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.

The Second Half of 2019 Has Already Begun! Amalgam Insights Highlights

We’ve reached July 1, 2019. It has been an amazing first half of the year both for Amalgam Insights and the tech world in general! From our perspective, it has been a good half as we’ve written 53 blogs, published 13 reports, and grown bookings 66% over the second half of 2018. Special Thanks to our corporate clients for your financial support that allows us to continue being a voice for changing the future of technology.:

And this gives you an idea of the companies that align with our perspective of technology being more global, usable, efficient, and financially sustainable in the here and now.

It is easy to be overwhelmed by the sheer hype of tech news cycles, but the past few months have been part of a fundamental shift in the world of IT that seems to happen once a decade. However, our audience has shown broad interest in topics across data management, cloud management, the future of finance, the neuroscience of learning, and enterprise-grade data science over the last six months. Heres a quick summary of the topics that Amalgam’s audience found most compelling in the first half of this year.

Amalgam Insights’ Top 10 for the First Half of 2019

  1. The Death of Big Data and the Emergence of the Multi-Cloud Era – Author: Hyoun Park

    Just as we saw the emergence of the Internet as a powerful business enabler around 2000 and saw the rise of Big Data and Analytics in 2010, we now face the emergence of Multi-cloud replacing CapEx as a fundamental basis for tech this year as we enter the 2020s.Based on that, it was no surprise that The Death of Big Data and the Emergence of the Multi-Cloud Era has been the most popular piece on Amalgam Insights in the first half of 2019.

  2. Docker Enterprise 3.0 is the Docker We’ve Been Waiting For – Author: Tom Petrocelli

    DevOps Research Fellow Tom Petrocelli describes in this research piece how Docker has been moving away from the commodity business of container infrastructure and reinventing itself as a developer tools company. It provides context to the DevOps community on why Docker 3.0 addresses one of the largest problems in DevOps, today.

  3. Microsoft “Early Adopts” New ASC 606 Revenue Recognition Standard – Author: Hyoun Park

    This piece continues to provide guidance to companies on how businesses prepared for ASC 606 accounting and has been a starting point for some of you to ask us about the likes of Zuora, Aria, Oracle BRM, SAP Hybris Billing, Sage Intacct, FinancialForce, Flexera Software Monetization Platform, Gemalto On-Demand Subscription Manager, and other subscription business platforms.

  4. Analyst Insight: 7 Key Technology Expense Management Predictions for 2019 – Author: Hyoun Park

    This report, published at the beginning of this year, provides7 predictions to help financially-minded technology managers gain 30% savings on operational cloud, network, and telecom expenses while gaining the visibility and governance needed to responsibly manage digital change and technology as a competitive advantage. This report, which comes with free analyst inquiry time, served as a strategic kickstart for enterprise IT and procurement teams in 2019.

  5. Technical Guide: A Service Mesh Primer – Author: Author: Tom Petrocelli 

    This groundbreaking Amalgam Insights Technical Guide on the Service Mesh provides enterprise architects, CTOs, and developer teams with the guidance they need to understand the microservices architecture, service mesh architecture, and OSI model context necessary to conceptualize Service Mesh.

  6. 2019 Top 6 Trends in Learning & Development and Talent Management – Author: W. Todd Maddox Ph.D. 

    Our resident Neuroscientist of Technology, Todd Maddox, provided Chief Learning Officers and enterprise training organizations with a headstart to 2019 with this overview of the six major trends that Amalgam Insights’ research suggests will dominate the Learning & Development and Talent Management landscape including: the Impact of Psychology and Brain Science, AI and machine learning as innovation drivers, the Emphasis on Empathy, the need for Scenario-enhanced Microlearning, best practices for using immersive and augmented reality, and the Power of Personality.

  7. SmartList Market Guide on Service Mesh and Building Out Microservices Networking – Author: Tom Petrocelli

    This piece, a companion to the Technical Guide for Service Mesh, is a comprehensive guide to the roles that top technology vendors play in the world of microservices and service mesh in 2019 including their roles in Istio vs. Linkerd, modern microservice architecture considerations, and the three segments of the service mesh market: Control Plane, Data Plane, and Value-Add.

