Less Is Not More

This month’s issue of CIO Insight includes our second annual Vendor Value survey, in which we asked more than 1,000 top IT executives to rate the value and reliability of a total of 44 top vendors. It’s a remarkable list, for any number of reasons—the most obvious being the generally high level of dissatisfaction IT executives feel toward their vendors. Some companies are obviously doing very well, and others are doing poorly. But the fact that the average overall score is 63.8—in other words, fewer than two thirds of respondents rated their vendors either “excellent” or “good,” just four tenths of a percentage point better than last year—is, well, disgraceful. “D-minus” is the phrase that comes most immediately to mind.

At least as interesting, in my view, is the vendor loyalty ratings—the green column in the Big Picture chart on page 54. The scores reflect the percentage of respondents using a particular vendor who say they would keep using that vendor if given a choice. Here, the average rating is 80.2, more than 15 points higher. Translation: There’s a significant percentage of IT executives out there who would choose to keep using their vendors, despite having rated them either “fair” or “poor.” While some of the discrepancy should be put down to familiarity, many IT executives clearly feel locked into particular vendors, either because that vendor has an effective monopoly on a certain aspect of their IT operations, or because the alternatives are no better.

Now imagine a future in which the list of major vendors we asked about were half as long as this month’s list. Now suppose that your ERP vendor, or your CRM vendor, had the same monopoly power as Microsoft has in desktop operating systems. What would the results look like then? That’s the future contemplated in “Deal With It,” on page 27, in which Senior Writer Edward Cone analyzes the ongoing consolidation among IT vendors, and how CIOs should prepare for the change.

Meanwhile, in another CIO Insight survey, on vendor consolidation, 77 percent of respondents said a vendor they worked with had been acquired in the past two years—and 35 percent of those said the service they received had deteriorated after the acquisition.

Let’s see: The specter of increasing consolidation and less competition in an industry made up of companies who are already doing a poor job servicing their customers. Who said the CIO’s job is getting easier?

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