Competitive Advantage in a Saturated Market: How Will the Big Few Do It?
Olin Thompson and P.J. Jakovljevic - April 22, 2005

How The Big Few Will Cope

Saturation of the application systems market and money-conscious enterprises are causing vendors to change gears in their business models. New accounts are hard to come by and, instead of ripping and replacing older systems, enterprises are looking for add-on enhancements and integrations. As a result, vendors are turning towards their existing customer bases for revenue. In the case of the "Big Few," who are vendors with about 20,000 or more customers and at least $1 billion (USD) in revenues, the customer base is a logical choice. By establishing business models that focuses on the existing customer base, primary streams of revenue can come from support and maintenance revenues and through developing operational efficiencies. Vendors can also sell additional software and services to their base, and, in case of Oracle, SAP, IBM, or Microsoft and other large companies, they can offer more infrastructure platform components. Securing a large customer base will also give the surviving vendors the economy of scale for support, services, and technology investments...