The Truth is That They Don't Care as Long as you Pay

November 28, 2011 --

After Orlando, Barcelona, and before India, Gartner held their Symposium in Australia last week. A much expected session of Symposium, and many other Gartner events, discusses how to deal with mega-vendors. Brett Winterford from IT News was in the room when Dennis Gaughan presented this session, and came back with some interesting – but not at all surprising – insight into the strategy of IBM, Microsoft, Oracle and SAP, the four mega vendors that rule IT today.

There are so many sound bites in Brett’s article that I wouldn’t know where to start – and my goal is not to plagiarize his article anyway.  Still, I couldn’t resist picking a few, see at the end of this post.

At the end of the day, it comes down to a simple fact: customers are cash cows for the mega-vendors. They don’t care, as long as you pay. They don’t view customers as partners with whom to build strong technology, they view them as account balances in their ledgers.

We have always known that mega-vendors rarely innovate. Sure, they maintain research facilities, but how many great technologies have come out of these? In fact, the only recent exception that comes to mind is SAP’s HANA – but then, in typical SAP fashion, they have out-priced the market – says Brett: “Pilot customers of HANA had reported that the in-memory technology enabled ‘dramatic performance gains’, but once SAP told the customer how much the technology would cost in production, they struggled to make a business case for deployment.”  Compare HANA with Hadoop. Same general purpose – extreme scalability. Closed (and secretive) product vs. open source collaboration. Outrageous price tag vs. free download. Runs on super duper expensive hardware vs. myriad of commodity nodes.

Beyond (lack of) innovation, there are two areas where mega-vendors create special challenges.

The first one is integration. Their technologies “suites” or “platforms” have only one point of integration: the price list.  When you are dealing with integration technologies, as Talend is, this is obviously an important issue. Integrating data/applications/processes with disintegrated technology does not make a lot of sense, you simply end up with mode silos!. The reason?  M&A-driven growth, and a lack of interest to invest into really building a platform. M&A is a respectable strategy and is not in itself a justification for non-integration: look at Talend ESB, the fruit of the acquisition of Sopera, which is truly part of the Talend Unified Platform. Lack of willingness to invest for your clients, this is the problem.

The other challenge is pricing. I am always baffled when I hear that analysts such as Gartner’s or Forrester’s (and attorneys too), are needed to review a vendor proposal.  Not only are these prices outrageous but they are so hard to comprehend that you have no idea what you will be paying down the road. That’s unpredictability at best.

At the end of the day, why do they keep behaving this way?  Because they can.  Real alternatives are few.  But they do exist, and are gaining ground.  Of course, open source will (does) play a role here, and is already pushing some large vendors to change their behavior. Mega-vendors are next.

The best sound bites

Brett’s article is worth reading in its entirety, but I couldn’t resist a bit of copy/paste:

  • Most inquiries to Gartner from CIOs interested in working with IBM focused on contract negotiation. (…)  The number one question is: how do you avoid being managed by IBM?
  • Oracle is not looking for where integration is possible but where it is profitable. (…)  It’s a bundling on paper, not in the architecture.
  • SAP haven’t sorted out the pricing. (…)  Gartner was most often approached by SAP customers to get a better understanding of software licensing.
  • SAP has interesting licensing terms for getting data in and out of the system for use in other applications. (Licensing terms to access YOUR data??)

Yves