Gregg Davis, CIO at Webcor Builders Inc., became concerned last fall when Oracle Corp. bought Primavera Systems Inc., because Webcor was a heavy user of Primavera's SureTrak construction scheduling software.
Sure enough, once the deal closed last November, Oracle stopped supporting SureTrak as a stand-alone application and rolled it into the Primavera P6 project management suite, Davis said.
Protests to Oracle from Davis and other construction industry CIOs fell on deaf ears, and Webcor was forced to purchase a pricey license for what he called the "behemoth" P6 package.
He added that Webcor is still evaluating potential replacement offerings.
The company faced a similar situation early last year, when the US$1.4 billion merger of Dell Inc. and EqualLogic Inc. led to the premature end of life for the EqualLogic iSCSI storage-area network arrays that Webcor had hoped to use for several years.
"We were hoping to get at least five, maybe eight to 10 years out of them," Davis said. But suddenly, "we were sitting on a dead, discontinued product."
A Sign of the Times
According to analysts, such incidents are happening more often during today's hard economic times. Strong vendors see it as a good time to swallow up weaker competitors and cut out what they see as unneeded products and services.
The bad economy can also prompt the unexpected cutting of products and services by vendors not involved in acquisitions, or even the closing of a key supplier without warning, they added.
Frank Scavo, an analyst at Strativa Inc., a management consulting firm in Irvine, Calif., noted that increased merger activity could provide some benefits to users -- such as fewer contracts to manage and more volume discounts. But those are usually outweighed by increased maintenance fees for acquired products, especially those that are difficult to replace, he added.
Scavo suggested that IT managers can often avoid such problems by implementing a policy of purchasing key products from two major vendors. "Always leave the option open to replace one with the other," he suggested.
Vinnie Mirchandani, an analyst at Deal Architect Inc. in Tampa, Fla., goes even further with his advice: Divvy spending among many vendors, and continually perform benchmarking to make sure contractual obligations are met. "Vendors often misinterpret long-term relationships as a license to pull lock-in shenanigans," Mirchandani said.
Even solidly profitable, very stable vendors have responded to the economic woes by cutting products and employees in recent months.
For example, Microsoft Corp. has phased out 13 products over the past eight months, according to Matt Rosoff, an analyst at Directions on Microsoft in Kirkland, Wash.
And many of the 5,000 employees the software vendor has laid off since January were in customer-facing field sales, marketing and support positions, he added.
Ray Wang, an analyst at Forrester Research Inc., said that while most vendors know the importance of keeping customers happy in a tough economy, they cite a variety of reasons -- some reasonable and others deceptive -- when products, services and support staff are eliminated.
"Blame it on the economy, fear of depending on their people or plain greed, but a good number of executives have taken an approach that attempts to enrich their fortunes at the expense" of customers, wrote Wang in a recent blog post.
He suggested that IT executives seek ways to pressure their vendors to live up to contract terms, even in the case of a merger or acquisition. And if technology companies don't listen to private pleas, Wang suggested that the IT managers take their complaints public.
Users should realize that the poor economy actually gives them some leverage, Wang noted.
For instance, buyers can demand contracts that assure them of working with trusted, effective sales representatives, he said. According to Wang, by threatening to postpone a deployment by a year, one company was even able to get a vendor to retain a consultant whose departure had already been announced.
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