Over my technology career I have watched with concern that the smartest IT, sourcing and legal executives who keep checks and balances on their product supply chains, labor unions etc have not done the same with their technology suppliers.
How lopsided is the situation? My research for The New Polymath showed
The top 25 global technology vendors, such as HP and AT & T, now make up more than 50 percent of the volume of the IT amount spent externally. The top 25 global technology buyers (dominated by large banks and government entities), however, barely make up 5 percent of the total spend.
Regulators like the US DOJ and the EU have not made much of impact – they make symbolic moves and block an occasional merger but have allowed concentration of economic power in the tech sector. No wonder, so many tech products from software maintenance to broadband to printer cartridges report over 80% gross margins.
So against this backdrop, I found it interesting that in the recent InformationWeek Cloud Computing survey 66% of respondents say they have between 2 and 5 cloud suppliers. Another 13% report between 6 and 10 suppliers.
Part of that is the state of the cloud supplier market. Other than Oracle and Microsoft, few vendors can provide the complete SIP - software, infrastucture and platform - as a service. Part of the explanation is the leading SaaS providers are functionally specialized - Salesforce for CRM, Workday for HRM and Finance etc.
While this will make many procurement folks groan - especially those who like the convenience of "one throat to choke", to me it is healthy "unconsolidation" trend for the industry.
