ConnectWise CEO Arnie Bellini and Autotask CEO Bob Godgart are scouring the software market for potential acquisitions. And each CEO says they’d consider buying the other company. To be clear: I think this is more talk than action. But the talk provides clues about where the MSP and PSA (professional services automation) markets are heading. Here’s the scoop and some analysis for managed service providers.
The acquisition chatter started yesterday, when word leaked about ConnectWise working with CoreConnex to transition CoreConnex’s PSA customers to ConnectWise’s platform. ConnectWise CEO Arnie Bellini and CoreConnex CEO Frank Coker will address CoreConnex’s PSA customer base during a Web video conference today.
Autotask has countered by offering a special message to the CoreConnex PSA installed base.
Round Two
Now for the latest twist. And it’s a significant one. In a Sept. 15 press release about the ConnectWise-CoreConnex deal, ConnectWise’s Bellini said his company is considering additional acquisitions — including the potential buyout of Autotask.
Here’s the complete quote:
“Despite the most challenging economic times in recent memory, ConnectWise has grown exponentially in the past few quarters. Acquisitions that add to our market share, community, knowledge and support network make good business sense for us at this time,” said Arnie Bellini, ConnectWise CEO. CoreConnex offers technology, business and human resources that will bring value to ConnectWise users and their bottom lines and we will continue to investigate other potential acquisitions, including companies like AutoTask.”
That’s quite a statement for a press release.
Still, Autotask CEO Bob Godgart and ConnectWise COO Santo Cannone both say there have been no acquisition talks between the two companies. But here’s another twist: Instead of selling out to ConnectWise, Godgart says Autotask would consider buying ConnectWise. “And we’ve got the financial backing to do it,” added Godgart.
I don’t have access to the Autotask or ConnectWise financial statements; both companies are privately held and appear to be well financed. Autotask has venture backing while ConnectWise is self-funded.
Reality Check
Will ConnectWise buy Autotask? Will Autotask buy ConnectWise? Near term, I doubt it.
I think both Bellini and Godgart are stating that consolidation is coming to the automation and managed services markets. Godgart says Autotask is looking at a number of potential acquisitions and it sounds to me like Autotask is close to pulling the trigger on something. And certainly, ConnectWise’s Bellini has made it clear his company has the financial muscle to make acquisitions as well.
In some ways, this is a blog post about nothing: Today, ConnectWise isn’t buying Autotask and Autotask isn’t buying ConnectWise. Also of note: Autotask’s Godgart and ConnectWise’s Bellini both have repeatedly stated to me in recent months that competition between the two companies results in better solutions for MSPs.
Still, the competitive posturing has started. And Bellini’s press statement essentially is an open letter to Autotask’s venture capitalists.
I’ve left a bunch of thoughts out of this article, including:
- SaaS: The software as a service model is a key driver for current and future consolidation.
- Corporate Cultures: When consolidation comes, I won’t call the deals mergers. They’re acquisitions, with only one corporate culture surviving.
- RMM: What if a PSA company acquired an RMM (remote monitoring and management) company — or vice versa?
- Wall Street: Is there an IPO window approaching for RMM and PSA companies that want to eventually go public? What if that window doesn’t open?
That’s enough from me. What are your thoughts?
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Posted In: Acquisitions | PSA
Tags: Autotask CEO Bob Godgart | Autotask ConnectWise | ConnectWise CEO Arnie Bellini | managed services acquisitions | PSA Acquisition
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Well Joe, this is starting to read more like a financial blog these days. Signs of the times…Considering that alot of vendors in this marketplace are still pretty healthy and merging and acquiring their weaker sisters isn’t much of a surprise. I still believe cash and the lack of it will be one of the bigger drivers to even more consolidation.
Stu
All I can think to say is that if Autotask and ConnectWise became one company it would be the worst thing that could happen for MSPs in the terms of PSA market. Between the two if they merged (buyout) I’m sure they’d account for more than 90% of the market share. Someone having this much control over a market singlehandedly is just a bad thing.
-Scott
Awesome post Joe! Now that I’ve gotten up off the floor from laughing at the idea of what a merger between the two would look like (and I know you know what I’m talking about), I would like to suggest we visit important topics like what I had for breakfast last Tuesday.
