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There’s been a lot of chatter in the market these past few weeks about acquisitions. Some larger players are clearly headed to Costco to look for warehouse bargains (smaller formats and Ma and Pop shops aren’t worth the time for these larger players, it seems). As someone pointed out to me the other day, Ariba has clearly spent quite some time attempting to clean up its top line to show higher-quality SaaS revenues–perhaps to argue for a higher valuation in the SaaS multiple range–while quietly pushing increased CD upgrades in Q1 to show the installed base is still alive. Might Ariba be on the shopping list for these larger players? I’d be surprised if wasn’t, but then again, it has been for some time. It’s just a question of valuation.
More important than who will be at the dinner table–and who will get served –is the question of what consolidation in the sector will mean for customers. Personally, I think we need to break this question down into multiple areas. From a BPO and consulting perspective, customers shouldn’t get too worked up over acquisitions if they’re buying services or outsourcing today. But they should scrutinize their contracts to see what flexibility they may have under change of control to, at the very least, help with their negotiating options.
In the case of enterprise software (i.e., installed or hosted in a non-SaaS environment), customers should look at acquisitions in a similar manner, although they should be wary about acquirers phasing out support for older versions of applications to force upgrades and/or increasing maintenance costs…
