Vendor Value 2008: IT Providers, Running In Place
Here's the good news from our annual Vendor Value survey: In a difficult business milieu, IT vendors have not lowered service levels, slowed innovation or delayed product updates. Now here's the bad news: They aren't doing much better than they did last year.
Value and reliability have stayed about the same over the past two years, says George Jackson, CIO of Triad Guaranty Insurance in Winston-Salem, N.C., who adds that "a few vendors have gotten a little more aggressive at being customer-centric with the worsening economic downturn." However, some of that energy is not well spent. "More products do not mean more solutions," points out Peace Corps CIO Edward Anderson.
Our survey results bear out these two points of view. In 2007, we saw vendor ratings gain across the board from 2006. But this year's survey shows more mixed results. From 2007 to 2008, there were 22 gainers in overall score and 15 losers. Loyalty levels, which had risen from 2006 to 2007, were stable this year.
This year's top-rated vendors performed somewhat better than last year's in providing a cost reduction or return on investment to customers. The top vendors did the best on reliability rather than value measures.
RSA Security, new to the survey this year and a surprise winner for highest overall score, got the second-best ROI rating, but the company really shone in meeting commitments on time and on budget, and in being flexible and responsive to customers' needs. Vendors that improved most from last year delivered value on customer investments, as the business climate stresses the overall value proposition from every vendor.
As in past years, security vendors scored the best and telecom vendors the worst. But the IT security market has seen rumblings of dissatisfaction, largely with the three major software vendors: Symantec, McAfee and Trend Micro. Users react to what they see as needless bundling, unnecessary added features and harder-to-use products. As a result, they turn to smaller, more focused vendors like 3Com's TippingPoint, Check Point or Cisco's IronPort. Security vendors showed the greatest drop in loyalty, compared with the other sectors.
Hardware vendors fared significantly worse this year on measures of flexibility and responsiveness, reflecting these companies' efforts to tie their product sales to larger consulting and service contracts. IT execs want this, but the implementation of these services has made them concerned about vendor lock-in.
The pressures of the tough economy may lead to a shake-out in vendor-customer relationships. "Greater industry innovation has created more products, but not necessarily better solutions," Anderson says. "This leaves the increased burden of integration, testing and documentation on the client."
Three of the most-improved vendors--Cognos, Sprint Nextel and Nortel--showed the greatest improvements in delivering either ROI or cost-cutting benefits to customers.
Value doesn't come simply from lowered costs, and reliability doesn't spring only from a long-term vendor relationship. Google's many free offerings make it a winner in the top-value category, but low acquisition investment is only half the equation. Another winner, Check Point Software, is valuable to customers for an unrivaled ability to address their business issues.
Well over half of the customers of every vendor we measured would choose to continue working with that vendor, but loyalty measures can differ from performance ratings. Companies like Salesforce.com and Adobe seem worth staying with because of the promise their offerings represent; SAP, while not pleasing many in the past year, has plenty of residual goodwill from customers. Novell, by contrast, has had enough of an uncertain past that it clearly has ground to make up despite its rather high ratings.
Small firms working with IBM rated the company much higher than their large-business counterparts did. Big Blue may seem like an expensive choice for small businesses, but despite having to deal with relatively high up-front costs, smaller customers find benefits in the realm of cost reductions. However, small businesses tend to use IBM's pricier services offerings less frequently than bigger firms do.
Hewlett-Packard's strong relationships with its many resellers and service providers translate into reliability levels that are usually reserved for big customers, making the company a small-business winner. And Research in Motion is doing a good job addressing an area of vital importance to smaller firms today--mobility--so it's providing small businesses with much-needed solutions.
Staffers can rate vendors much higher or lower than their bosses do: IT executives are often sour on a vendor that's liked in the trenches. Though Avaya is the lowest-scoring networking vendor in the survey, the company is much more popular with lower-titled IT professionals (those with manager titles and above, but below director-level). This is especially true of its service levels. On the other hand, Sprint Nextel fared better among executives than it did among lower-level professionals.
This divide between managerial classes is a worthwhile consideration when choosing a vendor. Staffers more likely will be tasked with deployments and use of a vendor's offerings, as opposed to managing the vendor relationship. Where there's a disconnect, it often shows differing images of the vendor at the deployment level versus the strategic level. Staffers may have good reasons to prefer a vendor that managers find difficult.
Check out the next page for detailed methodology.