Nextgen Distribution signs major software partnership with HPE Software buyer Micro Focus

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Nextgen Distribution signs major software partnership with HPE Software buyer Micro Focus
John Walters, Nextgen

When Hewlett Packard Enterprise spun off its software arm to Micro Focus, some readers might have been forgiven for saying, “Who?”

But the British enterprise software vendor is no small fry. With the HPE deal, it’s on track to become one of the world’s top software providers, joining the ranks of giants like Microsoft, Oracle, SAP, VMware, Adobe and Symantec.

Australian-owned Nextgen Distribution has also flown somewhat under the radar since being established by channel veteran John Walters in 2011. Known primarily as an Oracle house, the past 12 months have been busy for the Sydney-based distie; it posted its first profit on revenue of $68.7 million in the 2016 financial year.

In February 2017, the company made another major enterprise software landgrab with an SAP partnership focused on the German software vendor’s cloud portfolio. And now, it’s secured a deal with Micro Focus that should bring further growth.

Micro Focus’ US$8.6 billion purchase of HPE Software was announced in 2016, and it still has a few hoops to jump through. With the acquisition set to finalise later this year, the vendor was bashful when it came to the nitty-gritty details. But while Micro Focus may not be a household name, a cursory look at its recent investor relations material reveals a multibillion-dollar giant in the making.

The vendor has operated Down Under for more than 30 years, with a relatively lean team of 60 people acting as the local sales arm of the company. General manager for Australia and New Zealand Peter Fuller says Micro Focus’ software is embedded within many Australian business customers.

“You would probably struggle to find a decent-sized Australian organisation that doesn’t have some of our software, to a greater or lesser extent, embedded in their organisation somewhere,” he says.

Micro Focus has helped local customers move applications off mainframes and into Windows-based systems, Unix Open systems and even into cloud. “Another area is identity access and security governance; that’s through the Attachmate acquisition we made a number of years ago,” he says. “The other big area is host connectivity. We are arguably the world’s leading provider of host connectivity technology.”

Micro Focus is no stranger to M&A. There’s the blockbuster HPE deal, of course, and its acquisition of Attachmate in 2014. Micro Focus acquired DevOps enabler Serena Software in 2016, followed by enterprise archiving leader GWAVA that same year. The company made headlines in 2009 when it acquired application heavyweight Borland for US$75 million.

Through its acquisitions, the vendor inherited several distributors and resellers. This led to a revamped global channel strategy kicking off in September 2016 to unite both new and traditional partners. Part of this strategy sees Nextgen Distribution come onboard in ANZ as its master distributor, and that will likely see some of Micro Focus’ older local distribution agreements cease to be.

“We had a number of distributors here distributing different products through the different acquisitions. What I’m driving at the moment is a more consolidated and efficient process for Australia. We’re not so big that we can afford to have four or five different distributors,” Fuller says.   

It’s welcome news for Nextgen Distribution chief executive John Walters, who has been building up the Australian software distributor with a strong Oracle backing since 2011. “My vision for Nextgen is seeing it built up as an enterprise software valued distributor and putting services around that,” Walters says.

“We’ve been very regimented in looking at what enterprise software companies we could engage with or keep an eye on for the future, and Micro Focus is certainly one of those. It has been very aggressive in its acquisition strategy over the years, and that has been increasing in more recent years.”

Walters points to Micro Focus’ steady 10-year incline on the London Stock Exchange – where a share that cost £4.25 (A$7) on 6 July 2007 cost £22.5 (A$38) on 3 July 2017 – and says he doubts there’s another IT stock with a similar growth record.

“If you look at their financials, they’re an extremely well-led and managed company. Combined with the announcement that they bought HPE software in September last year, they’re going to be the number six enterprise pure-play software company in the world. That makes this a very exciting proposition,” says Walters.

The deal brings about an enterprise software trifecta for Nextgen, with the distributor now representing three of those top six software players in the local market: Oracle, SAP and Micro Focus.

Like the SAP and Oracle practices within the Nextgen business, Micro Focus will have a dedicated business unit. It’s headed up by business manager John Prichard, whose background ranges from enterprise software and consulting to financial services. More roles are being added as time rolls on and the value-add strategy of Nextgen plays out.

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