Topics of Interest Archives: Unified Communications

The $500 Billion Communications Race in TEM

TEM Acquisions Tango WidepointOne of the key themes for telecom expense management (TEM) over the past couple of years has been M&A and boutique consolidation.  Both Tangoe and WidePoint Solutions Corporation have completed multiple acquisitions. This is a testament to the activity in the industry, given that each of their acquisitions had previously acquired smaller vendors of their own. Companies previously content to leverage partners to fill gaps in service, capability, or vertical expertise are increasingly finding that, strategically, it is more valuable to own these capabilities. By combining wireless, IT management, sourcing, and consulting skills in-house, TEM companies continue to expand their competencies and market expectations. The most recent TEM M&A announcement will drive further changes.

On December 9th, the investment firm Clearlake Capital announced the creation of Calero, which aggregates the businesses of three veteran TEM organizations: Veramark Technologies, Movero, and PINNACLE. The consolidation is financed by Wells Fargo Capital Finance and Stellus Capital Management. Mooreland Partners provided mergers and acquisitions advisory services.  Although all three TEM companies possess deep experience, each brought a different focus to its client base. As such, understanding the future of Calero, one must first look at the past.

Veramark initially started as a call accounting company in 1983 that tracked local and long distance usage in business organizations.  With its call accounting software, Veramark supports market-leading voice systems including Cisco and Avaya.  This experience provides Veramark with experience in supporting landline end user endpoints.  In addition, Veramark acquired consulting group Source Loop in 2010 to strengthen its professional services. This burned their limited and critically important cash reserves, arguably not a smart decision by the management team.  Through this combination of usage management, audits, licensed software, hosted software, and consulting Veramark provides its telecom expense management solutions.

Movero is the result of a 2011 rollup of three TEM-related companies: Integrated Mobile, Broadsource, and Movero Technology.  Broadsource started as a TEM company focused on mid-sized organizations with spend in the range of $2 million to $20 million. Through the backing of Tripp Rackley, Noro-Moseley, and Harbert Venture Partners, BroadSource acquired managed mobility service provider Integrated Mobile in 2011 for $14.8 million. This acquisition opened up access to much of the Fortune 1000, who were existing Integrated Mobile customers.  Soon after, this combined company acquired Movero Technology, a company focused on mobile help desk support. Since May 2011, this combination of software, mobility services, and help desk services has gone to market as Movero with a focus on wired and wireless TEM solutions for large enterprises.

PINNACLE has provided telecom management software since 1988 and was originally created by the CLEC PAETEC (since acquired by Windstream).  Because of its carrier background, PINNACLE has traditionally demonstrated a wider focus than most of its TEM peers. This includes IT service management and vertical solutions for education, government, financial services, and healthcare.  This IT financial management position is reminiscent of ComSci, an IT financial management company recently acquired by Upland Software in November 2013.

These three varied approaches leave Calero with the challenges of integrating operations. They must avoid the plight of Tangoe, which is struggling to be perceived with one public face as opposed to a fragmented network of acquired vendors. Tangoe must support their customers with one voice and one platform. Word on the street is that Tangoe cannot keep their project management teams on schedule, resulting in team churn every six months. At the same time, Calero has the opportunity to grow beyond some of the artificial constraints that TEM companies have placed on themselves.

Calero needs a rapid roadmap to consolidate the PINNACLE, Movero, and Veramark platforms. From an integration perspective, it is apparent that one of these firms is not like the other. PINNACLE and Veramark were both established TEM companies, but lacked significant growth potential based on current technology and service capabilities.  Movero, on the other hand, quickly sought to increase both market share, new expense and support capabilities.  For Calero to succeed, Calero needs to embrace Movero’s ability to acquire new employees and to dramatically transform itself.

From a capabilities perspective, the new Calero is able to bridge the gaps between enterprise endpoints and carrier management based on core competencies.  For Calero to live up to its claim as a “Communications Lifecycle Management” company, it will need to support as wide a variety of enterprise communications as Tangoe.  Veramark’s strength with supporting PBX usage, Movero’s experience with mobility, and PINNACLE’s experience with IT systems will help, but one important aspect is still in question.

