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 Channel Futures

Networking


CA-Nimsoft: A $350 Million Wake-up Call for VARs, Microsoft

  • Written by The VAR Guy 1
  • March 10, 2010
The VAR Guy suspects most CA employees -- and most VARs -- had never heard of Nimsoft before today. But CA's $350 million buyout of Nimsoft represents a dramatic wake-up call for channel partners and big software companies (um, did somebody say Microsoft?) across the globe. Here's why.

wake-up-call-300x274The VAR Guy suspects most CA employees — and most VARs — had never heard of Nimsoft before today. But CA’s $350 million buyout of Nimsoft represents a dramatic wake-up call for channel partners and big software companies (um, did somebody say Microsoft?) across the globe. Here’s why.

Nimsoft is part of a small but thriving managed services software ecosystem. Over the past five years or so, thousands of VARs and MSPs have embraced remote monitoring tools from Nimsoft, Kaseya, Level Platforms, N-able, Zenith Infotech and various upstarts. Also, big distributors like Ingram Micro have set up divisions (like Ingram Micro Seismic) to help transform VARs into MSPs. (Seismic, by the way, has relationships with both CA and Nimsoft.) That reseller-to-MSP transformation involves building recurring revenue models with customers.

Meanwhile, SaaS-centric MSP tools have been getting acquired left and right. Recent deals involved:

  • Citrix Online buying Paglo in January 2010 (now rebranded as Citrix GoToManage)
  • Quest Software buying PacketTrap in December 2009
  • GFI Software buying HoundDog Technology Ltd. in July 2009

Educated Guesses

How big is the MSP market? The VAR Guy’s best guess goes something like this…

  • Let’s assume there are about 80,000 to 120,000 solutions providers in North America
  • Roughly 10 percent to 20 percent (8,000 to 24,000) of those VARs now offer managed services
  • But only about 10 percent of those MSPs (800 to 2,400) are really, really good at their craft

So is the glass half full — or half empty? The MSPmentor 100 survey, conducted annually since October 2007, proves that top MSPs remain in growth mode.

But here’s the strange part: Most of the world’s largest software and hardware companies — Microsoft, IBM, Hewlett-Packard, etc. — have largely overlooked the MSP opportunity. Fact is, the giants just don’t get it. They’re so busy trying to retrofit traditional IT offerings for SaaS and cloud, that they overlooked the IT channel’s fastest growing community — managed services providers (MSPs).

This Stuff Ain’t Easy

Since around January 2008, The VAR Guy has been waiting for big IT companies to wake up to the MSP opportunity. It’s finally starting to happen. A few key examples:

  • CA’s $350 million buyout of Nimsoft today, which positions MSPs at the center of the next-generation channel, according to Nimsoft CEO Gary Read
  • Lenovo’s work to begin integrating with MSP platforms
  • Cisco’s decision to overhaul its managed services partner program
  • Intel’s commitment to educate VARs and MSPs on recurring revenue opportunities
  • Dell’s re-commitment to work with MSPs on joint-engagements
  • Google’s decision to attend multiple MSP-centric events in 2009 and 2010

Can CA Change?

So, big companies are finally waking up to the MSP opportunity. But can they cash in on the MSP channel? During a conference call with media and Wall Street today, CA CEO William McCracken essentially conceded that CA has failed to master the MSP market. He’s hoping the Nimsoft deal will change that.

At the same time, CA’s R&D teams have been working to reinvent on-premises products (such as CA ARCserve) for cloud, SaaS and MSP environments.

But most of all, CA will need to retrain its existing channel to understand new MSP opportunities. That journey begins today with the Nimsoft buyout. Are other software companies — such as Microsoft — paying attention?


Follow The VAR Guy via his Newsletter; Webcasts and Resource Center; and via RSS; Facebook; Identi.ca; Twitter and VARtweet.


Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Channel Programs Cloud Leadership Networking

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