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The Way Business Is Moving

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Issue Date: July 2005

Standard vs customised software

1 July 2005
Devon Dalbock, sales director, Software AG South Africa

The question of whether standardised or customised software is the better choice for corporations has been with us for a long time.
There is a distinct difference between American and European software providers: US vendors dominate the market for standardised software, whereas their European counterparts focus on customer-orientated applications. In South Africa, vendors and user organisations alike source software from both territories, with the result that the state of these markets has a direct impact on the economic fortunes of local companies.
US companies specialise in standard software because they have maximum interest in gaining a monopoly for their applications through economies of scale. European companies, on the other hand, specialise in services and system integration. They have learned to form alliances with all types of companies along the value-added chain. Today, with their knowledge, they are in a position to work in a customer-orientated fashion. Instead of forcing the customer to use a standard, they meet the customer's needs with customised solutions.
The software industry consists of two different markets - the primary sector of software companies and the secondary software industry that has led to new business models in many sectors of the economy. The primary sector includes such firms as IBM, Oracle, SAP - and Software AG. They develop packaged software, standardised applications and system software for standardised customer requirements. Furthermore, there are thousands of small and medium-sized companies in Europe and South Africa with selected customers that develop and sell applications which are customised for individual customer needs. Software is a real engine for innovation in this area.
The last major wave of implementing standardised solutions was the turn of the new millennium. Since then, companies' budgets for new IT projects have dropped drastically, even while their demands for information technology have grown considerably. Today's customers want to protect their investments. They require a single view of all information relevant to the company. They must be able to call up their information in realtime, so that they can react flexibly to markets that are growing more quickly all the time. And it should all be as cost-effective as possible.
This can be achieved only if existing applications are integrated and modernised. Providers must offer their customers integrated applications that are customised for their needs, which are developed in close consultation with the customers. A commercial enterprise's competitiveness depends on its ability to innovate. Companies must be able to react ever more quickly to increasing corporate demands, such as short product lifetimes and greater innovation speed. There has to be an information technology response to these demands.
Therefore, companies that face this competition need operational application software that is customised for them and their market. At the same time, providers of operational system software must continually modify their software to meet the market's changing demands. This is true for applications involving such sectors as e-government and online banking, as well as for products customised by customers who place their orders via the Internet, as seen in the auto industry.
Users need customised software that makes it possible for them to innovate with their products, processes, and collaborations, and that develops with the customers. Standardised software can do this to only a limited degree.
Devon Dalbock, sales director, Software AG South Africa
Devon Dalbock, sales director, Software AG South Africa
For further information contact Devon Dalbock, Software AG South Africa, www.softwareag.com


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