The Canadian acquisition is the first step in an AppRiver strategy to expand its presence further beyond the U.S, but it’s not purely about acquiring customers, as some of Roaring Penguin’s anti-spam technology will be integrated into AppRiver’s own offering.
Roaring Penguin Software will now roar for a new owner. The Ottawa-based email security firm has been acquired by security-focused email hosting provider AppRiver. For AppRiver, the deal is the first in what it says will be an aggressive plan to expand their presence beyond the U.S., where they do most of their business. Roaring Penguin’s customer base will significantly expand AppRiver’s Canadian presence, and will provide a market for additional services they offer, including Office 365, which Roaring Penguin did not sell, and which AppRiver had been unable to sell profitably in Canada until they acquired a physical presence here under Microsoft CSP rules. AppRiver indicated as well that some elements of Roaring Penguin’s anti-spam solution will be integrated into their own.
Growth of AppRiver’s Canadian customer and partner bases is an important objective here, as part of a new emphasis by the company on strengthening their global presence in the SMB space.
“While the cybersecurity market for SMBs has been global, to this point AppRiver has been over 90 per cent concentrated in the U.S.,” said Kevin Hatch, AppRiver’s CFO. “Part of this acquisition is about growing our global presence.”
The Roaring Penguin deal is intended to be the first such initiative in expanding AppRiver globally, and the company says that others will follow.
“We also have small operations in Europe today, and we intend to build them out as well,” Hatch said.
AppRiver has been in Canada for years, but the Roaring Penguin deal significantly expands their operations here.
“They have 840 partners, and over 1000 customers,” Hatch said.
AppRiver also had some difficulties globally with Microsoft around Office 365 when Microsoft changed the sales model from syndication to the Cloud Solution Provider [CSP] one. This had the effect of reducing profit margins for countries in which the provider had no physical presence, to the point where AppRiver concluded it could not be profitable without unacceptable slashes to service levels. They thus temporarily dropped out of directly reselling Office 365 in most countries outside the U.S., although they continued to resell their own value-added security services around it. Having a physical beachhead in Ottawa will allow AppRiver to again profitably resell Office 365 itself in Canada, in addition to the value-added supporting services. The Roaring Penguin customer base also provides an opportunity to jump-start the re-establishment of that business.
“We are now getting back into Canada with CSP in selling an Office 365 presence,” Hatch said. “One of the challenges that Roaring Penguin had was not having the ability to offer Office 365. We can now provide that to their customers, as well as archiving, encryption and other security services that we sell.”
The deal also has some technology advantages around anti-spam for both AppRiver and Roaring Penguin’s customer bases. Roaring Penguin uses a machine-driven, statistical analysis methodology for identifying unwanted messages that will make AppRiver’s own MessageSniffer engine more effective. In turn, the human cognition element in AppRiver’s platform will improve the performance of the filtering that Roaring Penguin’s customers have received.
“Roaring Penguin has some distinguishing features in their email filtering product that have kept them around for a long time in a very competitive market, and we will enhance our product with their technology,” Hatch said. “Their customers also valued their strong customer support, which fits in well with our Phenomenal Care white glove service.”
The transition to AppRiver is expected to be complete by mid-year, with no disruption of service to Roaring Penguin customers anticipated during the change. Going forward, AppRiver also plans a major drive in Canada to bring in new business, including selling additional services to that Roaring Penguin install base.
“It will be a joint effort, and we will push hard there,” Hatch said. “The enhanced services will be great for the Roaring Penguin channel base, whose overlap with our partner network in Canada is not significant. Being able to resell Office 365 alone will be a major plus for them.”