Here is an anonymized question I received after the Mitsubishi Electronics acquisition of Nozomi Networks.
I have a project ongoing right now to select an asset inventory/detection product. This news hit right before our proof of concept phase, and obviously I notified the relevant decision makers that one of the potential solutions was purchased. They didn’t write Nozomi off just yet, but I did feel like this will weigh into the decision. What would you do?
Many of the factors in answering this question would be the same regardless of the type of network (IT or OT) or product (security, application, infrastructure, …). Still let’s dig into this from the OT asset inventory and detection product sector that Nozomi competes in.
In numerous articles and presentations over the past 5 years I’ve recommended that you position a purchase of this type of an OT asset inventory/detection product as a three year commitment. This is still true today. You need to set management’s expectations that you may be swapping this out with a different solution in three years.
Fortunately all of the vendors are pushing asset owner customers to annual subscriptions in pursuit of growing their ARR – – something that is a key factor in a company’s valuation. It will cost the company no more in hardware/software spend to switch. In fact, collectors will become less expensive.
There is the cost to rip out the old solution and replace it with the new one. I’ve seen large asset owners do this. It’s less difficult and expensive to do this than the initial install. The team knows what should be placed where and the general deployment method. There also is the cost and upset of a change in the management and monitoring applications.
With this as prelude, my answer is to look at what you expect from the company in the next three years. And not to panic if you are running the acquired company’s product. You have at least a year, probably closer to two years, before you will suffer even if the product is neglected or abandoned.
The key is not to listen to what the acquiring company says. Instead try to determine their business motives and strategy at acquisition, and then revisit this every six months until you are confident in your assessment.
Some examples:
- Microsoft acquires CyberX … It was obvious, or at least highly likely, that Microsoft wanted the OT protocol technology and team, not the products. Aquisition was the time for a CyberX customer to plan a transition to a new solution within 12 to 18 months.
- Cisco acquires Sentryo … This was at best a cause for concern. Cisco likely wants the product. However Cisco has a history of acquiring, promoting and then dumping or languishing acquired security products. There are exceptions where acquired products have thrived at Cisco. The other concern is the product goes from the reason everyone in the company comes to work. Their everything. To one product in a very large catalog sold through channels that focus on the easier sale. The key here was to see how Cisco and their channels were supporting the product after 12 months, and then make your decision.
- Tenable acquires Indegy … This was the acquisition I believed was most likely to work. If IT was using Tenable, it was a potential win. Even if IT wasn’t using Tenable, the product mix within Tenable made great sense. If you followed the “revisit every six months” advice, you would have become more concerned as time went by. First hint was the OT solution was stagnating as compared to the market. Second stronger hint was Tenable laying off most of the top OT security talent. At best this solution now only makes sense if you have Tenable in IT and are integrating OT into this solution, and maybe those are the customers that Tenable wants.
Which brings us back to the question of what does an asset owner do vis-a-vis retaining or buying Nozomi Networks products?
Asset Owner Has Deployed A Nozomi Solution
No need to plan to change to a different solution now. Revisit this decision every six months for the next two years. Nozomi will start as a subsidiary and ostensibly nothing will change. Monitor product support, product improvement, changes in talent and leadership, and the cadence of useful information they are providing.
There will be some who leave. This is natural after a liquidity event and startup life. If a whole new team leadership team comes in you need to evaluate the team and direction they are heading.
In short, no need to plan a replacement project … yet.
Asset Owner Is Acquiring A New Solution (the original question)
This is a tougher call, and the acquisition is a factor in this decision. If the evaluation team clearly prefers Nozomi, they should still select Nozomi (with the caveat that they may change in 3 years regardless of their choice). Any of the Nozomi competitors could be acquired or spun off at any time. Or Nozomi could remain independent and unchanged as publicly stated. Or … It’s a fluid sector.
If it’s a tie or very close between Nozomi and a different product, then I’d point the asset owner to the other product. The lower degree of certainty could be the tiebreaker. Again, this is something that could be different in six months.