Oracle gobbles up Siebel (buuurp). Sun swallows StorageTek (slurp). Adobe feasts on Macromedia (brrrap). And let’s not forget Sprint and Nextel’s $35 billion hookup, eBay’s purchase of Skype, the Symantec-Veritas wedding, or scores of other megabuck deals that are roiling today’s enterprise market.
Yep, tech companies have suddenly come down with a whopping case of the consolidation crazies. And as John S. Webster notes in "Merger mania," the recent spate of M&A (merger and acquisition) madness presents a challenge for enterprise customers who rely on these vendors for hardware, software, and support.
Webster, a Providence, R.I.-based journalist who specializes in business technology, set out to find what IT managers can do in the face of this radical remaking of the vendor landscape. In surveying the field, he found mostly resignation -- and not all that many solutions. “People recognize that this is going to happen, that some vendors and technologies they’ve invested in will be bought,” Webster notes. “No vendor, except for the very biggest, is immune, and despite all the best efforts, you can’t inoculate yourself.”
Webster did hear a common theme from many of the customers he interviewed: “You can minimize potential disruption by staying in constant communication with your vendors. While this may seem glaringly obvious, it also works.” If nothing else, keeping an open channel of communication can provide lead time before radical changes happen, including a brutal acquisition that ultimately kills an entire product line.
Savvy IT managers can also improve their odds by insisting on open standards, making it easier to find a substitute should a relied-upon infrastructure vendor find itself on one of the big boys’ dinner plates. This approach is especially useful if IT is engaging in the kind of interesting, innovative projects that can deliver competitive advantage -- using, say, Web services or other less mature technologies. In those cases, they’ll inevitably be investing in software from smaller, less established companies. “And those are precisely the kinds of companies that get acquired,” Webster says. “It’s inevitable.”
Think that Webster is overstating the case? Consider a typical five-day period from last week. Ericsson agreed to buy most of Marconi; Tibco snagged Velosel (master data management); Oracle binged on G-Log (transportation management); EMC captured Captiva (input management); Tata cashed in on Financial Network Services (banking software); and HP sliced up blade management vendor RLX Technologies. Not all household names, I grant you, but you can bet all those deals sent IT managers into a dead fright.
And remember, that was the week before Halloween. Something tells me that the corporate trick-or-treat loot bag isn’t full just yet.