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The Changing Business of IT

IT Strategy

The business of IT has experienced huge changes, but historically, IT people have been sheltered from most business concerns, as they fell to the legal, procurement or finance departments. Maybe it’s time for the people responsible for IT to be more engaged. Let’s examine several business aspects and I will suggest how IT personnel can participate in their organization’s strategic discussions.

Why Is Consolidation a Concern?

While consolidation remains a focus for IBM clients, it’s become more financially and vendor driven. Consider how HelpSystems, an ISV, acquired Tango/04, TeamQuest, Bug Busters and Linoma Software; while Sirius Computing Solutions, a national reseller, acquired Continuum Security Systems and thinkASG. Popular thinking is that consolidation usually reduces options and choices. I think that’s true. Products and markets are mature, and consolidation is the “natural selection” of the capitalistic world. The farther down the food chain your ISV’s products are, the higher the probability of their being killed off for any number of reasons, including the value in the install base (you) at some point.

What happens when a software company is acquired can vary significantly depending on the acquirer, the financial health of the target and how the market views the deal. As a guideline, if your ISV’s products are not yet the target for acquisition, learn why. Trade publications, newsletters, blogs and consultants are available to assist you. But ask yourself, “If one of my ISVs is going to be bought out, what would likely happen, and what would be the best response?”

I suggest being proactive, early and upbeat. If your ERP system will be unsupported after a conversion period, it’s best to present such facts to your management as soon as possible so that your company has a chance at success. Offer to be a beta test site for the successor or, better yet, a whitepaper subject. For even higher stakes, agree to be featured in a commercial or an ad campaign. Early adopters get to be experts.

The Special Role of Leasing

Leasing provides a special bond between client and reseller that is an intangible but valuable benefit for the reseller. While it’s not impossible to get out of a lease, it can be difficult and costly for the client. When it comes time to renew, the reseller has an opportunity to sell hardware, software and services under the lease, bringing the financial decisions down to a dollars-per-month discussion. Every purchase looks trivial in cost when boiled down to dollars per month over three to five months. The lease can, in most cases, eliminate the need for the dreaded capital appropriation request.

Jim Young is the VP of Sales for Midrange Performance Group, providers of performance management and capacity planning software and services for IBM Power* platforms.



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The Changing Business of IT

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