November 15, 2016 – Solganick & Co. issues its latest M&A update for the IT Services, Cloud and Managed Services industry sector for Q3 2016.  You can download the full report here: Solganick Co MnA Update – IT Services Cloud and Managed Services Q3 2016


The following summarizes the report:


IT Services, Cloud and Managed Services M&A Drivers for 2016-2020


Hybrid Cloud

By 2020, only 20% of enterprise workloads are expected to remain on premises as outsourced and cloud facilities become more popular. Having both on premises and cloud facilities allows user companies instant access to standard business capabilities via the public cloud, as well as a regular but more secure access via the customized private cloud. According to industry experts, by 2018, at least 50% global IT spending is forecast to be cloud-based, with over 50% enterprises expected to create and/or partner with industry cloud platforms. Further, during 2013–2018, the global cloud market is estimated to grow at ~19% CAGR to $139 billion, including a $70 billion contribution by private cloud.

Although the hybrid deployment model offers greater flexibility for IT and the enterprise, it has brought additional problems for IT professionals. CIOs and administrators have to find new ways to measure key performance indicators (KPIs) as data center sources become more complex. Furthermore, using a hybrid model involves comprehensive training for employees and additional costs in coordinating movement from on-premises and off-premises facilities. Service brokers have a new importance in the IT process, ensuring continuity and consistency between providers, KPIs and service-level agreements.


Cyber Security


Top Trend: With the emergence of telematics and IoT in business and consumer applications, companies are dealing with higher rates of cyber attacks. For IT and tech-enabled services companies, these security threats present opportunities for potential business and another layer of internal complexity. Due to the increasing number of separate technology solutions, systems integrators and IT services providers will find it harder to deliver an acceptable security solution, and there will be a corresponding increase in the more flexible SaaS model of security from specialized vendors. Additionally, service providers have typically been the cause of security breaches. With increasing fines, more data at stake, and more complex systems, firms may defer business to highly specialized vendors.


Artificial Intelligence
Tech companies like Google, Apple, Salesforce, and Amazon are investing in more AI-orientated research and acquiring more AI start-ups at a rapid rate. investment in AI is so strong that nearly 60% of the AI companies acquired since 2011 had VC backing. In 1H2016 Apple, Salesforce, Amazon and eBay have made 6 deals in SaaS & Cloud. There were multiple deals focused on AI-based image recognition software. In fact, Apple, Salesforce, Amazon and also KYOCERA have invested in companies with image recognition SaaS. Apple’s acquisition of Emotient, a provider of emotion detection and sentiment analysis software, is an interesting example of this trend. While this technology has been recently applied to areas such as healthcare in order to help read the emotions of people who struggle to express themselves, it is unclear how Apple plans to use it going forward.


You can review and download the complete report here: Solganick Co MnA Update – IT Services Cloud and Managed Services Q3 2016


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