Consolidation
The big news in business this week has been consolidation in the software industry. Oracle finally got its wish with an agreement to buy PeopleSoft, which in turn had scarfed up J.D. Edwards. This happened only after a coup at PeopleSoft that ousted the executive team that was dedicated to fighting the takeover. Meanwhile, Symantec bought Veritas this week. Symantec has been on a buying sree for a while.
Much of the analysis of the Oracle takeover focued on what will happen to PeopleSoft customers. Many think that Oracle wants to switch them all over to the Oracle database product.
I think that this consolidation reveals the lack of new markets for enterprise software. These companies sell preponderantly to very large companies. There are only so many of them, and the market is getting saturated. These "ERP" solutions have been so painful to install (I even personally know a few people who lost their jobs over an SAP installation) that the prospect of converting a customer has astronomic odds. No one wants to re-visit that pain.
This sounds a similar chord to the DCS market. Large new installations are few and far between. Tearing out old control systems is painful. Innovation from the suppliers focuses mostly on migration--how to provide new software and solutions without the pain of total installation of new equipment. ABB has come up with new software that can integrate control and information from almost all of the platforms it has acquired over the years. Invensys Foxboro has figured out a way to migrate competitive platforms to its latest platform.
While ABB has maintained many platforms and figured out a way to integrate them, Siemens seems to be taking the Oracle track with its absorption of Moore Products. I've been told that many of the Moore people have left and that customers are being switched to the PCS7 platform.
The market will tell us shortly, in all these cases, whether the integrate or switch solution is the best. One thing is for sure -- in these mature market segments consolidation will probably continue for a while.
Symantec Buys Veritas in 2nd Software Merger This Week. Symantec, the leading maker of computer security software, will buy Veritas for about $13.5 billion, creating the world's fourth-largest software company. By By TERENCE NEILAN. [NYT > Home Page]
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