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Take Back Enterprise Technology from the Vendors

It’s time for CIOs to stand up to rapacious vendors.

By Susan Cramm, And Mike Clifford

July 01, 2004 — CIO — Business in the enterprise technology arena is getting nasty. Vendors in the mature markets, facing declining new license revenue, are doing everything they can to generate additional income and drive efficiencies. Meanwhile smaller enterprise technology vendors operate under the threat of extinction.

CIOs believe that many of the large enterprise vendors have crossed over the line to customer abuse. Because their customers are captive, big vendors are taking every opportunity to exploit poorly negotiated or ambiguous contract terms. For example, they continue to charge maintenance fees for modules never implemented, increase maintenance fees regardless of support history, broaden the definition of seats to include Internet hits, and force upgrades even though additional functionality is of no value to their customers.

These tactics result in invoices that generate shock and awe in the vendors’ customers. CIOs scramble to get legal opinions and try to define effective negotiation strategies when, in fact, vendors are contractually within their rights. Even though vendors often eventually reduce the original demands by as much as 75 percent, memories of acrimonious e-mails and negotiation meetings remain (along with substantial cost increases that contribute to the enterprise technology financial hangover borne largely on the shoulders of CIOs). In retrospect, a lot of contracts out there favor the vendor due to the relative lack of sophistication of the customer a decade ago. (The customer’s technological knowledge bordered on ignorance compared to its vendor and systems integrator counterparts who, at times, advised clients while fostering strategic relationships with the technology vendors.)

Unfortunately, CIOs have few, if any, real options to restore some equity into the vendor-user relationship. They can’t subject their organizations (or careers) to replacing enterprise technologies. And even if a few CIOs were willing to martyr themselves, there would be little point. What well-established vendor in its right mind would redefine its business model and risk incurring the wrath of Wall Street, just to satisfy what it perceives as a few errant CIOs?

If wholesale replacement is untenable for any rational CIO, what can we do? First of all, we have to keep the end goal in mind: We want component-based architectures that we pay for based on usage. Even if we don’t achieve the open source-Web services Holy Grail, at the very least we need to break through the "all or nothing" model of integration and support offered by the large enterprise players. Consider the following actions to reshape the marketplace and protect your long-term interests.

 

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