Multivendor alliances aren't just about software integration, however. When vendors agree to integrate their software, they are also agreeing to integrate their companies - which can be much harder to pull off. One sure route to disaster for CIOs is choosing a multivendor alliance where the vendors compete over the same customers or software functionality.
Consider the alliance between procurement software maker Ariba, supply chain specialist i2 and their matchmaker, IBM's consulting division. From the moment the alliance was announced in March 2000, IBM became the shrink attempting to hold a dysfunctional marriage together. Ariba and i2 coveted each other's software - indeed, while proclaiming loyalty to the alliance, Ariba tried to buy Agile, a supply chain software vendor that competed with i2 (the deal fell through), and i2 bought a procurement software vendor, RightWorks, that competed directly with Ariba. The two vendors also coveted each other's customers. Unlike CPG, i2 and Ariba never tried to integrate their two products into a single unit. Customers who wanted the two software programs to communicate had to pay IBM to make it happen. The shaky alliance ended earlier this year.
"By definition, all these folks eventually become competitors," says Jim Prevo, CIO and vice president of Vermont-based Green Mountain Coffee Roasters, which bought into a software alliance between ERP vendor PeopleSoft and Vertex, a small software company that does tax calculations on online purchases. "They may do a good job of interfacing with each other, but they are always looking to expand into new markets and add new functionality. It's just the nature of the business," Prevo says.
Even if they're not in direct competition with one another, vendors would much prefer to have their best programmers working on new software rather than building integration links. The complexity and limited payback of integration work inevitably leads to problems and delays. And customers of the alliance can pay a heavy price for them.
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