ChannelTrends: M&A Deals, Tech Stocks Rising & Other Notable News

The channel is in a buying mood this week, from MSP business acquisitions to IBM stock, and a new distribution deal that should enhance the procurement process for ShoreTel partners. Is all this activity a sign the economy is back on solid ground, or could this be an indication of industry consolidation and a move to what many consider “safe investments”? You can be the judge, but several of this week’s topics provide fodder for that discussion.   

Mergers and Acquisitions Ring in a Strong New Year

The New Year is starting off with a flurry of M&A news. Our friend Joe Panettieri at MSP Mentor reported the eighth managed services acquisition of 2011 this week, with Fraser Advanced Information Systems scooping up Harrisburg, Penn.-based MSP PennLantic Corp. With annual revenue of $3 million, PennLantic will retain its name but be referred to as a division of Fraser AIS. Though consolidation of some overlapping facilities will result from the acquisition, executives expect to add employees and increase revenue when both companies are integrated. According to Bill Fraser, president of Fraser, “We have strengthened our position in the Harrisburg region and made our entire organization stronger as a result. We are very pleased to add PennLantic’s talented employees to our team, expand our IT services and resources, and provide our company team members with future growth opportunities.”

This transaction seems like a great example of growth through consolidation, with greater efficiencies and expanded growth potential with the additional manpower. In a regional merger, combining former competitors allows the new company to focus on selling solutions and expanding market growth, reducing discussions focused solely on price.

IT systems integrator NWN continues their expansion as well, announcing earlier this month the acquisition of ComFrame, an international application development firm with two offices in the U.S. and another in Beijing. "The differentiator," says CEO Mont Phelps, "is NWN's lower cost structure, business agility and its strong local relationships with customers which provide the opportunity to Team-Shore -- a unique blend of local development and business resources combined with an off shoring capability." Not only do acquisitions aid the integrator in their revenue and market growth objectives, but it provides the company with additional vendor exposure and partner program incentives.

But this isn’t the Waltham, Mass. provider’s first experience in M&A, buying up a number of organizations since 2000, including Woods Network Services, Tenafly Online and three systems integration units of Xcelecom. Phelps was quoted further in Ingram Micro’s Partner Smart Publication in 2010, suggesting, "The key to integration is to make sure you have the right company before you start, not afterward." That includes having scalable and easily integrated systems in place to start.

Are Strong Sales at Big Blue a Positive Sign For All?

I wouldn’t normally point out a particular company’s stock in an article, but this week’s announcement by IBM sparked some optimism in social media chatter and blog posts. Partners of “Big Blue” are numerous and each seems passionate about the programs and portfolio of products/services offered by the tech giant, but news and enthusiasm outside that community has been tepid during the past few months. I’m not a stakeholder or stockholder in IBM (full disclosure), but some investors I spoke with were quick to point to the company’s 16-percent fourth-quarter profit increase—over fourth quarter 2009—as a sign the economic crisis is over. Net income was also up a whopping $5.3 billion, 9 percent higher than Q4 last year.

As noted Wall Street looks to Big Blue's earnings as an indicator of what businesses are spending on technology. Is this the first BIG sign of growth for technology providers and the overall channel? We’ll have to see how it plays out, but I’m optimistic.

New Channel Options for Unified Communications

Over the past two years, while the IT channel buzz centered on the latest opportunities in cloud computing and managed IT services, the unified communications (UC) market has been gaining speed (and revenue) for many solution providers.  According to ABI Research, the UC market is expected to exceed $4.8 billion, quite a sizable opportunity for a technology that isn’t getting as much press as it used to. That may be about to change, with a number of notable events taking place in just the first couple weeks of 2011.

One of these signs is this week’s announcement that ShoreTel signed an agreement with ScanSource Communications to distribute its line of business communication solutions. The addition of a two-tier distribution network in North America will provide the UC company with greater access to the channel. Through their combined efforts, resellers will have new options when procuring ShoreTel equipment and services, including financing, training and communications. It seems like a win-win for providers, with the opportunities in UC growing and educational programs being developed to build a viable business practice.

One side note on UC: CompTIA is launching a new UC community, expected to be announced in the next couple weeks. This group will develop business educational programs and resources to help IT solutions providers develop this type of technology practice. Interested in joining or learning more? Message them at [email protected].