Vendorland gets tough in IT's new world

The new world is a depressing place for vendors as IT professionals have become ruthless buyers behaving more like smart businessmen than geeks, the managing director of consulting firm Project Media, Phil Ackman said last week.

After four decades, Ackman said, IT buyers have learnt to play the game cleverly which has left little wriggle room for vendors in the new world of IT and business alignment.

Presenting a paper entitled “What we all did wrong and what to do about it now" at the SeeBeyond user conference in Queensland last week, he said vendors are at a nasty intersection where bulldust and reality are on a collision course.

In this new world, Ackman said, there is little room for PR spin, PowerPoint presentations and glossy brochures.

"It is also the collapse of the vendor breakfast where you can inflict massive Powerpoints on buyers and feature-function them to death hoping they will buy; if that didn't work the backup strategy was free footy tickets," he said adding that these techniques are no longer effective.

“The world is so tough in user land it’s a depressing trend of enterprise and government department actually developing strategies and following through with them; technology now is only an ace not the whole deck of cards.”

But the new landscape was inevitable, Ackman said in an industry that has grown, on average, at a 25 per cent compound annual growth rate (CAGR) for nearly 40 years.

Ackman said it was an industry underpinned by buyers pigging out and buying everything while Bill Gates delivered software with 326,811 features of which users utilised only 33 of them.

He said CapEx on IT in the 1990s went from 5 to 10 per cent to 50 per cent of capital expenditure by the end of the decade.

Providing a historical snapshot of the industry, Ackman said it began with 'greenfields forever' when mainframes were a good idea and lots of 3270s were sold.

“No sooner did we put them in and then came the PC, but then everyone was convinced dumb terminals were not a good idea; you have to have the V8 PCs which you did,” he said.

“This gave birth to emulation software; every PC had to be lobotomised to connect to the mainframe.

“Then we played the game of mine is bigger/smaller than yours; this was the days of mid-range architecture computing.”

Networking and widespread use of the Internet gave birth to apps on steroids.

“This is enterprise apps like ERP, CRM and supply chain; enterprises spent a fortune buying them and hiring consultants to deploy them,” Ackman said.

Claiming the world drowned in SAP and Siebel, he said companies soon realised that data sucks.

“An organisation’s most private, gynaecological secrets were exposed via customer databases; it took 300,000 man years trying to make sense of the database,” he said before everything went “E” followed by Y2K.

“Until Y2K the IT guys were just geeks; this grave problem bought them to the boardroom table.

“Then came the dotbombs and the IT sector entered its first depression. It wasn’t a downturn but a depression. In fact it was a bloodbath. The roadkill we have seen over the last 16 quarters is horrific.”

Finally, Ackman said, the sector has seen death by feature and function and death of the forklift upgrade.

However, in terms of killer apps he said vendors are at a crossroad.

“There are two possibilities. The next killer apps is illusive and a long way away or there is a vast number of killer apps already out there but vendors can’t figure out what they are. Vendors are trapped at this intersection,” Ackman said.

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