Consolidation in the Vendor Market Is Now a Technical Risk
Three of the products we depend on changed hands in the last eighteen months. In each case the acquirer was larger, already sold us something else, and made reassuring noises about continuity. In each case the practical effect on us was the same within a year: a price rise well above inflation at renewal, a slower and less specific support relationship, and a product roadmap that stopped…
In the past eighteen months, three essential products relied upon by the organization have been acquired by larger companies. The acquiring firms, which had previously purchased other products from the organization, made promises about maintaining continuity. However, within a year of these acquisitions, the organization faced price increases significantly above inflation, weaker support relationships, and product roadmaps that no longer included critical features.
The reporter has begun treating this as an engineering issue rather than a procurement matter, as the solutions are technical and require more time than the typical renewal cycle allows.
The vendor market is consolidating, with categories that once had eight credible suppliers a decade ago now having only three. Two of these remaining suppliers are divisions of the same group. Acquiring a supplier does not lead to a gradual decline in leverage for the organization; it happens abruptly upon the deal's closure. Alternatives that were once considered as fallback options are frequently owned by the acquiring company as well.
Negotiating aggressively with a vendor becomes a mere performance, and both sides are aware of this.
To mitigate these risks, the organization has adopted several practical measures. They keep track of the actual cost and time required to migrate away from each significant supplier, rather than assuming it is achievable. The organization also ensures that data is stored in formats easily exportable and readable without the vendor's software, and they test these exports regularly.
They prefer integration through interfaces that can be reimplemented over proprietary connectors that only work in one direction. Additionally, they avoid bundle discounts that turn multiple dependencies into a single one, even if the arithmetic appears favorable in the first year.
While these measures are not free, they are considered a worthwhile insurance policy for the organization. The next decade of infrastructure work will involve fewer suppliers with increased power. This is a market condition, not a complaint, and organizations that handle this situation effectively will be the ones who price their exits while still having a choice.
Written by urgent.news from Dev.to's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
