Solution providers staying pat during the current M&A frenzy could find themselves left standing in what is turning out to be the business equivalent of musical chairs.
This M&A madness is anything but a child’s game. It’s all about making an almost unimaginable business transformation to a world where businesses are buying IT as a service. By the way, this transformation is one of the big reasons we here at UBM Channel put together the BoB (Best of Breed) Conference, which will take place this year from Oct. 15-17 at the Grand Hyatt in Tampa, Fla.
Nicholas Carr, the IT futurist, had it right in his book “The Big Switch,” which compared the current IT-as-a-Service phenomenon to the move by companies 100 years ago to stop building their own power sources and instead move to the electric grid. Today’s transformation, however, does not mean that every business will move outright to the IT-as-a-Service model. There will be plenty that maintain a hybrid model, building their own private clouds and relying on the public cloud for some services. But the economic forces that are reshaping the solution provider marketplace are moving at a breakneck pace.
Solution providers are looking closely at whether they have the right business model and technical talent to make it in this new world. Some of the largest players are bulking up, creating a new class of super-VARs scaling up to gain leverage and cost advantages. Many of those deals are driven by old-world economics. They are all about driving product revenue streams, not compelling new IT services models.
For my money, the more interesting deals are those aimed at cloud computing IT services superiority. GreenPages, for example, which began making big cloud computing investments long before it was fashionable, recently acquired cloud MSP LogicsOne. The deal comes as GreenPages is set to shake up the market with an enterprise hybrid cloud management offering.
“Everything we do is around infrastructure transformation, turning internal IT into a service platform, getting apps and data cloud-ready so customers can move to a new paradigm,” said GreenPages CEO Ron Dupler. “Everything we do is around the cloud.” Even without LogicsOne, GreenPages’ cloud services business is growing at a 30 percent clip. Add LogicsOne to the party and it takes the GreenPages cloud services story to another level.
Another big deal that rocked the cloud computing landscape is the merger of Cloud Sherpas, a top Google partner, and GlobalOne, a top Salesforce.com integrator. It is no small matter that the new company, which will retain the Cloud Sherpas name, also received $20 million in funding from an investment company.
These type of scale-up deals bringing together best-of-breed cloud computing service providers should worry companies that are staying pat. The IT services phenomenon means that solution providers need to, in one way or another, go big or go home.
BACKTALK: Are you going big? Reach out to Steven Burke via e-mail at firstname.lastname@example.org.