As communications capabilities increasingly move to the cloud, Calero will need to provide some way of supporting Skype, hosted unified communications, and other SaaS solutions that provide some method of conferencing or calling.  In addition, Blue Hill has recently covered the increasing importance of Amazon in providing new cloud services, which will need financial oversight similar to telecom expense management.  Our research and face-to-face interviews with CIOs show IT is moving to the cloud and fast.  This leads to a new set of expense management challenges as the traditional CapEx world of IT quickly changes to an OpEx and subscription world that is very similar to telecom.  Currently, the PINNACLE side of Calero is probably best suited to tackle the impending challenges of cloud management. Still, the cloud will prove to be a key test of Calero’s ability to evolve even as it integrates in 2014.

In addition, Calero now faces a new set of challenges accompanying its sudden growth in size.  From a revenue and future market cap perspective, Calero is now on par with the largest companies in the TEM industry: WidePoint ($90M) and Tangoe ($590M).  This scale has provided challenges to TEM companies in the past, such as Telwares and Control Point Solutions.  The creation of Calero will be a test for the TEM market to see if further consolidation will make it stronger or result in an unwieldy amalgam that forces customers to change TEM vendors yet again to find smaller and more nimble solutions.

The keys to success for Calero are simple:

– maintain and expand the current customer base;

– move to a consolidated platform as customers want and need one throat to choke;

– accelerate implementation times so that new customers are not stranded with an incomplete platform after 12-18 months

Calero must realize that this merger is only the beginning of its challenges. It is going down a road that many other TEM companies have travelled in the past and all of whom were devoured by Tangoe (Anomalous Networks, HCL Expense Management Services, Information Strategies Group, InterNoded, ProfitLine, Symphony Teleca, Telwares, Traq Wireless, TtMobiles Ltd., etc.).

Should Calero persevere, I expect an S1 filing to ensure investors, the management team, and employees see their returns on this strategic bet and sweat equity.  However, to succeed, Calero must take George Santayana’s creed about history seriously: “Those who cannot remember the past are condemned to repeat it.”

FULL DISCLOSURE: On December 8, 2008 I was appointed to the Veramark board of directors and resigned my appointment on March 5, 2010. On Feb 1, 2011 I joined the Advisory Board of Avalon Global Solutions, which later was acquired by WidePoint Solutions Corporation on January 4, 2012.

Posted in General Industry, General Function, Blog, IT & Infrastructure, High-Tech, Research, Mobility, Telecom Expense Management | Tagged , , | 1 Comment

Are Technology Predictions Any More Accurate than Tossing a Coin?

Implementation Fundamentals Coin FlipBlue Hill is conducting research on technology Implementation Fundamentals to better understand the factors that cause technology projects to fail or succeed. If you haven’t taken it, your answer to five questions will help us to identify the challenges that most often cause organizations to misunderstand the value of their investments.

This research is still ongoing, but a peek into the early results provides an observation about how well organizations are able to predict the impact of their technology investments (Figure 1). Fifty-four percent (54%) of study participants indicated that their most recent technology implementation met project goals. In other words, organizations are able to correctly forecast how an implementation will affect business a little more than half the time. That’s not much better than a “coin flip.”


Figure 1: Performance Impact of Most Recent Technology Implementation

Implementation Fundamentals Midpoint Review

Source: Blue Hill Research, November 2013

Encouragingly, in 71% of the cases, projects met or exceeded project goals. While these situations are generally better for the organization, they still constitute problems in investment planning. Even when results are better than expected, it indicates that the organization still misunderstood how the investment would affect performance. Of course, few will complain when an implementation provides more value than expected. Nonetheless, these sorts of misjudgments cause organizations to fail to properly allocate resources and priorities. Underestimating the impact of a solution also can result in decisions to forgo investment, causing organizations to miss opportunities.

