Parity: Good for the NFL, bad for real estate technology

What do the National Football League (NFL), Major League Baseball (MLB), and Premier League soccer have in common with the real estate industry? They all deal with the consequences of both open and closed systems.

I recently completed an 11-part series regarding software providers being open and connected as opposed to closed and monolithic, and I believe the constructs of the NFL, MLB, and Premier League mirror these positions in enterprise software.

Openness vs. closed systems in global sports

The NFL has a “hard cap” for player salaries. The 53-man roster must be at or below the salary cap. Failure to honor the cap will result in a number of fairly draconian penalties that are substantial deterrents. The general managers of each NFL team must decide how to allocate cap dollars to fill their roster, to sign their draft picks, to reward their stalwarts and to sign those needed free agents.

The salary cap, among other things, is intended to drive parity in the NFL by keeping player spending consistent across teams and ensuring that teams have the same resources to apply to the same goal of winning.

Salary caps occur in most major sports leagues globally, with some being more restrictive than others. The Australian Football league utilizes a cap similar to the NFL, driving parity and spreading success around the league.

In the UK, while the Premier League also has a version of a salary cap in the Financial Fair Play rules, it does not really hamper their ability to source star players globally.

In MLB, however, the general manager has a much different task. Aside from a luxury tax, there is no other penalty if one team spends substantially more on players than another team. The term “small market team” exists in baseball, not in football. No hard cap, no parity.

In the NFL, owners and managers are constrained by the constructs of the league in which they operate. In MLB, owners and managers have much more freedom to build their teams without a hard constraint.

A software provider’s “hard cap”

Providers of a closed set of software are basically providing a “functional cap” to their clients. Clients who embrace the closed environment must make do with the capabilities found within. Decisions are made on how to best use the capabilities that are included, just like NFL managers deciding how to spread salary cap dollars between offence and defense, between the all-important quarterback and the 53rd man on the roster. Unfortunately, the lack of flexibility keeps control in the hands of the provider and it limits the adoption of new and innovative capabilities to those that are delivered “under the cap.”

Without the ability choose – without freedom – it is much harder to differentiate. If everyone has the same tools, there has to be some level of implicit parity. For all the Patriots fans out there who would argue that their recent sustained high performance contradicts this, I think even they would agree that this is more the exception than the rule in the NFL.

Providers of open and connected solutions deliver the freedom for clients to choose which solutions they wish to assemble. Like MLB, you can add to your team to improve your chances for greater success. You are not constrained by an external force (hard salary cap) influencing what you can do. You are free to utilize your resources as you see fit.

You truly have freedom to build your team of solutions because, in business, parity is not the goal, winning is.