This transition isn’t unusual; it’s fueled by several compelling factors including the allure of enhanced efficiency, cost-effectiveness, scalability and access to more cutting-edge technologies than available within their own teams and resources. Even General Electric (GE) ventured into creating its proprietary software, Predix, to tap into the Industrial Internet of Things (IoT) realm, only to encounter a financial quagmire. This tale illuminates the perilous terrain of homegrown software ventures.

A Smarter Solution

For direct selling companies that do move out of software development and embrace best-in-class third-party solutions, it acts as a lever, propelling them into a realm of streamlined operations, financial prudence and a technological leg-up. There are advantages tied to this strategic shift, shedding light on how it’s catalyzing companies to not just stay afloat but sail deftly in the ever-changing waters of direct selling.

Why the shift towards third-party solutions? With the right teams and people at the helm, it can be a strategic maneuver to drive enterprise companies forward. Here is a look at what lies ahead.

1/ Enhanced Efficiency and Focus

Embarking on the journey of developing and sustaining proprietary software solutions often morphs into a labyrinth of time-consuming and resource-draining endeavors. Companies may find themselves allocating hefty resources to software development, sidetracking attention and resources from their core competencies. The General Electric (GE) example serves as a cautionary tale. According to reports, GE’s digital missteps cost the company billions, illustrating the perilous financial precipice that accompanies homegrown software ventures. Conversely, by embracing top-tier third-party solutions, companies can harness the prowess and experience of specialized software vendors—enabling the streamlining of operations; curtailing development time; and recentering focus on core business pursuits. This metamorphosis catalyzes enhanced efficiency and productivity.

2/ Cost Effectiveness

The financial toll of constructing and sustaining proprietary software solutions is often a bitter pill to swallow. Companies must invest in skilled developers, infrastructure, routine maintenance as well as hardware and software updates. Alternatively, third-party solutions unfold as a cost-effective oasis. By capitalizing on pre-existing software platforms, enterprises dodge the upfront financial bullet tied to development and infrastructure. Moreover, third-party solutions predominantly operate on a subscription-based model, bestowing companies with the liberty to pay for merely the features and services they need. This cost-sensitive model empowers companies to redistribute their resources and funnel investments into other pivotal business domains.

3/ Scalability and Flexibility

The trajectory of growth and evolution of companies invariably transforms their software requisites. Proprietary homegrown solutions may stumble in matching the stride of escalating demands and intricacies of the distributors and customers. Third-party solutions, however, are crafted to embody scalability and flexibility—adapting effortlessly to evolving trends and requirements; accommodating user loads; and melding with other software systems seamlessly. This scalability and flexibility liberate companies from the shackles of software infrastructure limitations, positioning them to swiftly respond to market stimuli and outpace competitors.

4/ Access to Cutting-Edge Technologies

The digital times we are navigating are marked by a blistering pace of technological advancements. Keeping pace with contemporary advancements poses a challenge for companies anchored to proprietary software solutions. Third-party vendors, however, are stationed at the vanguard of technological innovation. Their hefty investments in research and development ensure their offerings are imbued with the latest technological upgrades—encompassing artificial intelligence, machine learning and data analytics. By adopting best-in-class third-party solutions, companies unlock the gateway to these technologies without the necessity for extensive in-house development. This capability empowers companies to leverage sophisticated tools and capabilities, fueling innovation, honing decision making and securing a competitive edge.

5/ Integration and Collaboration

The essence of seamless integration and collaboration among diverse software systems cannot be overstated. Proprietary homegrown solutions often stumble at the altar of compatibility and integration capabilities, culminating in data silos and inefficiencies. On the flip side, premier third-party solutions are engineered to meld with a spectrum of software platforms, facilitating a smooth data continuum and collaboration across varied departments and systems. This integration capability bolsters communication, data sharing and decision-making processes, engendering a more cohesive and efficient work ambiance.

6/ Risk Mitigation

Proprietary software requires tribal knowledge and legacy headcount. Oftentimes, homegrown software was envisioned and structured by teams that are no longer working for the enterprise company, leaving single points of human capital failure to drive the foundation of their entire software program. Leveraging current technology that is available via subscription ensures that an IT team is always integrating industry-standard solutions.

Optimized. Effective. Proactive.

The metamorphosis from proprietary homegrown software solutions to third-party alternatives for the enterprise marks a significant stride towards an optimized business model, encompassing heightened efficiency, cost-effectiveness, scalability, access to the cutting-edge technologies and seamless integration.

As the business landscape is in a state of perpetual evolution, the adoption of best-in-class third-party solutions emerges as a cardinal strategy in propelling companies forward. This strategic pivot not only equips enterprises to remain competitive, agile and innovative but also lays the foundation for navigating the evolving market landscape with a keen sense of foresight and adaptability. Through this lens, it’s unequivocal that the shift towards third-party solutions is not merely a fleeting trend, but rather a cogent strategy destined to drive business success in the modern era.

Jack Farris, Chief Sales Officer at Exigo, has over 30 years of experience in building global sales and leadership teams through both organic and acquisition growth, primarily for private equity-backed software companies. In addition, Jack was founder or principal partner in three companies, within three different industries, with successful investor/PE exits.

From the December 2023 issue of Direct Selling News magazine.

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