As per our posts on Sourcing Innovation earlier this year, the M&A Mania has been in full swing for the past couple of years, and as per the acquisition news that came out Monday, it seems the mania hasn’t abated. But will it abate in 2019?
We hope so.
Sometimes M&A makes sense, but sometimes it’s too much too fast. The theory behind M&A is that it’s easier for the customer to have all the related solutions under one vendor’s roof than three, four or six when they need to build an end-to-end S2P support solution than to have to deal with six vendors when they have integration issues, support issues, or system errors.
It’s a great theory, but it doesn’t work any better in practice if all a vendor is doing is buying up smaller vendors to sell them under one roof. If all of the development teams are separate, all of the product management teams are separate, and all of the support teams are separate, you’re still trying to sync with six different groups in order to resolve integration issues, support issues, or system errors. What difference is it if they are under one roof, three roofs, or six? From your perspective, none at all!
The reality is that it doesn’t help you as a Procurement Practitioner at all if the solutions aren’t integrated, and we don’t just mean data-based end-point integration — where it’s easy to push data out of one tool and pull it into the next. It has to be a deeper integration that integrates process and workflow. And that type of integration doesn’t happen fast. It takes many months in the best of cases, and many years in the worst.
So when a vendor goes on a buying spree, without forethought as to how it’s going to integrate all those solutions into a cohesive platform in a reasonable amount of time, it’s just bringing the integration and support nightmare for its clients under one roof, and not adding any value.
The best M&A is when a company buys a company with a great complementary solution and then steps back, takes the time to get the teams fully integrated and the solution integrated at least at the process level with its solution (not necessarily deep workflow configuration but more than just end-point data integration), and only then thinks about the next acquisition.
Right now the big players have made so many acquisitions that the doctor thinks they are all at full capacity to manage integrations, and in a couple of cases, maybe beyond. So he certainly hopes that the M&A Mania winds down, at least until there is settling across the space.
Plus, any company that acquires too many solutions too rapidly puts itself at risk of acquisition by someone bigger still. Just look at what happened to CA Technologies — the Acquirer became the acquired … by a hardware company! The last thing we want is a big S2P play to be acquired by a big hardware or generic platform vendor that doesn’t understand the space.