In an era of cost reduction and IT consolidation the idea of fewer vendors can be appealing. Every vendor managed by an organization represents overhead, and that’s often a significant expense beyond the expected technology acquisition, licensing, implementation, and maintenance costs.
There is the cost of processing invoices and payments, the cost of negotiating contracts, the cost of training on each platform and system, and more. There is the cost of managing each vendor relationship, which can be considerable. How many IT vendors does your organization use? Multiply the costs by the number of vendors and the final number is likely to surprise you.
It is not unusual for an organization to have 10, 12, or more IT vendor relationships. Some organizations consider it a success just to reduce the number to five.
So, why not standardize your IT strategy on a single vendor’s solutions? If fewer is better, one would be the best of all, right?
Actually, it wouldn’t. The nature of the IT industry and an organization's IT infrastructure essentially rules out a single vendor. No one company can really do it all: network, storage, and server hardware; operating system, and software. If you think of the IT infrastructure, however, as a stack from the base hardware to the applications, then there are companies that can deliver the entire stack. They use partners for various pieces, but they sell, price, and support it all as a single stack.
The biggest advantage of one vendor delivering the entire IT stack is accountability; there’s no confusion over who is responsible when something goes wrong. You end up with, as they say, one throat to choke. There may be other advantages in terms of pricing, support, integration, and training, but it is the direct accountability that often wins converts.
Selecting a single vendor, however, is not always feasible. Many organizations have procurement or governance policies that require diverse sourcing and multiple vendors. A single vendor or even two may not be enough; some organizations want at least three.
Another reason organizations avoid a single vendor is fear of vendor lock-in. Without multiple vendors, IT managers argue, you have less leverage when negotiating prices. With multiple vendors, each competing for a bigger piece of your IT budget at the expense of the others, you can command the best pricing.
Also, once you commit to a single vendor's stack, switching vendors down the road will not be easy or cheap if problems arise. Although widespread support of industry standards mitigates some of the concerns about vendor lock-in, it remains a valid concern. Even if you are willing, the time, effort, expense, and risk of a wholesale migration to another IT stack is not trivial. The risk alone may be enough to discourage the organization.
In the end, the simplicity and accountability of a single vendor strategy may be appealing, but for most organizations it probably isn't practical.
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