On the flip side, firms investing in IT packages should look for opportunities to purchase all-in-one solutions. Although companies that focus on specialized products may outperform their competitors in side-by-side comparisons of specific offerings, this paper finds that buyers will be more satisfied overall when they purchase all elements of an IT package. In addition, this can help companies form stronger relationships with a smaller group of IT providers—an approach that has been found to boost a firm’s technological capabilities in the long term.
The authors recognize that there are switching costs associated with a vendor’s shift from offering one or a small number of products to integrating several across an inclusive suite. But given the long-standing observation that increased satisfaction and loyalty drive higher sales and firm performance, IT vendors may reap long-term revenue benefits from expanding their portfolio that outweigh the additional costs they’ll incur.
Indeed, the latest strategies adopted by leading technology companies appear to support these findings. Alesh Houdek of the Atlantic has argued that “with the success of Apple’s integrated approach, and the troubles in the PC market, it seems like the time has come’’ for Microsoft to stop outsourcing the manufacture of computers and get into the PC-building business itself. It could be the latest case of “if you can’t beat ’em, join ’em,” but it could also signal a shift toward a wider embrace of the Steve Jobs approach.
IT firms that offer related suites of products are rewarded with higher satisfaction and loyalty ratings from the companies they do business with. Building on Apple’s holistic approach to its consumer-oriented product suites, this paper argues that business-to-business firms can also benefit from integrating their offerings for clients.
- Matt Palmquist is a freelance journalist based in Oakland, Calif.