Culturally, I can’t even imagine a merger between the two companies. Still, an interesting statement by Arnie, and an interesting article in general, Joe.
I’ve often thought about what would happen if a PSA company acquired, or developed a RMM solution. The results could be interesting, though interesting as used in the Chinese curse ‘May you live in interesting times’…. Still, I’ll bet we see something like that happen in the future.
Also, given that SaaS has provided unprecedented access to startups and businesses who wish to transition into another specialty without the normal associated costs, one has to wonder if the reverse might be true…why wouldn’t someone develop and offer a hosted solution leveraging the cost and logistical advantages of the model?
Time for an iced coffee…
Jim Van
Logicomm, Inc.
http://www.logicomm-inc.com
Jim: I can’t get ignore the culture issues, either. In a completely hypothetical scenario involving ConnectWise and Autotask, one company would clearly need to be the buyer. And one executive team would likely need to exit. Again, this comment is based on a hypothetical scenario.
As my blog entry indicated both Autotask and ConnectWise seem to be in the market to make acquisitions, but neither company has actually spoken to the other about a potential deal.
Hi Joe,
This is RIDICULOUS.
Autotask has NEVER, EVER had any talks with Connectwise about a merger or acquisition and would never consider it if approached by them because of tactics like this one.
I am shocked and disappointed (but not surprised) at the reckless way that Connectwise and their CEO has unprofessionally dragged us into their fantasy.
If this is just “Arnie being Arnie” – why would anyone want to do business with them?
Bob Godgart
CEO, Autotask
The undisputed leader for hosted PSA for IT.
It continues to amaze me the amount of time and energy each of these two companies waste trading jabs with one other when, by both companies’ estimates, the available PSA opportunity is only 20% penetrated in North America.
This self-induced war of egos is disappointing to the partners and customers of each of these respected and well-run companies.
Would it not make more sense to focus your energy on the 80% untapped PSA market opportunity?
Enough. You are both better than this.
ConnectWise was obviously just trying to strike some FUD into the CoreConnex base that might entertain an Autotask migration. While those of us who have done business with either party find the suggestion laughable, it could be persuasive with those firms in the midst of an unplanned change from CoreConnex. Shrewd move.
Sounds like well placed exposure for both organizations. Those that understand the products/cultures (and business) wouldn’t realistically entertain the thought (today), but it is interesting that Autotask took a defensive posture.
I will have a very, VERY, very interesting thing to show about comment #4 in October.
As for the blog post, I think it’s accurate. I am sure that Autotask would gladly sell Arnie a subscription to Autotask and vice versa
-Vlad
Vlad: When you’re ready to share more in October please give me a shout.
Hi everyone,
This certainly is some very interesting posturing from Connectwise, although the comment about AutoTask appears to be completely fabricated for affect.
Some days I’m actually glad that Tigerpaw doesn’t get the same kind of press coverage as the other two in this industry. Not being drug into such public politics allows us to stay focused on continuing to develop tools that allow our customers to run their businesses better. We certainly are cooking up a special for those getting off of CoreConnex who want to move to a more robust solution than Connectwise.
James Foxall
Senior Vice President, Tigerpaw Software
I’m going to answer Bob’s question about “why would anyone want to do business with them?”
Because the software helps their business.
Why would anyone want to do business with Autotask?
Because the service helps their business.
Why would anyone want to do business with VirtualAdministrator? Because we help them help their business.
This is where the CEOs of all of organizations need to focus. Guy Kawasaki said something that hit the nail on the head at a recent Kaseya event – I may be paraphrasing – “Measure your success by the impact on the people you serve.”
In other words, stop looking so hard at how you’re doing and start looking at how THEY are doing. If you’re focusing on that, the importance of the “personality” aspects of the business vaporize.
There’s a book by Bill Walsh: “The score takes care of itself” that I think has some very cogent advice for leaders in the IT world – here are some snippets:
* Believe in People: Push them hard to be their very best. No one will ever come back later and thank you for expecting too little of them.
* Professionalism Matters: There was no showboating allowed after touchdowns, no taunting of opponents, no demonstration to attract attention to oneself: “Champions act like champions before they’re champions.”
* Keep a Short Enemies List: One enemy can do more damage than the good done by a hundred friends.
