Last month we examined the evolution of connected applications to integrated applications, specifically within the Human Capital Management software sector. In this article we take a closer look at the underlying technologies that are enabling an integrated approach, and what types of applications might benefit from such approaches in the immediate future.
Integrated or connected, what is the difference?
In the world of enterprise software, the term “integrated” is used liberally to describe systems that “connect” and pass data to each other. But the word integrated suggests these systems are actually woven together, which is rarely the case. At Bulger Partners, we debate these nuances frequently, and most of what we see in software today are connections, not integrations.
Every software sector has experienced, and continues to experience, some level of consolidation. Often, as we’ll discuss below, the consolidation is driven by the desire or need to expand product capabilities and deliver additional solutions to customers. Every organization evaluates build versus buy strategies, and often there are compelling reasons to acquire an existing platform rather than build it from scratch.
An interesting case study can be found in the Human Capital Management (HCM) industry, where rapid and increasingly expensive consolidation occurred between 2005 and 2012. While this consolidation created connectivity between offerings and has no doubt improved the offerings of the HCM industry, new demands from vendors will require enterprise software companies to take the next step towards true integration.
“He who sells what isn’t his’n, Must buy it back or go to prison.”
Daniel Drew, 19th Century American Financier
In Part I of this series, we covered several ways in which tech diligence identifies technical debt and other risks that can lead to unexpected costs and value impairment. In Part II, we explore other technical and legal IP issues that could require unplanned work, delay shipment, or, in the worst case, land an acquirer in a lawsuit over licensing that exposes proprietary intellectual property.
How Tech Trends have Influenced Tech M&A Behavior
Recent tech trends have actually led to a swing in the buy vs. build calculus, not towards more organic development, but to more inorganic growth via acquisitions. While this might seem counter-intuitive, in this article we explore why it is the case.