Monday Morning Impact – November 18

Report: IT Channel Companies Sharpen Focus on Emerging Tech, New Partnerships and Marketing

IT channel companies are increasing their involvement with emerging technologies and actively seeking new partnering opportunities as they strive to maintain their market relevance, according to new research from CompTIA – the voice of Information Technology, an industry trade association based in suburban Chicago.

Emerging technologies such as artificial intelligence, blockchain, drones, and the Internet of Things are viewed by many executives as an answer to the question about the channel’s future relevance.

“Most channel firms see major potential in emerging technologies,” said Carolyn April, senior director of industry analysis at CompTIA. “In many instances adoption of emerging tech remains a slow, iterative process for technology providers and customers alike. But more than half of the channel companies say they’re selling at least one category of emerging tech to customers today.”

The primary reason for adding emerging tech business lines – cited by 56 percent of companies – is the potential for greater revenue opportunities than provided by existing product offerings and customer demand.

“Customers are eager to take advantage of this new crop of technologies as a way to drive their own revenue growth or streamline their operations,” April added. “Many are turning to their current tech providers to help them get there.”

Accounting firms, law practices and digital marketing agencies are just a few examples of non-traditional players that have become sellers of technology products and services in recent years. Many channel firms have begun partnering with new market entrants. The report says three-fourths of channel firms say they frequently or occasionally partners with new players.

Greater use of marketing and social media is also in the channel’s game plan. Four in 10 firms are investing in these areas, including hiring people with marketing skills that fit best with today’s omnichannel communications environment.

The majority of companies surveyed (59 percent) believe there is some truth to the notion that the channel’s relevance is waning, though they add the caveat that future viability will likely be determined by each company’s business model.
One-fourth of channel executives queried believe that predictions of the channel’s demise are overblown, while 15 percent say there is reason to worry.

CompTIA’s “8th State of the Channel” report surveyed 505 U.S. companies engaged in the business of technology to gauge their views on today’s marketplace. These firms are among the nearly 150,000 U.S. channel companies that work with manufacturers and producers to bring technology products, services and solutions to customers.

Channel Impact^®
The report demonstrates how channel organizations are evolving their skillsets and partnership opportunities in order to keep pace and remain relevant in today’s business environment.

ConnectWise Acquires Continuum and ITBoost

ConnectWise, the Tampa-based provider of business automation software for technology solution providers, has announced the acquisitions of Continuum and ITBoost, as well as a strategic partnership with Webinfinity.

The convergence of ConnectWise’s PSA, RMM, and CPQ platform with the service-enabled RMM, security and NOC/SOC and Help Desk from Continuum, IT documentation from ITBoost, and partner relationship management (PRM) from Webinfinity, is intended to substantially increase value to channel partners by connecting the partner upstream to its suppliers and downstream to its customers.

“The combination of Continuum and ConnectWise enables solution providers to transform their business leveraging artificial intelligence, autonomic remediation, and a global workforce when necessary providing our partners with infinite and elastic scale,” said Michael George, CEO of Continuum. “Our two organizations complement each other perfectly, and the journey Continuum has been on for the past eight years—including our acquisitions of R1Soft, CARVIR and BrightGauge—have led to this transformational merger.”

Channel Impact^®
The combined platform represents an opportunity for ConnectWise to serve the much broader partner market by offering turn-key resources that help partners to sell service offerings immediately, and low startup costs that enable the creation of new practice areas or even new services startups.

Anixter to be Acquired in Private Equity Deal

Anixter International Inc., a global distributor based in suburban Chicago, has entered into a definitive agreement with an affiliate of Clayton, Dubilier & Rice (“CD&R”) to be acquired in an all cash transaction valued at approximately $3.8 billion.

Founded in 1978, Clayton, Dubilier & Rice is a private investment firm that has managed the investment of $28 billion in 86 companies, including numerous electrical and industrial distributors. The firm has offices in New York and London.

Under the terms of the merger agreement, CD&R-managed funds will acquire all of the outstanding shares of Anixter common stock for $81.00 per share in cash. This represents a premium of approximately 13% over Anixter’s closing price on October 29, 2019, and a premium of approximately 27% over the 90-day volume-weighted average price of Anixter’s common stock for the period ended October 29, 2019.

“We believe this transaction is in the best interest of Anixter and our stockholders,” said Bill Galvin, Anixter’s President and Chief Executive Officer. “After careful and thorough analysis, together with our independent advisors, our Board of Directors unanimously approved this transaction with CD&R, which has a strong reputation and a track record of success in helping industrial distributors, like Anixter, prosper and grow.”

It is anticipated that upon completion of the transaction, Bill Galvin, along with other members of Anixter’s executive management team, will continue to lead the company.

Anixter reports approximately 130,000 customers, support for nearly 600,000 products and over $1 billion in inventory.

Channel Impact^®
Plans for the company in the wake of the merger are currently undisclosed.