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Software Vendors Scooping Up SaaS Players
4:46 PM EDT Fri. Jul. 31, 2009
It's a phrase that may be heard a lot more this year in the MSP and Software-as-a-Service markets, as larger software vendors scoop up SaaS-focused companies to help them transform their business model.
McAfee grabbed headlines Thursday by unveiling a deal to buy MX Logic and two days before that GFI Software, a London-based security vendor, bought Hound Dog Technology, a U.K.-based managed services platform vendor.
Walter Scott, CEO of GFI, said his company bought HoundDog because it's the easiest way to transition his VARs and customers away from a license-based model, which now accounts for about two-thirds of GFI's sales (the other third is subscription-based).
"This is our first SaaS delivery model in our business that doesn't require an on-premise server. We're pretty excited about doing this. To be honest, I didn't understand until a few months ago how much easier it is to have SaaS as a delivery model for the velocity improvement of the product," Scott said. "[With SaaS], I don't have to test the database on every single infrastructure or hardware platform because I control it. I can roll out new agents when I want. When a customer has a problem, I can see it because it's in my system. It's a better development model."
It's a sentiment that could lead to a bigger trend toward more mergers to boost SaaS adoption. Scott said GFI decided to buy a managed services software company rather than partner with one because he could introduce GFI's network security applications to HoundDog's 1,500 VARs, and because it gives GFI an internal development organization. "They understand the issues of offering a product as a service," he said.
Still, GFI isn't abandoning its on-premise, license-based model completely, Scott said. He envisions a hybrid model going forward. "There's still going to be server huggers out there, which I kind of am myself. I like to own my e-mail server in the office with me. But at the same time we also use SalesForce.com, so my customer data is in the cloud. We will provide both," he said.
The acquisition brings GFI to close to $70 million in revenue, with about half of that coming from North America, Scott said.
As a result of the HoundDog acquisition, GFI is set to offer GFI MAX, its first remote management and monitoring tools for the channel. The solutions allow MSPs to offer realtime systems monitoring, automated daily health checks, asset tracking, patch management, own-brand client reporting and remote support solutions to build recurring revenue, drive down operating costs and deliver best-of-breed IT support services, according to GFI.
HoundDog's solution received a CRN Test Center Recommended seal in 2007.
"It is the easiest solution to get started with for a reseller or IT professional to start an MSP offering for their clients. It can be up and running in 10 minutes," Scott said.
