GartnerG2 Says Mergers and Acquisitions Are No Longer the Quick-Fix for Businesses; Relationships Provide More Flexibility and Agility

Special Report Examines Growth Opportunities Through Relationships,
Not Ownership

SAN JOSE, Calif., August 5, 2002 — Mergers and acquisitions (M&A)
are no longer the growth weapon they were before, so for companies
to return to growth, executives must seize alternatives to M&A,
according to GartnerG2, a research service of Gartner, Inc. (NYSE:
IT and ITB). GartnerG2 analysts said companies should look at
building relationships with other companies to meet customer

“We have entered an era of real-time business that
requires unprecedented agility and responsiveness. To react quickly
to changing conditions,
businesses must be flexible and nimble,” said Cathy
Spencer, research director covering strategic sourcing for
GartnerG2. “Rather than broadening
scope and increasing scale through M&A, many companies
are choosing to develop broad reach through new technologies and
relationships and forming integrated business ecosystems.

GartnerG2 analysts say there are processes and functions
within every business that could be performed better by other
companies by building a
variety of sourcing relationships. Most of today’s
sourcing relationships are tactical in nature, primarily driven by
cost reduction. This will change over
the next five years as many sourcing relationships become
strategic and begin to include the most critical sources of business
value, and
encompass the notion of sharing competencies among
companies for mutual benefit.

“From a business leader’s point of view, sourcing
decisions are deceptively simple: there are activities and processes
your company should be doing
itself and there are activities and processes that should
be given to others,” said Neil MacDonald, vice president and
director of research for
GartnerG2. “However, most businesses don’t understand
that the rules governing the “build versus buy” decision have
changed. Getting this
decision right means business growth, market leadership,
faster delivery of solutions to market and improved agility. Getting
it wrong means
relegating yourself to the pack of followers or, in some
cases, extinction.”

GartnerG2 analysts say the first step in leveraging
business partner competencies is for companies to identify their
value discipline—their chosen
path of competitive differentiation – and identify the
critical business processes and functions that define value in the
minds of their customers.
Then companies need to identify which of those critical
processes are part of their competitive differentiation and are core
competencies Processes
and functions that are non-core should be outsourced.

“In today’s competitive business environment, you cannot
succeed by trying to be all things to all people. Choose one
specific value discipline for
your business to pursue, and then select partners with
competencies that complement it,” said Spencer. “Partners that truly
enhance or extend your
core competency are essential to your competitiveness.
Companies will achieve growth objectives by combining the typical
core processes from the
other value disciplines with their own value discipline
through strategic relationships.”

Additional information is available in the GartnerG2
report, “Beyond M&A: Growth Through Relationship, Not Ownership.”
This report examines the
changing dynamics of mergers and acquisitions and
provides recommendations on developing strategy, defining growth
objectives and managing
relationships between business partners. To obtain a free
copy of the report, please go to

Strategic sourcing involves developing a sourcing
strategy and assessing the needs of the organization and whether or
not certain functions should
be outsourced or remain in-house. Gartner wrote the book
on strategic sourcing and this essential piece takes all of the
knowledge and real-world
experience of Gartner analysts and consultants and
integrates it into clear directives that can be used to achieve
successful sourcing relationships.
To order a free copy of Strategic Sourcing: The Book,
please go to

GartnerG2 is a new research service from Gartner that
helps business strategists guide and grow their businesses. For more
information on the
report and about GartnerG2 services, please visit

About Gartner, Inc.

Gartner, Inc. is a research and advisory firm that helps
more than 10,500 clients understand technology and drive business
growth. Gartner’s
businesses consist of Gartner Research, Gartner
Consulting, Gartner Measurement and Gartner Events. Founded in 1979,
Gartner is headquartered
in Stamford, Connecticut, and has 4,000 associates,
including 1,200 research analysts and consultants, in more than 90
locations worldwide. Fiscal
2001 revenue totaled $963 million. For more information,