One Leader to Acquire Another
Deltek Tenders Offer to Acquire Maconomy
On June 3, 2010, Deltek announced its intent to acquire Maconomy, Europe’s leading provider of integrated business solutions for professional services organizations. This announcement is significant because it combines the two leading global providers of integrated business solutions dedicated to project- and services-driven organizations. The combination of these two organizations provides its 12,600+ combined customers with a greater global focus and two platforms to run their businesses.
SPI Research principal R. David Hofferberth, P.E., has followed both Deltek and Maconomy for over a decade. Each of these solution providers has consistently innovated in the market, and both have become the defacto-standard for their core service vertical markets: Deltek for architecture and engineering, and Maconomy in the marketing communications and PR agency space. Both are also leading providers in the management consulting, accounting, and systems integrator markets.
Given the complementary solutions, customer bases and markets covered, Deltek is adamant about no major changes in employees, or moving customers off Maconomy solutions. SPI Research believes this to be true as Deltek has acquired a number of other solution providers over the past decade or so (Harper and Schuman, Semaphore, Wind2, etc.), and continues to support each. This acquisition allows Deltek to continue its already high research and development commitment across a much larger revenue stream.
Who is Maconomy?
Many firms outside of Europe might not have heard of them. Maconomy X1 is the leading Enterprise Resource Planning (ERP) solution for professional services organizations in Europe.
The company has made headway in the North American market, especially in large Marcom firms, but for the most part continues to focus on the European market from its headquarter base in Copenhagen. Maconomy currently employs over 200 people with offices in Denmark, as well as the Netherlands, Norway, Sweden, and the UK. It also operates its North American operations out of its Boston office. It has over 600 customers and 126,000 users located across 50 countries.
Synergy on Steroids
From SPI Research’s perspective, Deltek and Maconomy are the two most focused software vendors for the project- and services-driven organizations. For over a decade, SPI Research has used both Deltek and Maconomy to gauge overall market acceptance. Both firms have experienced high growth rates throughout the decade, and even following a slower 2009, have seen their demand increase.SPI Research sees no change in terms of the focus of Deltek going forward, primarily because Maconomy’s focus is the mirror image of Deltek’s. What SPI Research expects to see is a greater presence of all solutions in both Europe and North America. It also means that Deltek will be better able to target and support Maconomy X1 in the U.S. while selling more Deltek solutions in Europe across its robust product portfolio. These two geographic regions currently account for over 80% of the business applications sold in the Professional Services sector.
Competition Heats up in the Middle up, Where Else?
At the high end of the market in professional services organizations with over 5,000 employees, many organizations choose not to use one integrated solution, but use a financial solution with integration to best-of-breed applications. In smaller markets, with less than 30 employees, many PSOs utilize only a core financial solution without other business applications such as Client Relationship Management (CRM), Professional Services Automation (PSA), or Business Intelligence (BI).However, in the midmarket, with firms that have between 100 and 5,000 employees, integrated business suites, such as those provided by Deltek and Maconomy are in high demand. These organizations realize the need for greater integration of their core business solutions but prefer not to have to go through the process of integrating disparate solutions. Perhaps this is why solution providers such as Microsoft have moved upstream to go after the midmarket, while Oracle has focused on moving downstream to the midmarket. The net result of this acquisition will create much greater competition in the midmarket and the resulting solutions and support will improve as well.