Mergers and acquisitions are common practice in the information governance space, but is that good for customers? Turbulence abounds, and rarely does it benefit deployments already in-place.
Dell’s record breaking mid-October acquisition of EMC is just the latest and largest in a series of mergers and divestitures in the tech world and more specifically involving companies in the information governance and archiving space. This trend of Governance leaders acquiring technologies first started in 2005 when Symantec acquired Veritas and most notability it’s “Enterprise Vault” archiving product. Autonomy followed in 2007 by acquiring Zantaz’s archiving products and followed up that acquisition by purchasing Mimosa Nearpoint, CA Message Manager and the content management software, Interwoven. Autonomy themselves was acquired in an $11.7 billion dollar purchase by HP, which I will talk more about later this article. In 2015, Canadian content management leader OpenText acquired Daegis and its AXS-One archiving product.
So you may be wondering why I just spent 140+ words talking about a number of acquisitions in the last 10 years, but there certainly is a relevant theme here.
Historically, buyer’s remorse has been prevalent among these “mega-mergers.” When Symantec acquired Veritas in 2005 for $13.5 billion, they surely thought the combination of storage and security would result in making the value of both companies grow. Their reasoning was, if they did spin off Veritas later, it would be for a profit. Instead they sold it to a group of investors for about $8 billion: a $5.5 billion loss. HP’s Autonomy purchase proved to be even more problematic. Critics at Bloomberg called HP’s acquisition and the 70%+ premium they paid a mistake from the get go, and this feeling was only enhanced when HP had to write off $8.8 billion of the $11.7 billion after the first year. Some of the write-off was due to reported accounting errors by Autonomy, but the majority was related to overvaluation of the product. As of writing this post, Symantec and HP have both split off the Veritas and Autonomy lines of business into new companies.
Acquisition and integration of various software has another effect aside from general corporate instability; cobbling of products and code has the tendency to create data silos. As products are acquired by companies looking to gain functionality in a certain area (eDiscovery, Compliance, Records, etc.), they must be integrated and try to “speak the same language” despite differing code bases and data schemas. Ultimately, this rarely works well, and it causes delays with data movement from application to application, causes duplicate copies of the content (copies in the archive, in the eDiscovery solution, compliance solution, etc.), and causes holes in accountability. Due to these issues, search speeds come to a crawl, and accuracy is rare. Not to mention, defensibility and governance of the content suffers as well.
One final piece worth noting, however, is that governance is typically not the main focus in these acquisitions. For example, in the EMC-Dell merger, EMC’s VMWare virtualization product is named as one of the key acquisition products as well as EMC’s other hardware offerings. It is not without precedent that with a new sheriff in town, the information governance products are put even further on the back burner and become outdated, ineffective, and ultimately retired. From recent history, IG products involved in major mergers definitely deserve a closer look by current customers to make sure that their investment and reliance on the products is still safe.
So, from a business perspective, the M&A process can be an exciting time. But from a customer perspective, it more often is a time of commotion and immense uncertainty. Planning for vendor business changes is a key part of information governance strategy, and needs to be discussed early and often… preferably before even purchasing a solution in the first place.