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The death of the behemoth

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Peter Thompson

I like it when the table turns on companies who have stuck the knife in the back of their customers. Whilst on one hand it’s a bit evil to think that way, I cannot wipe the cynical smile from my face. The most effective time to stick the knife in always seems to happen when the customer has no other reasonable alternative.

Most often, it’s an act of large companies or behemoths as I prefer to call them, who are mostly faceless companies. They are packed full of self centred guns for hire, who move from one company to the next chasing the (potentially) larger pay packet. At these organisations, salary earners make verbal commitments to customers built on trust before changing company or departments effectively making the agreement null and void. And often because those companies are so large the poor customer is unable to fight back or even negotiate with them.

And finally with the huge changes in business, it’s visible that some of these companies reign is coming to an end. And I must admit, I am looking forward to them vanishing, suffering and having their market position eroded.

As a reseller of equipment for over 15 years, we have seen some pretty nasty business. The worst examples are where the vendor has tried to lock customers into their technology. And all the time while they were pillaging the customers profits, they had to be polite and put a smile on their face.
Large IT behemoths have been experts at gouging customers.

They purposely made their equipment proprietary and therefore every incremental increase in capacity or spare would cost a fortune. Upgrade to RAM or server memory were unbelievably expensive. Vendors would charge five times the price for memory that could be purchased from a third party manufacturer.

To lock customers in, the use of non-genuine parts would void the warranty. They still even do it today with the use of third party toner for printers.

I must admit, I used to feel guilty when I had to sell parts to a customer that were completely out of alignment with the market for equivalent componentry. Being the retailer at that time was kind of unfair because the end customer always looked at as local suppliers with suspicion that we were the gouger.

To make matters worse, these great behemoths used to distribute their product through a channel. They referred to us as value added reseller or VAR’s. And for a long time, VAR’s like us, the local guys who supported them loyally, bought and resold their product in addition to attending their trainings and certifications. And then, as soon as they possibly could, with the advent of the Internet they simply bypassed the channel and started selling directly wherever they could. I guess they just changed the term from “Value added reseller” to “Reseller”. They started competing directly with their loyal customers.

The good news is that proprietary driven companies are finally starting to die. Their market share is being eaten up by companies that are customer focused, flexible in their approach, have strategies that allow customers to grow into.

I am not saying that once these companies become a broad and far reaching established global providers that they won’t start gouging customers too. Maybe it’s just a symptom of greed and institutional shareholders demanding profits that makes these companies change. Get the customer hooked in and the pillage them because they have no escape. I guess it is the perfect business plan. It just stinks when you are the victim.

A good example of one of these companies has been the ERP/CRM providers. Whenever I think of some of them, I think “oh my God”, men in white suits coming with trucks. “Clear the way, the ERP/CRM people are here to install something.” Sirens start ringing as do the enormous invoice costs. And every single modification and addition to the “system” drives the business one step further into their hands and the proprietary nature of their services. It brings such a smile to my face to see companies like these who have gouged organisations for way too long, start to struggle to compete as non proprietary competitors deliver open source and better solutions.

I am just making my opinion, but the writing is on the wall for you inflexible, slow to move behemoths.

Karma is coming to get ya. I hope I get an invite to ya funeral.

♦ End

About Peter Thompson

Peter Thompson
Peter Thompson founded GCOMM in 1996. He received his Bachelor’s degree in Software Engineering/Information Systems from Griffith University and his MBA from Nyenrode Business Universiteit in Holland. He believes in building great teams of people, both in business and socially.
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