The Wall Street Journal carried a story the other day about the winners and losers in the software industry's rush to consolidation. As you might guess, many of the benefits consolidators promise never pan out. In fact, industry consolidation - whatever the industry - tends to lead to higher prices because it constrains choice for buyers.While the voluminous deal activity has meant a bonanza for shareholders -- many software stocks have soared this year, partly because of the hot merger landscape -- Mr. Gonick's [CIO, Case Western Reserve University] experience highlights the flip side: As the big software companies flesh out their integration plans internally, customers on the outside are left with unanswered questions about their future. It often takes years for software makers to integrate all the products they have bought -- if they manage to at all -- making it hard for customers to decide what to buy in the meantime. Some customers worry about losing negotiating power in the long run as the number of product choices dwindles. And all the dealmaking can crimp a CIO's ability to plan, since it's unclear which software makers will survive.
What can be done about it? Not much.… Read more