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COVER STORY: Enterprise Systems: Risky Business?
9/23/2005
Let’s examine some of the risk assessment and risk management strategies that CIOs believe in (and sometimes disagree with each other about). At the same time, let’s also look at how vendors view their roles in building solid and reliable partnerships.
Prove Safety
“I was purple with frustration when I found out that SCT was being purchased by SunGard,” says Jay Dominick of Wake Forest. “I expressed that as far up the chain of command as I could, at SCT. I was one of their most critical customers in the first year or so. But they’ve proved me wrong. They didn’t miss a beat.”
One reason that Wake Forest’s selection of SCT proved sound, even after a change in corporate ownership, was the way the university had probed the company’s compatibility before the decision. Dominick outlines the steps he and fellow administrators took to make sure SCT was the right match.
“We spent six months working closely with SCT to prove that Banner matched our requirements and would work in our environment,” he notes. Several factors increased Wake Forest’s comfort level: “We were the first client to launch Banner on Linux; we wanted to be on a platform where we could be more in control of our own destiny. And SCT was a large company that focused entirely on higher education, which addressed a risk we had seen with Bi-Tech.” The safest route, Dominick believes, is to “pick vendors who have no economic alternative than to stay in your industry.”
Go for Market Share
John Bielec, CIO and VP for Information Resources and Technology at Drexel University (PA), has a simple formula for picking a safe partner: Look for market share in higher education at similar (comprehensive research) institutions. “A lot of institutions would probably consider functionality first, but that is probably our last criterion,” he explains. “If you look at market share, you assume the functionality is built in. Market share is the key to vendor sustainability; the ability to keep enhancing the product over the years.” Following this formula, Drexel has gone with SunGard’s SCT Banner and BSR Advance (www.sungardbsr.com), and WebCT (www.webct.com).Consider the Client Base
The case of Oracle and PeopleSoft shows how important it is to choose the company you keep. The California State University system and Maricopa Community College each had different kinds of commitments to PeopleSoft products, when Oracle announced its bid to take over the company. But both probably benefited from the leverage provided by belonging to a massive client base.
| Insider Tip |
|---|
| “Pick vendors who have no economic alternative than to stay in your industry.” — Jay Dominick, Wake Forest University |
At Cal State, David Ernst says he was never really worried about the takeover. Ernst, who is assistant vice chancellor for Technology Infrastructure Services for the California state system, says, “There certainly was some trepidation at the time. But our feeling was, whether or not the merger was successful, the impact was not going to be that great. Oracle was not motivated to lose the PeopleSoft client base. And we are their largest client, so we have some insight and influence.”
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