| It used to be that M&A, in hi-tech, was a | | | | This is a prime example of what my company, |
| troubled endeavor. All mergers fail. That was | | | | Bluewolf, calls Agile Business Transformation(tm), |
| the edict. Integrating technology was too | | | | or Agile Business Transformation through Agile |
| difficult, and it was cheaper to build organically. | | | | Project Management. For businesses, Agile |
| Over the past five years, that trend has | | | | Business Transformation encompasses the |
| changed significantly. | | | | cultural, technological, and process oriented |
| If you are concerned about employment | | | | requirements for a company to survive and |
| numbers, this trend is scary, because M&A | | | | innovate in the 21st century. Organizations have |
| typically reduces jobs. When Mark Hurd took | | | | to be prepared for change, and their vision must |
| over HP, a few years after the Compaq | | | | embrace things like M&A as a cultural reality. |
| acquisition, and before a spate of HP acquisitions, | | | | To embrace change, processes must be flexible |
| including the swallowing of EDS, he immediately | | | | and measurable, so that organizations make |
| went into cost cutting mode and reduced HP's | | | | decisions quickly and objectively. If a process is |
| combined workforce by nearly 10%. Guess who | | | | going to change–which it will, in an M&A |
| is at the helm of Oracle now, after five years of | | | | environment–organizations must be able to |
| continual acquisitions? You got it: Hurd. | | | | justify the change through a measurement which |
| There are the large acquisitions like HP and EDS, | | | | aligns to a vision and which the organization will |
| or Oracle and Sun, or Intel and McAfee, but | | | | buy into. |
| underneath those, there are hundreds of smaller | | | | The good news for M&A is that flexible |
| deals that are happening on a monthly basis. A | | | | technology is becoming prevalent in corporate |
| recent one is salesforce.com's $140 million | | | | America. Even small, private, companies are |
| acquisition of Jigsaw (seven times revenue!!!) | | | | leveraging the Cloud to automate their businesses. |
| Several things are driving the trend for | | | | has nearly monopolized the small to medium |
| consolidation in high tech. For starters, the IPO | | | | business landscape, and this means that when |
| market has never recovered from the .com bust, | | | | these companies are acquired, they bring blue chip |
| which means that small, private, companies are | | | | processes, from forecasting to HR, that even the |
| tuning themselves for M&A instead of an | | | | larger acquiring companies may not have in place. |
| IPO. On the heels of that trend, the availability | | | | We see this regularly in Salesforce |
| of Private Equity dollars has spurned an | | | | implementations–or "org merges" as we call |
| environment where the typical five year | | | | them–when both organizations need to decide |
| investment horizon of a Private Equity firm | | | | which technology, and which processes, will |
| demands that companies exit in one fashion or | | | | survive. More and more, we see the smaller |
| other–PE ownership has little appetite for the | | | | companies' technology and processes surviving. |
| long, risky, road to independent | | | | Finally, it is also these companies that are ripe for |
| supremacy–they want a return today. | | | | acquisition. If a small company's processes are |
| Assuming that M&A remains as the ultimate | | | | cutting edge, if their reporting is real-time (i.e. they |
| "exit strategy" in hi-tech, and assuming that | | | | can produce a forecast at a moments notice), |
| stalwart tech companies continue their defensive, | | | | they are more likely to generate interest and a |
| acquisitive approach to innovation, what becomes | | | | premium in the M&A world. So having |
| the determining factor in a successful merger? | | | | flexible technology, a cultural vision, and a process |
| You got it: technology. Or, more broadly, the | | | | for sustaining on-going innovation–or, |
| ability of a company to use flexible technology to | | | | again Agile Business Transformation–become |
| execute efficient business processes and to | | | | the key mechanism's for ensuring long-term |
| quickly absorb a new entity into those processes, | | | | success, either independently, or in the arms of a |
| while retaining any processes which are | | | | large, cozy, acquisitive industry stalwart. |
| competitive differentiators for the company being | | | | Now just hang on to your job. |
| acquired. | | | | |