There's been a lot of chatter in the market these past few weeks about acquisitions. Some larger players are clearly headed to Costco to look for warehouse bargains (smaller formats and Ma and Pop shops aren't worth the time for these larger players, it seems). As someone pointed out to me the other day, Ariba has clearly spent quite some time attempting to clean up its top line to show higher-quality SaaS revenues--perhaps to argue for a higher valuation in the SaaS multiple range--while quietly pushing increased CD upgrades in Q1 to show the installed base is still alive. Might Ariba be on the shopping list for these larger players? I'd be surprised if wasn't, but then again, it has been for some time. It's just a question of valuation.
More important than who will be at the dinner table--and who will get served --is the question of what consolidation in the sector will mean for customers. Personally, I think we need to break this question down into multiple areas. From a BPO and consulting perspective, customers shouldn't get too worked up over acquisitions if they're buying services or outsourcing today. But they should scrutinize their contracts to see what flexibility they may have under change of control to, at the very least, help with their negotiating options.
In the case of enterprise software (i.e., installed or hosted in a non-SaaS environment), customers should look at acquisitions in a similar manner, although they should be wary about acquirers phasing out support for older versions of applications to force upgrades and/or increasing maintenance costs. Also, it's likely that acquisitions in this type of environment will moderately or aggressively slow innovation, as the acquiring party will often look to manage the new software asset as part of a broader debt-like portfolio with outstanding interest payments due rather than as a way to drive new solution sales and growth (despite what they might say).
For SaaS customers, acquisitions will often prove nothing but negative news--at least eventually. Ultimately, you'll likely be forced to migrate to a new platform if the acquiring party has similar assets (think Procuri/Ariba/CMSI). Chances are prices will go up at some point as well. Metaphorically, you might have bought a Kia knowing it was a Kia, but the acquiring party thinks a Honda would be a more appropriate choice for you down the line. And you'll ultimately have very little--or zero--say in the matter if you want to remain a customer. Moreover, for those lucky SaaS customers who helped define the development priorities for their vendors, chances are your special treatment will go out the server room door, despite what you may have fronted in the past. However, if your SaaS provider is snapped up by a vendor, consultancy, or BPO company with limited solution capabilities in the area already, you may (just maybe!) be in longer-term luck, provided you're willing to tolerate blatant sales pitches for other services and solutions.