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Managing Software: What happens when your software vendor sells out?

September 10, 2003
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Vendor buyouts give you an opportunity to re-evaluate your business systems.

Bill Friend
THE “URGE TO MERGE” GAME BEING played by the major software vendors is far from over. Marcam sold out to Invensys. Microsoft bought Navision and Great Plains. Invensys bought Baan and later sold Baan to SSA.

SCT spun off its process business as Agilisys to an investment group. SSA bought Infinium. Peoplesoft tried to buy JD Edwards and then Oracle tried to buy Peoplesoft. We are certain this is not over. What’s going on?

Olin Thompson
It is a sign of a mature market. Today there are a few software vendors who think that they can make more money by acquiring competitors or that they can stop their competitors’ growth by making preemptive announcements about buying other companies. There is no question that the software vendor community is in turmoil and in some boardrooms, IT and executive management will be second-guessed about their Y2K and post-Y2K software solution selections. If your software vendor gets gobbled up in the current feeding frenzy, what are your options?

First, figure out why your old vendor was purchased. Read their press releases. It’s interesting that in the hostile takeover move, Oracle said that they would stop selling Peoplesoft. That’s a pretty good sign of how the deal will go down for existing clients. Look at how complete the functionality of your current implementation is for your business. If you have most of the things you need, then report to your boss that there probably will be “no problem.” More likely, your implementation is a work in progress. In this case, read the press releases very carefully and start a dialogue with other users to develop a common front. If the functionality is not there and you had reasonable expectations that the old vendor would meet your needs, you will need to extract promises and guarantees with the new vendor early on.

Second, make an effort to get to know your new vendor. It’s likely that you won’t be as important to the larger new vendor as you were to the smaller company you selected. Don’t let that slow you down. Call your new sales rep and ask for a meeting. Listen to the pitch. What is being offered beyond collecting your maintenance fees? Find out how wired he is into the new company. If you are offered headquarters visits to meet with the new management, do it. If they offer a “bait and switch” to a new software suite, be wary. Evaluate all alternatives before taking the first offer.

Third, although someone buying your vendor justifies concern, remember that software does not stop working because your vendor has problems. Switching to different software is expensive in terms of money, time and disruption. ASK was a major vendor in the ‘80s and was gobbled up in the early ‘90s, but thousands of companies still run their business with ASK’s MANMAN product.

Finally, this is a good time to re-evaluate your software strategy. Think about all that IBM mainframe and Digital software that was used 15 to 20 years ago. Most of that software is either not being developed further or the vendors are out of business. In software as in life, sometimes we have to play the hand we are dealt. If you find that your current software implementation will be in jeopardy because a new vendor won’t be supporting your software, consider moving on. There are probably a few good reasons for disappointment with your current implementation. Use a vendor buyout as an opportunity to re-evaluate your business systems and learn from your previous information technology strategies.

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