As industries mature, consolidation inevitably follows, and so it has been in the IT market.
We’ve seen it in all segments: hardware, software, services and telecom. Many CIOs see the reduced choices and reduced competition resulting from mergers as an erosion of their negotiating position.
On the vendor side there has been a long period of tight user budgets and limited sales opportunities. In mature market segments, revenue from new licences is fast disappearing, so large vendors are looking for any means possible to replace it and become more efficient. Small vendors are in danger of folding or being swallowed up. All vendors have had to fight harder for their sales and, often, are unclear as to who represents the bigger purchase influence — IT executives, business users or, in some cases, consultants. Rather than taking on the task of corralling all the various involved parties in the user end of the deal — an admittedly daunting exercise — some vendors have tried to go around a perceived obstacle, often the CIO, thereby alienating the very people they need to win.
For vendors striving for the balance between Wall Street’s expectations and customers’ feelings, customers often lose out, especially when the customer is heavily reliant on their installed technologies. CIOs find themselves with few options to improve their hand since wholesale replacement of key technologies comes at a high price for the enterprise — and, perhaps, for a CIO’s career prospects.
All this adds up to somewhat strained relationships between CIOs and their suppliers; a subject we explore with seven prominent Canadian CIOs in this, our annual roundtable issue.
One way for CIOs to improve their negotiating position is through association. There is strength in numbers.
The CIO Exchange, an initiative of CIO Canada magazine, is a vendor-free, facilitated peer networking forum for CIOs. One of its objectives is to restore the balance between CIOs and vendors by promoting best practices among The Exchange membership and the broad vendor community, and by exerting its collective influence on individual vendors. Details can be found on page 34 of this issue or at the Web site http://www.cioexchange.ca.
As always, I will be happy to respond to any questions or comments you have about The CIO Exchange and any other issues you have on your mind.