US firm Glasshouse Technologies is acquiring two UK storage companies, Sagitta and Source Consulting, in an all-stock deal which will double Glasshouse's staff to over 200 people.
The aim is to provide an international capability for the existing Fortune 500-class clients that all three companies have been dealing with. The all-stock deal suggets that all the management people are in it for the long term and no redundancies are planned. So it's different from the CNT Bi Tech acquisition of last year.
Although both John Rabbetts, as MD of Source, and Andy Norman, MD of Sagitta, will lose their independence, they gain working capital fuel and the ability to meet their client's international requirements. Rabbetts will become MD of Glasshouse Technologies UK with Norman reporting to him as senior VP of technology services. Existing clients such as Marks & Spencer and Virgin Atlantic are now added to Glasshouse's client list including names such as Pitney Bowes.
A Glasshouse European organisation is to be run by Mark Vargo, with previous experience setting up EMC in the UK and merging Bi-Tech, InRange and CNT in the UK. There is a non-executive, part-time, chairman, Alan Watkins, who previously ran Cisco UK.
Their job is to expand Glasshouse's coverage in Europe, building out from the now substantial UK operation and using the existing small Glasshouse presence in Germany. Rabbetts confirmed as much when he told us the company had a plan for Europe and was "aggressively pursuing it".
Why buy both Sagitta and Source Consulting? Rabbetts explained: "Andy [Norman] and I had already agreed to merge before Glasshouse acquired us. I approached Andy to put some space between us and the nearest competitors." Rabbetts says that they were all rolling along in boutique mode, sub-£10 million operations. There was, is, scope for a gorilla to be created.
Glasshouse, he explained, is "as a whole well-funded and significantly venture capital-backed." It's not just in Europe that expansion can be expected. There is, "an existing very small Glasshouse footprint in Singapore and Japan - two or three people - the result of the acquisition of the Auspex services business."
Asked if their customers did not trust vendor-owned storage service operations to be non-partisan, Rabbetts said: "I think that's right. They have trouble in genuinely portraying a vendor-independent perspective." Why don't customers go to the big system integrators such as Price Waterhouse and Cap Gemini Ernst & Young? "The big SIs can manage infrastructures across all aspects of IT, but they often sub-contract out specialised storage part to people like us."
In other words the big SIs don't know enough about storage but are international. The UK storage consultancies know storage but aren't big enough or international.
Enterprise customers want independent and expert storage strategic planning, implementation and design services and, also, operational support services. They can't get this from CNT because, Rabbetts said: "CNT is a product company. It manufacture's hardware, as shown by the acquisition of InRange. I don't classify them as an independent storage services company."
Glasshouse Technologies reckons it can become the global storage services behemoth. It will be able to respond with better value for money, more scalability and cross national boundaries as customers apply storage strategies internationally.