CIOs rail against vendor lock-in

Good data management can be a business enabler and a cost saver, while poor data management can lose the enterprise money and blunt its strategic edge. This much should be obvious to all IT decision-makers. So what prevents good data management from happening?

An exclusive Computing survey of more than 180 enterprise IT leaders reveals that a massive 92 per cent of them believe that there are obstacles to achieving more efficient and cost-effective data management. Many of these are placed in their way by vendors and the contracts they foist on their customers, say the CIOs.

Asked what prevents the enterprise from achieving cost savings, more than 40 per cent of CIOs answered “existing contract terms” and over one-third said that licensing restrictions are to blame. Nearly one-quarter said that vendor lock-in was an obstacle, with a further nine per cent saying: “I am not in control of the IT environment, the vendor is.”

For example, an IT officer in one local council explained that licensing terms restricted him to running a database and applications on a specific type of processor. He described the licensing terms as “very restrictive”.

A significant minority of organisations find that a multi-vendor, best-of-breed approach is better suited to their business, as it reduces the risks of restrictive practices.

Being locked into a single-vendor agreement for enterprise hardware, applications and database may have its attractions - such as a single point of contact and reduced management time - but it may not always be in the customer’s best interests. For example, if the relationship sours then the enterprise is left with a major problem. Even if the relationship remains healthy, then the enterprise is still placing a great deal of power in a supplier’s hands.

In all, just eight per cent of senior IT strategists said that there is nothing standing in the way of them realising the IT and data management cost savings necessary to run an agile enterprise. Not all the blame can be placed at the vendors’ door, however: nearly 40 per cent of the UK’s CIOs cited a lack of business will to tackle data management issues.

In the meantime, enterprises may be losing money unnecessarily, while also taking drastic steps in the flatlining economy - such as cutting staff, budgets, or programmes - unaware that savings could be found in rationalising their IT estate with no impact on human resources or skills.

Asked where savings on their licensing terms specifically might lie, most said that consolidation and rationalisation was the key - and was also a factor in obtaining greater leverage with the vendor. Some admitted that better licence management would improve the situation.

There is certainly evidence of an internal management challenge in many organisations. More than one quarter of IT strategists questioned by Computing said that a lack of in-house skills is to blame for their inability to manage data more cost-effectively. Many admitted that they are using the wrong platform for their real-world needs, or that there is insufficient hardware and application maintenance within the organisation.

These are extraordinary admissions, given that most of the IT strategists questioned are actively involved in the day-to-day specification, analysis and management of enterprise software systems.

The business impact of some vendor contracts is part of the problem, found the survey. Over one-third of IT strategists said that their contract was actively a “barrier to change”. Nearly 10 per cent of UK organisations are fundamentally unhappy with their contracts, with half of that number saying if they could “rip it up and start again” they would.

In all, just six per cent of UK organisations describe themselves as “very happy with our existing contracts and what we get for our money” - hardly an overwhelming vote of confidence in vendors’ terms.

As one CIO put it: “The contract is based around the supplier’s needs and not their customer’s, and does not anticipate technological progress.”

Another CIO commented: “There’s no flexibility and we are locked in. There’s no blue-sky thinking and it’s very costly in terms of resource.”

The survey found that while only a small minority are at “breaking point” with their deals, a large majority - 85 per cent of the UK’s IT strategists - are making do with what they regard as less than ideal contracts, both for their needs and for the rapidly evolving IT marketplace. The cost and risk of changing the terms of the deal are what prevents them from doing it, they say.

For large enterprises, consolidation and rationalisation does not just apply to licensing and other business factors; it is also about the technology. As far as improved data management is concerned, a great deal depends on having the optimal mix of critical data, servers, database and enterprise applications - not just in terms of interoperability, but also in terms of efficiency, cost effectiveness and ease of management.

Forty-one per cent of respondents are running Oracle E-Business Suite, 40 per cent are using SAP, 21 per cent PeopleSoft, 12 per cent Siebel, eight per cent Sage, five per cent JD Edwards, and 21 per cent applications from a range of other ISVs. Given that Oracle owns Siebel, PeopleSoft and JD Edwards, its dominance of the enterprise software market cannot be disputed.

The rise of cloud services is also revealed in the survey, with 18 per cent saying that they are using a cloud-based enterprise application - more than the combined share of Siebel and JD Edwards within the survey’s response base, for example. On 24 October 2011, Oracle also acquired cloud provider RightNow in the first of what may be several acquisitions in the cloud services space, sending its share of customers’ business applications still higher.

Fifty-one per cent are running applications on HP hardware, 40 per cent Sun/Oracle, 38 per cent IBM, 38 per cent Dell, and 17 per cent a hosted solution - in other words, a mix of platforms, often within the same organisation.

The picture is further complicated by the different core databases. Seventy-one per cent of organisations are running SQL Server, 66 per cent Oracle, 16 per cent IBM DB2, 13 per cent Sybase and six per cent Informix - again, a mix of products, often within the same enterprise.

There is certainly a sense that enterprises find themselves between a rock and a hard place when it comes to efficient data management. The complex relationships between core business data, database enterprise applications and hardware can be a source of hidden IT complexity, inefficiency and cost - not to mention the licensing issues that are common to so many organisations. This is why many organisations seek single-vendor solutions where possible, only to find themselves locked in from a business perspective.

This is a major concern. The datacentre is not just where data lives, it also has productivity, cost-saving, revenue generation and compliance implications for the enterprise. It is there to make it money, and to serve the business in every respect, both operationally and strategically. Reducing and managing the hidden costs must be important considerations for all IT managers.

Growing frustration

However, the survey suggests that while many may be aware of the potential savings in better managing their corporate data - together with its supporting infrastructure and applications - they do not always have the freedom to access those savings. Certainly they do not feel that they do.

In large enterprises, consolidation, cost reduction and licensing terms are things that need to be well managed, especially as the enterprise becomes more complex through growth, merger or acquisition - which may, of course, also have licensing and contractual implications.

Many IT leaders decide it is easier just to soldier on rather than take a step back and try to address the problems - particularly when those managers find themselves locked into contractual arrangements with a single vendor for their databases, applications and hardware, for example.

However, in pursuit of a less complex, more efficient, better-performing system, many customers then find themselves trapped in monolithic deals that seem too risky and expensive to get out of. In the meantime, newer or alternative technologies are not always accessible without wholesale contract renegotiation.

In time, monolithic deals may also not reflect the day-to-day reality of the business, with a flat fee that does not apply to the actual number of seats in the organisation, nor to the pressures that the organisation faces in terms of productivity, cost savings, revenue generation and compliance.

Whatever the root cause, it is clear that vendor lock-in has created what might be called an “unhappy majority” of businesses that have accepted monolithic deals but find they now lack business and technology agility as a result - the very competitive and strategic elements that they expect vendors to provide.

Given the findings of Computing’s exclusive survey of IT leaders, the time has surely come for vendors to address CIOs’ concerns and look at what can be done to help British business.

The economic chill of fractional growth, sweeping cuts, volatile stock markets and falling consumer demand means that all types of business need support and understanding. Vendors that listen to their customers’ concerns will win their long-term loyalty and respect - and in this day and age, no company should dismiss the importance of that.