There’s security in scale
19 October 2018 | 0
Talking to Trilogy Technologies managing director Edel Creely a couple of days after the company announced it had acquired Zinopy Security, I was interested to know the rationale for the purchase. In the original announcement of the deal, Creely described it as “transformational for Trilogy, positioning us as a fast growing group at the forefront of managed IT and security services in Ireland”.
The addition of Zinopy Security was pitched as enabling Trilogy to provide a range of IT and cyber security solutions including virtualisation and cloud computing, IT security and risk management, mobility and professional, managed and consulting services.
“It’s interesting to see an Irish business highlighting the opportunities to build in the UK market, despite the shadow of Brexit hanging ominously over the economic outlook for Ireland and the UK”
There was also room for a mention of Trilogy’s presence in the UK, founded on the earlier acquisition of B2Lateral in 2014, when Creely said it was “well placed to take advantage of the significant growth opportunities in managed IT services domestically and in the much larger UK market, where we now have new opportunities to build on our existing footprint”.
According to Trilogy, the deal was set to create a new group with annual revenues in excess of €20 million and approximately 100 employees. Following the acquisition, the company said it would relocate to a new purpose designed office accommodation in Park West, Dublin.
Speaking in the aftermath of the deal, Creely argued that the market needed more consolidation. “To provide services at the level required in this market, you need scale,” she told me. “You need a technology platform that you have invested in yourself and systems and processes. You need to be investing in technology and people. There’s a level of investment that you need to deliver that and that’s why it makes sense to scale.”
Creely warned that organisations who hadn’t made the required investment would “find it difficult to catch up”. For its part, Zinopy had invested heavily in its security operation centre which made it “a nice fit that’s great for our customers and our people”.
Achieving scale through acquisition is nothing new and it does have the added benefit of delivering it almost instantaneously, rather than expending significant investment in time and money (as well as risk) in trying to build a presence in a market from scratch.
On a related note, it’s interesting to see an Irish business highlighting the opportunities to build in the UK market, despite the shadow of Brexit hanging ominously over the economic outlook for Ireland and the UK. Those opportunities surely depend on the nature of the deal or no-deal that emerges from Britain’s shambolic exit process from the EU, but it Brexit doesn’t seem to be acting as a deterrent yet. Perhaps because, when it comes to achieving scale, the UK is still considered to be the most convenient option for Irish businesses.
Putting Brexit into Context
On the subject of Brexit, it’s perhaps not surprising that the ChannelWatch 2018 report from Context finds that UK channel businesses are less optimistic for the next 12 months than they were in 2017. The report, compiled from interviews with over 7,000 resellers in 14 countries (not including Ireland, unfortunately), found that all the countries were in growth in the first half of this year, with distribution up by more than 5%.
Overall, nearly two-thirds of resellers were optimistic about business in the next 12 months with only 10% predicting they would be worse off and a third believing things would stay the same.
It also suggested that the reseller market is very mature. Nearly half of the companies surveyed were more than 15 years- old, while only 14% were less than five years old. Despite all the dire predictions of many resellers facing extinction if they don’t change their business, there was very little change in overall numbers which were down only 0.3%.
Could there be an argument that the static number of resellers, allied with the large percentage of businesses that are more than five years old, suggests not so much a “mature” market as one that is potentially ripe for change and widespread disruption?
Only time will tell but the channel has been threatened by similar disruptions and shocks for many years and managed to weather those storms before. The general sense of optimism from the resellers who took part in the survey suggests they have no immediate sense of foreboding over their continued role in the provision of IT goods and services for some time to come.
I expect that the findings for Ireland, if Context had asked resellers here for their views, would be broadly in line with those from resellers in the countries covered in the survey. It would be interesting, however, to see if Irish resellers shared the pessimism of their UK counterparts regarding the market for the next 12 months. There are reasons why we don’t have to feel as gloomy about Brexit as companies in the UK but Ireland could still take quite a hit if it continues to place too much of its focus on the UK market. If Brexit does happen, Ireland can exploit its position as the largest English-speaking country in the EU to act as a base for tech companies from the US and other English-speaking countries, possibly including the UK, for their European operations. Let’s hope it’s ready to take that opportunity.