Mick Morton can afford a wry smile about the way the IT industry is consolidating. As HR IT manager at Nottingham Trent University, he assessed several software applications during a comprehensive tender process in 2001, including products from Northgate HR, Oracle and Rebus HR Group. Only Oracle and Rebus made it onto his shortlist, and the university ultimately signed up Rebus in May 2002.
Less than two years later – and just six months after the university finished implementing Rebus’s PS enterprise (PSe) application – his choice became, if you will forgive the pun, academic. Northgate HR acquired Rebus in early 2004 for £153m, the latest in a string of acquisitions that have seen it expand its HR and payroll footprint in the UK.
While Northgate has pledged to continue developing and supporting the PSe product range, it eventually expects customers to switch to its own flagship HR and payroll product, Resourcelink.
This consolidation is becoming an occupational hazard for HR departments. Oracle’s high-profile $9.2bn (£5.3bn) takeover of PeopleSoft, which finally succumbed late last year after an 18-month fight for independence, was the most prominent example of the kind of industry manoeuvring that continues to unsettle software users.
And spare a thought for customers of JD Edwards software, the supplier that agreed to be bought by PeopleSoft just days before Oracle launched its own hostile takeover bid. They have now experienced two ownership changes in the space of 18 months.
For users, takeovers are always a matter for concern. In the short term, they threaten day-to-day disruption, particularly when they are driven by a need for consolidation. This usually means job losses at the supplier, which can result in the departure of key account managers and affect the quality of customer support.
Takeovers also raise concerns about how long customers’ products will be supported and whether the new owner will continue to develop additional functionality. And if customers have to switch products, they know they will be writing off the work they have done to customise the product, while facing the prospect of a time-consuming and costly new implementation.
The flipside of these concerns, however, is that suppliers are motivated by commercial reality. Software suppliers make huge sums of money from the annual maintenance fees they charge to keep their software up to date, which typically amo