Tuesday, May 30, 2006

Hummingbird Taken to Symphony

It’s very rare that I use this venue to explore IT issues. But on occasion, I find that those outlets afforded to my role as an industry analyst are far too restricted for what I want to say. Hence, I will use my blog.

This past week Hummingbird, the Toronto based supplier of content management and connectivity solutions, agreed to be acquired by Symphony, a Palo-Alto-based holding company. Many readers may be most familiar with Hummingbird as the sponsor of the Hummingbird Centre, a popular downtown performance hall. It is perhaps fitting that the Hummingbird Centre was once the O’Keefe Centre for the Performing Arts, owned by the O’Keefe Brewing Company. The ownership of the centre was transferred to Metropolitan Toronto in 1968 just before O’Keefe was merged with Carling Brewing to create Carling O’Keefe. This combined—but Canadian—entity was eventually sold to Elders IXL of Australia in 1987 and then merged with Canadian brewing giant Molson in 1989. In 1995, Molson was merged with its much larger American cousin Coors to form Molson Coors Brewing Company. I’m unclear whether this company should be considered Canadian or American. Perhaps that’s the lesson of these types of mergers.

In writing the last paragraph about Molson’s, O’Keefe, and (obliquely) Hummingbird, I found myself using a great deal of passive voice. In upbraiding myself about this severe lapse of technical writing proficiency I discovered that I was completely unable to assign agency to many of these events. In recollection, they seem as natural as comets or solar eclipses. Luckily, Hummingbird’s story is still fresh and we can still name the actors and describe the conditions. This note, however, is more about my own personal reaction to the acquisition because I have a personal relationship with the story.

My start in enterprise software was courtesy of Hummingbird. At the time, I knew nothing of the software industry and was working as a civil engineer. Knowing that I wanted to change my line of work, I paid a visit to a local company. I talked to the HR directory for Hummingbird’s Kingston Ontario office (formerly known as Andyne). Those who know Kingston will have a good sense of where I was living when I mention that I had to walk south to get to the office! Hummingbird never hired me but they gave me the list of skills that I needed to collect before I could get a job.

I eventually found a position with i2 Technologies, based in Dallas Texas. During my tenure with i2, we purchased a company called Aspect Development. The focus of i2 was—and is—supply chain management. Aspect offered synergies with their supplier management products. The deal was a blockbuster. At the time, it was the most valuable acquisition of a software company. I think the number was around eight or nine billion dollars. It’s an amazing number considering that i2 was later forced to divest itself of many of the employees and products that came with that acquisition. This past year, it finally rid itself of some of the Aspect’s content products. Needless to say, it sold as a fire sale.

So where did that eight or nine billion go? A great deal of it likely ended up with Romesh Wadhwani, the founder and CEO of Aspect Development. While i2’s fortunes (mostly) ebbed and (occasionally) flowed, Romesh went on to establish a holding company called the Symphony Technology Group. STG crossed my screen a few times over the last few years. The frequency has increased steadily in the last few months and now this: Symphony to acquire Hummingbird.

Other analysts have been critical of the acquisition saying that it’s a financial move and not a strategic or synergistic one. They’re missing something. Romesh is not just a financial buyer. This guy knows the software industry and how it works. To fully evaluate the acquisition I think it’s important to review the impact Symphony has had on previous acquisitions. Metreo, IRI, GERS, and Lawson/Intentia still operate as largely independent companies. Symphony allows them to follow their own development agendas and service their target markets. Symphony does, however, provide a guiding hand around development platform and direction. In my opinion, this direction is a good thing.

Compare Symphony to another ravenous consumer of enterprise software companies: Oracle. Ellison and Oracle have made a strong run by acquiring PeopleSoft (and J.D. Edwards), Siebel, and Retek. They have also bought any number of niche product suppliers. As an enterprise, Oracle is now faced with the daunting task of uniting all of these products into some sort of cohesive platform (the much heralded but eternally elusive Fusion). Of more concern to me is the cascade of sales information that Oracle reps have to wade through. I can only imagine what their price book looks like. How can any sales organization manage the crushing realities of such a massive collection of different products and options.

Symphony offers an alternative. The separate organizations know their products and know their markets. And they can offer to cross-sell products from their siblings. To me, Symphony’s ability to simplify the information onslaught of the modern enterprise software conglomerate is an attractive value proposition. We’ll have to see how it works out.

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