October 12, 2009
larry_ellison_oracle_ceoThis is going to be a strange week. I’m leaving a massive IT event (Oracle OpenWorld) and heading toward a smaller, highly targeted managed services conference (N-able Partner Summit). I can’t help but wonder: Is the next Larry Ellison (pictured) or Scott McNealy competing somewhere — right now — in the managed services software market? Here’s why I ask.
Sunday evening at Oracle OpenWorld, several thousand people (including me) listened to Sun co-founder Scott McNealy and Oracle CEO Larry Ellison claim the pending Oracle-Sun merger will crush IBM in the high-end server and data center markets.
But here’s the real lesson: Ellison has managed to keep Oracle at the forefront of the software industry — through Oracle’s own R&D but also through mergers and acquisitions. Major Oracle buyouts included PeopleSoft (and JD Edwards, by association), Siebel Systems and now potentially Sun (and MySQL, by association).
The key lesson: When markets mature, they consolidate around fewer players.
MSP Software Deals: Coming Soon?
The MSP software industry — though far younger and far smaller than the database, ERP and CRM markets — may soon consolidate as well.
A range of factors may trigger the consolidation.
Cloud Computing: A lot of competitive eyes are watching Kaseya’s forthcoming SaaS software launch. Already a major player in the RMM (remote monitoring and management) market, Kaseya’s SaaS offering will have some limited ticketing software. I’m not suggesting Kaseya is going to dive deep into the PSA (professional services automation) market. But plenty of people are wondering if CEO Gerald Blackie plans to both cooperate and compete (“coopetition”) with traditional Kaseya software partners.
Finances: The vast majority of MSP software providers are privately held. Many are venture funded. Those venture capitalists are going to want to cash out at some point — either through an IPO or a company sale.
Market Share Buys: Sometimes, the fastest way to gain market share is to buy it — especially if you’re well-funded and/or generating a lot of cash. ConnectWise has already announced its intention to consider potential acquisitions.
Some folks are predicting at least one or two MSP software industry buyouts before the end of the year.
Elsewhere, I’m hearing rumblings involving a small midwest software company that has some managed services expertise. The rumors started at SMB Nation Fall (Oct. 2-4, Las Vegas). Now, those same rumors are spilling over into my voicemail, though I’ve yet to confirm the speculation, and at least one source tells me I’m chasing a non-story.
Still, I sense consolidation is coming to the managed services software market. I wonder: Who will play the role of Larry Ellison?
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