  8. Amazon Aurora Serverless vs. Oracle Autonomous Database: A Microcosm for The Future of IT – Author: Hyoun Park

    This research document continues to provide guidance on the fundamental decision that IT departments need to choose in the world of cloud. Ease-of-Use vs. Granular Management continues to be a key IT struggle as the need for business agility creates conflict between the need for speed of implementation and management vs. the demand for individualized and customized business model construction.

  9. Amazon Expands Toolkit of Machine Learning Services at AWS re:Invent – Author: Lynne Baer

    The interest for data science and machine learning analyst Lynne Baer’s piece on Amazon re:Invent was driven by the interest in Amazon Textract, a service that extracts text and data from scanned documents, without requiring manual data entry or custom code. The promise of Textract in providing Role-based Expert Enhancement by automating manual work continues to be of interest for our enterprise IT audience.

  10. The CLAIRE-ion Call at Informatica World 2019: AI Needs Managed Data and Data Management Needs AI – Author: Lynne BaerThis research note reflects the synergy between modern data management strategies and evolution of artificial intelligence and Amalgam Insights’ recommendations for the data managers, executives, and enterprises in the Informatica ecosystem trying to figure out what to do next in preparing for the exponentially expanding challenge of billions of daily interactions, billions of daily searches, billions of devices and sensors – combined with a shortage of over 800,000 data science professionals.

As you prepare for the second half of 2019, please keep a look out for our upcoming research and review any of our top pieces that have been influencing technology decisions for our subscribers and advisory clients over the first part of 2019. If you are seeking guidance on the Finance of Tech, the Neuroscience of Tech, or the current state of ITOps and DevOps, please send us a note at info@amalgaminsights.com to set up a discussion. We look forward to supporting a better future for managing technology with you.

Tangoe Acquires MOBI to Strategically Expand Enterprise Mobility Capabilities

On December 5th, 2018, Tangoe announced the acquisition of MOBI, a leading managed mobility services organization based in Indianapolis, Indiana in the United States. With this acquisition, Tangoe increases its IT spend under management to over $40 billion, increasing its lead over other spend management vendors with multiple billions of dollars of enterprise technology under management including Flexera, Snow Software, Microsoft Azure Cost Management, CloudHealth by VMware, Calero, MDSL, Cass Information Systems, and Sakon.

Key questions to consider for this acquisition include:

  • Why did Tangoe decide to buy MOBI at this time? For its customer base? Corporate culture? Technology?
  • How does this acquisition affect enterprises seeking toolsets to assist with the orchestration and accounting of digital transformation initiatives?
  • How will work be split and coordinated between Tangoe’s Austin logistics warehouse and MOBI’s Indianapolis-based facilities?
  • What will Tangoe do with MOBI’s Robotic Process Automation initiative of Mobots?
  • Will Tangoe keep MOBI’s staff or will there be a bunch of high-quality mobility and support staff available?
  • What happens to MOBI partners who may compete with Tangoe?
  • Will MOBI customers be moved to the Tangoe Matrix platform immediately?
  • Will Tangoe contribute to the burgeoning Indianapolis tech scene that is currently one of the hottest startup spots in the country?

To learn more about which of these questions can be answered and which of these questions require greater due diligence, please read my full analysis, which is available at: https://amalgaminsights.com/product/amalgam-insights-market-milestone-tangoe-acquires-mobi-to-enhance-mobility-management-capabilities

5 Stages of The Technology Expense Management Market (re: Calero Acquires Veropath)

In my recent Market Milestone, Calero Acquires Veropath to Bolster its Global Role in Technology Expense Management, I made a quick comment about Veropath as an “accretive acquisition target.” But then I realized that I hadn’t explained what that meant from an Amalgam perspective. From Amalgam’s perspective, the Technology Expense Market (aka Telecom Expense Management, although…

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Calero Purchases European TEM Leader A&B Groep: What to Expect?


Note: This blog contains excerpts from Amalgam’s Due Diligence Dossier on Calero. To get the full report, click here.

