Stack Vendors vs. Pure Plays

Scott Francis
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If you follow Dennis Byron’s BPM in Action blog (one of the ones I track in my RSS reader), you might have noticed a series of posts about Stack Vendors vs. Pure Plays here about the enduring debate, here about whether stack vendors stifle innovation, and here with regard to pricing. One thing that may not have been clear in my comments (and comments on Dennis’ blog are moderated), is that we don’t view stack vendors as bad and pure plays as good – there are simply trade-offs between the two.  Stack vendors have some clear benefits:
  • Financial heft – typically they have deeper pockets than the pureplays
  • An integrated solution – if the stack vendor invests appropriately, they’ll integrate the set of technologies they acquire into a better-integrated overall solution.  The result is that customers don’t have to pay for that integration as a one-off, they can benefit from integration costs amortized over hundreds of customers.
  • Large consulting staff – this can be considered an advantage if you want the software vendor to implement your solution.
  • The ability to (try to) change the debate at any particular competitive situation to be one that focuses on the areas that are their strengths, and minimize the time spent on their relative weaknesses vis-a-vis the competition.
But of course, the real point I was making from the beginning is that the benefit of a pure-play vendor is their focus.  Because they’re focused on just one space, they aren’t likely to get distracted by all the noise in other market segments.  The thought leadership of your company is focused on one thing, rather than 10. As an additional point, I pointed out that if a vendor is giving a piece of software away, you should be suspicious- anything a vendor is giving away for free (or nearly so) isn’t likely to get a lot of investment of R&D dollars going forward.  Software companies tend to invest where they see a competitive edge, and they tend to discount and under-invest where they don’t.  It isn’t irrational behavior, and it isn’t a question of good/bad or good/evil – its just the trade-off of stack versus pure play. So the cons of the stack vendor:
  • Lack of focus and thought leadership in the market segment
  • Underinvestment in some segments of their product offering – and it isn’t always easy to tell which parts are being starved for resources.
  • Often innovation and enhancements take a backseat to platform consolidation in the first 12-24 months after acquisition.
  • The large consulting staff can create conflicts of interest with respect to their software development (e.g. does it make sense to invest in a software enhancement that reduces the number of consulting hours it takes to deploy, if you derive significant revenue and profits from that consulting?)
So the prospective customer simply has to weigh these tradeoffs, or use them to inform some of the inspection and evaluation they do when selecting their vendors.  Obviously I’m generalizing and no doubt there are examples of “stack” vendors that innovate, or pure plays that don’t!  And likewise for each of the generalizations I made.  However, the generalizations are based on observations from three sides of the vendor/buyer/consultant point of view. Your mileage may vary!  The reader can decide whether these generalizations accurately characterize the BPM market at this point…  I’m still looking for evidence to disprove the hypothesis in the BPM market, but so far I don’t have it.