Key Stakeholders: CIO, CFO, Chief Digital Officer, Chief Technology Officer, Chief Mobility Officer, Mobility Directors and Managers, Procurement Directors and Managers, Accounting Directors and Managers
On July 15, 2020, Tangoe announced that Chairman Dave Hansen was appointed as the interim CEO of the company, replacing Bob Irwin, who had been the CEO for the past three years. Amalgam Insights analyzes this change in terms of what Bob Irwin accomplished at Tangoe, what this change means for Tangoe as a company, Tangoe’s customers, and the Technology Expense Management market at large.
Bob Irwin was brought into Tangoe in June of 2017 when private investment firm Marlin Equity Partners completed the acquisition of Asentinel. Irwin replaced Jim Foy, who had a long history managing technology companies and served as a bridge between Founder Al Subbloie and Irwin. Irwin came into Tangoe with a record of success in sales and management at Sterling Commerce, TDCI, and EMS Software, all of which managed complex processes associated with suppliers, supply chains, and resource management. At the time, Tangoe faced the challenges of integrating functionalities from over 20 platforms into a more manageable portfolio, an employee count that could not be supported by Tangoe’s existing revenue, and financial challenges resulting from a history of improperly recognizing earnings as a public company.
The highlights of Irwin’s tenure were in the acquisition of MOBI and the focus on customer service and retention. Tangoe’s acquisition of MOBI in December 2018 followed an intense bidding war for the managed mobility services provider and resulted in an upgrade in Tangoe’s ability to execute on managed mobility services, the ability to consolidate mobility operations in Indianapolis, and an upgrade to Tangoe’s process automation capabilities that have since been integrated into Tangoe’s overall roadmap. In addition, Tangoe’s focus on customer retention during this time allowed Tangoe to at least partially stem the bleeding that allowed competitors to poach Tangoe accounts.
Over his three year tenure, Irwin headed a product consolidation to move the majority of Tangoe’s customers to one of three platforms: Tangoe Fixed (based on the Asentinel acquisition), Tangoe Mobile (based on the MOBI acquisition) and Tangoe Rivermine to support customers on this highly customized platform. This consolidation was choppy at times, as it was originally positioned as the development of a single platform, Tangoe Atlas, which was then changed in mid-stream to the current three-pronged strategy that exists today.
Irwin also reduced Tangoe headcount to a more manageable level that was consistent with Tangoe’s estimated $200 million+ annual revenue rather than a staffing that had been more suitable for a company twice its size. At the same time, Irwin worked on an internal culture that celebrated employee success and included public adulation across email, social media, videos, podcasts, and other customer-facing communications.
However, Tangoe still faced a number of challenges during Irwin’s management. As the market leader in Technology Expense Management with approximately $40 billion under management, Tangoe did not successfully grow at a time when its smaller competitors were regularly growing 20% or more per year. From a practical perspective, Amalgam Insights saw that much of the growth of Tangoe’s biggest competitors, which were between 5-25% of Tangoe’s size from a spend management perspective, came from acquiring Tangoe customers rather than expanding the breadth of the market. Why was this the case?
Amalgam Insights has long taken the stance that TEM is most accurately an acronym for Technology Expense Management and best suited to manage the $1.6 trillion market associated with IT subscriptions (landline telecom and network, mobility, Infrastructure as a Service, Software as a Service, and related connectivity and public cloud subscriptions). However, even at a time when the $200 billion public cloud market was growing faster than the $1.3 trillion+ telecom market, TEM providers were slow to support the cloud.
A second challenge for Tangoe was that it held massive amounts of spend under management as well as CIO relationships, but lacked the products to take advantage of those strategic relationships. Tangoe’s move to cloud expense management was a good start, albeit somewhat belated. And Tangoe’s move to create the Tangoe for Apple solution for fully managing i-Everythings was also a good move.
But Tangoe had the opportunity (and still does) to support IT planning, budgeting, and forecasting to take on vendors like Apptio, ServiceNow, Upland Software, Digital Fuel, and Nicus as well as supporting closer relationships with the likes of Dell, HPE, Cisco, and VMware in supporting multi-vendor and comparative sourcing or to create more customer-friendly leasing and subscription options. The latter suggestion is increasingly viable today as Cisco provides Catalyst and its DNA on a subscription basis and HPE Greenlake will cover all of HPE’s portfolio (including virtual machines, Nimble-based storage, and Aruba networking).
