Business & Finance
Commentary
4/22/2005
07:30 PM
John Soat
John Soat
Commentary
50%
50%

IT Confidential: Technology Marriages Made In Heaven

"It's striking. Success with outsourcing mirrors that in the divorce rate; that is, one in five deals ends within a year, and 50% of all deals end in five years." —Ken Landis, Deloitte Consulting, referring to the firm's recent report on the vicissitudes of outsourcing, "Calling A Change In The Outsourcing Market"


MARRIAGE AS METAPHOR. It's a common theme, comparing business arrangements to marriage--think of the stresses and strains of the vendor/end-user relationship. Given the consolidation going on in the technology industry, it might be fun to look at recent mergers in the light of age-old--and some not-so-old--trends in marriage.

1) PROPINQUITY. One of the earliest reasons for marriage was closeness--closeness in terms of blood line (as in royal lineage) as well as physical proximity (as in The Girl Next Door). That may bode well for the merger of WRQ and Attachmate, unveiled last week. Both companies are in the Seattle area, both do legacy-access applications (what used to be known as PC-to-mainframe connectivity), and both have been around the block more than a few times. Like Prince Charles and Camilla, however, marriage doesn't necessarily increase relevance.

2) CONVENIENCE. The New York Stock Exchange needs it, Archipelago's got it--an online trading floor. But will Archipelago respect the New York Stock Exchange in the future? Will NYSE be faithful? (For more, see story, NYSE And Nasdaq Power Up Electronic Trading)

3) CELEBRITY UNION. Think Madonna and Guy Ritchie; J.Lo and Marc Anthony; Britney Spears and Kevin Federline (OK, bad example). It's an attempt to boost the (perhaps waning) celebrity power of both. That may describe the merger plans of GameStop and Electronics Boutique, two of the biggest names in the electronic-gaming retail market (if you have teenage kids, you know what I'm talking about). True, GameStop and EB may be trying to head off inroads in the electronic-gaming market made by Best Buy and Wal-Mart, but as in any good, violent video game, two heads are probably better than one.

4) TROPHY SPOUSE. A concept that came into being in the 1980s, when baby boomers shucked their hippy pretenses and started making money, it may help describe last week's deal between Adobe and Macromedia. Adobe, the artistic free spirit, finally decided to get serious about its place in the software market and show up Microsoft by snagging an Internet media darling.

5) DIVORCE, AMERICAN STYLE. Is there a winner and a loser in divorce? Not from what I've seen. Still, karma may play a role. Last week, The Associated Press reported that Michael Capellas received a $5 million bonus for pulling MCI out of bankruptcy. Only about two years before, the ex-Compaq CEO was unceremoniously kicked out of Hewlett-Packard after helping engineer that company's acquisition of the PC vendor. So where's ex-HP CEO Carly Fiorina, instigator of the union? She's head of the World Bank, right? Oh, yeah, that didn't happen.

I've been married to the same person for 27 years, so I don't have a lot of experience with the process. And the reasons are only a dim memory for me at this point. Anybody got any good marriage advice? Or an industry tip? Send it to jsoat@cmp.com or phone 516-562-5326. If you want to talk about consolidation--business or personal--meet me at InformationWeek.com's Listening Post: informationweek.com/forum/johnsoat.

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