Playing “Fantasy UC” – Keys to a Successful Acquisition

One of the intriguing things about the sport of baseball is that its individualistic nature easily lends itself to conjecture about players on other teams. “How would that player fit on my team?”

Teams are always looking at moves they can make to improve themselves. They may need more pitching, for example, or they may need another infielder, or they may need late-inning defensive help for the outfield. Some trades, or acquisitions, are done to help the team immediately run to the season’s playoffs. Other trades are done with an eye toward the future - a team trades for prospects that may turn into big-leaguers some day, or that they can use as “trade bait” in the future.

Fantasy sports are big business, and it’s not hard to come up with the reasons behind their popularity. Owning a fantasy team offers the opportunity to build your own club, position-by-position, from scratch. You compete against other teams; maybe make a little bit of money (if it’s one of those kinds of leagues). And of course, make trades and acquisitions during the season to improve your club — just as in the real world.

In the technology world, the Unified Communications (UC) market is experiencing a rash of merger and acquisition activity, and it seems that hardly a week goes by without an acquisition announcement. When you see all the mergers and acquisitions taking place in the telecommunications industry, do you ever get the impression that some of these companies are playing “Fantasy UC?”

If you look beyond the press release marketing spin, you can see the logic behind what the acquiring company is doing. Enterprises need to go beyond the spin to identify the real purpose of the acquisition, whether it’s a short-term play, or something that sets the company up for success in the long haul. In some cases it’s a “block move” (to keep someone else from doing it), and enterprises need to question if it really fits the company’s overall strategy. These are the issues enterprises need to identify as they step up to the ever-improving buffet of UC choices.

Think about the merger and acquisition activity we have seen recently in UC: Avaya buying Nortel, Google buying GIPS, Cisco buying Tandberg, HP buying Palm, AVST buying Active Voice, Mitel buying InterTel, etc., to name just a few. Despite best intentions, each merger changes a company’s portfolio and disrupts the market.

Strip the layers off the external strife caused by M&A activity to look at what companies must consider and you can see that while adding an integral piece to the product portfolio might be the ultimate goal, for companies that have a plan, mergers are much more than just a product mix.

Mergers are enormous integration efforts that affect every facet of the companies involved. On the personnel side, companies must deal with duplicate and redundant positions, differences in cultures, and differences in technology expertise. Product-wise, companies must consider both portfolios: are there duplicate or redundant products? What about non-complimentary or disparate products, or different technologies and platforms? Is there a way to provide a migration path on a common roadmap to cover both of those contingencies? With all the above components in flux, merged companies still need to retain the install base while embracing (and integrating) the different user groups.

There have been many cases where, as part of a “make or buy” decision, a large company acquires a small company in order to attain a piece of technology. For example, while most people are familiar with Cisco’s acquisitions of Selsius and WebEx, many of Cisco’s 140 acquisitions made since 1993 have been based on acquiring technology elements that become part of a larger offering. While nowhere near the number of acquisitions as Cisco, Avaya has also been guilty of acquiring companies that provide a needed technology component, and in some cases the resulting products were never brought to market.

Aastra is a smaller company without the resources of some of its larger competitors. For this reason, each and every acquisition has to count. Rather than purchasing a start-up company in order to integrate the company’s technology into a larger portfolio offering, which may or may not ever see the light of day, Aastra must have a deliberate and focused acquisition strategy.

Aastra has been busy acquiring companies over the past years, and has successfully integrated not only the products, but the professional and development teams as well. Aastra looks for acquisitions that will serve important purposes, such as providing complementary products or helping to extend its global reach. For example, Aastra’s acquisition of Ericsson’s Enterprise Communication business in 2008 provided the company with complementary products to help establish Aastra as a major player in the enterprise communications market, while also expanding its global footprint by adding operations in Latin America, Eastern Europe, Asia Pacific, the Middle East and North Africa.

Aastra also attributes its success in integrating its acquisitions to its focus on open standards, which allows it to re-use components across different products, such as its endpoint devices and applications like the Solidus eCare Contact Center solution. Case in point, the company’s 2008 acquisition of Ericcson’s enterprise communications business led to the expansion of the MX-ONE IP PBX product capabilities, particularly with respect to open standards and interoperability with SIP endpoints. Aastra has well-defined roadmaps, and a history of continuing product lines to provide smooth migration paths.

In addition, Aastra has capitalized on the core competencies of each acquisition to create “Centers of Excellence” for R&D, as evidenced by Aastra’s Centers of Excellence for Mobility, Applications, Endpoints, Large Systems, Video, etc.  In all, Aastra has 10 Centers of Excellence in 7 North American and European countries.  Aastra gains economies of scale by focusing development resources in these centers and then deploying solutions globally.   

Also important is Aastra’s “overlay” strategy, which allows Aastra’s productivity applications to run on top of customers’ legacy equipment. Aastra’s “Immediate productivity without immediate replacement” philosophy allows customers to migrate at their own pace with minimal up-front capital outlay. This provides investment protection and assurances for customers of the companies that have been acquired, and is a prime reason why many of Aastra’s customers have been using their products for over 20 years. However, Aastra is not the only company to provide this kind of strategy, and several of its competitors have similar capabilities, allowing them to provide wrappers or overlays to existing legacy solutions while moving forward with the vendors’ migration path.

As mentioned, as a smaller company compared with some of its larger competitors, Aastra has to carefully deliberate each and every acquisition to ensure that it meets Aastra’s acquisition criteria. During its long history of acquisitions, Aastra learned the importance of having a clear migration path for existing customers, open standards support, and a commitment to investment protection for customers. The company has shown success with its recent acquisitions, and knows what’s needed to help customers navigate through change – whether they’re customers of the acquirer or the acquiree.

The decision on whether “to dance with the one who brought you,” or look for a new UC team with which to dance needs to be looked at as an opportunity. For the end user, it’s an opportunity to take a look at the reason the acquiring vendor upset your world, and evaluate whether its new offerings are better than what you invested in originally. For the vendor, this is an opportunity to sweep customers off their feet: to help them continue to feel great about their original investment and show them how a future with you is even brighter.

Watch the headlines for the next season of “Fantasy UC” to begin, and as always, ask this question: did your team improve?  

This paper is sponsored by Aastra.