Do Acquisitions Sometimes Kill Needed Functionality?

By John Phillips posted 02-20-2012 10:56


Innovation by acquisition has become a major corporate strategy for some business entities. Why select among highly competitive internal Research and Development projects to fund technologies for testing in markets when one might be able to buy that desired strategic advantage through just acquiring another already viable firm? Why invest in new entrepreneurial startups considering the risks involved? Unknown eventual market share, egotistical CEOs, patent litigation, and questionable technical employee loyalty are all possible factors in a startup’s early demise. For these reasons, a technology “development” strategy often witnessed in the marketplace is simply to buy patents, technical staff, and software code. After such an acquisition overall product lines can be said to be more comprehensive with increased functionality made available through (eventually) integrated product suites.

Of course, another major driving fact of life in business today is that a company can be acquired with consequently great financial and professional benefits to the sellers but while creating enormous dangers and disadvantages for their customer base. Despite all of the lofty claims of enduring allegiance to existing customers, software products that are acquired often morph into new packages that support and integrate with their new technology corporate “family.” In many cases some old capabilities that were vital functionality needed by former customers simply wither through developmental neglect and can eventually disappear completely. In other cases procuring the original functionality may become too expensive as overall pricing structures for the new software product family increases. In addition, technology infrastructure changes for the new integrated software environment can create incompatibilities with the IT infrastructures used by the existing customer base.

This may be coming true with respect to software systems capable of full featured management of paper records. Acquisitions in recent years by ECM vendors of ERM software companies whose products also provided paper records management functions have seldom resulted in any significant new functionality being developed to manage the vast volumes of paper records that swamp organizations. The first tasks after most acquisitions are the integration of corporate product strategies, merging of technical staff, creation of software code interfaces, and stabilization of the overall IT infrastructure. The paper and physical media functionality required for many customers is typically ignored or abandoned.

This is a business boon to the companies left addressing paper records management functions. It also leaves an easy market entrance for companies currently concentrating on document imaging and workflow to expand their product’s capabilities as they can offer both paper records management functions and operationally related workflow and imaging as well. Just ask any current user of physical records management software capabilities how much “strategic commitment” is communicated to them by the new acquiring company. They will probably tell you that the current software support staff simply does not know what will happen with the physical records management features that customers use daily.

It will be interesting to see who scoops up or capitalizes on this growing marketplace opportunity. Do you think ECM/ERM software vendors will begin to offer sophisticated physical records management capabilities for a reasonable price without requiring these customers buy into expensive e-records repository architectures? Will existing software companies that excel at offering products for managing physical documents thrive? Or will document imaging and workflow systems vendors take control of this market opportunity? Many Records Managers are caught in the middle of this software requirements challenge. Because they must manage all records regardless of the media used to record the information.


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