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Software Love, Marriage and Breakups

In every IT manager's life they'll experience emotions. The ones that come from a deadline beaten, budget broken or program crashed seem most expected, even if managers cannot tell if the news will be good or bad. But the love between software companies, their marriages through mergers, and the breakups of product lines or entire corporations are a different matter to manage.

Wedding riceSoftware love is evident when two companies make their products work together to complement one another. You don't see as much of this as you did even a decade ago, not on the midrange level. Tick off the list of apps and utilities you use and count the ones that take data or processes from another. The 3000 vendors excelled at this, even while they were competing. That's what you get out of firms where the lab is three coders, and as they used to say in the old days, "sitting in a room across from each other and yelling." Software love comes out of labs at first, is blessed by marketing, then approved by the sales force or resellers at its culmination.

Marriage is everywhere by now, but it usually has little to do with love or with needs of customers. At least not the midrange customers of older products. When one software company acquires another -- like JDA being acquired by Ecometry-Escalate-Red Prairie in a reverse takeover -- not many customers get consulted. Those big enough to be already using products from both suitors get a handful of rice to throw. Users of older, established software get something tossed, too, but it is often at them, or overboard.

Companies acquire each other because the expansion of customers, coupled with retraction of jobs and products, makes the deal look good to finance chiefs and big shareholders or investors. It's too early to tell what's going to come of the smaller, but public, Red Prairie acquiring the larger JDA. One early metric is that this new conglomeration now has 131 products -- and fewer product managers than the former aggregate of these two corporations.

Marriage looks good on financial paper, attracts large customers who prefer large vendors, and triggers big change. In some cases, like when Infor bought MANMAN and dozens of other companies, everything got to live together on a massive product list. Your support-paying experience was uninterrupted, but these things signal the end of new features for old products, in many cases.

We'll have more to report from the trenches of the multi-channel, or omni-channel, retail world. One survey has noted that 60 percent of retailers in the under-$200 million space are using Ecometry. And a surprising number of Ecometry sites -- well-known brands -- are still hosted on HP 3000s.

Like Infor in the manufacturing world, the bigger JDA suggests everybody's product is safe.

Will any products be discontinued? How and when will I know?

JDA’s general policy is that products are not sunset, and that customers are not forced to upgrade to specific versions of our products. Our customers are our top priority and we are committed to continue to provide customers value for the maintenance fees that they pay.

Additionally JDA has a comprehensive solution investment policy available online that outlines JDA’s industry-leading policy for supporting legacy versions of products. This policy will carry forward to the merged company.

By May it will be time for hard questions at what's now going to be a combined user conference for the two companies. Once again, managers are in the limited season of change for retail and e-commerce. By mid-year, all projects are locked down, and everything is finished by October. Some retailers make 80 percent of their sales in the final quarter of each year -- not a smart time to be installing, testing or even planning changes.

On the other end of marriage, the breakups become the most devastating emotional events for IT managers. A company whose parts get hurled to the winds of separate buyers loses more intelligence and experience than any other kind of relationship event. True, in a merger the sales rep you know might be one of the departed, judged against new peers who've sold differing products to other clients.

But in a breakup, the customers and accounts are all that a sales force of reps get to cling to -- because the ground they stood upon is crumbled. HP might be facing that kind of breakup, according to some analysts, this year. Others say there's a contingent in the company devoted to keeping it all together, one led by the CEO Meg Whitman.

An online finance publication as "sources familiar with the matter" say HP's leadership is considering a breakup. But that other factions in the boardroom don't feel the need, or even an urgency, to split up.

In a Dec. 27 SEC filing, HP said it was evaluating "the potential disposition of assets and businesses that may no longer help us meet our objectives." But the board has not formed a special committee to assess a breakup option, and does not currently have plans to do so, the people familiar with the matter said.

At issue is not so much how well HP's products are received in the market, as how the stock markets rank the share price. Breakup fans believe their companies are under-valued. Here in Austin, Dell averted a breakup of its services and hardware groups by buying itself back. That's the confidence and swagger of self-love, a rare event in the technology business. Software suppliers usually start with non-public money from venture capitalists. They get rewarded when their investment goes public. But when fortunes slide like Dell's has in a market that's forgotten how to buy PCs, keeping the band together is only possible when you own the stage, so to speak. Private companies are more reactive to customers, even while they have to answer to a new investor group.

At Dell, that group is founder Michael, as well as a large investment group which is said to have serious Microsoft money funding the buyback. Companies can get too big to serve the majority of their customers well. Or to put it another way, too large to serve customers better than smaller competitors. They say that being a market leader pulling in big margins of sales is like walking with a target on your back. Everybody wants to do what this kind of company does, and they get a chance because they can compete on price. A small company can get along with 15 percent margin on sales, instead of 40. They have fewer names on the HR chart to feed.