EMC denies acquisition will impinge on partners

Storage giant EMC has claimed its recent bid for UK technology consultancy firm Conchango will not threaten its channel, despite misgivings from partners.

As the latest vendor to throw its weight behind the services sector, EMC has unveiled a £42m offer for the certified Microsoft Gold partner in an attempt to bolster its global IT consulting services business.

With headquarters in London, Conchango boasts customers such as Tesco, Marks & Spencer and the BBC. Its 300 consultants across Europe will boost EMC’s global consultancy headcount to 12,000.

It is the fifth consultancy firm to have been acquired by the vendor in the past two and half years. Three of the other four were all Microsoft consultancies based in North America.

Tom Roloff, vice president of global services at EMC, told CRN: “Through previous Microsoft consultancy acquisitions, EMC has built up 450 consultants in North America, but wanted to expand its presence into Europe.”

Roloff explained that Conchango will become the base of EMC’s European Microsoft consulting practice, which is part of the vendor’s consulting and solutions integration services (CSIS) division.

Shareholders happy
The acquisition, expected to close this month, already has the support of the consultancy’s board and some 80 per cent of the firm’s shareholders. Roloff stressed that channel overlap with EMC partners would be minimal.

“Partners that sell EMC products, and are Microsoft partners will not be threatened by the acquisition as they add their own services that are very broad,” he said.

“Hardware-selling resellers that have invested in Microsoft Professional Services may find an overlap, but not a very large one.

“EMC is working to become more disciplined with its partners and to work better with them than it has in the past,” he added.

Mark Walker, business unit director at distributor Horizon, agreed the acquisition would have a minimal impact on partners.

However, Simon Aron, managing director of EMC partner and Microsoft Gold reseller Eurodata, said he was shocked to learn that EMC was acquiring Conchango as the company had never invested in Microsoft services in Europe before.

“Conchango is one of the best and largest IT consultancies, so why would EMC invest so much money into Microsoft services if it did not want to become a competitor to its partners?” he asked.

“EMC chose a Microsoft services consultancy, because it obviously wanted to move into the Microsoft services space, however it is a competitive move.”

Aron explained that Eurodata is a five-times Microsoft Gold partner and Conchango is a seven-times certified Microsoft Gold partner, which means there will be overlap between the two companies.

Conchango was admitted to the Alternative Investment Market (AIM) at the start of this year, claiming it would use the flotation to grow both organically and through acquisition.

Mike Altendolf and Richard Thwaite, the firm’s co-founders and joint managing directors, will lead EMC’s European consulting practice. All other members of Conchango will become part of EMC.

In a statement, Mike Altendolf said: “Conchango is thrilled to become part of EMC, which gives it the platform for expansion throughout Europe as well as access to the expertise and wider resources of the global EMC team.”

Future development
“Conchango looks forward to this next exciting stage in our development and the benefits we believe it will bring to our clients, employees and business partners,” he added.

Jon Collins, service director at analyst house Freeform Dynamics, said: “This acquisition is about standing on the shoulders of giants. It creates lots of opportunities for EMC’s partners to build upon the services that will be available from Conchango.”

“EMC will deliver services incremental of its core business and around its Microsoft portfolio, storage and content management products. It is good news for EMC, as it is growing its business in Europe, and for partners that can build upon it,” he added.

EMC revealed it does not expect the move to have a material impact on its profits for 2008.