Mergers and acquisitions: do they really matter?

Do software customers actually care about the impact of provider's mergers and acquisitions, or are they just too far from the crux of business.



commentary Do software customers actually care about the impact of provider's mergers and acquisitions, or are they just too far from the crux of business?

The day Symantec made its offer for storage management maker Veritas Software public, I received a text message confirming the deal while on my way to the airport.

Symantec had proposed a AU$17.62 billion bid for Veritas with John Thompson, Symantec's CEO, assuming the role of chairman and chief executive and Gary Bloom, Veritas chief executive, becoming president and vice chairman. The company will retain the Symantec name.

The news didn't come as a real surprise since Veritas has, for a long time now, been ripe for the picking. And Symantec, in an effort to play in the big league, has been on a spending spree with more than a billion dollars forked out since 2003.

My first reaction turned to the impending job losses. Veritas doesn't provide detailed figures but its Asia-Pacific head Steven Leonard previously revealed that 1500 workers are employed in 25 offices across the region.

And what about Veritas' customers such as the National Australia Bank, Vodafone, Telstra, AAPT, Qantas, Woolworths, Mitre 10, AMP, and Pfizer -- will they be left in the lurch?

The IT industry has witnessed consolidation in all shapes and forms over the past few years.
I proceeded to call a few friends who happen to use Veritas products. The reaction from these IT managers made me question if customers really cared about the impact of mergers and acquisitions. After all, it does seem like the C word (consolidation) is all the rage these days.

The technology manager I spoke to was largely unperturbed by the Symantec-Veritas marriage. He had other things to worry about, it seemed. "I'm too busy with dealing and worrying about day-to-day activities at work. [I] can't be too concerned about something happening miles away," he said. Furthermore, there was no point pondering over questions like "what now?" or "what if?". "The vendor has been paid. The software has been installed. People have been trained -- it's too late to turn back now," he added.

Another technology manager was resigned to the fact that the fate of IT vendors is decided in boardrooms and by shareholders. "Nothing I nor my company says can influence the outcome of the merger. Will Veritas say no to Symantec because customers are unhappy? I don't think so," she said. She also pointed out that customers -- by and large -- have reached a comfort level with the storage vendor so, merger or not, there's no reason to rock the boat. "I have a good relationship with Veritas. Hopefully, no one from Symantec takes over my account," she added.

Some might view these comments as valid -- others might question their lackadaisical tone. But at the end of the day, customers can only offer short-to medium-term views on the impact of such an outcome. Since mergers of this nature require regulatory approval, which can be a long drawn affair, there's no point fretting at this stage. Additionally, after fighting tooth and nail for budget approval, CIOs and IT managers who chose Veritas over the competition will probably keep a low profile.

Buying enterprise-class solutions is usually much more expensive than buying a car yet owners would baulk at having to change cars every few years -- but not software. Perhaps this because unlike the vehicle, the company is the one which picks up the tab.

The IT industry has witnessed consolidation in all shapes and forms over the past few years, and one thing's for sure: technology managers and CIOs know that after the ink is dry, contracts are virtually irreversible. As for assurances, who really believes in the term "investment protection" anyway?

This article was first published in Technology & Business magazine.
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