The IT industry hasnÃ‚Â´t been spared. When database maker Oracle set out to acquire PeopleSoft in June 2003 (days after the latter proposed a merger with JD Edwards), the business applications market was turned on its head.
The situation got tangled in a deeper web of confusion when the United States Justice Department took Oracle to court to prove that a PeopleSoft acquisition would create less competition.
Many years ago, things were less complicated. There was a time in the tumultuous world of technology when the greatest of debates attempted to distinguish the merits between off-the-shelf software and its custom-built cousin.
Vendors touted their wares, claiming to offer "a one stop IT shop" and "turnkey solutions" to enterprises. Those were the days when the EDP (electronic data processing) department reigned supreme and dot matrix printers were all the rage.
Years later, the focus was more on proprietary applications tweaked to fit into an organisationÃ‚Â´s make-up. This was also the start of "mega-projects", when we witnessed hundreds of thousands, even millions, being spent on business applications.
Oracle has since won its day in court and is free to pursue PeopleSoftÃ‚Â´s hand. The entire episode has left analysts lamenting about the shrinking software market and the limited choice in the market should Oracle succeed.
But what about the customers? Will there be continuity in terms of maintenance and upgrades? Or will their million-dollar software be dropped like a hot potato once a new owner comes into play?
There are no firm answers and customers have been somewhat left in the lurch, looking for ways to withstand the fallout of future mergers and acquisitions.
In the enterprise applications software market, Oracle has cited SAP, PeopleSoft and Microsoft as its closest competitors. However, there is anecdotal evidence of customers shying away from big names in a bid to have better control over their software investments.
If this trend prevails, we might see services or outsourcing companies such as Infosys, Satyam and Wipro become the new giants of enterprise applications. After all, their bread and butter is programming.
These companies could count on their alliances with large IT services firms including IBM, EDS and CSC, and indirect relationships with customers which rely on outsourcing and offshoring such as Telstra, HSBC, Commonwealth Bank, Pfizer, and Qantas.
One thingÃ‚Â´s for sure -- a hostile takeover can bring out the best in vendors. More than a year ago, Oracle CEO Larry Ellison intimated that he might discontinue PeopleSoftÃ‚Â´s product line if the merger was successful. This ignited the wrath of PeopleSoft which moved to offer customers money-back guarantees as a form of investment protection.
Ellison then accused PeopleSoft of waging a scare campaign, saying it was "ridiculous to offend the customers we spent billions to acquire" by sidelining them post-merger.
Whether EllisonÃ‚Â´s word is good enough isnÃ‚Â´t the point. Customers must bear in mind that a productÃ‚Â´s profitability doesnÃ‚Â´t necessarily guarantee its survival ... this is the real world so egos play an equally important part.
The guerilla tactics employed by Oracle drives home the point that customers come second. To any company, be it hardware or software vendors, in the IT industry or otherwise, the "I" word always plays a crucial role in growth plans -- how can I make more money? How can I expand my business?
Consolidation, mergers and acquisitions are part and parcel of the business landscape. The underlying issue is this: who controls the destiny of the software? The customer or the vendor?