Innovation Blog


Is standardization helping to drive corporate mergers?

Is standardization helping to drive corporate mergers?
Finding a “hook up” in the corporate speed-dating scene may be easier when everyone’s platforms are compatible

By David L. Margulius

January 27, 2006

It’s mating season again in the corporate world (come to think of it, when is it ever not?). Pixar and Disney are dancing the tango, Verizon and SBC have just gobbled up MCI and AT&T, and Guidant is in the final throes of being torn between two lovers -- Boston Scientific and Johnson & Johnson.

In the IT world, we take big-vendor mergers for granted, and sometimes they even make sense. Small companies are good at delivering innovation, but their innovations are often easier to consume as part of a larger package.

But outside of IT, mergers are less straightforward, causing years of integration pain, dislocation, and distraction. And when that’s over, the acquirers often change their mind and decide to spin off those divisions they bought and so painfully munged together.

Now IDC is out with its 2006 predictions, and right up top is a fascinating statement: “In 2005, the shift to more modular, efficient, and business-responsive IT drove dozens of mergers and acquisitions.” I think IDC was referring to vendor community mergers (Oracle-Siebel, for example) but they might as well have been talking about the corporate world, too.

Here’s my thesis: As IT standardizes, the corporate world becomes more like one big Lego set, more plug and play, quicker to build and disassemble. If both companies are on .NET, Java and plain vanilla SAP, or if they’re using SOA, ITIL, or hosted services, it’s a whole lot cheaper and quicker to integrate them (or untangle if need be) than it was when they were all running custom environments on legacy systems.

If you buy this vision of SOA, etc. as recombinant DNA, it means that going forward, we should expect a lot more hook-ups and breakups in the corporate world, and IT shops are in for an even wilder ride. Let the corporate speed dating begin ...

Bring on the Disrupters.  Among the other interesting predictions from IDC is the acceleration of “disruptive” innovation and delivery models in 2006. In a slower-growth IT environment, IDC argues, vendors and customers alike will be forced to think more aggressively outside the bun.

We’ll be confronted with “Open Innovation”, for example, a term that University of California, Berkeley, professor Henry Chesbrough coined, which basically means hard-to-predict innovation coming from non-traditional sources. IT innovation in 2006 may be driven by community-based projects like open source, IDC says, or even by Google.

“Google is the poster child for many, many disruptive visions of what the future will look like in software delivery, content aggregation, advertising, wireless communications, and possibly services like banking, travel, or online auctions,” IDC rhapsodizes.

And finally, the disruptive concept of “IT Inside” will continue to gain momentum, according to the report. The phrase refers to the Fedexes and Hewitt Associates of the world, essentially large BPO companies wrapping a business or consumer service, such as package delivery or benefits management, around a technology core. These are the new OEM’s, IDC claims, and more and more IT dollars will flow through them rather than directly to IT vendors.

I do think IDC is on to something here. Although, as Bill Gates once noted, people tend to seriously overestimate what can happen in a year, and seriously underestimate what can happen in 10 years. I personally will try to be more disruptive this year.