When is it Beneficial for a Firm to Pursue a Unified Procurement Strategy for Enterprise Software Solutions?

• Main Authors: KAUFFMAN, Robert J., TSAI, Juliana Y.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: Enterprise software; Industry consolidation; IT services; Move-to-the-middle theory; Vendor management; Computer Sciences; Management Information Systems
• Online Access: https://ink.library.smu.edu.sg/sis_research/2170; https://ink.library.smu.edu.sg/context/sis_research/article/3170/viewcontent/BeneficialFirmUnifiedProcurementStrategy_2009.pdf
• Institution: Singapore Management University

The underlying structure of the enterprise software marketplace during the past ten years suggests that the arrangements that firms make with respect to the acquisition of such software capabilities will become increasingly concentrated. This article explores the multiple theoretical rationales and business cases for the move to a unified procurement strategy for enterprise software, reflecting some differences in terms of what might be expected from the predictions of the well known move-to-the-middle hypothesis. Our central argument is that a "move-to-the-middle" with more than just a single vendor is the likely outcome in unconsolidated industry markets. In industries experiencing consolidation, firms and managers recognize shifts in the structure of the marketplace and industry competition, and they are more prone to make decisions that reflect their rational expectations about the outcomes of the competition regarding their procurement of enterprise software acquisitions. We present a unified procurement adoption process based on relevant theory to support this general argument, and provide analyses of several industry case studies that yield more specific findings relative to our knowledge of IT services management and service science.