SolarWinds expects to hear from partners about this potential spinoff in the coming months.
If the spinoff happens, the MSP business would be a separately traded public company. The standalone entity would provide IT service management to help MSPs deliver outsourced IT services to their SMB end customers.
SolarWinds would retain its core IT management business focused primarily on corporate IT organizations. The company doesn’t expect to complete the transaction before the end of March 2021.
Kevin Thompson is SolarWinds president and CEO. He said SolarWinds channel partners will play a key role in the decision.
“The decision to consider the potential spinoff of SolarWinds MSP was driven first and foremost by what we believe would benefit our customers and partners the most, for both the core IT and MSP sides,” he said. “These businesses support markets that while similar in many ways, have reached different points in their growth curves. If this spinoff takes place, we believe it would give us the opportunity to put even more dedicated resources to work for both the traditional IT pro and the MSP in unique ways.”
For the MSP in particular, SolarWinds sees that market as poised for a sizable jump. That’s “given the reality of where we are right now in terms of how businesses, SMBs in particular, work and use technology,” Thompson said.
“The SMB has never needed more support than they do now, and folks who would have never thought to outsource IT are now making that move,” he said. “Based on our view of the market, we believe the second wave of growth is going to come in pretty fast and we want to be sure we’re doing all we can to give MSPs the chance to take advantage of it. I can say that whether we make this move or not, our partner-first focus will remain our top priority.”
SolarWinds has just started exploring a potential spinoff, Thompson said.
“For our partners, our continued commitment to delivering IT solutions that make their lives easier remains fully intact,” he said. “The way they work with us, buy from us and leverage our expertise isn’t going to change.”
SolarWinds expects to hear from partners about this potential spinoff in the coming months, Thompson said.
“We have built a massive community of technology professionals that include IT pros, MSPs and developers, and we’ll continue to look to them to help guide how we work and prioritize,” he said.
Roy Illsley is chief analyst of IT and enterprise for Omdia. The spinoff could be a way to lessen the impact of AI for IT operations (AIOps) on SolarWinds, he said. AIOps involves the use of big data analytics, machine learning and other artificial-intelligence technologies to automate the identification and resolution of common IT issues.
“I do know SolarWinds and the market they operate in,” he said. “They tend to be found in SME organizations, and this sector also makes greater use of MSPs for the delivery of management. In my opinion, the on-premises infrastructure management market is one where the rise of AIOps is set to disrupt. It may take time to be a threat to the market SolarWinds plays in, but it is coming. The spinoff sounds like a way of separating the different revenue streams and mitigating the impact of the AIOps impact.”
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