Zenith Infotech Spins Off Managed Services Software Business

After several months of rumors, Zenith Infotech has spun off its managed services software business, which will be called Zenith RMM LLC. Moreover, Summit Partners -- a growth equity firm -- has invested in Zenith RMM. And Zenith RMM CEO Michael George's background includes multiple company sales. Zenith Infotech's move could trigger an inflection point for some MSPs that are still evaluating their remote monitoring and management (RMM) software strategies. But some well-known MSPs -- including Heartland Technology Solutions CEO Arlin Sorensen and LMS Technical Services Owner Larry Shulman -- are praising the Zenith RMM spin-out. Here are six questions MSPmentor hopes to answer about the deal.

First, a little background: Back in June 2011, Zenith Infotech dismissed rumors that it planned to exit the RMM industry. I'm speaking with Zenith Infotech leaders today to see if they'll clarify their statements from June vs. today's Zenith RMM spinoff. In the meantime, I believe the clarification could involve the following: Technically, Zenith Infotech isn't exiting the RMM market because Zenith Infotech has a stake in the Zenith RMM spin-out -- which has nearly 3,000 managed services partners who oversee nearly 400,000 endpoints, according to  Zenith Infotech.

Still, there's no doubting that the Zenith RMM platform's state of ownership and leadership team has evolved -- significantly. And that evolution could trigger an inflection point for MSPs that are still sorting out their software strategies.

Among the questions and story angles I hope to pursue today:

1. Spin-Off Process?: Was the Zenith RMM business put up for sale, and did any other companies -- including rival RMM software providers -- bid for the business?

2. Synergies: How will Zenith Infotech continue to ensure synergies between its cloud solutions, and the Zenith Infotech RMM solutions. And where does Zenith Infotech's NOC (network operations center) solution fit in this conversation? (I believe it's part of Zenith RMM but will double-check.) Plus, why did Summit Partners decide to invest in Zenith Infotech?

3. Time Horizon?: Does Summit Partners plan to own Zenith RMM for the long haul, or is the company planning to build the company fast and potentially flip it to another buyer? Could summit partners invest in more MSP-centric software providers? Also, how much of a stake does Zenith Infotech retain in Zenith RMM? In a press release, Zenith Infotech says it will continue to be "a major shareholder" in Zenith RMM. But does that mean Zenith Infotech has a majority stake in the company, or a small but significant stake?

4. Rivals: It's safe to expect rival RMM software providers to pursue Zenith RMM's installed base. You can bet rival phone calls into the Zenith RMM installed base will start almost immediately. What steps will Zenith RMM to fend off those rival moves?

5. MSP Reactions: In prepared statements, both LMS Technical Services and Heartland Technology Solutions -- two widely respected MSPs -- strongly endorsed the Zenith RMM spin-out. LMS said the Zenith management portal and NOC are "essential" to its IT services. Heartland Technology Solutions said it has seen the Zenith RMM product roadmap, and came away impressed. But will other Zenith MSPs also endorse the Zenith RMM launch?

6. Staffing and Channel Leadership: Key Zenith Infotech channel leaders like Senior VP Maurice Saluan will remain with Zenith Infotech. I'm curious to see how Zenith RMM will build out its staff -- how many employees? -- and who within Zenith RMM will drive the channel partner strategy and MSP community engagement?

Side note: The Zenith RMM spin-out is one of three business evolution stories we're tracking today. We've also spotted two merger and acquisition deals that could impact managed services providers. MSPmentor will be back with insights about Zenith Infotech, Summit Partners, Zenith RMM, and the other M&A deals today.

TAGS: Financing RMM
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