The supervendor debate: Will there be an IT buyer backlash?

Summary:The most compelling theme of the Gartner Symposium this week can be boiled down to five words: The rise of the supervendor. The big question is whether there will be any backlash from IT buyers.

The most compelling theme of the Gartner Symposium this week can be boiled down to five words: The rise of the supervendor. The big question is whether there will be any backlash from IT buyers.

Here's the backdrop: Supervendors are being formed via merger and acquisitions. You know the history by now. Oracle has acquired PeopleSoft, Siebel Systems, BEA Systems, Hyperion and dozens of others. Hewlett-Packard bought EDS, Palm, 3Com, 3Par and others. IBM bought Cognos, but has mostly focused on smaller software firms with an analytics hook. The general concept: Customers want integrated systems and one complete stack.

The rub: There seems to be some angst among CIOs when it comes to supervendors. CIOs privately note that they worry about giving away leverage. No one trusts lock-in. On the other hand, these executives don't exactly have the budgets to go best-of-breed and fool around with a lot of integration. Gartner analysts say that cloud services may be a once-in-a-career opportunity to stop paying so much maintenance and support to supervendors, who live and breathe support and maintenance costs.

Among the most notable quotes on supervendors this week:

  • Saleforce.com CEO Marc Benioff said that large vendors reinforce stale business models and prevent market shifts. Benioff specifically took aim at Oracle. Benioff talked about how he roamed around Oracle’s OpenWorld conference and saw 200 red cubes for all the companies Larry Ellison acquired. “Hyperion has a little cube. And BEA. This is what our industry has come to? 200 red cubes?" he said. Benioff questioned the wisdom of vendors trying to offer everything in one stack. "What’s next? More servers? More private clouds that eat up more carbon? While vendors get larger they hold the paradigms back."

The IT industry is caught in a vortex of supervendors who claim that they can purchase innovation. They claim this is superior to internal R&D. We believe this is not sustainable. Acquiring innovation is one thing. Maintaining it is impossible. Users will not accept architectural mediocrity. This will challenge the business models of supervendors.

  • Meanwhile, William Snyder, another Gartner analyst, said vendors are becoming "monolithic" and more likely to manage you than the other way around. "Vendors that are here today are somewhere else tomorrow, and, all too often, these vendors are consumed by a larger vendor with interests that may not be consistent with a customer's strategic direction," said Snyder.

CIOs will nod in agreement with most of these statements. However, there's no revolution. These CIOs are in yet another year of Gartner therapy in the name of better management, business alignment and all that stuff that has been talked about for a decade or more. But there's no revolt. Most of their budget goes to supervendors.

More: Salesforce.com's Benioff unplugged: Supervendors suck

The supervendor situation is almost tragically comical. Everyone sees the problems. Yet the IT buyer keeps going along with the status quo.

Sondergaard's statement that "users will not accept architectural mediocrity" had me chuckling the first time he said it. Why? Customers have already accepted mediocrity in many cases. Good enough is fine. In IT you strive for the "C" grade that won't get you canned.

Perhaps cloud computing will lead to a revolt that will seriously upend business models of these supervendors. The transition from support and maintenance to subscription revenue would be too much to bear. Salesforce.com is the most successful cloud/on demand software providers, but it's on a run rate of $1.6 billion in revenue a year. That's a nice chunk of change, but it's a rounding error to a supervendor.

Instead, IT buyers will have to focus more on vendor management, something they already do. Snyder's talk focused on the reality of vendor management. The gist: You need to allocate resources to deal with your big strategic vendors. The general idea is that you focus on vendor relations and management before there's a purchase event or failure.

Snyder said in his presentation:

Customers often focus significant resources on the initial acquisition to try to get the relationship right from the start, but then fail to be attentive to how the vendor performs unless there is some type of crisis. This pattern of attention has resulted in vendors that are attuned to dazzle customers during the sales cycles, but then ignore the customer until the next time a major buy is in the works. Customers are recognizing that this behavior does not deliver optimal long-term vendor performance.

While there's a lot of talk about revolution and whining about supervendors, the reality is that it's probably more prudent to follow Snyder's advice and put more time into vendor management. Welcome to enterprise IT, it's a game of managing monoliths.

Topics: CXO, IT Priorities

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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