Archive for October, 2009

One supplier too many?

October 26th, 2009

Mark Bartrick, MD at IT Negotiation Advisors Silver Bullet Associates says “end users approach the buying process in many different ways”. Some opt for a single supplier – the so-called “one throat to choke” strategy. Others buy from multiple suppliers to keep everyone honest. Most feel the multi-supplier approach is the way to go, but it’s a slippery slope. How many suppliers does it take before the pros outweigh the cons? Having too many suppliers on hand can dramatically increase cost of management and reduce overall efficiency. Negotiating a better price is always a balancing act. Suppliers often give deeper discounts to those who buy more of their stuff. So, while negotiation power can be improved with competition, actually buying from many suppliers can limit volumes and therefore discounts over time. Bids should be competitive, and exit strategies considered, but it makes sense from a pricing perspective to pool purchases with a smaller number of suppliers once the negotiations are done. No two environments are the same, but a good rule of thumb is to have no more than three different suppliers for any given product or service to keep costs under control and minimize complexity.

Open source gains popularity with SME’s as IT budgets shrink

October 19th, 2009

Computer Weekly recently surveyed 500 users to find out how likely they are to deploy open source software in their businesses, given the current economic crisis. The majority of respondents were positive about open source software, with a quarter (26%) already using it. A further 45% stated that they were likely to use it, even if only for some functions. Use of open source software appears to be more common among smaller organisations (those with less than 50 employees) and organisations with turnover under £10m. Cash is king with smaller businesses who often don’t have the deep financial pockets of a large organisation, so it’s no surprise that SME’s are the biggest advocates of open source products during the current economic difficulties. But Silver Bullet Associates believes that the take up of open source will continue on apace even after the recession is over for many reasons, and not just cost. Breaking the restrictive chains imposed by proprietary software vendors is one great reason to think open source. So it won’t be just SME’s that embrace open source; everyone will use it at some point soon and the mainstream software vendors will have to find another way of making revenue hay as their sun wanes.  

Rentokil deploys Google apps

October 12th, 2009

Rentokil Initial has become one of the largest users of Google Apps, rolling out the cloud-based office suite to 35,000 users globally. Rentokill plans to use Google to consolidate 40 email systems including open source products and Microsoft Exchange, into a single email system. Last year, Rentokil Initial deployed handheld computers. It installed a new network in the UK and is in the process of virtualising servers, rationalising data centres, standardising its PC infrastructure and moving to a single mobile telephony provider. The company aims to rollout Google Mail to 35,000 during 2010. Earlier this year, manufacturer Valeo became the first company to use Google Apps globally after it signed a deal to use the SaaS for three years.

While these two deals may only show as a miniscule dent in Microsoft’s vast sales revenues, it is the thin end of a growing wedge of businesses that are looking beyond Microsoft products for robust global apps and solutions. Alternative products ramp up competitive pricing pressures on Microsoft and give users a chance to demand better deals and better pricing. Silver Bullet Associates encourages everyone to watch this space; Rentokil and Valeo will not be the last to replace Microsoft products for alternative solutions.

Microsoft Windows 7 licencing and prices

October 5th, 2009

Microsoft’s CEO Steve Ballmer has ruled out reviewing its user licences, despite acknowledging the fine print and complexity can cause headaches for customers.“I don’t anticipate a big round of simplifying licences. The last round of simplification was done six years ago” he said. Ballmer has also said that the supplier was working hard to ensure the launch of Windows 7 was more successful than Vista. “My hope is that in the first three to six months [after launch on 22 October 2009] any new PC you buy will come with Windows 7. It would be a shame to see people acquire Windows XP machines in 2010,” he said. Whether Windows 7 takes off quickly or stumbles like Vista remains to be seen. It would be nice if Microsoft were to simplify its licencing terms; but don’t hold your breath. And it would be great if Microsoft were to acknowledge their pricing policy was unreasonable too. The next few years will become increasingly tougher for Microsoft as competitive products such as Open Office and Google Apps take chunks out of their revenues. Maybe Windows 7 will be the last great revenue hurrah for Microsoft before a long slow revenue decline sets in.