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Your Business Software Vendor Has Been Acquired. Now What?

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Your Application Software Vendor Has Been Acquired. Now What?

Mitigating Strategies Can Soften The Blow

A interesting thing keeps happening in the technology marketplace. Bigger companies keep buying both smaller rivals and big competitors, in a never ending search for new ways to expand their sales and revenue. But what about the customers? Are these company acquisitions, from the smaller deals to the blockbusters, doing anything to really help or hurt the customers that use their products?

An Associated Press story took a look at the software technology acquisition movement, which in the last few years has included technology vendors in every field, from ERP to CRM to IT services to networking gear and beyond. A common theme in the article was that many of the customers interviewed by the AP were not thrilled by their experiences with their IT suppliers after the acquisitions were completed.

Big tech companies often argue that by making acquisitions, they are able to offer more services to their customers and improve their product offerings, so the article said. But customers, well, they had a different view of the merger mania. "Often customers get new headaches with multibillion dollar deals by the likes of Oracle, IBM, SAP, Dell and Hewlett-Packard," the story advised. "When you add the challenges that come with any corporate acquisition, it's not hard to envision a reverse trend building: a drive to split up technology companies that have grown too large. In other words, the technology consolidation of the past few years could turn out to have wasted shareholders' money."

Now the reality checks are hitting the fan, according to the AP. "The demand for these mergers is not coming from the customers," Gopal Khanna, CIO for the state of Minnesota told the AP. "On the contrary, I'm best served when there's a phenomenal amount of innovation happening. Sometimes creating behemoths slows down that innovation engine."

Another CIO, Larry Bonfante of the U.S. Tennis Association, told the AP that his problems began shortly after one of his key technology vendors was bought a year ago by a large, publicly traded company. "Our service and our relationship with that provider since then has gone absolutely into the tank," Bonfante said. He declined to name the software vendor that he was having trouble with. "When the smaller guys are gobbled up by bigger guys, in theory it's supposed to be better, but in our experience it's been worse," he cautioned. "It's certainly not something that I'm excited about. It has the potential to be a positive experience, but my experience has told me more times than not, it's problematic."

This year alone, there have been more than 30 significant technology company acquisitions thus far, according to a list put together by Network World magazine. And they continue on a regular basis.

Even the open source ERP world is being affected. Last month, cloud-based open source ERP and CRM vendor Compiere was acquired by Consona Corp. in a move that highlighted the volatility of the merger market this year.

So what's this all mean for customers? It means doing your due diligence when selecting an ERP or technology supplier so you can try to mitigate a situation where you begin working closely with a vendor, only to find out that the relationship will later be complicated by an acquisition.

You certainly can inquire about these issues beforehand, but even so, there are no guarantees. Mergers and acquisitions can occur at anytime. There's no way to be sure that it won't happen with your chosen vendor. The best you can do is raise lots of questions, talk to other customers and users, read up on the technology vendors you are considering and even take some time to talk to some trusted industry analysts who might have their fingers most closely to the pulse of the marketplace at that moment.

More than anything else, know that an acquisition can happen no matter what, and it can raise its potentially ugly head wherever you are in the deployment or maintenance of your ERP platform. Life happens, and so do software vendor acquisitions.

And ultimately, if an acquisition happens and you're not happy with the results and service you receive after it takes place, you can always go and find another vendor. But beware, and stay loose. Because no matter what, you're still only one acquisition from it happening all over again.


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