The Ivanti CEO discusses the strategic fit between the companies, the likely direction of the roadmap, and the plans to integrate the two channels.
Ivanti has strengthened their ITSM [IT service management] capabilities, one of the company’s three core foundations, with the signing of a definitive agreement to acquire Cherwell Software. The terms of the deal were not disclosed.
Cherwell has been a direct competitor of Ivanti in the ITSM space. They go after the same customers – basically midmarket and the low end of the enterprise – leaving the big fish to the likes of ServiceNow and BMC. Ivanti CEO Jim Schaper was emphatic, however, in stating that this is not the kind of deal designed to eliminate a competitor and bring their customers into the fold, but has real synergies.
“In my past, I’ve been with companies that have done those kind of deals, where the goal is to buy up a competitor,” Schaper told ChannelBuzz. “The technology lift and shift is typically hard, and the customers wonder if their product will continue. This is not one of those deals.”
This deal, Schaper said, is all about strengthening Ivanti in one of their three product pillars, ITSM, with the other two being UEM, where the recent MobileIron acquisition fit in and security, where Pulse Secure became the anchor tenant when it was acquired on the same day as MobileIron.
“In ITSM, we have been very thoughtful in acquiring assets that complement what we already had,” Schaper said. He noted that Cherwell’s strengths did this very effectively.
“When we looked at where and how we compete and win, its primarily with our service desk capabilities, where we are very strong, and is superior to what Cherwell has had,” he noted. “Customers who buy Cherwell are looking for a different set of capabilities. They are incredibly strong at building out lines of business, like procurement, discovery, and legal. We hadn’t even started building our own lines of business in any depth. So it really is a good fit. Now we will still have a great service desk offering, and will provide customers with multiple lines of business which we will continue to enhance. When you put them together you have an industrial strength product offering, particularly as nobody else has our UEM and security capabilities, which are all brought together with the ITSM in our Neurons platform. Neither Cherwell, nor anyone else in the market, has had this ability to identify and track every endpoint on the network.”
Ivanti, a company created by consolidation four years ago when LANDESK and HEAT were brought together in a venture capital play, is often referred to as a consolidator, a perception which Schaper believes is well off the mark.
“Those kinds of companies tend to leave companies as standalone units,” he said. “That’s not our strategy. I look at our acquisition strategy pretty simply. If we can’t integrate the product, we aren’t likely to buy it. If we aren’t calling on the same customers as them, we aren’t likely to acquire them. They have got to be able to be integrated. They have got to be able to fit into those three product pillars, although we might look at adjacencies as long as it’s the same type of customers.”
While there are regulatory hurdles in making detailed comments on roadmap until the deal closes, Schaper was able to provide some guidance.
“We have no intention of sunsetting either platform at any time in the foreseeable future,” he said. “Both will continue to be supported and enhanced. They both have happy customers. Using Neurons, over time we will look at converging platform functionality. The issue if there is significant change is always what does a customer have to do, and what has to be gone through to migrate them.”
Schaper added that Ivanti liked the fact that with the Cherwell platform, everything is containerized, which gives a lot more flexibility.
Some acquisitions in the last quarter have clearly been the result of the acquired party being negatively impacted by COVID, but Schaper emphasized that this wasn’t one of them.
“To a certain extent we have all been stressed by COVID – even Ivanti,” he said. “Our security has done well because of it, but with everything else, it was difficult to learn how to build pipeline and close virtually. We never had to do these virtually before. With Cherwell, what we saw was a similar phenomenon. Early on, they had issues trying to figure out how to close deals virtually, but by the end of the year, they had worked through these, and they were growing in double digits.”
Schaper also addressed the issue of channel integration. That’s always an important issue when integrating companies with significant channel Go-to-Market, but is particularly so in this case. That’s because Ivanti made a major channel consolidation a year ago to correct what it had concluded were errors in not consolidating after previous acquisitions, so that the channel was bogged down by a lot of non-strategic partners.
“We started consolidating the number of partners in January 2020,” Schaper noted. “We went from 6000 down to 2000, with most of the rest becoming referral partners. We wanted to focus on a smaller number of high value-add partners. We also retooled the plan so they can make more money selling product, not just renewing on maintenance. We now do the renewals direct, and in the three quarters we have done that, we have been seeing a much higher renewal rate. But as long as partners add value and create demand, we now provide a much better program for them.”
Schaper said that both MobileIron and PulseSecure had similar channel models to what Ivanti had before.
“We will focus on the high value-add partners and reduce the number of partners that we have,” he said.
Cherwell’s channel strategy, until fairly recently, has been inconsistent.
“They went back and forth in their channel emphasis, depending on whether they were focusing on midmarket or the enterprise, and using the channel more if it was the former,” he said. “They’ve gotten much more professional in the way that they structure and manage the channel, and make it value-add. Our intention is to ultimately have one master channel program for all with one common rule of engagement, and exclusive channel distribution in areas of the world like the Middle East and parts of Asia where we don’t want direct employees. That won’t occur until later this year.”
That’s still a relatively quick channel integration, as these things often take 12-18 months.
“The management team I brought in likes to move quickly,” Schaper noted.
Initial customer response from both companies has been strong.
“Our customers seem to be anxious to get their hands on the more integrated lines of business,” Schaper said.
Finally, Schaper counselled not to expect a letup in the pace of acquisitions.
“I think we will continue to be very aggressive, particularly as we have two aggressive private equity sponsors,” he said. “Scale does matter in technology, and we are a billion dollar company now, and getting bigger.”