There is an article in BusinessWeek about SAP acquiring software companies. As it’s a story on a business-oriented site, the emphasis on matters financial is accepted. However it did make me question whether (some) journalists understand the impact of M&A in software companies.
The article mentions firstly that SAP has struggled to catch up with Oracle and Salesforce.com, but considering Larry Ellison discounted the cloud until fairly recently, and SAP is still the largest enterprise software vendor, I wonder what ‘catching up’ the writers are thinking about. From the way they write, it appears the writers think that the only real software business must be cloud based.
The emphasis of the article though is on the acquisitions SAP has been making. It find it interesting that, again, the writers compare SAP against Oracle, calling Oracle ‘a deal-making machine’; as though deal-making should be a major focus of a software company.
What I see in the article is an appreciation of M&A for investors; I don’t see an appreciation for what it means to customers, and the work that must be done internally by developers to meld the software together. Vinnie Mirchandani has made the point that:
… most CIOs are still ambivalent about technology M&A. As most will honestly say, we gave Oracle (or IBM or whoever) a chance to competitively win our business a few years ago and they did not. They are backing into our business with acquisitions.
why do these ego-maniac CEOs keep merging…? Why do their boards sign off? Why does Wall Street go along?
I worked at a US software company some years ago that did a few acquisitions, and saw the problems that it creates.
Software from two different companies rarely has the same user interface and user experience, and the integration of the two systems is often complex. Despite the best efforts of developers to sort out the technical challenges, customers have to bear the brunt (ie, cost and trouble) of the early integration implementations.
So instead of focusing so much on the money side, why don’t journalists explore what the impact will be for existing customers – whose payment of annual maintenance revenues funds the M&A activities.