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Buying amid falling numbers, changing tides

With the current economic uncertainties, user organizations are placing an even stronger emphasis on the reputations of IT vendors.
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Written by Victoria Ho, Contributor on

While the current economic uncertainty may have an immediate impact on companies' bottom lines, it also has a longer-term effect on their IT buying decisions, according to IT user organizations.

ZDNet Asia spoke to several enterprise IT users to find out how their buying plans could be impacted if vendor reputations were affected by the current economic situation. While the degree of impact varied, it was unanimous across the board that layoffs by vendors and their plummeting revenues, if any, are worrying signs for users when choosing an IT provider.

YCH Group CIO James Loo said the degree to which vendor reputations mattered depended on the kind of service provided. "We separate vendors into two categories--those for basic, commodity needs, and those that provide strategic services," said Loo, in a phone interview.

The reputations of "commodity" providers such as backup storage makers, were not as critical to Loo's buying decision. He said the company has practices in place to ensure it is "self-sufficient" in supporting such hardware so as not to rely too heavily on third-party vendors. "Even if the firm downsizes, we can support [the implementation] ourselves," he said.

"We have enough knowledge on [that type of] technology that we're buying. We evaluate based on a product's individual technical merits, not so much the company's reputation," said Loo.

On the other hand, "strategic" products like business intelligence (BI) software, need to be evaluated alongside vendor reputation, he said. "We can't just hop onto someone else's products if one company stops providing support... It's a bigger hole we have to get out of," said Loo.

Lo Sheng, vice president of engineering, online services and support at Muvee, agreed with Loo's sentiments. "We view hardware as a capital investment. If it breaks down after the warranty, you just get a replacement," said Lo.

It is the middle-tier vendors providing "unique services" that Lo worries about. Customized application providers and online hosts, for example, present the hassle of recovering all the company's data when they close their doors, he said in a phone interview.

For that reason, Muvee tries not to choose middle-tier vendors, instead going with the big boys. "HP, IBM and Microsoft are likely to be around" after the economic storm blows over, Lo said.

Visa's regional head of emerging products and technology, Paul Jung, said: "A company's reputation definitely has big influence on buyers' decision."

Speaking in his personal capacity, Jung said: "For me, a bad reputation will have a bigger influence than a good one." While the economic uncertainty "so far" has not affected his choice of vendors, financial instability or the changing of key personnel could negatively impact his future decision, he said.

Jung, who is one of the advisors for this year's ZDNet Asia Top Tech 50 Index, said in an e-mail he does not distinguish between hardware, software or IT services providers, but takes into consideration vendor reputation together with the quality and range of their offerings irrespective of their business.

Muvee's Lo offered an alternative solution to fellow IT end users: go open source.

"You could either go for the bigger guys or something you can support yourself, with a community that won't go away," he said.

He acknowledges that such a solution may seem daunting to companies nervous about not having a third-party vendor to rely on. "It sounds scary, but it's just a mental barrier. The open source community is recession-proof, and as a [technology-based] firm, we're quite used to supporting [our own infrastructure]," he said.

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