Navisite wants to be a one-stop SAP managed services provider for midmarket organizations. That aim is behind Navisite's November acquisition of Dickinson and Associates Inc., an SAP-focused systems integrator and consulting firm.
Navisite, in Andover, Mass., provides SAP managed services such as infrastructure support, security, database support, application support and data management, according to Mark Clayman, Navisite CEO.
The company targets small to midmarket enterprises that are often underserved by larger SAP managed services providers, Clayman said. The acquisition of Dickinson, which is based in Chicago, gives Navisite an opportunity to provide a deeper set of services to customers.
"We want to help midmarket and small enterprise customers to consolidate vendors," Clayman said. "Working with a single vendor can help them with managed services from the infrastructure up through applications, but the company now has the consulting and professional services arm to help them set an IT strategy roadmap and execute on that."
Indeed, while Navisite provides hosting and administering services for SAP systems, Dickinson's systems integrator (SI) services include helping customers select applications and technology platforms as well as how to think about and execute public cloud migrations.
Just right for the midsize enterprise market
Large SIs such as Accenture, Deloitte and IBM often have trouble serving the small to midsize enterprise market, while smaller niche SIs often can't offer a broad portfolio of services, said Don Dickinson, president of Dickinson and Associates.
The combination of Dickinson's project-based SAP capabilities and Navisite's SAP managed services could hit a sweet spot for midsize enterprises.
"Navisite is aiming for that 75% of IT relevance for their customers, and they're offering it to the midmarket in a way where they can be responsive and agile, which fits with where we sit in the SAP landscape," Dickinson said. "It will fit well together with the customer base that we're jointly going after."
One factor that will help Dickinson expand its ability to provide services is the deep pockets of Navisite's corporate parent Madison Dearborn Partners, a private equity firm that acquired the company in 2018.
Dickinson is experienced with core SAP ERP systems such as SAP ERP Central Component (ECC) and S/4HANA, but the backing from Navisite will help it grow its expertise in product areas like SAP Customer Experience and SAP Commerce Cloud as well as new technologies such as AI and intelligent RPA, Dickinson said.
"As the blurring occurs of SAP ERP on the SAP Cloud Platform and the HANA architecture, we know that a lot of customers want to integrate that to all their other solutions through SAP Cloud Platform and having enterprise analytics over all of it," he said. "So, we're going to continue to invest in those areas, and the access to capital helps."
Navisite resources expand Dickinson's capabilities
Pregis LLC, a packaging materials and systems manufacturing company in Chicago, has been a Dickinson customer for years, relying on the SI for SAP implementation, upgrade and licensing services.
Dickinson has worked with Pregis on a three-month project to migrate its legacy SAP Business Suite system to S/4HANA, as well as moving several companies Pregis has acquired onto S/4HANA, said Jeff Mueller, vice president and CIO at Pregis. As part of the S/4HANA migration, Pregis moved from a hosted on-premises deployment to the Azure public cloud.
Dickinson has helped Pregis implement SAP Analytics Cloud, and advised on licensing issues for SAP Leonardo, he said.
With the Navisite acquisition, Dickinson's ability to provide technical services has expanded, according to Mueller.
"We started to see as we did our upgrade that [Dickinson] is getting a little bit more breadth and bandwidth with those technical Basis [system administration] back office skills," he said. "And that's probably linked to some of the growth from Navisite."
The acquisition could also give Pregis another option for a cloud managed service provider.
"Our current partner is managing our Azure cloud, but as we work through our contract with them, we'll look to Navisite and/or others to see if it makes sense to transition to a new relationship," Mueller said.
The current managed services provider partnership is strong on both sides, he continued, but it may be valuable to have a partner that better understands the SAP implementation, which can provide insight into the hosting and cloud management relationship.
Providing specialized services a plus
Navisite has forged a good position with its midsize enterprise market focus, said Liam Eagle, research vice president at 451 Research, an enterprise computing industry research and consulting firm in based in New York.
"[Midsize enterprises] don't necessarily want to work with the big service providers because they don't want to be the 200th most important client to their service provider," Eagle said.
But Navisite isn't alone in its focus on the midsize market, and managed service providers are looking to compete by having specialized expertise for specific use cases, like migrating legacy SAP workloads to S/4HANA on the cloud, he said.
"Companies in this space tend to pick up other companies with that specific expertise and we've seen a lot of acquisitions in the past year," Eagle said. "The Dickinson acquisition is reflective of that kind of approach."
Eagle said the acquisition will benefit both Dickinson and Navisite, and that together, they'll each be able to expand the depth and the breadth of what they can offer customers, he said.
"If you were working with Dickinson previously, the scope of what you were doing would be limited to that project, whereas with Navisite, they can take on a role of being more like an across-the-board adviser for all this modernization," Eagle said. "Navisite can go down its list of customers and find out who might have SAP legacy implementations and who might be considering modernizing and can now sell them on this capability that they didn't have a few months ago."