Is the era of the end to end solution provider over?

Over the years, many IT firms have built large product portfolios around the idea that diversity and breadth of products is critical to growth and effectively enabling customers.  These firms, including HP, IBM and Dell, have refereed to themselves in many terms, but all roughly mean “end to end solution provider” because of their ability to delivery all necessary technology from the clients desk, through the required software, network connectivity and systems for the data center including storage, servers and backup devices.  This portfolio diversity has mainly come from firms acquiring one another.

In recent years, companies such as IBM and HP and sold off or split up large assets to become more nimble and focus on a narrower portion of the market.  The last major firm that has a complete portfolio, which could be characterized as end to end is Dell.  The reason for splitting the portfolio, in the case of IBM was to focus on their core business of services and software.  For HP it was to enable the client focused business to operate on its own, separate from the enterprise business which each have distinct buyers, buying patterns and industry trends.

This trend is not unique to IT either.  Many firms in manufacturing, power generation and transportation have followed a similar path over the years; developing a large portfolio of assets, only to separate out  for simplification and to enable better focus of a core business.  This can be seen across Siemens, Rolls-Royce and GE.

Why it is hard to be good at everything?

As a company, any time you diversify away from a single product, no mater how connected or interrelated the product sets are, it means executives at all levels have to make priority calls.  Just because software requires connectivity to operate does not mean there is an inherent advantage in having both software and switches in the product portfolio. These priority calls are what large companies struggle with, because a decision to provide resources to one project is by default, a decision to not invest in another.  There is a finite amount of resources for companies to apply across the product portfolio, and these resources including financial, staff, knowledge, experience, and executive support can only be sliced into so many individual pieces before parts of a diverse portfolio begin to unravel and suffer due to lack of investment.

The other struggle is vertical expertise versus horizontal capability.  Many smaller players are successful because they have deep knowledge of a specific industry, this enables them to carefully plan and develop features and workflows that meet expectations that are unique to specific markets.  This is difficult to accomplish when you are managing a large portfolio because of the differing needs across storage, servers, software, services, and networking and client devices.

Acquired assets present a unique challenge when working to integrate components across the stack and create a unified look and feel that is unique to specific companies.  Every acquired company has different development standards, different programming languages and different types of legacy customers that must be supported.  This causes many acquisitions to struggle to hit their intended value targets because of technology baggage and lack of additive value across the portfolio.

Integration is part of every project, why not pick best of breed?

Today, IT projects are a complex maze of technologies that are strung together by different generations of technologies, varying business processes and evolving industry requirements for compliance.  Because of this diversity in customer requirements and existing systems and processes that must be accommodated, it is difficult for any company to truly build an end to end solution that meets all the needs of the business as well as IT operations teams.

Almost every IT project has a component of integration between components from different vendors.  This integration is often done by outside consulting and services teams, enabling an organization to focus on their core business and long-term operations.  This model enables organizations to quickly deploy new, complex technologies, but ensure they have the backstop and support of a consulting team to assist with the complex integration and the experience that requires, but is hard to develop in-house.  Outside consulting teams bring a wide range of experience at complex projects from other clients, enabling an organization to leverage that expertise to move more quickly and avoid known pitfalls for deployment of complex systems or integration with legacy platforms.

Does this mean there is no place for end to end providers?

I believe that successful technology firms will fall into one of two categories:

1. Services Focused – Companies that focus on being vendor neutral and enabling customers to rapidly deploy complex solutions that are aligned with business needs.  These firms will develop their own intellectual property through methodologies and tools to speed delivery and lower risk to project deliverables.
2. Specialized Product Focused – Firms that are focused on delivering a small number of products, with specific uses and touch points within an enterprise.  These firms will develop partnerships for technologies they integrate with; too ensure that components are certified and work together, lowering risk to implementations.