Why Technology Business Management and Technology Expense Management Are Misaligned

(Note: This presentation is also available in a presentation format on Slideshare)

One of the most frequent questions Amalgam Insights receives is how Technology Business Management and Technology Expense Management are related to each other. And what do these topics have to do with the new phrase of “FinOps,” that is starting to appear? Amalgam’s perspective is definitely different.

Why FinOps is a Misnomer
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Developing a Practical Model for Ethical AI in the Business World: Stage 3 – Operational Deployment

In this blog post series, Amalgam Insights is providing a practical model for businesses to plan the ethical governance of their AI projects. To read the introduction, click here. To read about Stage 1: Executive Design, click here To read about Stage 2: Technical Development, click here. This blog focuses on Operational Deployment, the third of…

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AI on AI – 8 Predictions for the Data Savvy Pro

When we started Amalgam Insights, we oh-so-cleverly chose the AI initials with the understanding that artificial intelligence (the other AI…), data science, machine learning, programmatic automation, augmented analytics, and neural inputs would lead to the greatest advances in technology. At the same time, we sought to provide practical guidance for companies seeking to bridge the…

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Developing a Practical Model for Ethical AI in the Business World: Stage 2 – Technical Development

In this blog post series, Amalgam Insights is providing a practical model for businesses to plan the ethical governance of their AI projects. To read the introduction, click here. To read about Stage 1: Executive Design, click here This blog focuses on Technical Development, the second of the Three Keys to Ethical AI described in the…

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Developing a Practical Model for Ethical AI in the Business World: Stage I – Executive Design

In this blog post series, Amalgam Insights is providing a practical model for businesses to plan the ethical governance of their AI projects. To read the introduction, click here. This blog focuses on Executive Design, the first of the Three Keys to Ethical AI introduced in the last blog. Stage I: Executive Design As a…

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Developing a Practical Model for Ethical AI in the Business World: Introduction

As we head into 2020, the concept of “AI (Artificial Intelligence) for Good” is becoming an increasingly common phrase. Individuals and organizations with AI skillsets (including data management, data integration, statistical analysis, machine learning, algorithmic model development, and application deployment skills) have effort into pursuing ethical AI efforts.

Amalgam Insights believes that these efforts have largely been piecemeal and inadequate to meet common-sense definitions for companies to effectively state that they are pursuing, documenting, and practicing true ethical AI because of the breadth and potential repercussions of AI on business outcomes. This is not due to a lack of interest, but based on a couple of key considerations. First, AI is a relatively new capability in the enterprise IT portfolio that often lacks formal practices and guidelines and has been managed as a “skunkworks” or experimental project. Second, businesses have not seen AI as a business practice, but as a purely technical practice and made a number of assumptions in skipping to the technical development that would typically not have been made for more mature technical capabilities and projects.

In the past, Amalgam Insights has provided frameworks to help organizations take the next step to AI through our BI to AI progression.

Figure 1: Amalgam’s Framework from BI to AI

 

 

 

To pursue a more ethical model of AI, Amalgam Insights believes that AI efforts need to be analyzed through three key lenses:

  • Executive Design
  • Technical Development
  • Operational Deployment

Figure 2: Amalgam’s Three Key Areas for Ethical AI

In each of these areas, businesses must ask the right questions and adequately prepare for the deployment of ethical AI. In this framework, AI is not just a set of machine learning algorithms to be utilized, but an enabler to effectively augment problem-solving for appropriate challenges.

Over the next week, Amalgam Insights will explore 12 areas of bias across these three categories with the goal of developing a straightforward framework that companies can use to guide their AI initiatives and take a structured approach to enforcing a consistent set of ethical guidelines to support governance across the executive, technical, and operational aspects of initiating, developing, and deploying AI.

In our next blog, we will explore Executive Design with a focus on the five key questions that an executive must consider as they start considering the use of AI within their enterprise.

TEM Market Leaders Calero and MDSL Merge as Global IT Spend Management Consolidation Continues

Key Stakeholders: Chief Information Officer, Chief Financial Officer, Chief Accounting Officer, Controllers, IT Directors and Managers, Enterprise Mobility Directors and Managers, Networking Directors and Managers, Software Asset Directors and Managers, Cloud Service Directors and Managers, and other technology budget holders responsible for telecom, network, mobility, SaaS, IaaS, and IT asset and service expenses.

Why It Matters: The race for IT spend management consolidation continues. The financial management of IT is increasingly seen as a strategic advantage for managing the digital supply chain across network, telecom, wireless, cloud, software, and service portfolios.

