Enterprises Cut Cost, Vendor Contracts Challenged

by CXOtoday Staff    Jul 13, 2009

With more than 70% of enterprises looking for ways to consolidate their enterprise software portfolio within the next three years, Springboard Research feels there is a trend towards convergence and consolidation around the platforms of what it describes as a group of mega vendors .
Michael Barnes, VP of software research, Springboard said, "The primary drivers for improved software portfolio management all link directly to reducing costs and complexity and given the weak economy both globally and across the region, I expect this to remain the case for the next 12-18 months, and possibly longer."

Findings in the report are based on interviews with 442 CIOs, IT managers and business managers at large and SMB enterprises in Australia, China, India, Malaysia, New Zealand, the Philippines and Singapore.

According to Springboard, the ongoing consolidation in the enterprise software market will likely continue, with an overwhelming majority of organisations considering between 1-4 vendors to be strategic providers , critical to their ongoing operations.

The primary criteria for vendor selection are depth and quality of functionality, says Springboard, and it s rated as most important by enterprises, just ahead of local presence and price.

However, it seems that loyalty to vendors is under pressure, with less than 40% of organisations across the Asia Pacific considering their existing software vendor relationships when undertaking architectural planning or making purchase decisions.

Springboard reveals that the majority of organisations make architectural planning decisions based on factors other than existing investments (e.g. sunk costs) or existing vendor relationships.
While incumbent vendors clearly have an advantage in terms of impacting organisations decisions-making process, this advantage is not insurmountable since the majority of respondents make decisions based on other factors, said Barnes.

However, despite the pressure on enterprises to look outside their existing vendor relationships, for those that do consider their existing relationships when making architectural planning and/or product purchase decisions, Microsoft leads from IBM, with HP and Oracle equal in third place.
The report indicates that Microsoft also scored the highest ranking in terms of mindshare, again with IBM in second place ahead of Oracle.

The study also reveals that the top enterprise software classes considered as strategic by enterprises in the APEJ (Asia Pacific excluding Japan) are operating systems, ERP, security and CRM respectively.

Springboard said that, while 86% of the respondent organisations in the region consider enterprise applications to be part of their strategic software infrastructure, only 38% consider mainframes and/or mainframe-based applications and systems to be part of this infrastructure.