Piggy in the middle

Piggy in the middle

Mergers and acquisitions are standard fare in these turbulent times, but all too often the only thing they deliver the CIO is an upset stomach.

You buy into the strategy and product line of a capable vendor, and - whoosh! - the company is swallowed up by a competitor. Will the new, combined company shelve the product lines you've invested in? Will the inevitable confusion delay a new product you're counting on? Will your organisation's technology masterplan be derailed? These are questions to make the strongest queasy.

In the 1990's there have been many mergers of IT vendors. Sybase and PowerSoft, SynOptics and Wellfleet, Adobe and Aldus, CA and Legent, IBM and Lotus - these are only some of the most publicised. The really frenetic activity of late has been in networking. Cisco and 3Com have each acquired six companies since January 1995, including Stratcom and Chipcom. And last month 3Com announced the biggest merger of them all, a proposed $US6.6 billion marriage with remote access leader US Robotics.

Now it's true that mergers or acquisitions often end up benefitting users. For example, if your vendor gains a strategic technology, like the remote access servers and 56K-bits-per-second modem technology that 3Com will get from US Robotics. Or if one of your vendors swallows another of your key suppliers, then you'll only have to deal with one vendor in future, instead of with two.

But the hazards for CIO's caught in the middle of a merger are numerous, too.

Almost inevitably there is continuing confusion at the vendor, often for months on end. IT managers have an impossible time finding any sales staff or systems engineers who know all about the resulting product lines. Resellers are left even more out of the picture, and their training in the new product lines is frequently inadequate.

In the worst case, one observes that after the acquisition some product lines that were previously considered safe either disappear or else end up getting covered with cobwebs. And isn't that wonderful, when you've just finished recommending them enthusiastically to the board?Clearly, Australian CIO's have even less influence with the giant vendors than an ant has on an elephant. But to avoid being trampled, it can help to watch for these trouble signs, as described by IT industry watcher Cate Corcoran:* The development team leaves. (Who will work on future product upgrades? )* The product strategy is muddled. (If the vendor's strategy for merging and upgrading overlapping products is unclear, how can you adjust your IS strategy?)* Products compete directly. (The acquired product risks being eliminated in favour of the home-grown version.)*A product is left out of the big picture. (If the acquiring company's long-term strategy doesn't embrace your key product, that product may be sold to yet another company.)* Support slackens. (If the acquiring company is not well regarded for its support, then getting answers on a product it did not develop may be very, very chancy).

If the product in question is central to your strategy, then you need to insist that the merging vendors disclose what product lines will be retained or axed and what upgrades, if any, will be required. Ask them how the deal will impact your IT plans. If you find it's impossible to obtain satisfactory answers, then you might have to act tough. One US analyst suggests that freezing new orders is an infallible way of getting attention from the highest levels...

There is no indication that the pace of mergers and acquisitions will ease off any time soon. So even though it's not much fun playing piggy in the middle of a pack of rampaging technology vendors, it's definitely a game you need to play well.

* Steve Ireland is Associate Publisher of Computerworld.

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