Cultural concerns cloud acquisition potential
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As a Japanese telco prepares to take over a South African IT services provider, analysts ask whether cultural differences might undermine the deal. Plus, can Adobe sell enterprise software?
In July 2010, Asia’s largest telecommunications provider NTT offered to acquire Dimension Data, a South African IT services provider and Cisco reseller, for £2.1 billion.
The Japanese company’s ICT division, NTT Communications, already offers data centre hosting and other IT-related services, but like many of its peers it sees in cloud computing an opportunity to grow business sales.
Combining NTT’s global telecommunications infrastructure with Dimension Data’s IT services know-how will “create an incredibly powerful and unprecedented combination of capabilities and skills,” said the South African company’s executive chairman Jeremy Ord. “The combined companies will hold a strong competitive position serving global corporations moving to managed infrastructure services and cloud computing.”
However, analysts questioned whether two such culturally and commercially distinct companies might successfully integrate.
“There are historic warning signs that must be heeded in such a cross-cultural, cross-industry marriage,” wrote Ovum analysts Jens Butler and Mike Sapien. “Such trysts have not had the greatest success in terms of globalising, integrating, and delivering a common vision.”
“Unless the respective management teams align at the top, the resulting merged company could well be governed by the ‘slowest’ common denominator of decision-making and drive minimal innovation” as a result, the analysts warned.
Content credibility
Adobe’s decision to acquire Swiss content management provider Day Software was better received by analysts.
“Although they had some of the necessary [technology] pieces, Adobe were never taken seriously as a content management player,” wrote Apoorv Durga, a web content management specialist for analyst firm Real Story Group in reaction to the deal. “This announcement will surely change the situation dramatically.”
Again, though, cultural concerns were raised. Abode is best known for its Photoshop and Acrobat desktop tools, which are used by businesses and consumers alike. Durga believes that the company may struggle to build credibility when it comes to selling “enterprise-grade, customisable software”.
“Their history of selling shrink-wrapped, lower-priced, high-volume software has built the firm into a Silicon Valley giant,” he wrote, “but their ability to sell small-scale but very high-value enterprise software deals remains untested.”
