Over the past couple of several years, acquisitions and mergers have been the focus of great speculation, anguish, disappointment, and frustration. But are they good for the industry, consumers, and most importantly your business? What does it mean for innovation? And how important is that?

It wasn’t so long ago that I can remember companies with project teams whose sole purpose it was to rid themselves of a particular vendors technology in their infrastructure. Depending on how invested they were on the technology, the costs involved in replacing it, and how ingrained it might be with their systems and processes these projects would take months and sometimes years. The interesting fact here is that in many cases these project teams never dissolved – whatever vendor they were targeting for replacement very likely had acquired someone else that had an impact on their infrastructure so by the time they finished replacing one they’d be at it again. And again.

As we all know, it’s not always about the best technology, vendor, or solution. Whether the result of poor support, a project gone sideways, or an employees bias, it is quite common for companies to shy away from products manufactured or distributed by specific vendors. More specifically though, it isn’t the company itself with the bad taste, but the people involved with whatever happened. Thus, as people move between companies, so do the biases – for and against – specific vendors. Thus we have the notion of churn in the data centre, with technology purchases and expulsions patterns following employees movement throughout their career, company to company. A successful sales person sells to people, not companies, and thus their success is tied to making individuals successful. The challenge than is in convincing a person to choose against his ingrain bias – something a more successful sales team will accomplish.

Mergers and acquisitions shake up these buying patterns, and as they increase in frequency and size make it difficult if not impossible to target specific vendors or technology for purchase or avoidance. The fact is, innovate technology companies get acquired by larger, not so innovate companies all the time. The success of such an acquisition has more to do with politics and culture than the underlying technology itself – competitors will catch up when given the opportunity to do so, and innovation can be impacted greatly when a company is in the throws of acquisition, particular a hostile one, or one with clear culture differences. Losing all your key people, whether it be people cashing out or being left out isn’t going to make your acquisition pay off.

On the surface, then, all looks gloomy. Or does it?

Successful innovation requires flexible execution, which is generally a trait of smaller, more nimble companies. The challenge smaller companies have is getting their product to market, something which requires successful funding and industry accolades to turn prospects into customers. Turning a profit, one that is consistent and measurable is often a great challenge but should be a marker in companies purchasing decisions. Acquisition is often an objective of these companies, as it greatly accelerates their entry into the market. Being part of a larger organization with the funds and reputation to take smaller, innovative companies farther and faster than they could on their own is a recipe for great success for both organizations. When done correctly, customers will also benefit greatly. When done poorly, the result can be disastrous – for both vendor and customer.

Successful acquisitions allow for continued innovation, and retain the staff the made the company successful in the first place – from the engineers, developers, and support staff with product knowledge, to the sales and technical field engineers who have customer relationships and can instil confidence that “all is well”. You may never be able to convince everyone with a bias against the acquiring company to stay the course, but with the right approach the majority of customers will stick around and benefit long term, while the market opportunity dramatically increases for the vendor.

Mergers, while similar to acquisitions attempt to appeal to clients of both organizations, but generally do neither. A merger is an acquisition of equals, and eventually the corporate culture and management of one company will infiltrate or corrupt the other. Whether the customer will benefit while they take the time to sort that out is hard to determine.

Partnerships, while useful to those who look for integration and interoperability of best of breed products are at constant risk, particularly these days, to acquisition by competitors and the changing tides of business. Partnering allows companies to offer technology, directly through resale/OEM, or indirectly through partners, as a solution. But when a strategic partner gets acquired or folds, it leaves the customer and the vendor exposed to support issues and ultimately triggers technology migration. Partners become competitors and customers are left to deal with the issues. Successive attempts (and failures) by vendors to do this over the long term hurts their credibility and are highly disruptive to customers infrastructure.

Learning to ride the tide of acquisitions in the industry is an important success factor in your business being able to take advantage of new industry trends and technologies to drive bottom line profitability, while minimizing risk.

So the question must be asked – how has your infrastructure been impacted by acquisition and merger activity? Has it been positive? Did it bring any tangible or technical benefits to your business or day-to-day activities? And when you look to acquire new technology and solutions from a vendor, does their perceived risk to acquisition factor in to your buying decision?