Top Takeaway: The new combined business with over 800 employees, 3,500 customers, and an estimated 2 million devices and $20 billion under management both serves as legitimate competition for market leader Tangoe and an attractive potential acquisition for larger IT management vendors.

[Disclaimer: Amalgam Insights has worked with Calero and MDSL. Amalgam Insights has provided end-user inquiries to both Calero and MDSL customers. Amalgam Insights has provided consulting services to investors and advisors involved in this acquisition.]

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Look Beyond The Simple Facts of the Cimpl Acquisition

(Note: This blog was co-written by Hyoun Park and Larry Foster, an Enterprise Technology Management Association Hall of Famer and an executive who has shape the Technology Expense Management industry. Please welcome Larry’s first contribution to Amalgam Insights!)

On August 22, 2019, Upland Software announced the acquisition of Cimpl (f.k.a. Etelesolv), a Montreal-based telecom expense management platform that was the market leader in the Canadian market and had expanded into the United States market. With this acquisition, Cimpl will become a part of Upland’s Project & Financial Management Solution Suite and add approximate $8 million in annual revenue.

Context for the Acquisition

The TEM (Technology Expense Management) industry has experienced a continual series of ebb-and-flow acquisitions/mergers over the past twelve years. The typical TEM acquisition/merger encompasses two or more independent entities within the realm of TEM, WEM (Wireless Expense Management) or MMS (Managed Mobility Services) merging to create a more comprehensive expense management solution portfolio with superior global delivery capabilities.

The reality is that many of these mergers are driven by economic reasons where one or both entities can reduce overhead by eliminating duplicate services. Overhead is eliminated by unifying back-office operations and amalgamating technology platforms. These types of consolidation mergers are typical in a maturing industry that is eventually dominated by a few leading solution providers representing the majority of market share. All of the leading TEM solution providers including Tangoe, MDSL and Calero encompass a long history of multiple “like-minded mergers”.

Cimpl as an outlier in the TEM market

Until this recent acquisition, Cimpl has maintained the persona of the independent dark horse of the TEM industry quietly residing in Quebec, Canada refining its multi-tenant cloud platform and progressively building its market share.

Unlike most TEM managed service solution providers, Cimpl has decided to focus on being mainly a pure software company and providing a white-label technology platform for its delivery partners. In early 2018 CIMPL stealthily started to expand its physical presence into the United States. Since its inception, Cimpl has continued to progressively achieve conservative incremental success and stay profitable in contrast to a number of TEM vendors that have gone through boom-or-bust cycles driven by external funding (or the lack thereof).

The Challenge for TEM

The traditional acquisition playbook is preventing the TEM industry from being recognized as a strategic asset by organizations. Nonetheless, the TEM industry is experiencing a dramatic paradigm shift as organizations continue to replace legacy communication services with the ever-growing spectrum of cloud-based services. Traditionally, TEM solutions have focused on validating the integrity of invoice charges across multiple vendors prior to payment and allocating expenses to the respective cost centers leveraging the leased service. Enterprises derive value from TEM solutions by enabling a centralized ICT (Information and Communications Technology) shared service to automate the lifecycle from provisioning through payment and managing the resolution of disputed invoice charges for essentially static services.

However, as organizations adopt more ephemeral cloud services that encompass multi-vendor private, public and hybrid leased environments for compute, storage, API-enabled integrations, connectivity, input/output, and telecommunications, the purpose of the centralized ICT business operation is being transformed from managing daily operations to a fiduciary broker focused on optimizing technology investments. Unlike the recurring charges that represent the majority of traditional telecom charges, cloud services are consumption-based, meaning that it’s the responsibility of the client user to deactivate and manage the appropriate configuration of contracted services based on statistical analysis and forecast of the actual usage.

In the world of cloud, the provisioning activities such as activations, changes, and deactivations are done “on-demand,” completely independent from the ICT operation. The primary focus of ITEM solutions is to manage recurring and non-recurring invoice charges in arrears. As ICT operations evolve into technology brokers, they need real-time insight underpinned by ML and AI algorithms that make cost optimization recommendations to add, consolidate, change or deactivate services based on usage trends.

Why the CIMPL acquisition will help Upland

This context brings us to the real ingenuousness of the Cimpl acquisition. In the typical quiet financial days of August when everyone is away on vacation, Upland Software announced an accretive acquisition of Cimpl with a purchase price of $23.1M in cash and a $2.6M cash holdback payable in 12 months. Upland expects the acquisition to generate annual revenue of approximately $8M, of which $7.4M is recurring. The keyword buried within all of those financial statistics is “accretive” which means their strategy is to help increase natural growth.

Upland already has an impressive complementary portfolio of profitable software solutions. A closer look at the acquisition of Cimpl shows how Upland is formulating a solution strategy to manage all aspects of the Information and Communication Technology business operations.

