Promises, Promises

All vendors say they'll be good business partners, but who delivers? Who doesn't? Here's What you tols us.

BY LEE PENDER

The first words out of the mouth of most every salesman crossing the threshold of the CIO's office are about partnership and total solutions. Vendors and integrators promise to share risk, to codevelop, to work hand-in-glove with the client until all the wrinkles are ironed out.
    But what does it mean to be a partner? With consultation from a number of IT executives, CIO, in conjunction with its sister company, International Data Corp. in Framingham, Mass., developed a list of expectations that we believe a true partner should meet. A partner should

make an effort to understand its customer's critical business issues and opportunities.
help shoulder the risk and responsibility of joint implementations and initiatives.
exceed obligations, going beyond the strict interpretation of the contract.
ensure that its products and services deliver real business benefits.
work collaboratively with other vendors and business partners to ensure project success.
follow through after the sale to ensure satisfaction.

    In essence, CIOs want their vendors to stand by them through the inevitable complexities and difficulties that come along with implementing, maintaining and integrating IT systems. So which vendors and integrators really deliver on their partnering promises? Which are willing to put the proverbial skin in the game, and which are mostly talk? We asked CIO readers to rate their software and hardware vendors, as well as their systems integrators, in each of these six areas. Does the vendor meet these expectations? Always? Nearly always? Hardly ever? Never? We also asked about the relative strategic importance of each vendor to its clients' businesses.
    Five hundred sixty-four IT executives responded to our survey. The accompanying charts and tables show our findings for the market-share leaders in four crucial product and service categories: enterprise resource planning, data warehousing, groupware/messaging and systems management.


Surprises
The charts accompanying this article indicate the highest- and lowest-scoring vendors and integrators in each product category. Inside the numbers, the survey identified a variety of themes:

• Integrators generally outscored product providers.

About 70 percent of respondents (consistent across all product categories) contract directly with their product vendor. Of the remainder, most work with both a vendor and a systems integrator. Very few deal solely with the integrator. Yet the overwhelming sentiment expressed by the CIOs is that for users seeking a partner with whom to work closely in an IT implementation, project integrators are a better bet than the vendors themselves.
    "Integrators are more responsive to us [than vendors]—and the bigger the vendor, the more this is true," says Chris Foretich, CIO of Primis Inc., a national property appraisal company headquartered in Alpharetta, Ga.
    Another survey respondent found a different way to express this difference. "The vendor comes in with the assumption that the software works. The integrator works under the assumption that he will make it work," says Donald McMahon, corporate director of IT for Allegheny Teledyne Inc. in Pittsburgh.
    Of course, pulling in a third party typically adds to the overall implementation cost. However, the bottom line, according to Tom Oleson, a research analyst at IDC: "For major software implementations, the aid of a systems integrator will pay dividends to the project."
    McMahon adds one caveat. He says that this conclusion holds up better in more mature product categories. The maturity of the product means integrators have had time to build up extensive experience and hence expertise. For newer product and service categories like e-commerce, Allegheny Teledyne prefers to work directly with vendors because the integrators have no more experience than McMahon's own staff in that area.

•  High strategic importance ratings typically go to the vendors with the big market share. However, those measures are no guarantee of exceptional partnering capability.

Microsoft Corp. is certainly one of the dominant providers in messaging/groupware, and users gave the company high strategic importance marks. However, respondents think less highly of the company's partnering capabilities.
    The same is true for Computer Associates International Inc. (CA) in the systems management category. The inherent contradiction in these results suggests that corporate IS has placed a greater value on factors other than partnering in assessing strategic value. In the jumbled evolution of distributed computing, the safest way to ensure compatibility has often been to buy the most common package—the de facto standard in a given technology area. McMahon believes that this practice has led many big software companies to develop "the arrogance that comes with success. If you make a product that works fine for 99 companies, you don't want to change it for the other one company."
    And speaking of big software companies, John Connors, vice president of Microsoft's Worldwide Enterprise Group, says his company is working to strengthen its ability to partner with customers. Connors' group has developed an enterprise services strategy to "bridge the gap between Microsoft technologies and customer needs." The idea is to allow customers greater access to Microsoft's technical courseware, development and integration methods. Many of these new services and capabilities are scheduled to debut with Windows 2000.
    Marc Sokol, senior vice president and general manager of global marketing for Computer Associates, says "Our experience with our clients completely conflicts with the results of the survey." CA holds a number of events during the year to meet, support and build relationships with CIOs. The company employs client relationship managers whose performance is measured on the success of the customer/CA partnership rather than through sales quotas, Sokol says. "The ultimate measure of partnership with a client is whether they come back and do business with you repeatedly. Our clients are telling us directly that they are satisfied and that CA delivers in these categories," Sokol says. On the other hand, there are many reasons that customers may stay with a specific vendor. While CA may attribute their retention rates to good customer relations, our results suggest otherwise.
    They also suggest that in a world where no one company can be assured of an enduring technological advantage, big vendors that fail to meet growing partnership demands are at risk of having their market share nibbled away by more nimble players.
    Several smaller companies, like Systems Software Associates Inc. in Chicago, an ERP vendor, earned better marks than their bigger brethren. In fact, some of the best scores were earned by small companies that are not listed because the number of respondents naming them fell below the entry threshold.
    PricewaterhouseCoopers LLP's consulting practice in ERP, based on seven responses, earned scores that would have placed it in the top two finishers in each of the six rating areas. Similarly, Markham, Ontario-based SoftArc and Bannockburn, Ill.-based Open Text Corp. placed head and shoulders above the competition in the groupware/messaging category in terms of partnering capabilities.
    But smaller is not necessarily more beautiful. Another small vendor in IDC's top 10 groupware/messaging list earned extremely undistinguished scores. Neither does bulk necessitate poor partnering. IBM Corp. in particular came through smelling like a rose, lagging behind the pack only in the performance of its subsidiary, Lotus Development Corp. IBM's high scores may be explained partially by the fact that the respondents view it as a systems integrator, particularly in the ERP category, where the company doesn't have a product. Microsoft and CA, on the other hand, derive their revenue primarily from software sales.