In January 2018, Calero announced two acquisitions, Comview and A&B Groep. These acquisitions have increased Calero’s headcount by over 70 employees, added geographic footprint, demonstrated a specific profile for acquisition, and demonstrates the willingness for new owners, Riverside Partners, to quickly take action within 120 days of acquiring Calero. This combination of acquisition, execution, and stated focus result in the need to re-evaluate Calero in context of these significant changes.

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The Enterprise Opportunity in Apple’s Slowdown

From Pixabay


On December 28th, Apple released a statement regarding the fact that it was planning to lower the battery replacement costs for Apple 6s and 7s from $79 to $29 as a followup to a December 20th statement made to Techcrunch in which Apple described how it was slowing down iPhone 6s and 7s. This piece provides guidance to enterprise IT, mobility, and procurement managers on what this issue is and how to take full advantage of this situation to improve your enterprise mobility environment.

Recommended Audience: CIO, Chief Procurement Officer, IT Procurement Directors and Managers, Mobility Directors and Managers, Telecom Directors and Managers, IT Service Desk Directors and Managers

Vendors Mentioned: Apple, Samsung, Huawei, Calero, DMI, DXC, Ezwim, G Squared Wireless, Honeywell, IBM, Intratem, MDSL, MOBI, Mobichord, MobilSense, Mobile Solutions, NetPlus, Network Control, One Source Communications, Peak-Ryzex, RadiusPoint, Stratix, Tangoe, vCom Solutions, Visage, Vox Mobile, Wireless Analytics

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Riverside Partners Acquires Calero: TEM in Transition

Calero Logo
Calero

On September 13th, 2017, Riverside Partners, a Boston-based private equity firm, announced the acquisition of Calero Software from Clearlake Capital. Calero manages more than $6 billion of annual telecom, mobility, and cloud spend for more than 3,000 customers in 40+ countries and provides managed mobility services for more than 400,000 devices, making it one of the largest technology expense management solutions overall behind Tangoe’s $38 billion+ in technology expense management and Flexera’s $13 billion+ in software expense management. (Cass does not break out its telecom spend, but Amalgam believes it to be similar in scale to Calero.)

This blog covers Amalgam’s perspective on:

  1. Why Clearlake sold Calero?
  2. Who is Riverside Partners, a relatively new player in the TEM space?
  3. What to expect from Calero going forward?
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IT Asset Management Must Change to Cut SaaS Costs by 30%

Money Bubbles in the Clouds
You Must Change Your LIfe ~ Ranier Maria Rilke
You Must Change Your Life

A generation of IT has been trained on the practice of Software Asset Management, which has been built on the focus of audit-based license agreement compliance. As the enterprise software market has moved to SaaS, the need for regular audits has decreased because of a fundamental shift from vendor-driven contract enforcement to client-friendly policies for adding new licenses and services.

As software shifts from being a license-based capital expenditure asset to a usage-defined operational expenditure service, the foundational nature of software management must change as well. Rather than managing software as a sunk cost with the goal of squeezing the maximum utilization out of an initial license before the software becomes obsolete, companies must now treat Software as a Service as a constantly renewing and updated functionality aligned to specific business roles.

The trade-off for the ease-of-use and support for SaaS is that enterprise software contracts are harder to negotiate because a number of buyers may end up purchasing SaaS and the purchase cycle is built to support consumerized purchases through P-cards, expense accounts, and line-of-business operational budgets rather than through a formal IT process.

As a result, the traditional world of SAM compliance and top-down procurement is being replaced with the need for cost management solutions that focus on:

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Sumeru Equity Partners Acquires MDSL and Combines with Telesoft

money-graph
Title Page: SEP Acquires MDSL
SEP Acquires MDSL

Note: Updated August 2nd with coverage links from Sumeru, MDSL, Telesoft, AltAssets, AOTMP, Crunchbase, PEHub, and Pitchbook.

In case you missed the announcement, as of July 31st, Sumeru Equity Partners has acquired MDSL and is joining Telesoft with MDSL to form a single Technology Expense Management company. I had a few opinions about the new MDSL that didn’t fit into my more formal analysis because they’re observations rather than directional guidance. If you haven’t read the formal Market Milestone yet, please check it out.

First, Sumeru Equity Partners has an interesting portfolio of companies that could be accretive to the new MDSL company. Take a look at their current portfolio:

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