The strategic value of the Cimpl acquisition becomes very clear when you recognize that Upland is the first company to combine an IT Financial Management platform (ITFM), ComSci, with an IT Expense Management-based solution (ITEM), Cimpl. Upland already owns additional complementary solutions such as a document and workflow automation, a BI platform, customer engagement platform, and a knowledge-based platform. With these components, Upland is working to create an industry-leading ERP-type solution framework to automate, manage, & rationalize all aspects of ICT business operations.

Although both ITFM and ITEM support the ICT business operations, they focus on different aspects. ITFM is predominately used on the front end to manage budgets and on a monthly basis to support internal billing/chargeback activities and leveraged by the IT CFO office whereas ITEM solutions like Cimpl are used by analysts and operational managers because they focus on managing the high volumes of transactional operations and data throughout the month, including provisioning and payment of leased services such as both landline and mobile communication services and now the ever-expanding array of cloud services.

Looking Forward: Our Recommendations

In this context, take the following recommendations into account based on this acquisition.

Expect other leading TEM, ITFM, CEM/CMP (Cloud Expense Management and Cloud Management Platform) solution providers to develop competitive solution frameworks that bring multiple IT categories together from a finance and expense management perspective.

ICT managers need to evolve and transform their solution to due diligence approach beyond pursuing and leveraging independent ITFM, ITEM, CEM/CMP solutions to choosing solutions with comprehensive IT management frameworks. As IT continues to become increasingly based on subscriptions, project-based spend, and on-demand peak usage across a variety of categories, ICT managers should aim towards having a single management control plane for finance and expenses rather than depend on a variety of management solutions

Real-time management is the future of IT expense management. The next levels of operational efficacy will be underpinned by more comprehensive real-time insight that helps organizations understand the most optimal way to acquire, configure and consume inter-related cloud services and pay their invoices. This will require insights on usage, project management, service management and real-time status updates associated with expense and finance. By combining financial and operational data, ICT managers will have greater insights into the current and ongoing ROI of technology under management.

Mobile Solutions Launches New Robotic Process Automation Capabilities

[Edited July 25th to reflect Mobile Solutions’ current public-facing offerings]

Key Takeaway: Mobile Solutions is providing Robotic Process Automation for Managed Mobility Services with a focus on mid-market enterprises and organizations. This capability provides Mobile Solutions with a starting point for handling basic service orders.

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3 Big 2019 Trends and 4 Strategic Tips for Managing the Transforming Cost of Technology

Amalgam Insights estimates that the total technology spend formally and centrally managed by enterprises with over $1 billion in revenue from telecom, network, mobility, Software-as-a-Service (SaaS), and Infrastructure-as-a-Service will double from June of 2019 by the end of 2021 driven by the massive growth of cloud computing and the need to manage a variety of “shadow IT” costs that grow to the size that formal management is required.. By “formally and centrally managed,” Amalgam Insights assumes full visibility of inventory, contracts, billing, and service orders across all vendors with active usage and supplier optimization efforts.

In 2019, Amalgam Insights notes several key trends in the world of technology expense management that IT organizations should be aware of.

First, every IT expense management solution is increasingly focused on cloud-based expenses, either in terms of Software as a Service or Infrastructure as a Service. Established Software Asset Management (SAM) companies are working on their SaaS expense capabilities including Aspera, Flexera, ServiceNow, and Snow Software and a variety of standalone vendors including Alpin, Binadox, Cleanshelf, Intello, Torii, and Zylo are emerging. Amalgam Insights is planning a SmartList for November 2019 to focus on key vendors to manage SaaS across the SaaS expense, SAM, and Technology Expense markets.

On the IaaS side, every major global Technology Expense Management solution has launched IaaS management capabilities, also known as FinOps or Cloud FinOps, including Asignet, Calero, Cass Information Systems, Cimpl, Dimension Data, MDSL, Sakon, and Tangoe. In addition, this market has been an area of rapid acquisition over the past couple of years including Microsoft’s acquisition of Cloudyn, Apptio’s acquisition of Cloudability (which calls this practice “FinOps”), and VMware’s acquisition of CloudHealth Technologies. And there are still standalone players such as Cloudcheckr in this space as well. This crowded market seeking to manage the next $100 billion of public cloud spend represents an interesting set of choices for IT departments in choosing how to aggregate and manage IT spend.