•  Taken as a group, vendors and integrators alike scored most favorably in the areas of understanding clients' businesses and delivering business benefits.

    Their worst scores were consistently in the areas of sharing risk and in collaborating with users and other vendors to deliver full solutions.
    These results suggest that even though CIOs are not getting everything they want from their vendors—particularly in the partnership area—they still believe they're getting critical value from their products. Indeed, several respondents suggested a number of strategies for compensating for the vendor's reluctance to share risk and/or work collaboratively.
    For example, Joe Schwaller, director of information technology for Oriental Trading Co. (OTC), an importer of toys and other merchandise based in Omaha, Neb., works closely with IBM. In addition to running OTC's core business systems on IBM AS/400s, Schwaller's company uses IBM applications for various e-commerce projects. In order to promote closer ties with his vendor, Schwaller participates in two IBM programs. As a member of IBM's Partners in Development program, OTC serves as a pilot site and helps direct some of the vendor's product development efforts. In return, Schwaller's group receives training offerings and has direct contact with the development team, something extremely helpful when it comes to receiving support. The second program, Technical Advocate, provides OTC with a key contact at IBM who can help locate the best person to call in a given instance, depending on the user's current support needs. In addition to these vendor-sponsored initiatives, Schwaller says his company participates in an AS/400 Large Users Group that is independent of IBM, providing a further channel for influencing development. "We're using some technology that's fairly new on this platform. If we don't stay connected with IBM, we won't be successful," Schwaller says.
    Foretich of Primis looks for vendors that scale their support to meet different customer requirements. Primis is relatively small (revenues between $50 million and $100 million) but has a high growth rate. "We're not Coca-Cola, and we have different needs from Coca-Cola," he says. Primus needs support personnel who know its specific requirements. He says vendors that do that best are those with distinct support groups for each customer.
    Some vendors continue to follow a retail model rather than a partnering one. Anthony Candito, CIO of New England Financial in Boston, says vendors are particularly reluctant to share risk. In his company's contracts, Candito resorts to workarounds: training goals for Candito's internal staff, right of review and refusal for the vendor personnel working on the project, and progress reports vendors must deliver during implementation.
    CIOs are sending a message to the industry. As IDC's Olsen says, vendors with a big market share but little interest in partnering have a lot to lose

Overall Partnering Scores

Tier 1

IBM

Other Integrators

Tier 2

System Software Associates

JD Edwards

SAP

Other Software Vendors

Tier 3

Baan

PeopleSoft

Oracle

Tier 4

Computer Associates (CA)

Geac

Placements are based on the sum of each vendor's ordinal rankings in six categories. Tier 1 is best. See methodology for more details.

Partnering Scores Breakdown
Understands Our Business
POSITIVE	NEGATIVE
IBM	Geac
Other Integrators
Shares Risk
POSITIVE	NEGATIVE
IBM	CA
Other Integrators	Geac
Exceeds Obligations
POSITIVE	NEGATIVE
IBM	CA
Other Integrators	Geac
Delivers Business Benefits
POSITIVE	NEGATIVE
None	CA
	Geac
Collaborates
POSITIVE	NEGATIVE
Other Integrators	CA
	Geac
Follows Through
POSITIVE	NEGATIVE
IBM	CA
Other Integrators	Geac
Groupings indicate vendors that scored higher or lower than the mean by a full standard deviation in the given category.