Which of the following is a limitation of the single vendor strategy?

• A. If it fails, the organization can incur significant losses.
• B. It requires a wide range of skills to manage the applications.
• C. It is a fragmentation of work.
• D. A single contract makes it difficult to manage initial capital outlays and ongoing operating costs.

Answer: (A)

Relying on a single vendor creates a single point of failure. If that vendor runs into financial trouble, cannot deliver services, or suffers a security incident, there’s no immediate, built-in alternative to step in, which can lead to downtime, project delays, regulatory risk, and potentially substantial losses during a transition to another provider. That risk—the heavy dependence on one supplier and the large impact if they falter—is the key limitation of a single-vendor approach.

The other statements describe situations that are not fundamental limitations of using one vendor. Managing applications under a single vendor can be supported by the vendor’s expertise and governance, so it doesn’t inherently require a wide internal skill set. Fragmentation of work is more characteristic of multi-vendor or best-of-breed strategies. And while a single contract can influence budgeting, it typically reduces complexity and makes cost management easier, not harder.