IBM selling off their legacy software products to HCL Technologies is recognized as the largest Indian IT acquisition to date. But how will this move affect IBM’s legacy clients? No notice was given of the deal, yet all these clients have a new vendor and no clarity of what’s going to happen with the development and support of these software assets.
IBM is known for putting themselves ahead of their customers and employees as seen over the years with their FileNet and Cognos acquisitions. Once IBM gets what they want from the company, whether it be revenue or inside information, they dump it and move on.
A couple of years after IBM acquired the then successful web-based integrated business, Cognos, their sale attribution started to dry up. The main problem was that the brains of the Cognos operation quit and essentially Cognos went on life support. Ten years down the line now and Cognos’ reputation and company size has shrunk by almost half the size and resulted in up to 6,000 - 8,000 job cuts.
With the HCL acquisition of IBM’s legacy software, 5,000 of IBM’s legacy clients move across to HCL. This could lead to diminished support for these clients as IBM operates in 170 countries worldwide whereas HCL operates in 43 countries worldwide with their headquarters in Noida, India. So already IBM’s legacy clients are down to 75% less support worldwide for their software. These clients were not made aware of the acquisition before it took place, yet they have already paid IBM a premium to support for these software assets. Now they are left wondering what level of support they will be getting and where their nearest support is?
IBM seem to have sold these software products off with zero regard, once again, for the fact that some of their clients are running their entire software estate on these legacy systems and that they have paid for premium support. They need reliable support as an hour’s systems outage could run into of tens of millions in costs and losses of revenue. How are they expected to rely on a significantly diminished support for such a high-risk area to their business?
Prior to the acquisition, HCL stated that they have a strong client focus and are about the autonomics to transform client’s business and IT landscapes and they are focusing on moving systems into the future, where do legacy clients feature in on this? HCL believes that these additional 5,000 clients will aid their customer base, enhance their business and drive future development. But again,at whose expense and how? Will HCL also treat these acquisitions the same way IBM did, an easy cash flow? Or will there be proper support, maintenance and improvements throughout HCL’s seven new software assets since their clients have already paid for this support.
It is also unclear as to whether IBM’s legacy support employees will move across to HCL or not. If not, this will leave a massive knowledge loss of how to maintain these legacy systems, knowledge that IBM legacy clients rely on to keep their systems stable.
With all this uncertainty, we at Origina have seen an increase in IBM’s legacy clients seeking out third-party support as they don’t want to play the wait and see game. They want the security in knowing that they have the right support in place so that if they have any issues, they are resolved as soon as possible, minimizing the risk.