The more concerning takeaway from Figure 1 is that when companies misjudge the impact of an implementation, the ultimate impact falls below the mark more often than above. Seventeen percent (17%) of implementations exceeded project goals. Just as often, the improvement falls below expectations. In another 12% of cases, the investment caused performance to worsen or made no change at all.

Blue Hill will return to these findings as it completes its Technology Fundamentals research. If these results remain consistent, they will paint a story about organizations’ ability to successfully predict the impact of technology. Any given investment has a roughly fifty-fifty chance of providing the value forecasted. This failure to predict accurately will mean one project in ten is a wholly wasted investment, with no impact or negative impact.

In part, this is not a problem of technology assessment, but project execution. The challenges that emerge in the course of an implementation can play a major role in eroding the impact of a deployment. As we complete our research, Blue Hill will isolate the most common challenges organizations encounter as well as the challenges that most often correlate to project failure.



Posted in Analytics, General Industry, General Function, Blog, Mobility, Enterprise Risk Management, Policy and Compliance Management | Tagged , , , , , , | Leave a comment

Siemens Unify Introduces Project Ansible and Says Goodbye to “Enterprise Communications”

Unify Project AnsibleOn October 15, Siemens AG relaunched Siemens Enterprise Communications as Unify. The move will not involve any changes in management structure or in ownership. Unify, like Siemens Enterprise Communications before it, is a joint venture between The Gores Group and Siemens AG.

The new launch largely represents a rebranding effort, putting aside the more generic “enterprise communications” label for a name that demonstrates the organization’s dedication to the unfulfilled promise of unified communications. Not unsurprisingly, Siemens’s Project Ansible, a unified communications and collaboration platform announced in June 2013, is at the center of the new company’s positioning.

Project Ansible is a cloud-based communications system that wraps together voice, video, text, applications, and conferencing into a one platform, or “single pane of glass.” Siemens also reports that Project Ansible will support almost any form factor between all connected devices and is well-positioned to focus on and support mobile and tablets. Unify also announced that it would be accelerating development on Project Ansible. Initial customer trials are now planned for January 2014, with general rollout in July 2014.

Enterprise telecommunications have been evolving towards unified platforms following the entrance of companies such as Skype, GotoMeeting, and WebEx. As these providers have expanded communications options, organizations have increasingly found that expensive landlines (POTS) and traditional phone systems present burdensome cost centers. In its place, unified communications offers a vision where cloud-based platforms connect enterprise voice, video, email, social, analytics, collaboration, and conference tools with mobile and tablet computing.

Unify describes this view as a “single-pane-of-glass experience.” In addition, Unify is focused on bringing the same ease-of-use consumers have come to expect in mobile experiences in harmony with their enterprise system environments. In rebranding Enterprise Communications as Unify, Siemens hopes to relieve itself of the confusion and market legacy burdens associated with expiring telecommunications technology as it introduces Project Ansible.

Organizations should take note. As Blue Hill observed in its report The CIO’s Guide to SMAC, social, mobile, analytic, and cloud technologies are converging.  The challenge presented by older infrastructures is not just the cost of management, but the inability to keep pace with organization’s current telecommunications needs. Workforces are increasingly mobile and dispersed, requiring new collaboration models. As such, the ability to centrally manage collaboration across a multitude of communication channels will play a critical role in how effectively an enterprise works. Disconnected conference call, email, and instant messaging tools may be adequate today, but will increasingly prove too clumsy to meet organizational needs.

From this standpoint, Unify represents a promising development. Enterprise Communications offered a sophisticated array of telecommunications solutions and Unify brings these offerings together. Unify presents a unified communications vision that is well aligned to today’s collaboration needs. Organizations, particularly those with disconnected and aging communications infrastructure, will do well to keep an eye on Project Ansible as it develops. If Unify delivers as promised, it may prove to be what they need.

Do you think Unify will deliver on its vision? What future do you see for unified communications, we’d love to hear your comments.

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