The death of the larger HMS provider?

Some weeks ago, I arranged a very popular session we called Question Time with a panel who discussed the topic: ‘Is the recent acquisition of Capita from MRI and other acquisitions a good thing for the sector’.

It was a great event and can still be seen on our YouTube channel here: https://youtu.be/gD_FGSA5Thw

We held this event as I was asked on a number of occasions what I thought about the spate of acquisitions and what it means for the sector.

As folks will know I have been working with housing management systems suppliers, procuring, implementing and analysing for some years and get asked by many landlords and indeed other suppliers what the state of the nation is on a regular basis.

Well, from recent activities and news, I don’t think the state of the nation is all that healthy when it comes to many of the traditional suppliers.

Awkward reviews and customer feedback, needless acquisitions, further competition from other, newer suppliers, and changing needs all mean there is some very serious questions that should be asked of the suppliers. Let’s take some case by case:

Capita/MRI

I don’t think the acquisition of Capita from MRI is all that good for the sector at all. It’s one step too far for the American company. Scale does not necessarily translate and bigger is not better, no matter what anyone says. Capita were seriously struggling on a number of fronts before the acquisition and the buyout means that a company who has aggressively sought and bought many other solutions providers have just added another layer to the complexity and confusion as to their offerings for a sector that needs simplicity. We are now seeing the Competition and Markets Authority (CMA) is investigating the completed acquisition by MRI Software LLC of Capita One Limited. So, a stage too far and a terrible decision? We’ll sound find out.

See the investigation and enforcement order here: https://www.gov.uk/cma-cases/mri-software-slash-capita-one-merger-inquiry

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Civica

I have over the past few days had two calls from landlords asking what I think about Civica’s current position. The initial discussions I’ve had are not looking good, with business change that seems evidence of a poor run of implementations and incredible consultancy costs. If you also pay attention, you will have seen a number of redundancies in recent months, another sign of a struggling business perhaps. Make of it what you will, but when has redundancy been a sign of anything good. Are Civica struggling? Are the new owners getting nervous, it looks like it.

There is also a human side to this, and I know of many excellent folks in Civica that, just before Christmas are looking for jobs.

?https://www.blackstone.com/news/press/blackstone-completes-acquisition-civica/

Aareon

Another company who were a mainstay in the housing sector have had some serious issues of recent years and I am not convinced their recent buy-out from TPG (Who?) for 3.9 billion, that’s right, 3.9 BILLION for a struggling company in a crowded market, well, guess someone thought that was worth it.

So, another acquisition and one that will no doubt bring a pretty pay packet to some individuals, but what about the customers, are they seeing any value? I just don’t know, perhaps worth digging further.

https://www.tpg.com/news-and-insights/aareal-bank-and-advent-international-to-sell-aareon-to-tpg-for-approximately-e-3-9-billion/

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SDM

SDM, perhaps not as well-known as the above companies, yet one with a decent number of customers were recently bought out by the Volaris Group, a massive acquirer of software businesses across the globe. How this is affecting SDM provision of software in the social housing sector I don’t know yet. What I do know IS that when you add it to the mix again we have to ask is there simply too many acquisitions in the sector and is it a good thing, is it damaging trust in said providers actually caring about the sector or is it just about the next buck?

Then there is NEC

NEC just seem to be getting on with things. You may recall they were once Northgate, and one acquisition that was managed well.?

So, it can work, but I wonder if that is the exception,

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Designer Software, MIS-AMS and Rubixx

These three companies seem to be the steady ships of the sector and have not been enticed by big money buy outs that from my opinion seems to be purely about money. Will this remain the case, who knows, but for now these companies must be sitting back and wondering if the amount of acquisitions above can only be a good thing,

So, back to one of the first points. Are there acquisitions a good thing for the sector, will they all work out, is it fundamentally changing the way landlords will seek solutions?

I also think the overall approach is changing and we are seeing a change in systems architecture, with the large, all encompassing system not the only option for landlords. Best of breed, specialist software providers are offering in some cases far better solutions at more affordable costs. Integration solutions are advancing also. My point then to finish up is that there are options, you can if you are unhappy with a supplier question their motives, question if they are right for you as a customer. Carry out some due diligence and ask others what they think. Don't just assume the acquisition is right for you.