Avasta Inc. and Siterock Corp. today became the latest couple to come together in the management service provider consolidation dance.
The two San Francisco Bay area service providers believe they are a perfect complement to each others service offerings, with Avasta providing application management services and Siterock providing monitoring services for networks and servers.
But whether the merger of the two privately held service providers is an act of desperation as market acceptance continues to elude the MSP business model is an open question. Neither company has yet to achieve profitability, but officials claim the merger will move up the timetable to break even.
"The companies are doing it not for desperation, but because we feel we can do more together for customers," said an Avasta official in San Francisco.
The services each company provides do not overlap, and in fact one customer found them together to be a perfect fit. "Marrying the two functions together with sophisticated monitoring that can go deep into the machine, the application and the network, and the expertise to take action on problems, notify me and give me detailed reports--thats like having a kick-ass IT department for a quarter of the cost," said one Siterock customer, who asked not to be named.
Siterock, based in Emeryville, Calif., provides monitoring of customers infrastructure using their existing monitoring tools. It uses a centralized alarm processing system to take the data feeds from those management tools, aggregate the alarms into a single view and process them. It then notifies the customers IT staffs when problems are detected. Avasta provides a platform to take action to remediate and resolve problems to quickly put customer applications back into operation. It specializes in managing enterprise resource planning and customer relationship management applications.
The two companies intend to integrate their respective platforms by the fourth quarter. Once the merger is completed sometime next month, the combined companies will eliminate overlapping headcount. Together the companies will have 60 employees, and a customer base of about 50 direct customers and 200 indirect customers through channel partners.
Siterock brings to the table a strong channel program and a partnership with IBM Global Services, while Avasta brings a relationship with Accenture.
The two companies also plan to consolidate into Avastas operations center in San Francisco. Avastas CEO Thomas Engdahl will be named CEO of the combined companies, which will retain the Avasta name. Siterock CEO Tim Bacci will become a board member of the new company.
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