We're sometimes asked whether the business and technical platforms for N=1; R=G business capabilities (explained in Chapter 4) can be accommodated using customized packaged software applications, or do I need to build my systems from scratch? Our answer is NO. Emerging software technologies like software as a service (SaaS) make that choice increasingly irrelevant.

We all understand that packaged software provides us with readily available solutions, while a custom-built solution traditionally takes a long time. It is also argued that a packaged product is better at scaling with business growth. Our point in the book is that emerging technologies make it possible to have the best of both worlds, i.e., the flexibility of custom-built applications and the speed of packaged applications. Let me start with some examples from a couple of recent articles I read.

First is a hot-off-the-press McKinsey report on SaaS. Author Abhajit Dubey presents the emerging battle in the architecture for SaaS platforms. The report explains three kinds of SaaS platforms -- Delivery, Development, and Application-led platforms -- and presents the implications and suggestions for ISVs (Independent Software Vendors) and platform vendors to succeed. This report gives a good overview of the evolving application software space.

In a recent Financial Times article, based on an interview with Huberus Vandervoort, CTO at the 27-year-old Bedford, Mass.-based Progress Software, it is claimed that the new software architecture based on SOA (service-oriented architecture) will bring about the end of old hierarchical management practices. The new approach, Vandervoort claims, will be adoption of management working rules based on trust and commitment with multiple partners. He claims the emerging architecture will use loosely coupled, contract-oriented interfaces. This is consistent with the specifications we define for the N=1; R=G business model. Here, firms need not be concerned with the details of underlying technologies used by their partners. As long as they conform to standards of SOA, collaboration between partners is possible. According to Vandervoort:

"Think of the most extreme example of a composite application that includes UPS, Amazon, eBay and so on. You can't make them conform to your schedule, you can't make them do what you want them to do. So you can't use the traditional management dogma: 'I'm going to beat you into submission or fire you' because there is nobody to fire any more."

The R=G model of collaboration demands such composite applications. Let us take the example of Louisiana-based PHI Helicopters, which operates more than 300 helicopters and jets to serve customers in North America, Africa, and Europe in wide-ranging contexts such as medical airlifts and offshore oil platform shuttles to Arctic missions. A few years back, PHI was struggling with several legacy systems that operated in silos, with thousands of databases to connect with different partners and customers. PHI transformed its business processes using the VirtualWorks Platform from Ramco. PHI's business processes now connect with its suppliers seamlessly through the platforms of their logistics partners such as UPS or Fedex to provide the level of transparency required for the N=1; R=G business model.

This platform also allows for flexibility in business processes to adapt to unique customer needs. Managers at PHI now monitor the company's inventory and supplier performance in real time! If there is a preferred vendor list, real-time data on supplier performance either confirms or questions the logic behind the preference. This new approach has already saved PHI over US$10 million in warranty and inventory costs. The company also has improved its aircraft-on-ground measure by four times. It now has real-time access to usage and profits from each customer, and has adopted an N=1 pricing model. PHI has transformed into a growing business with increasing profits. The entire system for this transformation was built in less than eight months.

In summary, the demands of the Customer Co-creation (N=1) and Global Resource Leverage (R=G) business models call for a new approach to software platforms based on emerging technologies. These platforms, as discussed above, provide the flexibility of custom applications at a speed faster than the time required for implementing packaged solutions. In addition, the concept of scale in an N=1 model -- by definition -- introduces demands for flexibility. A packaged solution is scalable with your business when you deliver more of the same products or services -- but it isn't scalable in the new model of innovation.