The Traveler and the Tree: Learning from Wodehouse - InformationWeek

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Software // Information Management
Commentary
4/13/2007
10:38 AM
Rajan Chandras
Rajan Chandras
Commentary
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The Traveler and the Tree: Learning from Wodehouse

The Software Equity Group reports that 2006 "established new benchmarks for domestic M&A activity." In North America alone, there were more than 1,700 mergers and acquisitions in the software and IT services sector... Watching giants like IBM, HP, Microsoft and Oracle voraciously mop up the IT landscape, we expect 2007 to be another stellar year for acquisitions, with implications for all of us.

The Software Equity Group reports that the year 2006 "established new benchmarks for domestic M&A activity across all industry sectors." The operative phrase is, of course, new benchmarks: 2006 has apparently beaten records set in the glorious - some might say vainglorious - years of 1999 and 2000. In North America alone, there were more than 1,700 mergers and acquisitions in the software and IT services sector, up from 2005 and consuming more than $80 billion in M&A spending, up about 10 percent from the previous year.

This comes as no surprise. Watching giants like IBM, HP, Microsoft and Oracle voraciously mop up the corporate IT landscape (not to forget, of course, the Googles and the Ciscos), we expect 2007 to be another stellar year for acquisitions, with implications for all of us.For IT solutions and service vendors, the writing on the wall is clear: to be complacent in their size - measured any which way: revenue, market leadership, employee strength - is to be foolish. In these days of mammoth collusions and wheeling-dealing between technology companies and investment corporations, nearly any IT vendor (barring perhaps a handful of giants) must consider itself a potential target.

Gone are the days when only technology start-ups needed an exit strategy; these days, CEO's of leading technology and service companies will do well to sign up for continued learning programs in M&A preparedness and market survival, and IT sales and delivery professionals will do well to remember that the technology or solution they ridicule today may very well be the one they endorse tomorrow.

For IT customers, the implications are even more momentous. No matter your sense of comfort and stability with the vendor, be aware that the relationship could change practically overnight, shaking up your technology portfolio and enterprise architecture profoundly. Avowed Microsoft shops with Peoplesoft or Siebel implementations are likely to find Oracle Fusion-based application and database technologies sneaking in the back doors, and former Ascential customers are probably already succumbing to a slew of IBM solutions.

To cope with this, IT management must be prepared to change their ways with the times. The late P. G. Wodehouse, a British/American humorist with a fantastically loyal following the world over, once referred to an Arabian tale of a traveler who, sinking to sleep one afternoon upon a patch of turf containing an acorn, discovered when he woke up that the warmth of his body had caused the acorn to germinate and that he was now some sixty feet above the ground in the upper branches of a massive oak. Unable to descend, he faced the situation equably. "I cannot," he observed, "adapt circumstances to my will: therefore I shall adapt my will to circumstances. I decide to remain here." Which he did.

Mergers and acquisitions, and their impact to your organization, are unavoidable. What isn't unavoidable is the shock factor and the resulting disorientation and damage. M&A can be the mechanism of rapid change. Be aware, and be prepared.The Software Equity Group reports that 2006 "established new benchmarks for domestic M&A activity." In North America alone, there were more than 1,700 mergers and acquisitions in the software and IT services sector... Watching giants like IBM, HP, Microsoft and Oracle voraciously mop up the IT landscape, we expect 2007 to be another stellar year for acquisitions, with implications for all of us.

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