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Vendor acquisitions are a good thing

Sep 10, 20033 mins
Data Center

* How vendors buying vendors can yield better management tools

It seems to be open season for management vendors looking to acquire technologies.

Although the economy is less than robust, many software vendors are taking this opportunity to snatch up technologies that broaden or help fill holes in their product lines. While the trend may seem peripherally interesting to you now, it’s definitely something to pay attention to, because the technologies being acquired today will quickly become part of the palette of management tools you’ll be choosing from in the near future.

It’s not the same kind of merger and acquisition frenzy that was happening during the dot-com bubble. Today’s acquisitions seem to be thought through more carefully. The vendors are loading up their software quivers so that when the economy recovers, they will have built out better and more complete product offerings.

Vendors are benefiting from buying new technologies at a lower price, thanks to the economy. They avoid the costs of developing the technology from scratch. Although they will have to invest in development to integrate the technologies into their current products, the cost here is not as significant as “building your own.” Their biggest advantage is that they leap ahead a few years in terms of technology development. They acquire a more mature, proven technology that is, hopefully, “best of breed.” So these vendors are becoming consolidators of technology.

Consolidating technology is a good thing, within reason. It’s better for the vendors to serve this function, rather than IT organizations having to put the puzzle pieces together and make them work. Building the puzzle will still happen of course, but it’s much easier to put together a puzzle with fewer, larger pieces.

So you’re wondering about my “within reason” comment above? Consolidation can be a good thing, but when done to excess, it can also create such a mish-mash of products that there’s no consistency of look and feel, integration is not seamless, and the architecture becomes mediocre and inefficient. We’ve seen this happen in the past, and it’s not pretty.

Vendors are also acquiring technologies to build out their visions for next-generation management initiatives. These new initiatives require new technologies and approaches, so acquisition makes a lot of sense. The vendors can get a rapid start on delivering on the vision that they’ve set out, and they’re moving forward with proven technologies that, in many cases, are already somewhat integrated with their products. Take, for example, Tivoli’s acquisition of Think Dynamics, or HP’s recent announcement that it would acquire Talking Blocks.

In the long run, I believe the winners will be IT and the users of IT, particularly if the software vendors pass on to their customers the cost savings from acquiring the technologies. Infusing leading-edge technologies into the portfolios of established software vendors is a good thing because it:

* Updates established products with state-of-the-art technology.

* Provides a sense of security for companies that need leading-edge technologies but are wary of small start-up software companies’ longevity.

* Better integrates new products with other management tools, rather letting them exist as a single point product.

* Establishes credibility, validity and presence in new technology areas.

* Ensures that new technology will not disappear as a victim of the economy.

So don’t ignoring these acquisitions, leaving them to the realm of the financial geeks. You have a vested interest in paying attention.