Within the managed services software market, sales of PSA (professional services automation) and RMM (remote monitoring and management) software continue to grow, as does cloud adoption of such tools. Amid the market growth, the industry is also consolidating a bit as some vendors (ConnectWise-LabTech Software, PacketTrap MSP and PSA, and Kaseya) attempt to juggle both offerings. But are we really talking about market consolidation -- or IT convergence?

When I first spoke with ConnectWise CEO Arnie Bellini about the ConnectWise Capital investment LabTech Software, I mentioned the word "consolidation" over and over again. All IT markets, after all, eventually consolidate around a few market leaders. But Bellini continually reinforced the "convergence" theme rather than "consolidation." His key point: Software needs to work together in order to accelerate market growth.

Apparently, Bellini is onto something. He took some heat from some MSPs when ConnectWise Capital first invested in LabTech Software. But the critics didn't notice Kaseya was essentially taking a similar step, striving to build its own PSA capabilities directly into the Kaseya 2 IT automation platform. And more recently, Quest Software's PacketTrap team has pushed beyond RMM software (PacketTrap MSP) to offer a PSA edition (PacketTrap PSA).

Whether you call it consolidation or convergence, few software vendors seem to be suffering. During recent calls with a range of RMM and PSA vendors, virtually every CEO told me about strong 2011 performance that continued in 1Q 2012. But I wonder:
  • How many of those companies will continue to go it alone over the next 12 to 18 months
  • And how many will ultimately pursue M&A deals to scale up and out?
Answers pending.