What’s the Worst That Could Happen?
In the past few months, the contact center industry has seen some major acquisitions. NICE acquired inContact in May, and just a month ago, Genesys acquired Interactive Intelligence. As the press releases rolled out announcing the big news, optimism for the future was the main talking point. Of course, one wouldn’t expect any different. When shareholders and customers are all looking for reassurance that it was a move in the right direction, potential risks are better left unsaid.
According to a Harvard Business Review report, the failure rate for mergers and acquisitions is between 70 and 90 percent. Yes, acquisitions can be successful, but the harsh reality is that they can also be messy, lengthy and often unsuccessful – especially in the tech world.
It’s a risky move no matter how well planned.
Think of an acquisition in terms of buying a house for the first time. You find the perfect house; you fall in love, and you just have to have it. Sure, it’s slightly above your budget, the roof is 20 years old, and the walls need to be repainted, but the realtor is buzzing around your head telling you what a great investment it’s going to be. Two months after moving in, your heater needs replacing. A month after that, the old roof, which the inspector said would last a few more years, is leaking. You’re taking time off work and spending your weekends maintaining your new home. You’re beginning to realize that owning a house involves a lot more work, time, and money than you ever imagined.
This same scenario often occurs with acquisitions. A company is motivated to take on a new enterprise, so they gather a group of advisors and accountants to assess the risks and benefits of the purchase. Once the decision is made to move forward, they find a way to finance the deal. Regardless of how great their advisors tell them the deal is or how optimistic both companies are, only after the purchase can they truly determine the amount of work and money the acquisition will require. The consequences are unpredictable, and unfortunately, many companies find themselves in over their heads after it’s too late.
Can’t We All Just Get Along?
Successfully merging two company cultures takes strong leadership, willing participants, and a well thought out strategy. Egos have to be set aside, new policies have to be put in place, departments have to rearrange their organizational chart, and the list goes on. When two companies merge, potential culture clashes and personnel issues are often underestimated. Trying to sort out a new processes, titles, responsibilities is just another task to add to the daunting list of to-dos that acquisitions require. Day to day tasks are put on the back burner, and resources are stretched. “Business as usual” ceases to exist.
Customers Often Take A Back Seat
Unfortunately, when two companies merge, especially in the tech industry, customers are affected. The Salesforce/ExactTarget merger is a great example. Even though their acquisition was a success both financially and operationally, their customers weren’t immune to the disruption.
Three years after Salesforce acquired ExactTarget in 2013, the merging of software and personnel was considered complete. In regards to the three-year transition, CEO of Salesforce, Scott McCorkle, stated:
“The first year, the company has to learn its away around and perform as expected. Year two, you understand the company and its value, and you have feedback from customers. Year three, you can execute and make things happen.”
As McCorkle admitted, the first three years are rough. In June 2013, an independent analyst firm, Real Story Group, predicted ExactTarget customers would likely experience poor usability in the short-term. Even though Salesforce could now offer an amazing lineup of products, they wouldn’t be very well integrated for years.
Were the predictions right?
The only people who could speak to whether or not those assumptions were correct are ExactTarget customer. Reviews of ExactTarget during the time of the merger provided some great insight into the customer experience. Below are a few excerpts of those reviews:
“The user interface is difficult to navigate, unreliable and often crashes on me. The so called [‘integrate’] with Salesforce is merely a tap that links you to the Exact Target website. The integration that they are currently selling and showing people is a new product – but if you are like myself who purchased the platform a few years ago, they cannot update it. Never, never use a product that has recently been purchased by another company. They’re are too many kinks and issues that need to get worked out.”
“There’s been a lot of lagging lately and errors moving from section to section. I hope this problem will resolve after the product is completely transferred over from being branded as ExactTarget to SalesForce Marketing Cloud.”
“I have experienced less contact from the account representatives since the acquisition of Exact Target by Salesforce. Additionally, we have been told of vast improvements over the past 2 years that have simply been great marketing materials but have never really gotten off the ground and out of BETA. This has been the case since Salesforce took over ExactTarget.”
The Struggle is Real
When two companies come together, technology, people and everything in between have to integrate into a cohesive unit with a shared vision of the future. Many companies jump into acquisitions without fully comprehending the amount of time, work, and manpower it takes to pull it off successfully. Companies that have recently merged are touting a perfect union reminiscent of our favorite lovely lady and a man named Brady, but keep in mind that there’s a very real possibility that what’s actually going on behind the scenes isn’t the perfect love story.