SiteLite announced Monday (March 26) that it plans to acquire fellow Management Service Provider (MSP) RECCOM in an all-stock transaction.
“There’s a great synergy between our two companies,” Steve Sickler, SiteLite’s executive VP sales and marketing, told ASP News. “We had already worked with RECCOM on integrating our systems for our work with Exodus, so it makes perfect sense.”
Financial terms were not disclosed, but Sickler put the value of the acquisition, expected to be completed by the end of April, at “tens of millions of dollars.”
SiteLite, founded in 1995, is a founding member of the MSP Association. Its core offerings before the acquisition centered around application and database monitoring through its SiteLite platform. RECCOM’s focus was on network management. The two were brought together when Exodus Communications decided to incorporate SiteLite’s and RECCOM’s offerings into one private-label service they call Platinum 365.
“While we were in talks with RECCOM, we went to Exodus to see what they thought, and they encouraged us to work something out. It makes it easier for them to manage,” Sickler said. “Now we can go after other Exodus-like companies with a one-stop solution.”
SiteLite’s strategy is to become the “outsourcer to the outsourcers,” targeting the system integrator and managed hosting markets, Sickler said.
SiteLite provides proactive monitoring and problem resolution for the industry’s leading software applications, Web servers and operating systems. The acquisition will allow SiteLite to expand its existing software management services to include the monitoring, maintenance and problem resolution of hardware, such as firewalls and networking.
SiteLite will also offer standard application support for applications not included at the enhanced support level, including custom applications, through a managed service agreement, or MSA. With the MSA, SiteLite asks the customer to teach it how to monitor the application – which events to monitor, when to escalate an issue, who to notify, etc. Then that information is institutionalized into the BriteLite management system, and the software is monitored based on the rules the client set forth in the MSA.
The new company and its products and services will be branded under the SiteLite name. Kumar Yamani will continue to serve as president and CEO of SiteLite, while former president of RECCOM, Reddy Marri, will serve as SiteLite’s chief operating officer.
Because there was very little overlap in what the two companies were offering, Sickler said that there would be no layoffs, and in fact the combined company would quickly resume its growth, from 175 employees now to about 200 in the next 3 months, he said. SiteLite is also in the process of finding a combined headquarters in Ervine, Calif., where RECCOM was located. SiteLite is currently 25 miles away in Rancho Santa Margarita, Calif.
On a combined basis, SiteLite and RECCOM provide services to more than 200 customers, including Amgen, BMW, Canon, Ford, Janus, JCPenney, Sharper Image, Sony, Unocal, Vodafone and Washington Mutual.
“MSPs will continue to sustain as a valuable option for companies; this is not just a fad,” said Corey Ferengul, senior program director for The META Group. “With the rapid vendor expansion we now see the majority of MSPs operating with fewer than 50 customers, so consolidation in this industry is inevitable. To survive, MSPs must either expand their customer base or increase per-customer revenue. The only way to do this is to offer more value-add to customers, through new services, or to work with reseller partners.”