Dell's Quest Software Buyout: Memo Offers Integration Update

Dell's Quest Software Buyout: Memo Offers Integration Update

How is Dell's buyout of Quest Software proceeding? A recent Quest Software (NASDAQ: QSFT) memo sent to employees, and viewed by MSPmentor, suggests Dell (NASDAQ: DELL) is moving fast on the integration plan -- led by Quest VP of Engineering Eric Baurle, Dell Executive VP of M&A Marc Stein (pictured), and Dell Executive Director of SaaS and Application Services Victor Raisys. But not all of Quest's software will survive the integration process, MSPmentor believes. Here's the update.

A recent email to employees states that Dell acquired Quest for three reasons:

  1. Strategic products that are adjacent to Dell's core hardware and services offerings.
  2. Quest offers a scalable, foundational software infrastructure, culture and assets that can accelerate Dell's entry into the software business.
  3. The higher margins and potential revenue that come from a solid software business.
(Interesting, that top 3 list doesn't include cloud integration and cloud migration services.)

Let's Not Mess This Up

So what are Dell's priorities for the Quest integration? The memo stated:
  •  First and foremost, "Do No Harm" (i.e., make sure we preserve Quest differentiators and revenue drivers). [Editor's note: On a somewhat related note, a separate Dell-Quest memo addresses channel partner program commitments and competition with HP]
  • Achieve the "value drivers" (the three main reasons listed further above).
  • Build a $5 billion software company within Dell as part of a strategic multi-year plan.
Those three bullets should bode well for PacketTrap, a small but growing Quest Software business that empowers MSPs with remote monitoring and business management software.

Meanwhile, it sounds like John Swainson, president of Dell's software business, will soon visit -- or recently visited -- Aliso Viejo (Quest's headquarters) to share his software vision.  (Swainson has already talked up his vision publicly.) And sometime in August, Quest Software employees will have their photos taken for Dell security badges.

Some Software Could Die

Sounds promising. But the integration team is closely evaluating potential overlapping product issues. Within an FAQ sent to employees, one question addresses the potential death of some products. It states:
Q: Does Dell want all 200+ [Quest] products, or will products be killed off?

A: Quest’s family of software solutions and key technologies are strongly aligned with Dell’s software strategy. There are areas of complementary IP as well as overlapping offers. The Dell and Quest management teams are working together as part of the integration planning process to discuss go-forward product strategies.
Read between the lines and it's clear some products will need to die -- but that's hardly surprising. Which products could be on the firing line? I have no idea...
TAGS: Financing RMM
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