Reduce Software Costs with a Dual-Vendor Strategy
Recently some of the big vendors have raised their prices, like Oracle’s 15-20% hike a few months ago. This obviously comes at the worst possible time for their customers. While talking to Fred Gallagher of Ingres at the Pentaho partner summit last week I was reminded of something I learned last year when I was on a panel at an open source seminar for finance industry CIOs. Many of the CIOs talked about the dual-vendor strategy they use to maintain leverage against hikes in maintenance costs.
Basically they have a policy of having relationships with two vendors for all major systems: operating systems, databases, application servers etc. This way if one of the vendors tries to force price increases the CIO can threaten to move applications over to the other vendor to reduce their dependency (and costs). Of course, dual-vendor strategy or not, anyone can threaten to change vendor at any time. But without an existing dual-vendor strategy there are obvious costs involved in switching. When the dual-vendor strategy is in place the threat is real, without it the threat is fairly weak.
For example lets say my ERP system runs on Windows and Oracle, and my CRM system runs on Red Hat Linux and Ingres. However my ERP system is capable of running on Linux and Ingres. When Microsoft or Oracle raise prices on me I threaten to move my ERP system to Linux and Ingres, and in order not to lose the business entirely the sales rep gives me a discount such that I avoid the price increase.
The CIOs I talked to recommended a strategy of using a commercial open source product as the second vendor. These vendors scare the enterprise sales reps. Choosing an unsupported open source alternative opens the CIOs to increased risk and lowers the threat of the dual-vendor strategy.
There are lots of choices when it comes to running in dual-vendor mode, for example.
- Operating System: Red Hat Enterprise Linux or Ubuntu with Canonical support
- Database: MySQL Enterprise, Ingres with Enterprise Support
- Application Server: JBoss Enterprise WebServer w/JBoss Network
- ESBus/SOA: Mule Enterprise Edition, JBoss Enterprise SOA w/JBoss Network
- Portal: JBoss Enterprise Portal w/JBoss Network
- ERP: Compiere, OpenBravo
- CRM: SugarCRM
- Content Management System: Alfresco with Enterprise Network
- Business Intelligence: Pentaho