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Editorial: Got any poison pills?

Editorial: Got any poison pills?

An interesting mix of news, upheavals and predictions appeared in the IT realm last week. While some observers were claiming that the industry was on the up, with companies spending more freely and jobless rates falling for the first time in God-knows-how-many months, a consolidation war was under way in the US.

The People Soft/Oracle/J.D. Edwards saga indicates that the industry can hardly sustain its current numbers even at the highest end of town, which has been steadily streamlining for the last couple of years or so.

Cannibalisation, growth fetishism and poison pills aside, the ERP story has been one of the most exciting IT dramas featuring all the ingredients of a good soapie — the “evil” rich man, lawyers, law-suits and counter-suits, the profiteer — you name it, this story has got it all!

Although PeopleSoft’s board reportedly rejected the bid at the time of ARN’s going to press, the saga is far from over and can have far reaching implications for the market. Locally, no executives were willing to comment, but potential job losses and PeopleSoft brand-slaughter were first on everyone’s lips. So far, the only victim of the process seems to have been the ego of grand and cheeky Larry Ellison who, in a manner of a seasoned politician and great public opinion manipulator, accused PeopleSoft’s management of not looking after its shareholders in rejecting Oracle’s bid.

On a lot smaller scale, more rumours of mergers, marriages and acquis­itions created white noise in the local IT channel. Predictably, it was the eXeed-Dicker Data speculation that sent the most tongues wagging, with a number of people offering their two-cents worth on what could be one of the most significant mergers to hit the local IT scene for a while.

While most pundits commented on the potential value of the transaction, speculated to be at the lower end of the $10-20 million scale, the main actors remain mum last week, preferring to keep the details of the negotiation under wraps. And while the eyes of the channel are on one of its most liked figures — Fiona Dicker, further channel consolidation efforts are brewing behind the scenes with at least a couple of tier one resellers rumoured to be in merger talks. Meanwhile, another channel favourite — research group Inform Business Development was another company to become part of a larger entity -— GfK Marketing Services for an undisclosed amount.

The events of last week indirectly confirmed that HP was continuing to realign its tier one resellers, with Digiland’s MD, Paul Kruss, revealing the distributor has signed ‘several’ formerly tier one HP resellers in the last few weeks. In another bout of ‘it’s none of your business’ type secrecy, HP has not only refused to comment on the developments, but has also issued instructions to most of its partners asking them not to reveal any details of the new restructure, with affected resellers too worried about potential consequences to speak out.

Of course, all will be revealed in due time — when the deed is done, that is. It will include the fact that the new and tighter credit terms of the largest channel partner in the world may force some of the realigned partners either out of business or into marriages of convenience. And don’t take this statement as proof of sensationalism-prone journalism, one reseller — speaking to ARN — already claimed the reduced credit terms meant the end of the affair for his HP-dependent outfit. Sadly, consolidation seems to be THE channel story of the moment, and as exciting as it may seem in creating a good read here and there, the reality is that there is no real sign of it being completed any time soon.


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