Best-of-Breed Software: Fewer Bells and Whistles, More Value

New developments in the evolution of stand-alone financial applications mean expanded functionality in a variety of BOB categories. But software buyers are focusing more than ever before on vendor stability and integration costs.

When Ernest Guerra Jr., director of travel services for American Standard Companies Inc., the $7.9 billion Piscataway, N.J., maker of air conditioning, plumbing and automotive braking systems, discusses expense management, he begins by mentioning his company's Six Sigma initiative and its related productivity and standardization objectives. When he gets to the organization's search last year for an expense management application (it chose Gelco), Guerra emphasizes vendor viability and due diligence. "We called several Gelco customers," he notes. "We needed to find out if the low implementation costs the company presented held up in practice. We also wanted to choose a financially stable firm that would stay the course with us."

The research paid off. Guerra's department implemented the Web-based expense management tool in 90 days. Since then, his team has shaved the time it takes to reimburse travel expenses for the 18,000 employees it serves (about 5,000 of whom are regular business travelers) from five days to three days.

Welcome to the world of best-of-breed (BOB) applications, circa 2003, where even the most focused software implementation requires alignment with strategic objectives and exhaustive due diligence. Jon Derome, senior analyst with The Yankee Group in Boston, recently helped a client select an accounts receivable application. "Eighteen months ago, the main question would have been whether or not an application had the 10 bells and whistles the company needed," he says. "That's no longer the case. Now the first two questions are: Will the vendor be around two or three years down the road? And how much will it cost to tie this application into my existing systems?"

Over the past year, improvements in BOB software have simplified and reduced the cost of application integration. Best-of-breed financial applications have also made notable strides in the realms of speed, ease of use, inclusion of nonfinancial metrics and data integrity. Plus, the vendors in this space appear to be improving their understanding of the challenges finance managers face.