When Konica Minolta purchased managed services provider All Covered some years ago I was not sure if this trend of "non-services" companies making acquisitions of managed services organizations would be a continuing trend or just a one time occurrence. Furthermore, I wondered if such activity would be solely a trend within North America. I now have answers to both my questions.
Print Vendors Meet MSPs Lanier, a Melbourne Australia based vendor of printers and copiers, just acquired Inspire IT, a managed services provider also based in Australia. While M&A activity in managed services is not new, this deal signals the export of a trend that I believe started in the US with the Konica/All Covered deal. When Konica Minolta purchased All Covered, it was one of the first major attempts by a print vendor to to this. Now, Lanier has done the same thing in Australia. What does this mean?
Why do Print Vendors Want Managed Services? The reasons why the print vendor would do this are obvious. Print vendors, facing increased price pressures on their products, have been looking at alternatives for adding more lucrative IT services offerings to their revenue for some time now. Better revenue, higher margins, greater stickiness and customer satisfaction, and faster time to market (via acquisition compared to building a MSP practice internally) are all real benefits for print vendors facing a commodity future. What MSPs want to know is how do such acquisitions impact their markets and customers.
Konica's future was set early on when they established an objective of making the All Covered locations produce hardware revenues. This was a unique way of gaining greater hardware sales using a MSP acquisition; something many MSP buyers would not do. The trend, if you subscribe to this theory, has been to acquire MSPs in order to increase the amount of managed services, not to increase the amount of hardware you sell. The print vendors seem to have a different perspective.
So, the question becomes whether Lanier will take the same approach as Konica-Minolta. If they do, will Lanier erode the capabilities and relationship it has with its own managed services customers it just acquired? One thing I have learned is that MSP customers are facing even greater choice when it comes to the providers they can choose. It will be interesting to see how much of the old MSP characteristics remain in the new combined company.
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