Consolidation rules enterprise application market
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14 Feb 2008, Robert Jaques , V3
Consolidation in the worldwide enterprise applications market could become a "permanent fixture" in the high-tech industry, a new IDC report predicts.
Mergers and acquisitions will continue to represent an indispensable vehicle for vendors and investors to strengthen their businesses and portfolios in the years to come.
"In 2007 there were 230 announced and completed deals in the enterprise applications market, and the aggregated valuation reached an unprecedented level of $59.4bn," said Albert Pang, research director for enterprise applications at IDC.
"The deal-makers involved will continue to follow the money because of the need to gain shares in strategic segments ranging from structural design engineering to remittance processing and from mobility to green initiatives."
IDC's report also suggests that western vendors are going east in their hunt for quality deals and "technology gems".
Vertical vendors will start expanding into adjacent or new industries because of a need to diversify their customer portfolios and mitigate risks in anticipation of a "deep and intractable recession".
In addition IDC expects midsized enterprise application vendors to start positioning themselves more like infrastructure players and vice versa by buying each other out.
Do you agree?
Consolidation rules.....but is it hindering innovation?
The acquisition activity that we have seen in the business intelligence market illustrates the growing trend across the IT industry for organisations to bolster their portfolios through purchasing others, as indicated through IDC?s research.
While this may be a positive trend for those looking to extend their offerings, the negative consequence of such rife acquisition is innovation withdrawl, particularly when we look at larger vendors like Oracle and SAP regularly purchasing niche players. Their acquiring habits mean that a focus is placed on integration instead of innovation, as they work to embed the new applications into their existing infrastructures. As a result, we are beginning to see the emergence of a standardised market, lacking in innovation, in which vendors offer a ?one stop shop? for every businesses? IT needs.
Consolidation in a bid to remain competitive is not the answer, the industry needs to continue to strive for innovation to drive the market forward.
Posted by Richard Kellett, SAS UK, 28 Feb 2008