Are the M&A Markets Catching up with SharePoint?

Over the last several months, there has been a good deal of debate on SharePoint – it’s effectiveness, complexity, business user adoption, time-to-value, market size, etc. Although opinions vary widely on all of these issues, what is indisputable is that SharePoint is a dominant platform in the broader ECM market and is gaining momentum. A position and trend which it is not likely to relinquish with the advent of Office 365 coupled with the enterprise’s growing adoption of cloud computing.

So what does this mean? Who benefits (besides Microsoft)?

Ultimately, SharePoint is evolving so it is a bit too early to tell, perhaps with one exception – the proliferation of SharePoint has been a bonanza for channel vendors and service providers. According to an article published by Computerworld: “For every dollar customers spend on Microsoft enterprise licensing fees, they spend $8 with consultants and channel vendors customizing Microsoft’s tools or integrating other products.” – Jackson, Joab. “SharePoint Has Its Limits.” Computerworld, Inc. April 28, 2010.

Other evidence of this correlation is starting to surface. First, in published reports (e.g. 2011 Inc. 500/5000) as well as anecdotal accounts, SharePoint software vendors and services providers alike have experienced rapid top-line growth over the last several years. Another tell-tale sign is the increased capital markets activity in this sector. Through just the first six weeks of 2012, four SharePoint-centric firms have been acquired, including Rackspace’s acquisition of SharePoint911 announced earlier this month.

Consequently, what we considered to be a cottage industry is maturing into a dynamic sector of the broader IT services market. As businesses big and small continue to migrate to the cloud, we expect strategic (e.g. software & hardware vendors, IT service providers) appetites for SharePoint expertise to grow, stimulating M&A activity for the foreseeable future.