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2/18/2010
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Rob Preston
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Down To Business: The 10 Most Strategic IT Vendors

They're integral to the business, command a central place in the IT architecture, and are mighty hard to replace. How do these vendors compare to your list?

In interviews with countless CIOs over the past decade, InformationWeek's editors have asked about their most strategic IT vendors -- or "partners," in the politically correct parlance. What makes for strategic? For one thing, those relationships usually are forged over many years. Strategic vendors often command a substantial share of IT budget and a central place in the IT architecture ("We're a Vendor X shop"), and they'd be very hard for CIOs to replace. Strategic vendors sometimes play a critical role in supporting basic business functions ("We run our business on Vendor Y") and delivering competitive advantage ("Vendor Z is our innovation engine"). And you'll find them at the end of the "No one ever got fired for..." line.

Given those rough criteria, what follows is a back-of-the-napkin Top 10 ranking of the world's most strategic IT vendors. Despite their dominance in certain sectors, all of these vendors are vulnerable (think DEC and Unisys), though some more than others. We invite you to weigh in with your additions, exceptions, and critiques -- and even your suggestions for Nos. 11 to 20. Let the debate begin.

1. IBM. Yesterday it was the mainframe and Big Blue's world-class service and support that commanded customers' allegiance. Today, IBM's range of services and products -- outsourcing, integration, consulting, software, systems, security -- still make it a one-stop business technology provider for the blue chip crowd, and not just for the banks that were once its core domain. Under the Smarter Planet campaign, IBM's vast system and software expertise is at the strategic center of healthcare, energy, crime prevention, retail, transportation, government, and many other sectors.

2. SAP. Customers literally run their financials, manufacturing operations, supply chains, and other core operations on SAP applications. For SAP to remain strategic, however, it must -- as my colleague Bob Evans argued in an open letter to company chairman Hasso Plattner -- start viewing customers "in terms of what they need rather than what you have." Following a boardroom shakeup earlier this month, Plattner promised to strip away the company's bureaucratic decision-making and renew SAP's commitment to technical innovation.

3. Microsoft. Some will say this No. 3 ranking is too low; others, too high. But for all the talk about alternatives to Windows and Office and Exchange and Internet Explorer, it's mostly just talk. And as my colleague Art Wittmann says, when Microsoft gets something right, "it really revolutionizes business." Think SharePoint, at the heart of many companies' efforts to spark Facebook-like collaborative energy inside their walls, or how fast Microsoft has executed on its "software plus services" strategy. What makes Microsoft highly strategic, "if not always all that innovative," Art says, is the answer to this question: What if there was no Microsoft? "The landscape of IT would change enormously."

4. Oracle. The vendor's multibillion-dollar acquisitions of application developers like PeopleSoft and Siebel get most of the attention, but Oracle remains most strategic as the No. 1 database vendor ("unbreakable" or not). It might be easier to swap out your house's foundation. Meantime, with its recent acquisition of Sun Microsystems, Oracle is positioning itself as a one-stop supplier of integrated software stacks optimized to run on its hardware appliances. It's a bold move worthy of maverick CEO Larry Ellison.

5. Cisco. No IT vendor dominates like Cisco, whose many networking competitors are vying just to be No. 2. So why isn't Cisco among the top two or three strategic vendors? While "Cisco shops" abound, it wouldn't be a monumental feat to piece together an alternative using other vendors' products. Still, Cisco's hegemony is impressive. Having all-but-cornered the routing and switching market, Cisco now has its sights on the "single-fabric data center," where virtualized servers, storage, and networks are managed and secured as one (Cisco) architecture. The company is also looking to leverage its tight relationships with CIOs to bolt on network-based collaboration applications: telepresence, Web conferencing, unified communications, and more.

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