ServiceNow CEO says mergers and acquisitions are off the table – too messy

In a reminder – if ever one were needed – of the sheer brass neck of celebrity tech CEOs, Bill McDermott, head honcho at helpdesk-cum-workflow-slinger ServiceNow, has informed investors that mergers and acquisitions (M&As) are bad for tech integration and engineers hate them. ServiceNow has reported revenue of $1.6bn in the …

[Pascal Monett]

"every day is a reason for celebration"

And that is life for the least talented bloviators with golden parachutes.

At least there's a ripe market for psychiatrists.

[Rango]

It would probably help if I knew what an M & A was. Googling two letters doesn't sound like a good tactic either.

[Cosby]

Merger & Acquisition

[Fruit and Nutcase]

Not to be confused with M & M

[Dave@Home]

Bear with me here

But maybe he's learnt from how painful things were when he tried that route before?

[Cederic]

Re: Bear with me here

Plus a different Board, a different set of shareholders, a different corporate culture, a different management team.

It's almost as though it's a different company.

Disclosure: I've been a customer of SAP and of ServiceNow and have strong opposite views on each.

[Jackissimus]

Re: Bear with me here

I don't know any engineer here at SAP who was a fan of the M&As. And founders like Hasso Platner, still sitting on the board, weren't big fans of them either. SAP's big strength has always been its integration over various components. That was broken by the M&As.

And about ServiceNow: We are a customer of that system too. It's pretty, but slow and completely unusable. Our old internal system was much better.

[Anonymous Coward]

Re: Bear with me here

Shouldn't you be learning this on the way up rather than experimenting in your 1 million Euro a month Top Job?

OK, that figure is the current job not the previous one but it's probably in the ball park.

[jollyboyspecial]

He's not wrong. Senior management usually love M&A but the engineers hate them. For a number of reasons, trying to integrate the systems and workflows of two companies is a nightmare - especially as senior management usually want it done in no time with no budget. Then there's the fact that M&A always come with job losses. Of course management will always say there aren't going to be redundancies, but there always are. Not only that when M&A are even mentioned there will always be people who quit and of course senior management don't want to back fill those roles. Either way they like to call this loss of heads something like "synergy savings" because it sounds nicer than the alternatives. Either way they are always surprised to learn that if two separate companies amounted to X person hours of engineering time to support their customers then a single merged company supporting those same customers will still need X person hours of engineering time.

I don't want to think about how many times I've been through this. "Let's reduce the headcount by ooooh (wet finger in the air) 25% to account for projected synergy savings". Then a few months later "We seem to be paying out an awful lot in overtime, lets recruit more enghineers. About 33% should do it." Of course you've already lost all those years of experience and customer knowledge that you're not going to get back by recruiting new staff. And then the next M or A comes along and the whole process is repeated. One thing you can say for managers it they are consistent and never, ever learn from their previous mistakes.

[DevOpsTimothyC]

You forgot to add another reason senior management usually love a M&A is because senior management typically get some sort of financial incentive.

[jtaylor]

Yup, it's all about their goals. These CEOs are often highly motivated, used to defining a goal and then seizing it.

Fictional example. If the Board at SAP set his Key Performance Indicators were (stock price), (revenue growth targets), and (year-on-year quarterly profit margin), then if he could buy another company to achieve them, he will. Slash headcount? Yes please.

Still fictional, if the Board at ServiceNow set his KPIs as (billable hours per employee), (increased revenue per customer), and (market share), he could invest in retaining staff, jigger how time is billed, push inside sales targets, and offer discounts to customers who drop a competitor.

[Edwin]

It seems he's learned something then ;)