A few days have gone by and I have read a great deal of commentary on the merger of IHS and Markit. It has been interesting to see the various hopes expressed for a dynamic future, the justified faith in valuations borne of data and analytics, the readings of the leadership tea leaves in analytical circles and the various interpretations surrounding the decision to move the tax base to London. All good stuff. But it leaves me puzzled about the questions not asked and the analysis not performed. I have known IHS since it was a Thyssen Bornemiza company years ago, aligned with search engines of the 1980s like BRS. Seeing it then as the Information Handling Services outsource for the aircraft industry of Denver (think taxonomy when we called it thesaurus!) I have watched it grow at least once before out of control, re-niche itself around energy and engineering, and then regrow again in wild acquisitive profusion. Likewise I have watched Markit’s lusty growth, it’s move into data markets (recall DataExplorers) and its competitive issues with Bloomberg and Thomson Reuters.

So, what I wanted to know from the commentators was fairly basic: Does this mean that the IHS rapid acquisition strategy has failed? Is this a portfolio company that, once again, needs weeding and reconcentrating? Will that be done more effectively in London than in Denver? Does this mean that the strategy of buying high value, profitable operations and keeping them in their niches is at an end? When they decide which business areas they want to centre upon, will they create a new data platform, concentrate all of their data from these currently unrelated companies, and begin again on new product development in co-operation with their clients?

And the questions go on. Does this mean the end of using acquisitions as a way of goosing the share price and a return to strategies based around organic growth? Does it suggest a strategy that returns to the old portfolio ideas (it’s never raining everywhere), or, hopefully, is there a Thomsonesque idea here of a Markets company, with the glue not corporate law and compliance, but a specialization in the energy and engineering sectors, the former especially being of great interest and a wider concern for all corporates at large. So does such a strategy foreshadow a bid for Thomson’s IP interests, now available, which would cement a traditional specialization of IHS in industrial documentation from standards to patents? And having just swallowed IPIS, the oil pricing service, can they let Argus Media, now on the block, go to a competitor with similar strategic aims (like Verisk, owner of Wood Mackenzie). (Perhaps, since it will probably go to private equity, this should not disturb a night’s sleep!).

Nature abhors a vacuum! Since I have no answers to hand from managers or analysts, I may have to supply some of my own. IHS owns many stunning properties. But it really does need to get them onto one coherent platform, along with the user data and profiling that has arisen from their historical usage, and get into the service provision mode of co-creating new services in conjunction with their clients. They need no more than two “broad niches”, and Markit can well cover the market focus of those – sell everything that does not fit these niche definitions. Bring third party and Open niche data onto the platform in order to become once more the focus of user service creation efforts – I have already written at boring length on the flawed decision to sell GlobalSpec. Use the business models that give greatest returns for the greatest amount of user reliance and loyalty – business models are not religious beliefs. Above all, think carefully about new product development. Your data is vital: your productisation of it as of now is less so. Your brands are valuable but they are not static either, so you need to be able to extend them across new services built co-operatively with your customers.

And is there room for such a strategy? And who is doing it? Well, a class example would be Lexis Nexis Risk in the insurance vertical. Thomson Reuters are slowly moving from Portfolio Mode to Corporate Market Services mode (corporates as investment vehicles plugged into a service base of law, tax, risk and compliance). Does Bloomberg see it or not? Bloomberg Law and BNA says they buy some of this – but neither of the large markets players, by their small investments in data (New Energy Finance, Point Carbon etc) has put themselves in anywhere near the position now occupied by Markit in energy markets. How that positioning is deployed and how successful it is could be the key to consolidations as yet un-imagined.

Above all, success will depend upon how effectively these players can co-create with users who know and trust them and procreate new product development. The start-ups cannot be relied on to work quickly enough on seed corn funding. The conglomerates cannot simply wait for start-up trial and error to succeed and buy the results – and then not integrate them into their own operations. If we as an industry cannot get this right- then our users will do it for themselves!

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