with.
- This means an unfavorable side by side comparison when having a careful look at ToC, Total Cost of Ownership.
Working on tightly integrated end to end systems is more likely to mitigate risks and can deliver an incremental type of innovation.
- Often times, innovators looking to leverage synergies from E2E solutions aim for cost and performance efficiencies, which can be hard to achieve when having to align different product teams with conflicting P&L priorities.
It should be noted that, some vendors such as Accenture have made systems integration and customization of end to end solutions a profitable business. So, there is a need for considering the specific ecosystem of vendors and practices in any industry vertical as well as the degree to which modularity and standardization play a role.
Basically, the point I’m trying to make is that innovators have to run a sanity check on their options and what it takes for their product to succeed.
| J. de Francisco |  |
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| New York, NY. 10 July 08 |  |
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