IBM's Sell-off to HCL: 4 Take-aways

Today brings news that IBM has sold some of its enterprise software portfolio (most notably Notes/Domino, but also Portal, Connections, and Unica) to HCL technologies.  I've been watching many of these tools for 15 years, and believe there's four things to learn here.


1. These were declining toolsets

RSG evaluates several of these offerings in our Digital Marketing, Enterprise Portals, and Social-Collaboration marketplace streams, and they all had this in common: they are mostly legacy offerings, in long-term decline.  Much will get made of the fact that these are mostly on-premise solutions as well, but I think the bigger story is that they are all complex platforms, the kind that customers have heavily customized.  That makes them sticky, which brings me to the next point....

2. There's money in legacy systems

Just ask OpenText.  They've built a whole business model around acquiring aging platforms and housing them more or less gracefully to their dear demise some years down the road.  It's like a retirement community for digital tools.  This can be very profitable...for the vendor.  And yet...

3. This is probably not good news for licensees

If you license one or more of these IBM platforms, you have good reason to feel a bit queasy right now.  Aside from the usual acquisition bumps, it's not clear that HCL actually knows how to execute effectively on this model.  Among other things, will they now freeze out competing integration partners?  Many licensees have longstanding relationships with knowledgeable implementation firms (again, these are platforms).

4. Lines continue to blur

The line between large outsourcing/integration firms and traditional software vendors has been getting blurry, and this just continues that trend.  Services firms are envious of the recurring revenue streams that vendors see, especially with new cloud models.  As an enterprise customer, though, you need to understand the different motivations and operating models at play.  Strategies can change faster than corporate cultures.  OpenText has been a relatively reliable steward of its aging toolsets; will HCL do likewise?

Want to talk more?

If you're an RSG subscriber with advisory access and wish to discuss this further, feel free to schedule a session with one of our analysts.


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