Point Solutions Or An Integrated Platform: A Business-Critical Decision

Rob Mallernee is the CEO of Eton Solutions.

Choosing the right software solutions for your business can be challenging and contentious, with long-term implications. For many companies, the debate may be whether to embrace one or more best-of-breed point solutions or an integrated platform that addresses multiple processes and functions.

Undoubtedly, the correct answer depends on the company’s specific needs and circumstances. Nevertheless, there are some critical differences worth considering when making the decision.

Point Solutions

Each point solution addresses a single functional need within your company. If you go this route, you’ll want to look for one with a rich, best-in-class feature set that will appeal to the people involved in the tasks it helps perform. Make sure it excels in addressing its niche area of focus.

But note that each point solution must be integrated with other point systems. As the number of point systems increases, the need for system and data integrations increases.

Maintaining IT staff (if automated integration) or administrative staff (if manual integration) to manage these integrations creates significant costs beyond the explicit cost of the systems. Training and administrative costs of dealing with multiple user interfaces and contracting with multiple vendors should also be considered.

Integrated Platforms

While an integrated platform may not have all the bells and whistles of a point solution in that single function, a truly integrated solution connects processes and data across functions and application modules. This reduces the need for IT or other staff to perform these integrations.

Collecting and storing data within a common database alleviates problems of entering data into multiple systems and consolidating and reconciling that data for analysis, reporting and decision making. This reduces costly and time-consuming manual processes and human error.

Rather than dealing with multiple vendors to troubleshoot problems, an integrated platform allows the customer to turn to a single vendor to resolve issues. There is no opportunity for vendors to point fingers at each other when problems arise.

The comprehensive nature of an integrated platform benefits organizations, but it can present challenges. An enterprise-wide system impacts numerous functions and personnel across a company, requiring employee training, new skills development and change management throughout the organization. Resistance to change can be an issue and requires close participation from senior management.

Too, defining what processes and functions should be integrated and redesigned can take significant time and effort in the implementation process. Finding an industry-specific platform designed to accommodate and streamline your company’s key business processes can address these issues and dramatically reduce implementation time.

Streamlining Your Organization

There is a mandate today across businesses of all kinds to streamline and automate cross-functional business processes to improve organizational collaboration, productivity, customer value and profit margins and to minimize risk. According to McKinsey, simplifying end-to-end processes can reduce fixed costs by 20%-30% and speed up service delivery by 20% while increasing customer satisfaction by 5%-10% and revenues by 3%-5%.

Making the integrations necessary to stitch together multiple point solutions with different databases limits a company’s flexibility to make organizational changes. A best-of-breed point solution may eloquently address an immediate pain point more quickly at a lower initial cost, but a proliferation of discrete solutions can lead to dysfunction and productivity obstacles down the road, if you’re not careful. This limits an organization’s ability to scale services and ultimately may become more costly.

Organizations faced with these choices need to make a comprehensive assessment of their needs, not only today but in the future. Suppose your organization has complex data processing needs and seeks to implement best practices that address underlying relationships across various processes and workflows. In that case, you may want to consider an integrated platform.

This is not to say that point solutions are not the right choice in some circumstances. Organizations with relatively simple business processes and very discrete needs, such as billing or basic accounting, can benefit greatly from best-of-breed solutions—and implement them quickly at a relatively low cost.

Considerations For Family Offices

In the industry I serve, family offices that manage the wealth and business affairs of ultrahigh net worth families, many offices use separate systems for functions such as accounting, wealth management, customer relationship management and document management. As a result, they typically use spreadsheets for data consolidation and analysis. This can result in inefficiencies that waste time and money, with expensive personnel spending countless hours using spreadsheets to generate reports.

While some family offices may be relatively small in employee headcount, they might have highly complex process requirements involving numerous interdependencies among multiple legal entities, family members, assets and liabilities. A set of siloed solutions for functions such as general ledger accounting, investment performance reporting, fund accounting, document management, etc., might not sufficiently address these complexities or incorporate the cross-functional best practices the office requires.

Family offices have a fundamental need for best practices involving numerous functional areas and personnel for such things as review and approvals, authorization of transactions, and segregation of duties to ensure transparency and manage risk. An integrated platform can embed these practices within the system.

So, when do point solutions make the most sense? For organizations with straightforward, well-defined needs that are limited to specific functional departments, the right point solutions can deliver significant improvements without impacting the rest of the organization.

Within family offices, for example, organizations focused solely on investment performance, without managing accounting for multiple LLCs, trusts, etc., may well find the right point solution for reporting on investment performance sufficient and highly valuable. In this situation, a stand-alone document management system may also be sufficient. It can radically reduce inefficiencies in organizing and archiving paper documents.

The Choice Is Yours

The choice between improving business processes using best-of-bread point solutions versus an integrated platform is one every organization faces. The importance of achieving data and process integration to drive long-term value must be strongly considered when making the decision.