IT supervendors: They can buy innovation, but can't maintain it

IT supervendors: They can buy innovation, but can't maintain it

Summary: Enterprise technology supervendors are busy gobbling up acquisitions in a strategy that equates to buying R&D. However, that model is unsustainable in the long run, argues Gartner's head of research.

TOPICS: Emerging Tech, CXO

Enterprise technology supervendors---Oracle, Hewlett-Packard, IBM and others---are working diligently to acquire everything in sight and give you integrated stack of technology and innovation in a box. However, these IT vendors can buy innovation, but they can't maintain it over the long run.

Does your enterprise tech vendor look like this?

Does your enterprise tech vendor look like this?

That's the message from Gartner research head Peter Sondergaard. Speaking at the Gartner Symposium in Orlando, Sondergaard said:

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.

Sondergaard's theory is that the enterprise IT industry is going to face a massive upheaval over the next 20 years as things like social computing, context aware computing, pattern based strategy and cloud computing all wreck traditional supervendor models.

I've questioned the concept of the supervendor for one reason: Economics. Why would an IT buyer give up all of the negotiating leverage to one vendor and one stack? Why would you lock yourself in like that? The idea of an integrated stack always struck me as a vendor creation.

Sondergaard's argument is a bit different. He projects middling IT budget growth over the next 5 years. Think 3 percent to 5 percent growth a year, a tally that won't keep up with global inflation. This weak budget growth will force companies to act differently. Toss in consumerization, changing work habits and the blurring of personal and professional activities and IT managers are just going to use whatever gets the job done. Those tools could be smartphones, tablets or something else. Chances are it won't be a so-called integrated stack.

The message: Some supervendors will be toast because they won't be able to meet the needs of customers. They will miss the curve, becoming jarringly mediocre and lose. When will this happen? Sondergaard said the next decade to 20 years. For now, supervendors are dominating, but the following trends will make them look like dinosaurs:

  • Cloud computing: On demand delivery models will change the IT industry and its financial model. Can supervendors adapt to cloud models when they live off support and maintenance and upgrade cycles?
  • Social computing: This trend will change marketing, customer service and culture and pervade the enterprise. Lines between personal and professional activities will blur. "The rigid business processes you have are suited for routine activities, but are poorly suited for complex decision making," said Sondergaard. Guess what supervendors sell? He added that processes merely show how work is supposed to get done, not how it actually happens.
  • Context aware computing: Wireless connectivity everywhere will create a new Internet fabric. Context like location, language, desires and dreams will launch a bevy of new services. The network will provide translation between machines, people and other devices.
  • Pattern based strategy: Analytics will combine structured and unstructured data. Companies will seek patterns, model the impact and then adapt to them. It's no wonder that supervendors are talking analytics so much.

Sondergaard said each will be disruptive, but combined these four trends will be "diametrically the opposite of what we have focused on the last 40 years."

Topics: Emerging Tech, CXO

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  • RE: IT supervendors: They can buy innovation, but can't maintain it

    Once the big companies snarf up the innovation (R&D) it isn't long before they smother the flame. The fact that R&D requires investment without immediate return ends with the bean counters strangling funding as they work to make next week's numbers for Wall Street and fund the CEO's bonus.
    • R&D funding

      @7mgte: "The fact that R&D requires investment without immediate return ends with the bean counters strangling funding"

      Actually, the problem is not that R&D doesn't provide an *immediate* return. The problem is that in many cases it provides *no* return. You've got to fund a lot of "misses" to get the occasional "hit".
  • This is rich coming from Gartner?

    And who has failed to ask the right questions of these "supervendors"? Who fails to really understand real innovation by 45 minute interviews over a phone with more often than not lack of preparation?
    So in UK I have taken upon my self to ask the awkward questions of the suppliers of the core enabling technologies for Business Software in the context of Government IT.
    For too long Government has not really understood just what they are buying into in terms of the underlying business software technology which is largely supplied by the 3 global vendors Oracle, IBM and Microsoft. They each have their powerful ecosystems that built products or are service driven to custom build and or deploy. They use as suits them with historically a fairly dumb buyer who just pays up.

    It is vital as the largest buyer of ?IT? that there is an understanding of core capabilities that the technology vendors can support. For example answers to the following questions will give Government a really good understanding of how future systems will look?

