Consolidation of software vendors doesn't breed anxiety like it used to.The incredible pace of enterprise software company mergers and acquisitions continues.
In little more than a week in April, CA announced a deal with job-scheduling tools supplier Cybermation, Red Hat agreed to acquire open-source middleware supplier JBoss, and acquisition-hungry Oracle said it was buying billing software company Portal Software.
These are just some of the enterprise software company buys that have occurred since the first of the yearwhich is a continuation of the deal-making that's been going on for some time.
In fact, 2005 was an especially busy year. The worldwide enterprise applications market saw what research company IDC said was a "spectacular amount of merger and acquisition activities." According to IDC, the number of deals in 2005 climbed to 199, compared with 144 in 2004, and the value of these deals more than doubled, topping $36 billion.
But while in years past, software mergers and acquisitions led to a certain amount of anxiety, it seems that technology managers are learning to deal with software consolidationfor a number of reasons.
One is the simple fact that a lot of information managers like the thought of dealing with fewer vendors. A survey last year of 100 CIOs conducted by Merrill Lynch found that 61% planned on buying an integrated stack of database, middleware, tools and systems management software from one vendor.
But an even bigger reason is that CIOs have learned to plan for consolidation, whether by doing formal contingency planning in case a major software vendor is purchased, or keeping tabs on vendors to constantly assess what else is on the market, or just looking at the bright side of a merger. I've heard that some information chiefs seek to negotiate better licensing deals whenever a company that buys one of their vendors comes calling in an effort to keep their new customers happy.
And CIOs seem to be less stressed about their software portfolios because of the advent of service-oriented architecture (SOA) and other developments that give them far greater flexibility than they've ever had before.
In the wake of the Oracle-Portal announcement, I had a chance to talk to Cornelia Pool, the information chief at Covad, the broadband communications services company. She told me that while no one looks forward to software mergers, SOA gives her greater options in dealing with software consolidation.
SOA is a software design framework that organizes the functions of an enterprise software application into standards-based, interoperable software units. These units, or services, can represent a chunk of data or instructions on how to perform a task. These services can then be quickly combined and reused to meet other business requirements, negating the need to build these functions into new programs. Not only does this speed up software development, but it also lessens the stranglehold any one vendor can have on a company's software portfolio.
One of the key characteristics of SOA is that services are independent of the underlying software. So, it's possible to replace the software that provides a service without disruption by maintaining the same interface, such as, for example, the set of request and response commands the service supports.
Granted, all these vendor consolidation strategies put more demands on those managing corporate software resourcesbut the people and companies that succeed are usually the ones who want to determine their own destiny and leave as little to chance as possible.
A final note: Information managers looking to learn more about information-technology consolidation might want to take note of Ziff Davis' CIO Summit. The annual gathering of information chiefs will be held this year from June 12 to 15 at the Silverado Resort in Napa Valley, Calif. The theme: "Progressive Strategies for I.T. Consolidation."