IT Business Acquisitions And The Side Effects On Customers
Originally published in (Business Computing World)
Like any other, the IT market has software vendors of different sizes ranging from small to large. The core strength of these small and medium IT vendors lies in providing a wide range of software products with deep technical expertise. What’s more, these players are more or less becoming game changers because of the incremental innovation that they bring to the market.Besides, the market conditions favour affordable and technically superior products that take on the bigger rivals. That said, the success of many of these agile challengers makes them an attractive acquisition prospect to bigger rivals. It is not tough to guess what the customers of these acquisitions are left to deal with. This article intends to examine the advantages of acquisitions for the organisations and the resulting side effects on the customers.

Acquisitions
First, a little bit of theory. In a business strategy, acquisitions are also known as horizontal integration. It is an integration that occurs when a firm is being taken over by, or merged with, another firm which is in the same industry. The goal of such integrations is to:- Venture into new businesses and markets
- Increase the market share
- Consolidate and monopolise the market
Acquisition behaviour and its impact on customers
For most big players, it is a herculean task to focus on engineering new products all the time. An inorganic growth allows them to increase the business size by acquiring smaller rivals in the same market. However, it is the customers who end up bearing the brunt of such acquisitions. Some common issues that stem from these consolidations are,- Conflicting motives: The acquired company may have different objectives from that of the acquiring company. This impacts customer relationship in terms of SLAs (Service Level Agreement).
- Increase in product prices: The acquisition comes with a cost; it becomes difficult for the organisations involved to manage the products at the existing price points post consolidation. The implications could be an increase in the expenditures and the operational overheads, leading to an increase in price for the prospects and existing customers.
- Product Stagnation: When the organisation acquires a business in the same vertical, there is a significant chance that the scope of the product growth will hit a dead end. This is due to the lack of market expansion outside the existing customer base. In many cases it halts the product growth altogether, negatively affecting the customer.
- Calling off support for the product: Support forges the relationship between the business and customers by enforcing confidence with technical assistance to fulfill the IT service needs. Typically, a product team consists of an engineering department, a product management and the support department. All these three teams have to work coherently to understand the changing needs of the customer and meet the customer expectations. Support engineers are the front runners who play a proactive role in understanding the needs of the customers and delivering solutions instantaneously. Support is that vital link between a product and its users. Any changes in support policies post acquisitions, could adversely impact the customers.
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