Vendor Value 2009: IT Vendors Deliver MoreBy Guy Currier | Posted 10-26-2009
Vendor Value 2009: IT Vendors Deliver More
Tough times create opportunities for those resourceful enough to react.
That's forcefully evident in the results of our 2009 Vendor Value Study, where vendors could not maintain their positions if they were only able to maintain their customers' satisfaction levels and not improve them.
From 2008 to 2009, a vendor had to move up to keep up: Even accounting for the remarkable performance of vendors that appear for the first time this year, the only sure way for a seller of technology to keep pace on our list was to raise its scores.
The lesson for the CIO is clear: Ask more of your vendors now, and you shall receive it.
Among vendors in both the 2008 and 2009 reports, the average overall score was up four percentage points--71 percent this year from 67 percent last year. Scores improved for 22 vendors and dropped for only eight. If a vendor didn't improve its score by at least four points, it was likely to fall in ranking.
It's worth noting that higher scores are partly a result of the times, as firms jettisoned vendors when cutting spending or realigning IT strategies. The average number of vendors our survey's respondents worked with was down slightly--from 12 in 2008 to 11 this year--creating some upward pressure on ratings. This is because we only ask respondents to rate vendors they currently use, and naturally firms have stayed with the ones they are most satisfied with.
The appearance of new vendors on this year's list made a big difference in rankings as well, as most debuted in the top 20. Intel, which was included in our survey this year for the first time, has arrived out of nowhere to take the top spot, driven by a remarkable 93 percent score in quality, the highest reliability or value score we've seen in recent years. Intel's 97 percent loyalty score, matched by Google, is also one of the strongest we've ever seen.
Other additions fared admirably as well. Siemens, tied with perennial favorites Google and Red Hat, would have done even better if not for concerns (by contrast to Intel) about quality levels. APC impressed respondents with its ROI proposition and its responsiveness to customers' needs. NetApp, like Siemens, raised concerns about quality but plainly addressed users' business needs with focused, right-sized offerings, while WebEx did well for inverse reasons--its high scores for quality and responsiveness offset issues customers had with its ability to meet commitments on time and on budget.
This kind of detailed data on vendor performance helps reinforce, with specific examples, the fact that recessions create buyer's markets. It behooves organizations today to be demanding of vendors, and to work to get the greatest value out of vendor relationships.
Not only are many well-established vendors exerting themselves more than they ever had before to please us, newcomers are finding ways to make names for themselves. IT should take advantage of both of these situations to improve service levels while still meeting cost objectives.
Winners and Losers
Winners and Losers
When you take both factors into account, many vendors' drops in ranking turn out to be just maintenance of prior years' standards in a more competitive market.
Dell, for example, which fell out of the top 10 this year, would have still been there if it weren't for six newly arriving vendors now above it. VeriSign would have still edged into the top 10, and Adobe and EMC would have been higher up on our list as well. However, even though all four vendors' scores changed by no more than one point from 2008 to 2009, that still would have been enough for them to drop in rankiing even without the new arrivals--if not as sharply.
McAfee's and Trend Micro's fortunes declined more significantly. For these two vendors, the 2009 results accelerated earlier declines that were hitting other security companies as well; both scored much worse this year on their ability to reduce costs and to deliver on time or on budget. Only Symantec managed to keep pace with the more competitive market.
Symantec, in fact, is the fourth-most-improved vendor in this year's survey, having scored much better than in 2008, particularly in its ability to reduce organizations' costs, be on time and on budget, and provide good ROI.
But the real winner this year is Sun Microsystems, which has rocketed into the top 10. If there's a theme for the most-improved vendors, it's cost and budget control, and Sun exemplifies this. But satisfaction with the company improved in many ways, including its ability to help organizations increase revenues and address business problems, as well as its overall quality levels.
Security's Fall From Grace
For many years running, security vendors as a whole fared best in the Vendor Value survey. But we noted storm clouds on the horizon last year, and despite Symantec's performance, the tempest hit with the troubled economy. Meanwhile, both the hardware and networking vendors have amplified their service offerings in recent years, and the resulting greater focus on providing for IT's service needs improved their value levels.
So although security vendors' average overall score of 71 percent is not much lower than it was in 2008, in tune with the general theme this year, this wasn't good enough to maintain the category's former pride of place in the technology spectrum. With strong showings from HP, Sun, Fujitsu and IBM, hardware vendors now provide the greatest overall value to customers, scoring 76 percent on average. Networking, led by Siemens, takes second place at 73 percent.
Telecommunications scores also improved, in one case--Verizon Communications--quite dramatically. But while no longer abysmal, customers' opinions of the telecom sector remain low.
What to Expect of Vendors Now
The downturn has predictably altered organizations' approaches to the vendor relationship, beyond just cost-cutting and value-seeking. Most major vendors reacted to the new economic environment by working to reduce their customers' stress levels--by being predictable and flexible, as well as addressing cost and ROI issues.
This comes down, in a word, to service. And as we start to look beyond the recession to the future of vendor relationships, we can see that this may very well be a permanent paradigm shift.
The demand for excellence in service and support is higher than ever because as IT adapts to new business demands and the transformation of the IT infrastructure, its needs are greater and more complex than ever. Vendors that will benefit in the years to come will be those that provide the kinds of solutions that simplify IT's approach to business problems, costs and management.
IT executives, then, can and should require vendors to step up their offerings to address more than just particular technology or business needs. Companywide goals today of efficiency, compliance, environmental friendliness and revenue growth can all be addressed directly and effectively by smart technology sellers, and can further the important continuing alignment of IT with business strategies.
IT vendors are pushing themselves to become more of a critical resource to business. They're beginning to raise their game. It's a good time to take advantage.