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Gorillas on your list a diversified oem environment can lower your risk latest thinking
1. latest thinking
Nowadays, large organisations see
much of what’s considered to be
standard networking equipment
– routers, switches, and firewalls
– as commodities. Commodities
usually have three characteristics
in common: they’re standardised,
readily available, and cheap,
regardless of who supplies them.
At least, they ought to be.
So, in light of global pressure
to keep ICT budgets flat while
accommodating rapid growth,
businesses are asking increasingly
searching questions about who they
get their equipment from, at what
total cost of ownership ... and why.
Gorillas on Your List –
A Diversified OEM Environment
Can Lower Your Risk
Tough questions are changing
the landscape for large OEMs
According to Dimension Data’s Baba
Nadimpalli, US Client Director, and Christine
MacKinnon, Global Managed Services
Vendor Manager, businesses want to know
why they should pay a premium for a
commodity. Are they staying with a particular
original equipment manufacturer (OEM)
simply because they’re familiar with its
products and their engineers are certified in
supporting them? And, by aligning with a
limited number of OEMs, are they perhaps
missing out on more innovative and cost-
effective technology that would suit their
evolving environment better?
‘Businesses are also wondering if it’s really
worthwhile to refresh devices as often as
stipulated by OEMs simply to stay with
premium products that are supported,’ adds
Nadimpalli. ‘Maybe their so-called “ageing”
equipment is doing a perfectly good job
in spite of having no OEM to call on if it
breaks? What are the real risks of pushing
the end-of-life boundaries?’
These questions are changing the game for
large OEMs – the so-called ‘gorillas’ of the
ICT market. Says Nadimpalli: ‘Large OEMs are
beginning to realise that the trend among
the majority of clients is towards greater
diversification, not towards single-vendor
estates. Some OEMs even acknowledge
that a multi-vendor approach just makes
more sense for a client because it lowers
operational and commercial risk and helps to
future-proof the organisation’s environment.
However, some client organisations aren’t
quite ready yet to move boldly in that
direction ... and for good reason.’
2. latest thinking | Gorillas on Your List – A Diversified OEM Environment Can Lower Your Risk
Navigating the changing
landscape
Having too many vendors in your network
is just as risky as having one ‘gorilla’. It
becomes difficult to achieve scale and
management is complicated. You have no
leverage, limited ability to negotiate on
price, and added operational complexity.
Cheap to acquire is also not necessarily
cheap to operate. With a single ‘gorilla’
on your network, it might seem less
complicated, but it is a road fraught with
a different set of risks, such as being tied
to the vendor’s strategy. The ideal situation
is somewhere in the middle: a balanced
approach with a few carefully selected and
well-managed vendors.
Global expansion made easier
with multi-vendor approach
The changing vendor landscape was clearly
illustrated in the journey Nadimpalli saw
one of Dimension Data’s long-term clients
take, over the last few years. ‘As a large
and well-known software provider, this
organisation was itself deeply integrated
into the ICT market and maintained valued
mutual relationships with prominent
OEMs. As a result, the software provider’s
environment was as much as 80% single-
vendor focused – a situation the business
began to see as both risky and expensive
to maintain.’
‘The client then took the bold decision to
reverse the trend by putting out to tender
each and every piece of networking and
security equipment – from software phones
to specialist routers. It wanted to better
understand whether the business was
paying the right price for this equipment;
whether it was paying for what it
needed, or more; and whether procuring
the technology at that price was really
maximising the benefits for the business
itself, and not only for the OEMs that
provided it.’
This new multi-vendor approach
proved particularly beneficial when
the organisation embarked on a more
aggressive growth strategy a few years
later. Says Nadimpalli, ‘From 2010
onwards, the organisation began acquiring
businesses at a rate of up to 12 acquisitions
per year. With these acquisitions came an
ever-broadening range of vendor brands.
‘The acquisitions also brought new
employees with a variety of certifications.
Had the organisation enforced a rigid
one-vendor policy, it would have incurred
unnecessary costs, lost qualified employees,
and negated the flexibility and expertise
brought into the organisation through
acquisition. Later, the organisation settled
on a range of OEMs that best aligned
with its strategy, and enforced the
implementation of these technologies as a
global standard. But before reaching that
point, the multi-vendor approach helped
ensure that it maximised the gains from its
rapid, global growth.’
This new multi-
vendor approach
proved particularly
beneficial when
the organisation
embarked on
a more aggressive
growth strategy
a few years later.
Says Nadimpalli,
‘From 2010 onwards,
the organisation
began acquiring
businesses at
a rate of up to
12 acquisitions
per year.
Financial benefits above all else
Nadimpalli points out, however, that the
success of this approach greatly depended
on how the organisation was run. ‘Our
client is managed with strict financial goals
and business outcomes top of mind. In
such an environment, there’s little tolerance
for decisions made either to maintain a
comfort zone, or out of loyalty. All decisions
had to make business and financial sense.
In contrast, many organisations still operate
as though the equipment or devices they
procure are the most important aspect
that determines success – there’s a focus
on features and functions, rather than on
overall strategic intent.’
MacKinnon points out that another
determinant of success with the multi-
vendor model is access to the right level
of skills and expertise to ensure that
all components of the disparate OEM
environment interoperate optimally. ‘Here,
the organisation can choose to acquire,
retain, and develop in-house expertise
through training, or use the services of an
appropriately skilled systems integrator.
The in-house route is both more risky and
expensive. It’s risky, because the business
can never be sure that the skills and
expertise it invests in today will be those it
would need most in the future. Technology
evolves rapidly and often unexpectedly.
This is one way in which a broader multi-
vendor approach can help future-proof
the environment. In-house upskilling is
also expensive, because specialist skills in
niche technologies are scarce and difficult
to retain. Outsourcing this risk and cost
to a service provider that can aggregate
support for a broader range of OEMs in
your environment is clearly a better way to
go – financially, operationally, and with the
future in mind.’
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