Layered Tech Ready for IntegrationBy Liam Eagle, theWHIR.com
April 15, 2008 -- (WEB HOST INDUSTRY REVIEW) -- We reported on Monday morning that Layered Technologies (layeredtech.com), one of the few hosting companies leading the charge in the grid-based on-demand hosting market had acquired managed hosting provider Fastservers.net (fastservers.net).
Fastservers has certain traits that make it obviously appealing as an acquisition - it's a growing hosting company with an excellent reputation for managed services and a unique server management service offering with its "defcon" tiered services structure. But according to John Pozadzides, chief marketing officer of Layered Technologies, there is more to the relationship that makes Fastservers an acquisition particularly well suited to Layered Tech.
The company has built a significant base of more than 10,000 servers of the unmanaged dedicated variety. And in the market for grid-based "cloud" type hosting the company is, next to Amazon, perhaps the largest provider of hosted on-demand infrastructure.
"We're really big in the individual unmanaged servers, and we're really big in the grid hosting space. And that leaves this little sweet spot right in the middle for the managed server offerings, which is the only thing that Fastservers does. So when you put the two companies, that's why it's such a beautiful fit for us."
The prospect of integrating that acquisition, however, raises the specter of some of the most notable failures in the hosting business of the last year. Major difficulties in integration at companies like IPower and Hostway drew widespread criticism from customers in 2007, and made these processes some of the biggest stories in the hosting business last year, and cemented integration one of the most notable pitfalls of the hosting business.
According to Pozadzides, Layered Tech's executives have a pedigree that includes some important experience in integration. Pozadzides himself and CEO Jack Finlayson previously worked with Savvis, where they were involved in some significant deals.
"I think there's something to be said about having an experienced management team," he says. "And that's one of the reasons that I think Jack and I were brought on to Layered Tech, and more recently our new CFO John Faulkner. Jack and I, back in the Savvis days, we effectively integrated Savvis's large hosting base of clients with the former Exodus Cable and Wireless customer base. You didn't hear anything going wrong with any of that. And that was arguably the biggest hosting client merger of all time."
Finlayson says Layered Tech will approach the integration with a certain philosophical understanding of the process.
"The best I've heard it said," he says "is there are two things you can do wrong: the first is integrate too slowly - I guess the old Sprint-Nextel would be a good example of that. And the second thing you can do wrong is integrate too quickly."
The plan for Fastservers involves both short- and long-term objectives, and, of course, one day after the acquisition there are still decisions to be made.
"Systems integration - meaning from a platform and a billing and an ERP system, which we're completing the roll-out of right now - we'll start that right now," he says. "But that obviously is roughly a six-month project to roll out. So the systems, billing and support will be on the same ERP system by the end of the year. But systems are kind of a long pole in the tent. Things like marketing, cross-selling products, messaging and branding, will all be in the 60-day bucket. We won't do it Monday, but we'll do it quick enough that we're not running two separate organizations."
Ultimately, Pozadzides says part of what makes this integration so promising is the relationship Layered Tech has planned for Fastservers.
"Some of this is the philosophy you pursue. If what you're looking to do is go in and buy companies that do what you do, and just gut them and move the guts into your stuff so you can optimize costs and get rid of the excess in the other company, you're going to have bad things happen. That's not what we're doing. We need those people. We want the customers. We want the services they offer to put into our product portfolio. And we want to offer our products to theirs. And we need their people, and they need our scale. Its very complementary."
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