September 25, 2023 / Thomas Kühnel, Co-CTO

The digital transformation for organizations continues. With it, the technical requirements that systems have to fulfill are becoming increasingly complex. Many companies lay their focus on customized "enterprise applications" in their plans to grow. According to a study, 74 % of the companies surveyed see customized software as a success-driving factor. What is behind the term “enterprise applications”? Why is the need for customized development increasing? And what about out-of-the-box solutions?

First things first, the term enterprise applications refers to all applications that guarantee the ongoing business operations of a company or organization. The range is very broad: from internal processes such as accounting or personnel management, to enterprise resource planning (ERP) or data management, to comprehensive e-commerce platforms in sales. Every company, i.e. an enterprise, is a kind of project. Enterprise applications are therefore all applications that support this project.

Foremost, Enterprise applications play an important role in the automation of business processes, which significantly influences the technological development of a company. A classic example: employees should no longer laboriously maintain data in Excel sheets and manually transfer it to different systems. Instead, the systems should exchange data automatically with each other, for example by allowing changes to customer data to flow from the CRM directly into the ERP.

This saves not only working time and costs, but also enables new profit zones thanks to more efficient usage of resources. On a construction site, for example: Workers are given a mobile device with a specific ordering software with which they can order and reorder materials and specify what they want on the construction site and when. The software then regulates the internal ordering processes behind it and on day X the materials arrive at the right address at the right time. In this way, work can be done efficiently on the construction site. In addition, storage space is saved, which is an important issue, especially in city centers.

The goal of every company should be to develop and perfect precisely this type of automation. Because in today's market, you no longer set yourself apart through your product range alone; service and the efficient use of resources are playing an increasingly important role.

More flexibility in system landscapes

Companies that want to unlock these potentials can either use existing standard solutions or build individual, customized solutions for their IT landscape. Companies usually turn to existing solutions, as the initially higher investment costs for custom-written software provide a too high threshold for them. With a standard problem, a standard solution is certainly the right thing to do. However, every company has different requirements, markets and problems. And it is important to stand out from the competition. Standard solutions usually only help in the short to medium term - and with considerable limitations.

In addition, companies already have many different enterprise application solutions in use in their different business areas. The goal of a holistic digitalisation strategy is to combine and automate these individual components with each other and break down digital silos. All the different standalone solutions have to communicate with each other in order to drive real automation. It usually makes sense to integrate a system in the middle that acts as a mediator in landscapes like this. In most cases, there is no off-the-shelf software able to do this. This needs a customized solution.

The goal of a holistic digitalisation strategy is to combine and automate these individual components with each other and break down digital silos.

Also, thanks to their flexible software architecture, a custom solution allows for lower adaptation costs in the long run. With interfaces that are easy to connect, individual components can be exchanged without much hassle. For example, a company uses Pixi as its ERP solution, but realizes after two years that it needs more functionalities and is switching to Microsoft Dynamics instead. All other systems that were linked to Pixi now must be re-integrated with Dynamics. In existing systems that have been manually interlocked, this can be a lot of work. A flexible structure, on the other hand, simplifies exchanges considerably.

Adapting standard software is a lot of extra work

There are large standard software, for example an ERP system such as SAP, that have the capacity to be adapted to different needs of a company beyond their ERP tasks. However, this requires considerable programming work and involves many stumbling blocks. SAP can only be bent within certain limits. If the software is modified too much, it may end up no longer being updateable. New features are no longer compatible due to the many changes that have been made. Enterprise applications develop their strength primarily in the areas for which they were developed for.

Therefore, instead of implementing a large software package, companies often take a "best-of-breed" approach. They choose the "best" software solution for the respective task areas. However, in order to unlock more potential, the different systems must be intertwined. Interlocking components only provisional and subsequently can mean that security-relevant or feature updates can no longer be carried out. Enterprise applications with flexible interfaces embedded in a modular structure, on the other hand, are easier to update. But this also leads to more complexity and more maintenance work.

Enterprise application systems have not yet unlocked their full potential in many companies.

With increasing digitisation, the requirements for these systems are becoming more and more complex. Various aspects must be taken into account when setting up the system architecture. Standard solutions are often cheaper and develop their strengths in their specific use case. With a best-of-breed approach, companies can use many different standard solutions for different tasks.

However, in order to profitably link the various solutions without creating a “big mud of code”, customized enterprise applications are needed that act as mediators in the middle of the architecture. These individually developed solutions are more expensive to purchase, but can be tailored to the specific needs of a company and offer more flexibility and adaptability in the long term. Companies must weigh up to what extent available standard software meet their requirements or whether customized solutions are more cost-efficient in the long run. The choice depends on the specific use case, the existing systems and the company's long-term goals.

Thomas Kühnel