Dell buying Quest Software: It’s the Practitioner, Stupid

When I heard about the mooted management buy out at Quest Software recently I was fairly surprised given I had long assumed Quest was already an acquisition target for a major tech vendor. Quest is excellent at selling into franchises, directly to practitioners– notably MS Active Directory and Sharepoint, but also application and performance management for relational databases such as Oracle and Microsoft SQLServer.

Then last week a new suitor came in, and today Dell confirmed its the buyer. The fit is obvious to the point of absurdity. For one thing Quest provides instant scale.

• Quest generated $857m in global revenue for fiscal year 2011 – it has 1,500 software sales people and 1,300 developers.
• It also is a margin beast, very different from traditional Dell products – with gross margins of 86% and operating margins of 11%.

Quest quietly excels at selling to practioners – in that respect its the new BMC. Quest has folks that get on the phone, find the tools guy, and sell to them, day in and day out, no airmiles required. Given Dell’s sweetspot is the midmarket, and so is Quest’s, the fit is obvious. There is significant risk in the deal obviously- not least because as software moves into the cloud today’s tool chains will be significantly disrupted. But if RedMonk is right and practioners are the new kingmakers, growing in importance, then Dell just bought an important channel. Buying quest won’t make Dell better at selling to the CIO, but in today’s IT market the CIO is the last know.

disclosure: Dell is a client, while Quest is not.