Government // Enterprise Architecture
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4/29/2010
01:03 AM
Bob Evans
Bob Evans
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Global CIO: Can HP, IBM, & Oracle Make Peace With Breakaway Banks?

Three huge global banks plan to revolutionize the CIO-vendor relationship—will their audacious plan trigger major changes from major IT vendors?

Try this nightmare scenario on for size: three of your biggest global customers tell you you're not innovating your technology and your business models rapidly enough or aggressively enough for their liking, so they plan to build their own substitutes for some of your emerging products and, in effect, go into competition with you. And to ensure they get the best prices from you while they're jumping into your business, they're also promising to band together to create a buying consortium to command lower prices from you.

After you regain consciousness and pick yourself up off the floor, what in the world do you do? What can you promise to convince those customers not to take this drastic step, and to make them believe that you'll accelerate whatever needs to be accelerated to meet their needs and desires? How would you try to stop this disaster from happening?

Or, if it's too late to change their minds, how do you try to minimize the corrosive impact of competing with customers that've paid you tens of millions of dollars in the past, and that you'd like to have continue paying you at least something close to that in the future?

So have some pity for IBM, Microsoft, Oracle, and HP, because for them the situation's not hypothetical at all—it's very real and is due to go into effect in less than three weeks.

Fed up with the failure of HP, IBM, Oracle, and Microsoft to deliver industrial-strength cloud solutions at dramatically lower costs, three big global banks are taking matters into their own hands with a plan to build their own global cloud infrastructure and network that will, in effect, put those blue-chip customers into competition with those same IT powerhouses.

So the $64 million question—or maybe the $640 million question—is this: what if anything can HP, IBM, Oracle and Microsoft do to win back the confidence and trust and ongoing revenue from those three big banks? And if it's too late for that, how can those big IT vendors find ways to coexist with their new competitor-customers and prevent many more banks from also jumping ship and turning huge chunks of revenue over to the new global banking cloud?

Or are we witnessing the first highly visible instance of a dramatically new model for how IT vendors and their customers interact—one that's much more fluid and complex and within which a customer can also be a partner and a competitor and maybe even a supplier?

As we reported Wednesday, Commonwealth Bank of Australia, Bank of America, and Deutsche Bank are planning to launch on May 17, according to comments from Commonwealth CIO and group executive for operations and technology Michael Harte.

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This one has to be incredibly tricky for HP and IBM and Oracle and Microsoft to navigate (all three companies declined to offer comments on the plan by the three banks), but I think it's safe to assume each company will go to extreme lengths to not just placate the frustrated global banks but also give them great confidence that high-intensity cloud-based innovation is coming—and faster than those leading IT companies would have liked.

However, so that you can gauge the intensity of the displeasure the banks are experiencing, here's an excerpt from our Wednesday column, called Global CIO: Global Banks Form Consortium To Counter HP, IBM, & Oracle:

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