Niche vendors have the ability to address specific needs not currently being met by large, and often mainstream, providers. IT leaders should perform the necessary background research before entering into long-term contracts with niche vendors to identify additional risks.
Niche Vendors Defined
Niche vendors are typically small (though not always), yet highly focused enterprises that identify and fulfill a specific need in the IT marketplace. For mainstream vendors, those market segments are too small to serve them profitably and often lack economies of scale, intellectual property, and/or knowledge depth.
Niche vendors carve a niche (or market focus) for themselves through one of the following approaches:
|
Approach |
Description |
|
Function |
The vendor sells a product or service geared towards a specific business need (i.e. e-business: dutch auctions, supply chain management: route optimization). |
|
Industry |
The vendor caters exclusively to a particular industry segment (i.e. financial services, healthcare). |
|
Environment |
The vendor supplies a solution to specific software, hardware, or computing environment (i.e. Linux antivirus program). |
|
Compliance Requirements |
Niche vendors frequently address very narrow regulatory compliance needs that mainstream vendors may not. Enterprises with very unique or uncommon compliance requirements may find better support for these requirements in niche vendor offerings. |
The more highly defined the vendor's focus, the better the product value for companies who fall into the vendor's area of focus.
