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GFI Software Working Toward Split into LogicNow, GFI

GFI Software, the surprisingly fast-growing player in the managed services provider (MSP) market with a large community of channel partners for its more traditional software products, is in the process of splitting into two organizations.

When the split, first announced in September, is complete, GFI Software will become two different entities with different boards and different employees -- LogicNow and GFI. LogicNow will focus on cloud technologies under a subscription model and will include the MSP platform, which was previously known as GFI MAX but is being renamed MAXfocus. The GFI side will become an entity focused on private cloud solutions marketed to end user IT administrators. The two companies will have 350 to 400 employees each.

RCP caught up with Dr. Alistair Forbes, general manager of LogicNow, for an update on the corporate restructuring.

RCP: Why split?

Alistair Forbes
Forbes: The reason for making that change is really reflected in the nature of the way those types of products are built and supported. With on-premise, [you have] one, maybe two major releases a year. Customers have to download and install these updates. With a cloud-based product, because we're applying those updates and all the customers are getting the benefits right away, it allows us to iterate on the product much more quickly. The two products have quite different support requirements.

Speaking from a LogicNow perspective, a large part of doing this is to reduce our cycle times and bring new versions of our cloud-based technology for MSPs to the market faster. [The LogicNow MSP products include MAXRemoteManagement, MAXMail, MAXServiceDesk and MAXBackup.]

Will the entities share a board of directors?
Up to now, there was one board for GFI Software, the whole entity. Going forward, there will be two completely separate corporate structures. Ownership will remain the same. Our majority investor is Insight Venture Partners. There will be some commonality in terms of the board. But the management team and all the people working on the products, they will be completely separate. Walter Scott is the CEO of both companies for now. We haven't completed the full legal separation as of yet. We've announced new brands. The legal separation process is moving forward. Walter will be CEO of LogicNow. Likely, there will be a new CEO for GFI.

What will change for current GFI Software partners?
In the short term, as far as partners are concerned, the changes will be largely cosmetic. There will be a substantial number of [LogicNow] partners who currently resell GFI products and will continue to do so. We've seen a migration into the managed services approach for running their organizations using our MAX products. Internally, we had separate field and support organizations for both sides, so that will not be different.

How many MSP partners are using LogicNow MAXfocus (formerly GFI MAX)?
We've currently got just over 11,000 MSPs who are using the MAX management platform. We're adding typically 200 net new customers every month. We're continuing to recruit partners through our hosted e-mail product and backup products, as well. In the aggregate, the number is getting close to 15,000. That, to our knowledge, is the biggest community of MSPs using a platform in the world.

We're seeing a continued move of resellers or consultant-type companies into the managed services space. Overall, I think the market growth is robust and still strong. There certainly was concern and consternation about the impact that the move toward cloud might have. Notwithstanding the fact that more companies are starting to use cloud-based services, they still do want to have an advisor or someone who manages those services on their behalf. They're used to dealing with a single contact. As for the concern that there was maybe 18 months, two years ago, about the threat to the managed services market, the market remains very strong and robust. We're seeing new partners and growth for existing ones.

Is there overlap of GFI and LogicNow partners?
The reseller base for GFI is somewhere in the region of 20,000 partners. It's still a very strong partner community that works with GFI. There's certainly an overlap. It's by no means the majority of either partner base that would also be using the other.

Within the MAX platform, we have some elements of technology that come from the GFI organization. We will have OEM agreements to use things like the patch management [GFI LanGuard]. In a commercial sense, the organizations will be pretty much completely separate. There will be technology that we license backwards and forwards.

What are LogicNow's plans geographically?
North America still remains a very strong growth market for us. The market is growing, and we're also seeing our market share continuing to grow. In certain European markets, they've been later to the party in terms of this move to managed services, particularly southern Europe -- France, Spain and Italy. There, percentage growth is quite high but from smaller numbers. In percentage terms, growth in South America is also high. Asia [is another opportunity] we might look at over the next year.

Posted by Scott Bekker on November 20, 2014