EMC buys Business Edge - Implications for Life Sciences

Although I've known about this for quite some time, it is now official that EMC has purchased New Jersey based Business Edge Solutions.

A recent article here, for example, discusses EMC's reaction to concerns in the channel that by building its consulting business through acquisitions, it will take business away from their own channel partners. This is known as channel conflict.

That, however, is not the focus of this article, which is more about the impact of this acquisition on our own Life Sciences Industry.

For those of you who have not heard of Business Edge, it is the fourth* consulting and systems integration firm started by, built and then sold by a trio of very smart business people. The vast majority of its revenues come from two industries, Financial Services and Life Sciences. In Life Sciences they have done work for pharma companies of all sizes including Pfizer and Merck.

Within Life Sciences, BusinessEdge has focused heavily in the areas of content management and clinical research. More recently, they have also taken an interest in the Manufacturing segment. From a geographic perspective, BusinessEdge has focused its sales on the eastern corridor and within that, primarily the NY/NJ market. This does not, however, mean that they don't do work elsewhere. In fact, there are clients around the country. Chicagoland and the LA area come to mind.

Consulting and systems integration firms who specialize in content management, eCTDs, SPLs and electronic publishing should rightly be concerned about this acquisition. Especially if they are focused on services around Documentum. Despite protestations to the contrary, past real-world behavior by EMC has shown that they will either try to keep consulting firms away from certain clients or compete with them for the services business. With the BusinessEdge acquisition, they now also gain a very strong core team of content management and Documentum experts. We can expect that these individuals will nicely complement the Life Sciences focused Documentum team within EMC.

The second front will be around Microsoft products and SharePoint in particular. Companies like First Consulting and NextDocs, who have new products based on SharePoint will either need to align themselves with EMC or compete with them head on. On this front, NextDocs is the more likely to be an ally while First Consulting may have to compete. Why? Because they are primarily a services firm and have products that directly compete with EMCs own software offerings (read Documentum).

For pharma, biotech, med. device and diagnostics firms, the impact of this acquisition can't be stated with any degree of accuracy. In other words, we'll need to wait for about two years to see the effects. If you are an optimist, you can hope that the heavy customer satisfaction oriented BusinessEdge staff will get their way and push the EMC consulting organization to be more responsive and caring toward their life sciences clients. If you are a pessimist, you may think that these people will simply be swallowed hole into the current EMC psyche or leave the company out of frustration.

A longer term outcome may be that EMC will develop more industry-focused hardware and software based on input from a stronger consulting/services team. This can only happen, however, if the organizational, reporting and communication structures within EMC foster such cross-pollination.

Another natural question arising from this acquisition is whether the consulting team will be biased toward the marketing of EMC software and hardware. This is a critical question when companies are looking for unbiased opinions from their consultants. To some extent, EMC will be powerless to stop some clients discounting them as an unbiased source. In other words, they won't even be asked to come to the party. In other cases, EMC will be able to show that they can still provide recommendations that are right for the client even if it comes at their own expense. If any company can do this, it is EMC. After all, they have proven with their VMware division that taking a neutral stance can have a tremendous payoff.

Despite what I have said above, and except for existing Business Edge clients, the announcement of this acquisition will most likely elicit a yawn. In other words, it may be much ado about nothing. From where I sit, the growth of one or more major players whether they be hardware, software or services firms is a good thing. After all, we don't want the situation where you can only buy things from IBM or Accenture. Having a choice can only be good.

* - In the interest of full disclosure, I was employed for some time by the third of these companies (Trecom) and have done consulting work for the fourth (Business Edge.)

Comments

[Business Answering Service]

Well, they have proven with their VMware division that taking a neutral stance can have a tremendous payoff.

Ben Cliff