    Agility in software to support change ? this must surely be a priority?
    Ability to produce quickly prototypes reflecting the end user/business need to engage early feed back
    Ability to connect to legacy systems
    Use of open source
    How much custom coding is required to build custom solutions and is it accessible
    Does any model capability reflect what is actually deployed?
    Reusable features to speed up future development
    Flexibility in build of working user forms and ease of change
    Ease of delivering as a service or from cloud (thin client?)
    Shared service capability
    How many proprietary tools are required to address the following and if branded under one toolset detail of when acquired or built, state of integration as one and lines of code or file size.

    BPM focus on people and their processes
    Process engine to ensure all works to plan
    Rules engine reflecting real world of compliance
    Calculation engine automating system work
    State/ instance engine Real time feed back
    Workflow everything connected in right order
    Audit trail, events, escalations = supporting control = empowerment
    Time recording supports activity based costing
    Real time reporting become predictive
    Build mash ups one screen multiple data sources
    Linked Ajax Grids faster access to related data
    Roles and performers people and machines
    Management hierarchy who sees what
    E-mail and correspondence control tracking external communications
    Collaboration by accessing remotely required files = efficiency in storage
    Data storage link between front office and back office

    Get these questions on the agenda so "we" become the intelligent buyer and demand better value not just lower cost but more business relevant technology that delivers how people work.

    These big vendors should be volunteering these answers and cut back on the market hype that hides the truth.
    David Chassels
  • Empty oil supertanker picture, intent or karma?

    Did you mean to use the picture of an empty supertanker for your picture? If so, cool! If not, karma!
  • RE: IT supervendors: They can buy innovation, but can't maintain it

    IT supervendors may not be the answer but many best of breed applications are not the answer either because integration costs become excessive. I recently analysed adding a COTS application to an existing IT environment. The COTS application was inexpensive and highly functional (users loved it) but integrating the COTS application into the existing IT environment wold cost twice the purchase price. Purchasing a similar application for more money that would integrate easily into the existing IT environment was actually cheaper. My recommendation: A small number of vendors for the entire IT environment.
  • Hypocrisy kills innovation

    I'm no fan of the so-called supervendor...too big to fail comes to mind. But I'm also no fan of those who use the word impossible, ahem Sondergaard. I'm even less of a fan of hypocrisy...and this topic smacks of it.<br><br>Good relationships, personal and professional, require mutual understanding and support to survive and thrive. Vendors need not behave as the innovation killers @7mgte and Sondergaard describe.<br><br>Change begins with executives AND investors (the latter of whose unrealistic expectations and conservatism are largely to blame, IMO). Both groups are responsible for the risk averse corporate behavior that suffocates innovation.<br><br>Where am I going with this? Well, change begins at home. If we wish to nurture a culture of innovation we need to invest in it, accept more risk and reward the risk-takers with our support. As @johndoe445566 wrote, "You've got to fund a lot of misses to get the occasional hit." If we continue to play it safe how can we possibly expect the companies composed of us to act any differently? <br><br>I suspect if we were to look at the investment portfolios of individuals such as Sondergaard (and the millions like him), we would very likely discover that they play it safe while publicly chastising companies for behaving in the same manner. That, friends, is hypocrisy.
  • RE: IT supervendors: They can buy innovation, but can't maintain it

    For large companies, "innovation" today has become a game in which each will outbid the other to acquire smaller companies. At some point, an asset (or line of business) will be spun off in order for the parent company to recognize "value". And so it goes... merge/acquire, then spin-off, then do it all over again. Wall Street's view is that the companies who perform this dance well are the ones whose stock price will do well relative to the rest of the herd.

    This paradigm simply reflects the fact that the IT industry is now a "mature" industry, with its status becoming more and more every day like "traditional" industries.
    Sean Jay
    • RE: IT supervendors: They can buy innovation, but can't maintain it

      @Sean Jay
      David Chassels
    • RE: IT supervendors: They can buy innovation, but can't maintain it

      @Sean Jay
      Yes BUT the product set they sell as business software is still immature. The user has to have a serious reality check to what it is they are actually buying into? And how are these supervendors going to handle the paradigm shift of simplicity...... That excellent article a few weeks ago from our host "IT today: Unsustainable, unhealthy and just plain screwed?" sums up what a mess?
      David Chassels
  • RE: IT supervendors: They can buy innovation, but can't maintain it

    If you believe IT Supervendor won't survive you are not related to selling to big corporate clients, it is usually a big pain in the neck to do business with a new guy, they want service around the globe, they define a global "strategic" product and they stick their guns to it even if it is the worst product available, if you stand up to it, you are going to be a road kill.