We are actively looking to partner with companies that provide tools used by IT (Information Technology) professionals (in-house and services providers) and software development teams. The IT / developer tools landscape is dynamic and rapidly evolving, creating unique business-building opportunities for innovative founders. We see great potential for entrepreneurs to leverage industry tailwinds to build the next generation of market-leading technology solutions.
IT & Software Development Sector Update Overview:
- Trends for Vendors in the Software Development Life Cycle
- Trends for Vendors Serving IT Professionals
- IT Spotlight: Tools Used by Managed Service Providers (MSPs)
- MSP Tool Market Map
- Schedule a Meeting
1) Trends for Vendors in the Software Development Life Cycle (SDLC)
- Every company develops software now: New business formation is overwhelmingly indexed toward technology, and incumbent players in every industry are scrambling to develop software competency (whether building their own solutions or leveraging 3rd party solutions).
- Development processes are evolving: Agile requires new collaboration tools and more fluid / rapid interaction between product managers, dev teams, and business managers.
- New procurement models favor flexible tools: Bottoms-up procurement is increasingly prevalent, and flexible tools that can by used by multiple constituencies (e.g., dev teams and ops teams) and can seamlessly integrate with other apps will win the day.
1) Plan
2) Track
3) Code
4) Build
5) Test
6) Deploy
7) Monitor
On the front end, we believe there are under-served categories with explosive growth potential (e.g., tools used by product managers).
On the back end, we believe there are opportunities to build competitive moats through infrastructure-specific (e.g., Azure) and application-specific (e.g., EHRs) monitoring expertise.
2) Trends for Vendors Serving IT Professionals
- Increasing complexity creates new requirements: IT organizations often have to monitor and manage numerous environments (public, private & hybrid cloud), a growing list of 3rd party applications, and a broader array of devices.
- Need for tighter alignment with business users: IT departments have to engage with and satisfy employees who are generally more tech savvy and demanding. Tools that improve end user experience and enable IT automation are critical for effective IT ops.
- Ecosystem navigation and optimization. As clear leaders have emerged in certain categories (e.g., ServiceNow in ITSM, the three public cloud providers, etc.), there are opportunities for vendors to develop solutions that integrate seamlessly with leading platforms and augment feature/functionality. Ecosystem partners have opportunities to carve out defensible niches and benefit from the reach of their platform partners.
Network, Infrastructure & Database Management
Application Management
Endpoint & Device Management
IT Ops & IT Service Management
Security
IT Spotlight: Tools Used by Managed Service Providers (MSPs)
Within the IT sector, the MSP market is highly fragmented and continuing to grow, which is why we believe this market gives rise to attractive investment opportunities. MSPs have specific requirements and leverage a wide variety of tools to serve their customers. The average service provider offers a broad range of solutions, including device management, server management, network management, backup / disaster recovery, and managed security services, among others. As the list of service offerings grows, so does the MSP toolkit.
Serent’s interest in service provider tools is based on a straightforward thesis:
Large Market in the Midst of a Transformation
- The global managed services market will likely top $200BN in 2020 and is still growing 10% YOY according to a 2019 report on MSPs from SolarWinds.
- Managed services have transformed the IT channel; the cloud changed customer requirements and enabled new services monetization opportunities for channel partners.
- Evolving service requirements / complexity creates opportunities for innovative tool vendors.
Core Service Offerings are Increasingly Complex (Tools Required)
- Core offerings, like device and network management, can be a drag on efficiency if tools aren't leveraged appropriately (ideally tools that enable automation).
- Trends like hybrid infrastructure, remote work, and BYOD (Bring Your Own Device) create opportunities for emergent vendors to take market share from legacy players.
MSPs are Looking to Provide Higher Value Services (Tools Can Help)
- MSPs are seeking to grow by introducing higher value services (e.g. managing applications, security services, etc.).
- Tools that generate ROI and help MSPs expand the breadth of their offering can rapidly gain traction (and this innovation isn't likely to come from some of the larger providers such as Datto, SolarWinds, ConnectWise, or Kaseya).