How to choose large enterprise software: buyer beware

Choosing software and systems for large enterprises has never been easy, but
then again it has never been more difficult than it is right now.

It’s a case of buyer beware. Oracle’s recent acquisition of IT all-rounder
Sun Microsystems is clearly an epoch-defining moment, though how it shakes down
in the future remains to be seen. Meanwhile, it has created a level of
uncertainty and speculation in the information technology industry that must be
just a little troubling for the allies, competitors, vendors and partners of
Cisco, IBM, Fujitsu, HP, Microsoft, Oracle and myriad other suppliers. It’s not
much fun for customers either.

On top of the many complex issues and concerns that large organisations must
always factor into any decision relating to systems procurement strategy and
policy (see box), they now need to face up to the spectres of:

• Product rationalisation. What will Oracle do with MySQL?
• Strategic re-alignments. Who will Cisco collaborate with next and, if Oracle
  retains Sun’s hardware business, will Dell and HP move closer to Microsoft?
• The battle for the cloud. Will the Sun-swollen Oracle compete on the
  platform as a service front?
• Further market consolidation. Will IBM buy SAP?

With so much up in the air, and so much to potentially win or lose for all of
those who are directly or indirectly affected, now is a difficult time to go
shopping for enterprise systems, undertake a technology refresh or make any
really big decisions about associated strategies – even if the recession is
pushing organisations to do everything they possibly can to get more bang for
their buck from their IT spend.

However, if needs must, and your organisation can’t afford to spend a few
months playing ‘wait and see’ then, from a theoretical point of view, the
process of systems selection remains much the same as always.

Even if you hand some of the associated processes over to consultants, at the
very beginning (at least), you will need to create a multi-disciplinary team to
help with the evaluation of processes and the definition of needs. On the basis
of vendor responses to requests for information (RFIs) or consultants
recommendations you can then draw up a shortlist and send requests for proposals
(RFPs). The vendors can then be invited to demonstrate their solutions – but
before any decision can be made all of the following (and more) must be
carefully evaluated.

• Cost
• Product functionality and flexibility
• Product technology requirements
• Role of existing systems and software
• Process fit
• Fit with corporate strategy – short term and long term
• Vendor service and support
• Vendor corporate strategy
• Vendor diligence and viability
• Vendor corporate strategy

Just defining, measuring and ranking all of the necessary criteria can be a
nightmare of confusion, whether you are choosing business intelligence software,
collaboration tools, datacentre storage or servers, rationalising your database
management systems, looking for middleware, deciding on an operating system,
outsourcing processes or services, streamlining your administration, setting up
a private cloud or consolidating your ERP systems. They each create a host of
different selection criteria, interoperability issues, plus strategic and
operational challenges.

Overlapping products, integration issues, system compatibility and
incompatibility, internal politics, consultants’ conflicts of interest, vendor
relationships, vendor portfolio complexity, vendor hype, complex software
licensing schemes and cost of ownership calculations, tricky service level
agreements, multi-vendor offerings and emerging industry trends are just a few
of the many complications that could trip you up along the way.

Get the process right, and there are enormous benefits; get it wrong and the
results can range from disappointing to devastating. So, buyer beware.

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Focus on the big four

At the moment, heterogeneity rules enterprise IT, with IBM, HP, Microsoft and
Oracle all occupying slightly different but overlapping spaces. IBM is
positioned as an integrated infrastructure (hardware and software) and services
company and, although HP doesn’t have its own database software, it also focuses
on storage, servers, outsourcing and service solutions. Oracle and Microsoft
started out as software infrastructure vendors, but over the years both have
moved (at different speeds) into the applications arena.

All four of these giants now have product portfolios so wide that some
organisations could (arguably) benefit from negotiating enterprise-wide licenses
for many (if not all) of their IT needs, rather than diddling about with the
best-of-breed approach (see other box), particularly in areas such as
collaboration tools, server database software, middleware and operating systems.
But, by the end of 2009, this landscape could look very different. Oracle could
emerge as the ‘über one-stop-shop’, offering applications, services and
(hardware and software) infrastructure, as well as being reasonably well
positioned to exploit the shift towards cloud computing and ‘platform as a
service’.

Best-of-breed or one-stop-shop?

Choosing between best-of-breed and one-stop shop has always been a difficult
judgment call. Using multiple suppliers can reduce risk and be used as a
bargaining tool to keep prices down and service levels up, but it hampers the
supplier consolidation that could minimise administrative complexity and
overheads.

Weighing up all of the pros and cons will remain a complex process, no matter
which way Oracle jumps. But the changes could benefit many organisations,
whether the increased competition brings keener prices, better service and
improved features, or new offerings that bundle hardware, software and services.

It remains to be seen how Oracle will position itself post-Sun, and it would
be foolish to make any decision on the basis of either its declarations of
intent or the suppositions of sooth-sayers. If all goes smoothly, the Oracle/Sun
deal could be finalised by mid-summer. But we will have to wait longer for
answers on the big questions.

Analysts expect it to take another 90 days before Oracle provides any
definitive guidance on issues such as customer support, product portfolio, sales
and marketing organisation, and so on.

Until then, all bets are off because Oracle, as a new powerhouse in the IT
industry, is about the only certainty.