The cost of monoculture part 2

Some customers have binding agreements with specific (pick your favorite TLA) vendors and insist upon buying from only them. They somehow believe they are getting a discount. It is worked into the price. They somehow believe that this saves them money.

It doesn’t.

It reduces competition for their business. It increases their costs when the technological fit just isn’t there, yet they try to force the issue.

So how does decreasing competition and efficiency increase savings?

I hope someone can explain this one to me.

Makes them green around the gills when we show up, and then come in under their pricing, sometimes substantially, for arguably the same thing.

Makes us waste our time convincing layers of management that a) they are the same, b) they are being ripped off by those purporting to sell them things at a steal.

One customer actually rejected a solution we offered that was less expensive, faster, and completely open (e.g. they could fire us and hire anyone else to service/support it if they wished) because we are not a large vendor. Think about this. This means that they are voluntarily paying a higher price for a name brand. For a security blanket. Worse, they are paying more for no added stability, but for a proprietary solution which, if the vendor goes away, so does all support for the solution. Worse still, they are betting their business on this. Here you have a COTS solution on one hand, servicable/supportable the world over, completely and totally open, nothing proprietary about it. There are no risks whatsoever to them if our day job goes away. None. Zero. Zilch. Nada. There are huge risks if they buy the competing products, which are proprietary, and the company that makes the technology goes away. Open-ness reduces risk. And yet, despite it being superior from a pricing perspective, a performance perspective, a management perspective, a functionality perspective, a cost to support perspective, … it was rejected.

PT Barnum and lots of marketeers are smiling now.

If you can substitute vendors for critical functionality at any point without causing grief (think about your choice of disks being put into your servers, if Hitachi goes away, as unlikely as that may be, Seagate can take over with nary a peep from your servers), your risk of using that solution is lowered. This also means that competition is fiercer, the pricing is under pressure, and you will more than likely get a good deal. This is the nature of our product. It is a good deal. It is open. It is a ferocious competitor.

If you cannot substitute vendors for critical functionality at any point without causing grief and spending money and time, your risk of using that solution is raised. You have a business case built upon a proprietary solution. A solution that if it goes away, is acquired and quashed, will cost you time, effort, and real money to solve. This also means that competition is less intense, the pricing is not under pressure, and you will more than likely get a bad deal, paying what the market will bear as compared to a more competitive market. Features will take longer to implement if at all, and you will be at the complete mercy of the vendor. Think about IE in the web browser space until Firefox started its assault. This is the nature of a lockin market, or a monopolized or oligarchic market. It is a bad deal. It is closed. It is not competitive, it is dictatorial, despotic. Your risk grows inversely with the number of suppliers. Single suppliers of technology represent the highest risks.

It was with this as the nature of reality that our open solution, faster, better, cheaper, available today, was rejected in favor of a closed solution, slower, worse, possibly available tomorrow, but who knows.

Update: More about the interesting case study of South Korea on this blog. Call this a worst case scenario. Or something like this. When single vendor completely and absolutely controls a market, with no competition whatsoever. The population, of the entire country is literally at their mercy. Unfortunately for this country, businesses are not in business to be merciful, but to make money.

When a single vendor so completely dominates a large market, that they can make effective government policy and access control decisions, and impose costs upon the population indistinguishable from new taxes, one needs to ask whose interests are they acting in. Specifically, if they can impose costs upon a population, with no possibility of competition for this business, make decisions which cause additional costs upon the population, how is this of benefit to the population?

This isn’t theoretical. This is why we need competition. Businesses have a self interest. As do governments. The self interests of businesses are rarely aligned with the self interests of governments, which should be aligned with the interests and needs of the population. It is in the self interest of every government to insure there is fair and vital competition for their citizens business. Lest the citizens, and the government be subject to the businesses whims.

Read that blog. It is chilling.

Viewed 6118 times by 1115 viewers

Facebooktwittergoogle_plusredditpinterestlinkedinmail