* Protect Your Blind Side: Prompt yourself to aggressively analyze not only your organization’s strengths, but also its unseen vulnerabilities.
* Sometimes You Can’t Have he Last Word. A leader cannot escape harsh criticism. Ignore the undeserving; learn from the deserving. Lick your wounds and move on. Your bruised ego will get over it.
We’ve tried to live by this advice as well as that contained in “The Go-Giver” and every time we do, we move a step further forward.
Let’s all take the effort we have put in to “posturing” or “bickering” and put it on being the best option we can for the people we serve. That’s how Connectwise and Autotask started out and how they developed their respective followings, and that’s how they’ll continue to be relevant in a rapidly changing market.
Oh – one last thing. Since VirtualAdministrator is headquartered in the Washington, DC area, and we’re in the home of the original “Beer Summit”, I’m happy to host the First Annual PSA Provider Beer Summit. Bob, Arnie, we can meet at the Brickskeller on 22nd Street – and (at least until the 3rd or fourth round) we’ll see what we can come up with!
I agree with Justin above. We use AT but it is far from perfect as anything is right now. I think focusing on the products to help all of us managed service providers will go farther than any PR ever will. I for one don’t like feeling like I’m back in the gym locker room having to hear triumph stories of the boys with their pants down.
Tavis Patterson
TAZ Networks
Computer Services Ann Arbor
Sounds like Mr. Godgart wants to “take his toys and go home”. And his tagline is interesting. “The undisputed leader for hosted PSA for IT.” How exactly is it undisputed? You should run for President. Did you actually write that with a straight face?
Regardless of whether you wrote your “tagline” yourself, or someone else, it cannot be true. How can that be “undisputed”? Hey, you could be President, looks like you are good at doublespeak!
Make sure you give my regards to Bob Vogel.
Bob, I’m an objective observer. I’m not an MSP, I just do tech leasing. You would have been very convincing if you’d have left that last question off your response. By bashing them, you only expose your own insecurities and it makes you look bad. As a leader in your field, you dont have to stoop to that.
So many of the MSPs here use your stuff, so be the bigger man. I bet you can do it and that you’re better than that.
Stu
Oh, my, goodness! Thank you for the entertainment. No one discussed how much they can bench press? One good comment. Rich Forsen Says focus on the customer. Everything else is measuring your, you know what with a ruler.
While much has been said about ConnectWise and AutoTask posturing, little mention is made about one of the other questions that was posed: Should PSA vendors acquire RMM vendors, or vice versa to make the MSP experience richer?
Judging from the current integration possibilities between various PSA and RMM products, I can only say that there is much room for improvement! And there is at least one RMM vendor (that I know of) that seems to believe that integrating traditional PSA functionality into its RMM product set is going to make its solution more valuable to its clients and that is Kaseya with their imminent introduction of a Service Desk module. Although Kaseya maintains that they will never be a full function PSA product, I cannot help to wonder how traditional PSA vendors must feel when one of their most important components of their solution is successfully implemented in the toolset of a leading RMM vendor.
I am quite interested to see how relationships between PSA and RMM vendors evolve over the next 12 months…
Mark Geschke
Managing Director
Space Age Technologies
I have used AT in the past. It was slow, took me forever to transition screens and was an overall hassle to use. An excel spreadsheet would have been a better tool to use.
I also had an issue with them relying on Active X controls as I do NOT use IE, I use Mozilla Firefox. I install Firefox on all my clients machines, explain to them the security risks associated with IE and suggest that they ONLY use IE when they must (Micrsoft’s website, etc.) My clients’ default browser is Firefox, so the AT Client Ticket Generator wouldn’t work and it was confusing for people. (One of my motivating factors to buy)
When I approached AT about this on their tech support line, I was referred to their forum. Ok, fine. I found a post regarding this and replied to it. I was QUICKLY flamed and an AT employee, I can’t remember his name, but he was an Officer of the company, told me to basically deal with it because they were NOT going to change it.
There were several Engineers that had an issue with this functionality. All I wanted them to do was to edit the Client Service Ticket portion. I never expect or asked to have the entire application re-written.
