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Small Vendor Software is Risky Business

July 25, 2008 Comments off

There is an inherent risk to using enterprise software from small vendors, it tends to quickly become unsupportable, or completely disappear.

Software solutions from smaller vendors is often superior to the major players, solving the problem in more elegant and efficient ways.  But, when an enterprise makes an investment in a smaller software package, one of two things will probably result:

Oracle BEA

Oracle BEA

1. The vendor is a niche player and is quickly surpassed by the major players.  The vendor’s market share disappears, along with its install base.  The enterprise is quickly left with an unsupportable legacy system that requires a costly forklift replace.

2. The software is “a winner” and gains a large install base.  The vendor is quickly nabbed up by one of the major players (IBM, Oracle, Microsoft) and cannibalized for parts.  The enterprise is faced with a short term 500% increase in the support costs (due to a new “licensing model”) and needs to begin planning a migration to the vendor’s “enterprise suite” in order to remain current.

The latter is the case for my current organization, having purchased the Plumtree Portal a few years ago for delivering web applications to our external partners.  At the time, it was far superior to anything from the major players and offered to us for a fraction of the cost.  It was not long before Plumtree was acquired by BEA (then a major player).  The acquisition increased our support costs, but thankfully BEA saw value in the product and continued development of it.

Now we are faced with the acquisition of BEA by Oracle, which again is increasing our support costs.  However this time the products are being cannibalized for their features, and we are looking at migrating to the Oracle Enterprise Portal platform, or moving to another vendor entirely.

In hindsight (20/20), it might have been better for us to go with an IBM or Microsoft from the start… We may not have had the latest features at the beginning, but overall we would have less change and rework.

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