Amalgam Insights posits that there may be an additional challenge associated with the sales culture, where the aggressive product-based sales and marketing culture that built Tangoe was largely replaced as Tangoe went private and brought in a group of experienced solutions-based executives. To some extent, Amalgam Insights believes this challenge is related to the prior product development challenge, as Tangoe still lacks the breadth of portfolio to support the executive-focused enterprise solution selling approach that it both has the expertise and relationships to execute upon.
In theory, Tangoe could also acquire additional solutions to fill out its portfolio of operational and financial capabilities, but the relative lack of acquisition activity outside of MOBI seems to indicate Tangoe’s unwillingness to take on additional acquisitions after its lengthy streak of purchases over the past decade (including Traq Wireless, ISG, Internoded, Telwares, Profitline, HCL (Control Point Solutions), Symphony, Anomalous Networks, ttMobiles, Rivermine, Vodafone Global, Asentinel, and MOBI).
So, what does this all mean for Tangoe, Tangoe’s customers, and the rest of the market? Let’s break it down.
First, this isn’t Dave Hansen’s first run at being an interim CEO, as he served as the interim CEO of OnX Enterprise Solutions in 2016 after the prior CEO retired. In that run, Hansen held the role for roughly three months before turning over the reins (reigns?) to veteran tech executive Tom Signorello. Amalgam Insights would expect that Hansen would serve a similar placeholder role here for the next several months, similar to Jim Foy’s tenure, as Tangoe seeks a permanent CEO.
However, given Hansen’s previous experience with CA Technologies, BMC Numara, and Dell, we wonder if Hansen might be able to build some relationships more directly in his role as CEO that would be accretive to Tangoe. For example, Tangoe could use Numara-like service and asset management capabilities to help Tangoe become a more holistic Management-in-a-box or Management-as-a-service offering for IT managers who want to align technology management to business demand and cost management.
[Analyst’s Note: When I first wrote about the potential for Information Technology Expense Management back in my Aberdeen days in 2009, I thought that the telecom expense management players would be best positioned to support a future of IT as a Service and the breadth of IT expenses that would emerge as what we then called SoMoClo (Social, Mobile, Cloud) evolved into a dominant platform. Although that platform has matured, financial and accounting management across collaboration, APIs, mobile devices and services, cloud infrastructure, and cloud-based software is still largely a siloed mess for the CIO, CTO, Chief Architect, or IT strategist to traverse.]
Although this would be interesting and in line with a growth-oriented company, Amalgam expects that Hansen’s top goal will be to maintain Tangoe’s existing structure and operations and to focus on current customers rather than aggressively pursue opportunities for improvement or growth. This should be good news for Tangoe customers seeking stability and directional progress towards a more standardized Tangoe and the completion of short-term projects.
For the rest of the Technology Expense Management industry across telecom expense, cloud cost, and enterprise mobility management markets, be aware that you likely have several more months to execute on the “Tangoe playbook” currently being used to sell against them before that book starts to change. At the same time, this is not a time for vendors to measure up against Tangoe, but rather an opportunity to evolve into the aspects of TEM where the vendor provides best-in-breed capabilities.
For instance, just as a partial sampling of solutions:
- AMI Strategies has developed an smart AI-powered invoice processing engine
- Asignet has its deep automation capabilities associated with its Wayfast platform
- Calero-MDSL has strong data services and asset management capabilities
- Cass has a variety of spend management solutions that should be bundled
- CloudCheckr has its API-driven CMx Platform for managing cloud services
- CloudHealth by VMWare has to be considered in context of the larger picture of vRealize Operations Cloud and Tanzu Portfolio
- GoExceed has superior process and machine learning capabilities for cellular management
- MobiChord is built on the ServiceNow platform
- Upland Cimpl is part of Upland’s broad portfolio of software solutions
- vMOX has its intellectual property to support its cost optimization approach
- Vision Wireless has its focus on enterprise mobility, and
- WidePoint has its government and security backgrounds
just to name a few quick examples of some of the solutions Amalgam Insights has recommended over the past month. Each vendor is different enough in this space to find greenfield opportunities in the technology expense management space.
Overall, Amalgam Insights believes that Irwin’s tenure at Tangoe will be remembered as a time of significant operational consolidation and optimization at a time when the company needed to create stability after a roller-coaster and alphabet soup filled era of growth, M&A, IPO, and SEC financial issues. For the next CEO, Amalgam Insights expects that there will need to be an emphasis on sales and external outreach that has not been seen in recent times. But for now, Tangoe remains the sleeping tiger of the TEM industry and Irwin leaves having righted the ship for the next captain.
If you’re interested in more information on the Technology Expense Management industry, please visit our free 15-session event, Technology Expense Management Expo, which is now available on-demand and at no cost until August 13, 2020.