Navigating the M&A Minefield With Third-Party IBM Support

Mergers and acquisitions may be an important tool for entering new markets, or increasing market share, but for the CIO they represent a major operational headache. Merging the supporting the newly acquired IT applications is incredibly difficult at a technical level but also understanding the myriad of complex software contracts of the new environment is often just as complex.

In order to make a merger or acquisition profitable, systems and data need to be combined as quickly as possible. But there are a few (significant) barriers to completing that merger.

Unfamiliar systems and insufficient skills

The sheer diversity of applications and systems in use across your industry is startling – and there’s a very good chance that the company being acquired uses something incompatible with your own. You may even find that divisions within your own enterprise are using different tools for the same tasks.

Either way, if your business doesn’t use the same IBM application, you probably won’t have the skills needed to support them in house. Comprehensive IBM support will be crucial for navigating the initial handover period, providing you with access to the expertise needed during the transition. Less welcome will be the cost of official IBM maintenance, particularly if existing contracts are approaching renewal.

High quality third-party support for IBM applications may not be common – but it is available. The experience of Origina clients has shown that time and effort spent sourcing third-party maintenance is more than repaid in cost savings over OEM contracts. Your business will be able to call upon the resources needed to complete the transition, without being tied into a contract that runs several years into the future.

Duplicated IBM maintenance contracts

Of course, it is possible that both businesses rely on similar IBM applications – but that’s not to say the merge process is necessarily any easier. It’s perfectly possible that you both use different versions of the same application for instance – they may be compatible, but each company will have its own IBM maintenance contract in place, increasing the software asset manager’s administrative overheads and costs.

IBM will of course happily provide a quote to upgrade to bring software versions into line – but it will undoubtedly be expensive. And you will almost certainly be expected to renew your IBM support contract for a further three to five years.

If your business plans to drop IBM applications following the completion of the merger, don’t expect Big Blue to do you any favors. They will almost certainly demand your business signs a full three-year contract, even if the transition takes just one.

Again, the experience of Origina customers shows that there is a better way. By being able to vary the length of IBM maintenance contracts, customers regain control of their contracts – and budgets. As the merger/acquisition progresses, third-party IBM support contracts can be allowed to lapse (or possibly even shortened), ensuring there are no duplicate support provisions in place, and that costs are minimized as far as possible.

Unfamiliar licensing terms

Most software licensing follows the same general trend – perpetual licenses with support arrangements of three to five years in duration, with the obligatory inflationary  cost increase. The details of these contracts can vary widely however, meaning that those software asset managers unfamiliar with IBM’s terms may end up paying more than they need to for services they never use or accidentally tying themselves into longer support contracts than are needed .

Again, the wrong choices about IBM licensing or IBM support contracts will increase the overall cost of the merger, reducing the return on investment.

Bridging the gap more effectively

One way to regain control of the merger process is to go outside existing support structures. An IBM third-party support provider can offer additional flexibility that the OEM will not.

As you would expect, a third-party has the necessary expertise to bolster your own support team. In the case of Origina, IBM support is provided by ex-IBM engineers for instance. This ensures your business can maintain OEM-quality support throughout the merger process. In addition a company like Origina has in-house IBM license experts who can advise along the journey as to what you can/cannot do with you IBM software assets and the associated contracts.

A third-party also offers increased flexibility in provisions. Planning to drop IBM applications during the acquisition? IBM third-party support provisions last only as long as you need them, so you never pay for longer than is required. And you’ll never come under pressure to carry out a costly upgrade either.

A risk-free merger typically relies on keeping as much of the existing infrastructure in place as possible – at least in the first few months of the transition. Traditional IBM support provisions are not designed to simplify the licensing and management of two (or more) disparate application infrastructures.

With no vested interest in selling additional software licenses, or trying to extend the maintenance contract period beyond what your business actually needs, IBM third-party support ensures complete coverage for applications in both businesses and helps to reduce costs during the transition.

One Origina client had decided to standardize on SAP BusinessObjects for BI and reporting across their global operations. Origina was able to reduce the annual cost of supporting IBM Cognos (used by certain divisions for reporting) by 52%, freeing up funds needed to complete a migration to Business Objects and helping them achieve their corporate standardization targets.

To learn more about how IBM support services from Origina can help to make your life easier during an acquisition or merger, please get in touch.