Let merger mania commence

Analyst firm Gartner made headlines in late 2001 when it said consolidation would wipe half the well-known IT firms of the day from the map within three years. That was about a year-and-a-half ago. There've been a few big vendor marriages since then.

Analyst firm Gartner made headlines in late 2001 when it said consolidation would wipe half the well-known IT firms of the day from the map within three years. That was about a year-and-a-half ago. There’ve been a few big vendor marriages since then.

Hewlett-Packard and Compaq, already making eyes at each other when the Gartner prediction was made, took their stormy courtship through to an apparently happy conclusion; IBM got together with PricewaterhouseCoopers (which had an earlier flirtation with HP); and, showing itself to be something of a polygamist, IBM wed Rational.

Gartner was talking well-known vendors. In this part of the world, the acquisition by NetIQ of Marshal Software would qualify, though it barely caused a ripple elsewhere.

You might think the absence of a long roll call of mergers would cause Gartner to recant. But no. Since he first made the prediction at the firm’s Symposium/ITxpo 2001 in Florida, Gartner boss Michael Fleisher has gone on to repeat it. A year later, adjusted for the passage of time, he told delegates at Gartner’s Sydney symposium that half of today’s high-flyers would be history in a couple of years. In that case, the pace of mergers is going to be dizzying.

A lot of hot air, says rival analyst IDC (a subsidiary of Computerworld’s publisher IDG, we should point out). IDC’s head software analyst, Anthony Picardi, dismisses Gartner’s prediction as “trivially obvious”, and dishes out that most damning of all put-downs -- that it is mere FUD. (Remember our friend FUD -- fear, uncertainty and doubt -- an often-deployed tool in the IT marketing world. Is it being employed less frequently – perhaps corroborating claims that the industry is growing up – or are we becoming inured to it?)

Picardi, a keen sailor on a flying visit to New Zealand from the US that just happened to coincide with the America’s Cup, says it serves Gartner’s interest to put the fear of extinction into IT vendors. They’ll then be driven into Gartner’s arms to buy its latest research for clues to their survival. Consolidation, he goes on, has long been a feature of the industry. For each company that passes into history, new ones are constantly taking their place. The accounting systems market used to have “thousands” (really?) of suppliers, but today is dominated by a handful, he points out. (Indeed, there’s a market, neglected in the earlier list of mergers, where consolidation has occurred in the past couple of years, principally through Microsoft’s acquisitiveness: Great Plains, Solomon and Navision have all been swallowed up by the monster from Redmond.)

Similarly he reminds us of what’s happened in the database market, in which companies like Informix (now part of IBM) and Ingres were once as important as Oracle and much more so than Microsoft. Today you don’t hear of them. In their place are up-and-coming providers of security software – the antivirus vendors; content management companies (New Zealand does well in this market, as we once did in accounting systems); mobile middleware makers; and authentication system and identity management providers (watch one of the great survivors of the industry, Novell, make a comeback in this niche).

So there’s some merit in what Picardi says. But merit, too, in Fleisher’s prediction. He’s talking not just of the normal churn that goes on in a young market, but of the unexpected demise of badly run businesses. (To be fair to him, he qualified his words by saying 50% of firms would cease to exist “in their present form”.) Adolescent was the term he used to describe the quality of management decisions that he asserts will lead to the downfall of many of them.

Speaking of mismanagement, two excellent guides to avoiding it have been getting my attention. One’s on the box, the rerun of the excrutiating British series The Office. You know your management abilities aren’t up to much when screensavers of David Brent, the hideously true-to-life star of the show, turn up in your office. Dilbert and the Way of the Weasel, a new book by Scott Adams, is the other indispensable aid. It’s a detailed topographical map of the Weasel Zone, the “gigantic grey area between good moral behaviour and outright felonious activities”, which is where most of life happens. Adams says the zone is known by various names, one of which is Redmond.

Want to know more? Next week we’ll kick off a regular new book review spot in the paper, featuring Dilbert and the Way of the Weasel.

Doesburg is Computerworld’s editor. Send letters for publication to Computerworld Letters.

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