What does the Datatel and Sungard Higher Education merger mean for higher education?
After being "tipped off" a couple of days prior to last week's merger announcement through web analytics data, it's been interesting to "watch" what's on people's minds through their ongoing web searches and social chatter.
Web queries range from information seeking - "datatel purchase sungard higher education," to searching for analysis - "what does the datatel sungard higher education mean."
Watching the twitter feeds, comments range from partner well-wishes:
... to less enthusiastic responses:
What happens going forward? Here are five questions (and answers) to consider:
1. Was this expected by the market?
For higher ed IT veterans and vendors, this merger is probably not a surprise. With the number of big ERP deals vanishing over the last few years - and outside of organic growth of new products and services - what better way to gain market share and lock-up annuitized service and software maintenance revenues.
Since Ron Lang's arrival at the helm of Sungard Higher Education, some industry observers expected that his task was to get the company into shape for acquisition or to take public if the market turned. He apparently did his job well.
It is also positive sign that Mr. Lang - a SunGard veteran - will continue on with the new company in the role of Vice Chairman of the board.
2. What changes do you expect to see?
In the near term, not much. In the carefully worded merger announcement, the companies pointed out that for the foreseable future both entities will work independently. Sungard Higher Education and Datatel customers have certainly been burning up the phone lines since last week asking their account managers and company executives for insight.
Don't expect much as both companies are limited in what they can say about the future.
In addition to regulatory hurdles, executives will be working on transition plans, evaluating technology portfolios, and assessing their teams.
3. The combined company touts a combined work force of some 3,000 employees. What should employees expect?
In 12 - 18 months, don't expect the companies to be touting 3,000 employees. In mergers, investors typically look for productivity gains (e.g., layoffs) as they combine functions.
Keep in mind the end game of most private equity investments. Reduce costs, gain market share, and make the company attractive for bigger fish - whether that be an initial public offering (IPO) or purchase by an even larger company or investment entity.
4. Will I have to upgrade?
Both companies have strongly reiterated that their customer investments "will be protected." Now, what does that exactly mean is to be determined. Consider the following tweet:
Once company executives have evaluated their combined technology portfolios and create a development road map going forward, expect migration paths from certain software products.
As an institution, I wouldn't take this to be a negative. If decisions are made to sunset some existing technologies, good. Customers will likely be offered incentives to move to better technologies.
And I suspect there are a lot of commissioned sales people within Datatel-Sungard Higher Education that cannot wait for these details.
5. What will be the name of the new company?
From Datatel to Systems and Computer Technology Corporation (SCT), the new name will likely have nothing to do with their technology heritage. Rather they will look for - or create - a name that encapsulates people, service, and higher education.
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