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Vermeer Technologies

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Case Outline: Vermeer Technologies was one of the pioneers in the web authoring tool development industry and was acquired by Microsoft in January 1996 at estimated $130 million. Although the developers at Vermeer were excited with the prospect of working for a giant like Microsoft and very attractive performance based compensation plans, they were also concerned and worried about moving to Redmond with their families, adapting & accepting the new lifestyle at Microsoft. On the professional level they were worried about the bureaucratic, hierarchical and complex organizational structure of Microsoft negatively affecting their work and life. For Microsoft the major concern was how to successfully integrate a small, agile start-up like Vermeer into its corporate culture. (HBR, 1997) Although Microsoft took the right decisions in terms of appointing a dedicated head Chris Peters, VP web authoring unit, as in charge of the transition and responsible for prioritizing the relocation of new employees to Redmond and arranging trips to Microsoft, they however could not convince these developers of the value of product planning schedule and the role of PM. This report would identify the key issues, analyze the alternatives and accordingly suggest suitable recommendation.

Issues for Vermeer: One of the most dominant issues among Vermeer employees was regarding relocation to Redmond. Most of Vermeer employees were older than employees at Microsoft and had responsibilities of family and kids; hence they were reluctant to leave their relatives, friends and lifestyle as in Cambridge and start all over again in Redmond. Adjusting in the Microsoft culture and adapting to the "Microsoft way" were other major factors making Vermeer team sceptical of this move. Apart from the uncertainties involving the relocation, work culture and organizational alignment, Vermeer employees were also worried about internal competition from other Microsoft teams/ sub groups like Blackbird working on web authoring tools. Other issues involved fear of mediocrity, bureaucracy and inefficiencies due to the big size and hierarchical organizational structure of Microsoft.

Issues for Microsoft: One of the challenges faced by Chris Peters, VP Web Authoring Product Unit at Microsoft was the acquisition integration process for Vermeer. The issues involved facilitating the move of Vermeer employees with families to Redmond, making them feel comfortable while also gradually making them adapt to the fast paced work culture at Microsoft and convincing new employees to see the value in Microsoft's organizational structure. A smooth transition into the Microsoft's development process was critical for value creation by successful integration of Vermeer. Another major issue involved addressing insecurities of Vermeer developers related to the role of Program Managers and product planning; essentially this meant ensuring autonomy and sense of ownership for developers.

Alternatives: Irrespective of the alternatives outlined below, Microsoft should prioritize the relocation process by either actively facilitating or outsourcing relocation to real estate specialists. Utilise its resources more towards identifying Vermeer's business model as a whole (Appendix A) and then coming up with an acquisition integration strategy/alternative.

1. Status quo/ Holding integration: This is more like the holding integration approach (Appendix B); wherein the present Vermeer business strategy, which is working well, could be expanded in terms of general management and operations skills. Chris Peters outlined the integration process in two phases; first phase involved facilitating the relocation and helping the Vermeer employees in Redmond. The second phase would be to navigate them through the company. (HBR, 1997). All this would not be required in this alternative and Vermeer could possibly operate as it is operating now with same leadership and development style, only the marketing and other appropriate risk sharing and financial activities would get integrated.

2. Integration based on strategic interdependence/Symbiosis: In this alternative the emphasis would be on sharing of resources at operating level by transferring and mixing teams according to their specialisations and capabilities. This essentially means restructuring the teams based on core competencies, changing leadership styles and cross adaptation of management skills by other Microsoft teams and Vermeer. This would lead to value creation in the sense that both parties get to merge completely and utilize the resources strategically. For e.g. an approach could be to merge Vermeer, Colusa, NetCarta and Blackbird teams to develop the web authoring tools together; hence eliminating duplication of effort and any negative internal competition. This would also help create synergies and enhance overall performance of the team.

3. Integration based on organizational autonomy/Preservation: This is essentially the approach used by peters as in the case, giving complete discretion to the team on most factors with little direction from PM's. In this integration strategy Chris Peters needs to evaluate the need for autonomy to Vermeer web authoring unit in order to preserve the strategic capability of the acquisition. Determining the level of autonomy and specifying the areas in which autonomy is required would play an important



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