Autotask Acquires VARStreet: Services, Products Converge

And now for something completely different. Autotask has acquired VARStreet. The move potentially allows VARs and MSPs to have a single dashboard for managing distributor relationships and product sourcing (VARStreet) and IT services automation (Autotask). Here's some analysis of the deal, the potential implications, and a FastChat video conversation with Autotask CEO Bob Godgart.

According to the official statement from Autotask, VARStreet is a cloud-based e-commerce platform that offers "powerful tools to automate and streamline the entire IT product sales and procurement process." Or as Godgart told me: Autotask and VARStreet represent "managed service and managed product, all under one roof."

Think of it this way:

  • Historically, Autotask has appealed to MSPs that want to more effectively manage their service engagements and internal business processes.
  • VARStreet has appealed to a few hundred VARs that want to rapidly source IT products from distributors and generate the best hardware margin possible.
  • In theory, Autotask and VARStreet together could offer VARs and MSPs a single dashboard for managing service and product engagements.
Is this a game changing move? Potentially yes. Roughly $1 billion worth of IT product sales flow through VARStreet annually. As one distributor source put it, "Autotask is gaining a solid platform in VARStreet. It's a brilliant move by Godgart. VARStreet really works as advertised."

But therein lies the key challenge: VARStreet is a solid platform that has lacked aggressive sales, marketing and promotion to VARs for roughly five years. In many ways, VARStreet's marketing and partner efforts never really promoted the systems' technical power. (You'll find more details about VARStreet's business history over on The VAR Guy.)

What VARStreet Is

Clearly Autotask hopes to bolster VARStreet's position in the market. The system, which Autotask has quietly expanded over the past three months, includes:
  • VARStreet Back-Office technology, a "completely integrated IT Product Sales and Procurement platform that includes real-time pricing and availability from distributors, advanced product quoting, sourcing and fulfillment."
  • VARStreet e-Commerce includes VARStreet Back-Office plus a complete VAR-branded and controlled e-storefront.
  • And an existing high-end VARStreet XC platform, with "more power features and controls, rounds out the product line."
  • All three products are available immediately. An embedded e-commerce module for Autotask is scheduled for release in late April, 2010, following the Autotask Community Live conference.

The Big Picture

In the following FastChat video, Godgart further describes Autotask's buyout of VARStreet, and the implications for VARs and MSPs:

The video discussion covers:
  • 0:00: Introduction
  • 0:15: A quick overview of Autotask buying VARStreet
  • 0:48: What the VARStreet platform does
  • 1:50: What the deal means to Autotask customers, VARStreet customers and the broader VAR market
  • 3:11: A single dashboard for product and service management?
  • 3:45: Integrating VARStreet with Autotask
  • 4:00: Where to find more information
  • 4:23: Conclusion

Current Users

True believers in the VARStreet platform include large VARs and solutions providers like Emtec, Pomeroy IT Solutions and Zebra Technologies, according to Autotask.

On paper, the deal potentially is a win-win for Autotask and thousands of VARs that have yet to automate their businesses. The move also potentially allows Autotask to push beyond the traditional PSA (professional services automation) market, where multiple vendors (Autotask, ConnectWise and Tigerpaw, most notably) have been battling for MSP marketshare.

As a distribution source put it, "VARStreet's technology works, and it allows Autotask to change the conversation and move beyond the basic PSA discussion, which is a knife fight with ConnectWise. Now, Autotask has a solution for all VARs -- even those who haven't joined the managed services discussion."

I've got a note out to the PSA industry players for their potential reaction to the Autotask-VARStreet news.

The Changing Role of PSA

The Autotask-VARStreet move is the latest indication that the PSA software industry has evolved far beyond trouble tickets and service management.

Sources say Autotask and VARStreet have been working on this potential business combination since around September 2009. Around the same time, ConnectWise started developing plans for ConnectWise Capital -- an incubator that has since invested in CharTec (hardware as a service) and LabTech (remote monitoring and management).

No doubt, the ConnectWise vs. Autotask competition sometimes involves dramatic company statements. But ultimately, these are two very different companies moving in very different directions.

In recent months, Autotask and ConnectWise have been talking less about each other and focusing more on new or different market opportunities. That's a healthy development for both companies. And a healthy development for MSPs and VARs that need to move beyond the basic PSA and RMM mindset.

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