My impression of AT is that it was NOT a tool that helps me do what I do Better, cheaper, faster, but rather an expense to a vendor that is going to be non responsive to my input. I canceled my membership shortly after that incident.
I would spend money on a tool that makes my life easier, streamlines what I do and helps me stay on top of my business. I won’t spend money on an “Can’t be done” attitude for any reason.
btw, in case it is brought up, I have always had the fastest internet connection available in my area and always will. The cost is relatively not an issue when i look at the increased speed in which I can do what I need to do.
Mark@18: Building on your thoughts about Kaseya, MSPmentor will be watching closely when Kaseya launches its SaaS offering, sometime in the October timeframe (my best guess).
Much in the way that Microsoft increasingly competed with Oracle (and vice versa), I do wonder if a few years from now we’ll see PSA and RMM players competing in some areas.
-jp
In reply to Paul Chrisco’s post:
Hi, Paul. Sorry that you feel that didn’t have a good experience with our product. But I checked our records, and here’s what I found:
You signed up for Autotask Go! more than a year and a half ago in January 3, 2008, and only had the product for five months. (BTW, when you cancelled on June 5, 2008, we even credited you for the month in which you cancelled, even though you were already billed contractually obligated to pay the last month).
Also, there are no service tickets in our system from you complaining of speed issues, and no notes or e-mails from you either… and We ALWAYS document all customer calls, e-mails and service tickets inside of Autotask.
We also always check-in with our customers a month or two after implementation with an initial satisfaction survey. When we contacted you and asked how things were going with survey question, you us a 5 out of 5 “Very Satisfied” when asked how satisfied you were overall.
In addition, we always ask customers who leave to share with us their reasons for cancellation, so that we can either cure the situation, or learn what we need to do better. Your stated reason for cancellation was “financial hardship,” and that you told us you were cutting as many expenses as possible. You also told us that you would consider using us again if/when things turned around for you.
You had that opportunity to complain about about speed issues, about lack of browser support, or even being unhappy that we were not listening to you. Since our Autotask Go! contracts are all month-to-month, you had nothing to fear about telling us the truth at that time.
I’m not sure what your post here has to do with Joe’s original blog post, or what motivated you to write it. But the gist of your complaint about us seems to be that we don’t listen. But the facts here suggest that you may not have taken advantage of the opportunties we presented to you to speak to us.
I think that the vast majority of our customers would disagree with your assessment of us. We’d love for you to come back and give Autotask — the platform, and the company — another try.
A couple of people on this thread called me out for responding so strongly.
Frankly, you were right. I apologize. Thanks for your honesty. I should have just denied the report and moved on.
Bob Godgart
Autotask
Thanks Bob G.! Way to step up and recognize your mistake. Anyone can retort but apologies come from only the humble and brave. I’m glad you are passionate about your company and it is dissapoiting to see you and Arnie always getting into these (can I use the term “pissing contests”? Nah.) petty debates. I would like to challenge both of you in this public forum to keep the blows above board by competing in areas of customer satisfaction and product functionality instead of cheap shots via PR releases and blog comments. You are both better than that. How about that beer summit? Vegas? Jeannine and I will buy.
Mark
Funny thing is I don’t see anyone getting into a “pissing contest” here but employees from Autotask – and not just any employee, but the CEO and some other random employee.
Personally I think it must speak volumes about Autotask as a company. Especially when I can’t find anyone from Connectwise pulling the low blow punches that multiple people from Autotask have in this post. Wow.
This is a 3 WOW post… I don’t use this word lightly.
Wow maybe I’m really dreaming right now and not just enjoying my morning cup of coffee, reading my favorite blogs.
AutoTask, did you really post this information about a customer on the internet? WOW really? a little guy? you had to crush him, publicly embarrass him to make sure he will never post his opinion again? I get stating what really happened, but this, this, is just WOW. You had made your point way before this paragraph.
You’re lucky this guy doesn’t drive to your office. despicable.
Sorry but we’re not friends on facebook anymore…lol
AutoTask wrote:
“In addition, we always ask customers who leave to share with us their reasons for cancellation, so that we can either cure the situation, or learn what we need to do better. Your stated reason for cancellation was “financial hardship,” and that you told us you were cutting as many expenses as possible. You also told us that you would consider using us again if/when things turned around for you.”