(As an aside, Amalgam Insights finds the use of the term “FinOps” by Apptio and Cloudability to be an interesting way to coordinate multiple departments and provide guidance on how to manage cloud expenses. At the same time, FinOps seems to be recreating the wheel to some extent in rebuilding a set of practices and cross-departmental teams that already have been managing telecom expenses for a number of years. Amalgam Insights is quite interested in seeing how this duplication of effort within IT departments will sort itself either by the establishment of separate Cloud FinOps departments, integration of Cloud FinOps and “Telecom FinOps” a.k.a. Telecom Expense Management, or the integration of both cloud and telecom into a larger IT expense or finance role. This is an interesting transitional period for IT expense as more spend moves to subscription, usage, feature, user, department, and project-based spend and chargeback models. )

A third key trend is the move to Europe. European IT is being targeted as an area that has traditionally been informally managed or managed in geographic silos that prevent strong global management and alignment with strategic enterprise efforts. To solve this problem, there has been a variety of acquisitions and office launches across Europe as the likes of Calero, MDSL, Tangoe, Flexera, Snow Software, Cloudcheckr, ServiceNow, VMware, and others. Amalgam Insights notes that European IT management challenges have been poorly supported in the past by global vendors that have not adequately accounted for the differences in managing data, connectivity, and compliance in each European country and the relative lack of geographic footprint to support services. In light of this, Amalgam Insights has been tracking European IT management successes and provides guidance on this topic for end user, investor, and vendor advisory clients.

To prepare for this evolution in technology expense management, Amalgam Insights provides the following guidance for Chief Information Officers, Chief Procurement Officers, Chief Accounting Officers, and related IT procurement, finance, and expense managers to prepare for the second half of 2019 and beyond based on prior guidance and research.

$100K and 30% are key benchmarks for specialized IT spend categories. Once an IT spend management category exceeds $100,000 per month, organizations start having the potential to save at least one employee’s worth of payroll through optimization by pursuing the 30% savings that typically exist in a previously unmanaged environment that has not been formally managed or audited over the last five years. At this point, your company should start looking for a dedicated solution for expense management, whether it be manual support from an in-house employee with telecom experience, a software platform to support management, or managed services to support contract, invoice, inventory, and usage management. These rules of thumb are especially true in SaaS and IaaS management, which are currently rife with poor governance, duplicate spending, and unmonitored usage patterns associated with decentralized cloud computing purchases.

Enterprise buyers at Global 2000 companies should review their current strategy for IT spend categories with the goal of supporting all cloud, software, hardware, network, and mobility spend from a usage and subscription-based perspective. IT is moving to a subscription and usage-based paradigm that started by enterprise telecom and then evolved through the enterprise adoption of cloud computing. Firms currently considering new or replacement IT expense vendors, due diligence in understanding prospective vendors’ roadmap and experience for new technology categories is vital for futureproofing this investment. This is especially true in an “As-a-Service” world where all aspects of IT are increasingly being sourced and billed in a telecom-like function which shifts these vendor relationships from traditional asset-based approaches to subscription and relationship-based approaches. Look for depth in the following functional areas: inventory, invoice line-items, service orders, disputes, optimization, governance, and security.

Customer satisfaction, geographic expertise, vertical expertise, and depth of managed and professional services are key differentiators. Amalgam recommends that companies looking at TEM solutions focus not only on the technical aspects of invoice and inventory management, but on the alignment between the vendor’s expertise and the potential buyer’s geographic footprint and business model. This alignment is often more important than the extremely granular Request for Proposals that Amalgam has seen in this industry. In 2019, there have been a number of specific trends in this regard, such as the telecom expense management market’s push towards aggregating European spend among market leaders, focus on providing additional managed services such as security and managed mobility, and vertical-specific cost management focuses that also include specific asset management and IT management strategies. Customer retention and satisfaction are also key metrics. For mature solutions, it is not uncommon to see annual customer retention metrics above 95% and to see an year-over-year increase in wallet share as new cloud and app spend is brought into a solution.

Rather than ask hundreds of questions where there is little to no differentiation, such as how invoices are processed and whether a specific type of inventory can be stored within the solution, focus on how the vendor supports the usage and management of value-added technology. The goal of IT is not to restrict the use of helpful technologies, but to increase the use of productivity-driving and outcome-improving technologies and then to providing that optimal level of utilization in a cost-effective manner. Spend management vendors that can help identify technology associated with revenue growth or customer satisfaction provide a competitive edge in understanding the cost-basis of strategic IT. By taking these steps, companies can start to better understand how to manage IT spend more practically.

(Note: This piece is an excerpt from Amalgam Insights’ upcoming SmartList for Technology Expense Management Market Leaders scheduled to publish in August 2019. If you would like more information about this topic, if you are considering a net-new or replacement purchase for IT expense management, or are interested in the upcoming report, please feel free to contact us at info@Amalgaminsights.com)