A Vendor 'Tax' on Integration? You Betcha.

Loraine Lawson

Times are tough all over, so I was recently assessing the fees I paid for telecommunications costs. I rang up the local cable company with cancellation on my mind.

 

No problem. They immediately removed the services for me. Then, quicker than you can say "cost cutter," they tried to sell me a new "higher-speed" Internet connection. I asked how much it cost.

 

Their fee? Five dollars more than the total costs of the services I'd just canceled.

 

I begrudgedly declined, frustrated by the fact that companies seem to try to get me coming and going these days.

 

Well, heads up, people: Apparently, at least one vendor has figured out how to squeeze you in between - specifically, during integration.


 

Gartner Research Director Debbie Wilson posted an intriguing, small blog item yesterday revealing that one vendor plans to charge companies for integrating with their product. Alas, she didn't name names - but she did say it was "a major procurement vendor."

 

Wilson specializes in procurement strategies and applications analysis, so let's be clear: She isn't talking about a vendor charging you to create custom integration code or even for giving you adapters.

 

This is a new money MO. Wilson explains that the vendor plans to "tax" customers for each integration connection between their platform and a heterogeneous system:

 

"This vendor offers a variety of procurement apps, but in many cases their customers opt for a best-of- breed module to support certain processes. So if the vendor can't get the license revenue by getting customers to use their app, well at least this way they get a cut."

 

I can't help but wonder if this is a defensive strike back at SaaS. If it is, other vendors could follow suit - but that's just wild speculation on my part.

 

Of course, vendors and cable companies aren't the only ones putting on the squeeze. As Dennis Byron recently pointed out, "Buying enterprise software is like buying cars; no one pays sticker price." Even so, with nearly half of IT budgets slashed in the first quarter of this year, many CIOs are pushing back even harder on vendors.

 

IT Business Edge's Ann All recently argued againstCIOs putting the squeeze on tech vendors. Pushing for a deep discount, she wrote, can result in fewer services or lower quality in outsourcing, hardware and even software contracts.

 

Good point. But wouldn't it be nice if, in return, vendors agreed not to put the squeeze on you?

 

Fat flying pig of a chance.

 

"Buyer beware," Wilson warns at the end of her post on taxing integration. Good advice, because in this economy, I suspect both sides are going to squeeze and squeeze and squeeze until even the flying pigs sing soprano.



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