The spirit of the individual

While merger and acquisition activity was high across the whole of the technology industry throughout the year, 2007 saw especially dramatic consolidation in the business intelligence (BI) market, where more than £7 billion worth of deals took place.

And after BusinessObjects and Cognos were bought by SAP and IBM respectively, BI player MicroStrategy went from being the third-largest independent vendor to the largest.

Now, the company’s independence is one of its chief selling points. However, as Rowland Adshead, the company’s UK managing director, explains, the tide is turning for so-called ‘best-of-breed’ players.

“The majority of companies spend more than half of their IT budget with one company,” he says. “The last time that happened was in the 1970s with IBM.”

That, he argues, is because “some CIOs genuinely prefer to purchase all of their IT solutions from a single vendor.”

But this predominance of ‘conglomerate vendors’ threatens innovation, says Adshead. When users are limited in their choice of suppliers, the impetus for those vendors to deliver new value to their customers diminishes. “Freedom of choice forces vendors to be responsive to their customers’ needs,” he says.

In the face of rampant industry consolidation, the challenge for the CIO is to judge when it is appropriate to buy ‘best-of-breed’ and when to plump for the consolidators’ tools. According to Adshead, the former represents freedom of choice and vendor leverage while the latter option entails vendor lock-in and the end of innovation.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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Business Intelligence