Enterprising Developments

Make Vendors Fight for Your Business

Joe McKendrick
Insurance Experts' Forum, December 7, 2010

I can actually remember a time when there was a thing called an “all-Blue” shop. That was a company that was end-to-end IBM, from the back-end CICS-based transaction system to the messaging middleware to developer toolsets to the terminals and PCs sitting on peoples' desks.

Since Microsoft evolved into an enterprise powerhouse over the past decade, it, too, has aspired to become a one-stop source of tools, platforms, middleware, and applications. Lately, Oracle has made moves in this direction, with its acquisitions of every ERP system under the sun (except SAP), and, as an added measure, grabbed the Sun (Microsystems, that is) as well for its stable of hardware and operating systems.

For IT managers, one-stop shopping has always been a love-hate thing.  They love having “one throat to choke” when things go wrong. But with that throat comes lock-in and proprietary systems.

Despite a lot of consolidation taking place in the enterprise software space, the trend in recent years has been toward multi-vendor shops. That point was recently driven home in a Gartner analysis that heralded the end of single-vendor networks within enterprises.

According to Gartner, “most organizations should consider a dual-vendor or multi-vendor solution as a viable approach to building their network, as significant cost savings are achievable with no increase in network complexity, while improving the focus on meeting business requirements.” 

Having additional vendors on board will not increase costs and, in fact, may reduce total cost of ownership by at least 15% to 25% over a five-year timeframe.

Gartner's analysis was meant as a slap at Cisco, but the lessons provided actually make a good case for multi-vendor approaches to all levels of the IT stack. Consider these advantages:

•  Negotiating power: Having multiple options puts your company in a stronger position on pricing and service bundles.

•  Second sourcing:  As any purchasing manager will tell you, it's always a good idea to have a second source of solutions, just in case the prime vendor decides it no longer wants to be in a certain line of business, or even goes out of business.

•  More motivation to standardize: Having multiple vendors will justify efforts to adopt industry standards and protocols across the board— always a good thing to ensure more flexibility and agility, as well as opening up the talent pool to maintain your systems.

The bottom line is that the IT industry has become highly diverse and fragmented, and gone are the days where a single vendor—or even limiting engagements to two or three vendors—is a viable strategy. With the rise of industry standards and approaches such as Web standards and cross-platform languages, enterprises can choose from the best and brightest solutions available at the time.  And vendors will need to work hard for your business.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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