Vendor Neutrality and Sole Suppliers

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I had some business courses when I was an undergraduate at Drexel University. One of those courses talked about business management, and one of the main tenants of that course was that companies should, whenever possible, be “vendor neutral” and have a second source of the products and services needed to run their company.

What is a second source? Simply a second potential supplier of whatever you need, particularly critical components.

Why should you have a second (or third or fourth) source? There are many reasons:

  • a sole manufacturer could go out of business
  • a sole manufacturer could start creating shoddy products, with no recourse for you
  • a sole manufacturer leaves you no real bargaining power
  • a sole manufacturer may not be able to meet your volume needs
  • a sole manufacturer may be hit with embargo limitations by their country or yours
  • a sole manufacturer may be subject to high duty rates from their country or yours
  • in the case of services, it may be cheaper to break delivery of services across world borders

Car and airline manufacturers have understood this for many years. Their buyers continually look for alternate suppliers to obtain the best rates and prices, yet still spread the orders across multiple vendors.

While volume purchases from one vendor may lower prices, companies have been burned too many times when they have “put all their eggs in one basket”, particularly when the vendor is a relatively small company.

The ironic part is that today, no company is “too big to fail”, and even large companies with good sales in one division can cancel products in other divisions.

Standards help vendor neutrality when it comes to second sourcing. It was standardization of parts that allowed the automobile industry to not only set up assembly lines, but to also create secondary manufacturers of their parts, and even a healthy “off-brand” set of manufacturers that could create replacement parts for cars no longer in the “mainstream”. Thus you can buy new parts for a Model “T” Ford and they will fit, even though the Model “T” has not been manufactured for close to 100 years.

Standards in making and threading pipe, means that pipe does not have to be transported across the entire country from one vendor just to fit the threads of pipes in a different part of the country.

Standards in electronics allow us to hook various electrical components together, so we can feel confident in buying resistors from several different vendors.

Thus it boggles my mind when I see companies buying their software from only one source.

“Oh no” managers will tell me, “we have different contractors for different jobs.” Or they will say “We get some of our software from Dell, and some from IBM.”

But the manufacturer of the software, is still typically one company.

People have been lulled into believing that they are obtaining “a good deal” on their manufactured, closed source software because it is so cheap. But if the manufacturers of that software had a true clone available from a competing second source, would the software be even less expensive to the customer?

Would the competing sources give better service or a better deal because the customer could give more business to one while continuing to buy software from both?

Not having a true second source weakens your ability to negotiate favorable terms.

Another issue that has been gaining more visibility in the computer space is the issue of embargo. Countries like Cuba and Iran can not legally use software from USA based companies. This includes companies like Red Hat and Novell. They do, of course, use some USA based software products, but this is typically through resellers based in other countries, or pirated software. However USA based companies can not legally help Cubans or Iranians with their software problems due to embargo issues.

There are even “partial embargoes”. A few years back the laws about exporting encryption software were fairly rigid, and many countries could not legally obtain software products based on encryption from the United States. Even today there are partial embargoes against supercomputing technologies.

Turning the embargo issue around, it is not infeasible that countries might have software embargoes against the United States (which may ave been less popular in the past due to the purchasing power of the USA). However with other strong “customer” countries developing (for example, China and India), the United States is not free from embargo threat. The oil embargo of a few years ago is a prime example of this.

So it is with software and why Free Software and Linux is a great source of vendor neutrality.

First of all, Free Software is developed around the world and for the most part is owned by virtual communities and not one individual or company. It is true that in some cases there are single companies that may sell services or do the major part of the development, but the source code is freely licensed and has been copied many times around the world. Natural or man-made disasters or wars are unlikely to wipe out the sole copy of Free Software source code, nor the knowledge it would take to restore the code for distribution. If companies or governments were truly afraid of this happening, its is a simple task to copy the sources of the software into escrow and keep a copy of the source code safe.

Secondly, in many cases there are secondary sources of the main distributions of software such as GNU/Linux or *BSD. In the case of GNU/Linux there are MANY distributions of the software, most binary compatible because of efforts such as the Linux Standard Base project. In addition, Free Software actually gives the business or government many more “second source” choices, since the operating systems tend to run across different hardware architectures as well and allow for sourcing of hardware from many vendors.

Third, even if every “vendor” disappeared off the face of the earth, a country could still keep Free Software going, using their own people to help the country maintain it.

Free Software is the most “vendor neutral” software you can find.

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