Exclusive Supply Agreements - who benefits?

By Steve Feldman

We're all familiar with those win announcements that proudly boast of a vendor's success in acquiring a new customer. But why is it that within the IT industry, and specifically the geographic information (GI) industry, the concept of exclusive supply has become the 'holy grail' for vendors? And who actually benefits - the customer or the vendor?

Obviously, locking in the client represents a significant revenue opportunity for the vendor and provides a return on the investment that is made up front to win the client in a competitive bid scenario. But how beneficial or realistic is this 'one size fits all' approach for customers?

I doubt that one vendor's products, no matter how reliable and effective, will be right for every area of a business. Of course you can achieve connectivity between business functions and applications with this approach but you may not get a best of breed solution, one that is tailored to your specific requirements or one that is developed in step with advances in technology.In the UK Local Government sector the importance of interoperability is being driven by the ambitious national targets for joined up government, electronic service delivery and cross organisational partnerships which require sharing of data, often in real time. Sharing data across different vendors systems can be a minefield without the deployment of open standards for interoperability.

Of course, the introduction of standards-based interoperability provides the means for departments within an organisation using different applications to share data, while inter-organisational data sharing and communication becomes more transparent with greatly reduced integration costs. So despite the fact that the deployment of interoperable solutions is currently limited, organisations are now beginning to address the need to consider this approach. The OGC refers to this as 'Open Procurement' - open standards making open procurements possible.It is now viable to deploy AutoDesk technology in one department, Intergraph in another and MapInfo in a third allowing users to take advantage of the compelling and distinctive features offered by each vendor whilst all sharing the same data.

Interoperability represents a challenge to vendors as they will no longer be able to bask in the relative security of their 100% supplier agreements with customers. The ability to operate across multiple systems within an enterprise obliges suppliers to continuously prove their worth as the vendor of choice, by providing cost effective solutions that represent the optimum response to user requirements.

Competitive pressure on vendors is one inevitable consequence of the uptake of interoperable systems but consider also the potential benefits for customers. The relative ease by which a range of originally disconnected but largely satisfactory systems across an organisation can all be joined up using interoperable open standards may signal the end of the big bang approach to GI implementations.Clients will no longer need to write-off of previous investments and suffer the consequential financial and training costs involved with implementing new technology.

A year ago, very few organisations were considering the implications of interoperability and open standards. Now these are the industry buzzwords and most large customers are (and should be) asking about support for open standards within their procurement processes.

It's fair to predict that the win announcements of the future will not be trumpeting corporate-wide deployments of single vendor solutions. Instead they will proclaim interoperable solutions that have fitted easily in to an organisations existing IT infrastructure, communicating seamlessly with other applications within the organisation and with external systems.

Within our industry, interoperability represents a great opportunity for Geographic Systems Integrators to deliver cost effective, joined up solutions to clients in cooperation with vendors who support open standards. By embracing this, not only will vendor opportunities increase but customers will be empowered to pick and choose how to build their systems to best serve their needs.

Published Saturday, March 13th, 2004

Written by Steve Feldman

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