Consolidation in IT is survival of the fittest

It’s the most commonly heard term in IT industry circles today: consolidation.

And whether it’s the consolidation of IT departments, corporate cultures, mission-critical enterprise applications or the fusing together disparate systems, the perils can be daunting.

It would be prudent of

IT firms to consider the impact on their customers first and foremost. Users typically have no say in these situations, but hell hath no fury like a customer scorned.

Ted Barnicoat, chief information officer for Trimac Corp. in Calgary, says consolidation in the IT industry has given him pause to consider his future purchases.

“”I’m always concerned a company will buy another company’s customer list without supporting the (existing) products,”” he says. “”It’s not a pretty picture.””

As a customer, Barnicoat likens IT vendor consolidation to being forced on to the “”bandwagon of upgrades . . . you can either take your lumps and follow the route provided or you can decide the product is perfect the way it is and live unsupported.””

He expressed frustration while describing the purchasing of company-wide software and/or systems, and says Trimac regards the support services offered by IT vendors as akin to being “”a hamster on a wheel.””

But the alternatives are limited, Barnicoat says.

“”One option is to look for another vendor, (but) it’s a real worry to me. If I purchase a product and that company is sold, will the new company maintain my product?””

In its Canadian IT Market Perspectives 2003 study, Toronto-based IDC Canada Ltd. predicts vendor consolidation will be a big theme this year. According to the report, a mature market, excess capacity and margin pressures will drive consolidation in the overall IT industry.

“”The driving force behind IT decision-making right now is simplification,”” says Vito Mabrucco, group vice-president for IDC Canada and co-author of the report. “”Companies are looking to reduce the management and overhead costs of their broad, spread-out infrastructure.””

He says customers need a clear understanding of a vendor’s strategy and that strategy is for the provider to remain focused on its core competencies and achieving value for the customer.

“”From the customer’s point of view, unless they have a shotgun clause in their service agreement that says they’re allowed to walk in the event the vendor is purchased, there’s not much they can do about it,”” says Mabrucco.

He says companies tend to lean towards recognized brand names when making technology purchases.

“”The larger company is potentially safer, and in reality, you see people doing it everyday — we buy recognized brands.””

Mabrucco says the consolidation movement is a global phenomenon whereby IT companies are going through a period of rationalization.

“”Return on investment is now justified through cost reduction, and it’s not just a Canadian scenario,”” he says. “”In an industry sense, consolidation is going on due to a numb

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Jim Love, Chief Content Officer, IT World Canada

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