“Bundled” or “Bungled”: Unwrapping Total Talent Management Solutions | DCR Workforce Blog

“Bundled” or “Bungled”: Unwrapping Total Talent Management Solutions

acquisitionsWhen the discussion at the table in my office cafeteria turned to “software bundling”, things heated up quickly! Software bundling refers to the practice of bringing together independent software products, and marketing them as “all-in-1” solutions. We were unable to decide whether it is good thing to have software services emulating supermarkets; which seems to be the trend these days. Do we shop around for different products or depend upon a single ‘super’ service provider who offers a bouquet of services – all in one place?

Take total workforce management. The trend seems to be moving towards offering end-to-end solutions which enable companies to procure and manage their permanent workers, contingent workers, SOW projects and independent contractors. This is often referred to as “total talent management solutions”. The promise is that these individual products will come together to provide software solutions that will work seamlessly across cloud-based and network-based platforms. While all of us could agree that the concept is not a bad one, we recognize that “the devil is in the details”. Of course, I was motivated to blog about this issue.

Total talent management solutions are almost always created through the acquisition of companies and their products. In an earlier blog, I discussed the issues surrounding the acquisition of your VMS provider Let’s now explore why companies create total talent management solution bundles, the potential problems with these bundles, and their likelihood of being successful.

There are many reasons why companies choose to acquire software (and software companies) and then bundle these products with their own to create larger solutions.

  • Technology changes fast. ERP companies whose products were built on old client-server technology may be attempting to buy their way into a ‘Software as a Service’ (SaaS) solution.
  • They are chasing new market opportunities. Nobody wants to miss a new trend, and an acquisition may be the fastest way to be among the leaders.
  • It may be a defensive move. Acquisitions are done to block the actions of a competitor. In some cases, larger companies eliminate competition by buying them!

At this point, Dr. Phil would ask the acquiring company, “How’s that working out for you” My colleagues cited numerous instances of the way these ‘bundled’ offers could go, and used the examples of why Microsoft does not go for big ticket acquisitions these days.

Business management wisdom has always been against jump-starting growth using the M&A route. According to a 2011 Harvard Business Review article, companies spend $3 trillion on mergers and acquisitions each year, of which a daunting 70% to 90% fail. Software acquisitions are always at the high end of that failure rate. Why?

  • Culture clash. Small businesses have been known to offer greater innovation and better client service – when compared to the behemoths. If an acquisition by a larger entity saps into the agility of the smaller one, as decision-making styles change, the acquisition may actually result in lowering customer service standards, leadership changes, and high attrition rates, all ultimately leading to failure.
  • Technical incompatibility. Each product was built by a different development team, using different techniques, platforms, and user interfaces. Efforts to create a consistent user experience across all of these products often result in internal engineering battles. A wise man once said, “A compromise is an agreement whereby both parties get what neither of them wanted.” Unfortunately, that’s often the case when merging software development efforts.
  • Customer resistance. If the bundling forces customers to buy components they don’t want, or pay more, they will find another provider who offers exactly what they are looking for.
  • Poor market intelligence. Often, companies place their bets on “trends” that never actually take root, or take longer to emerge that anticipated. Is the world ready for total talent management? Are companies organized in a way that creates a need for a single platform for managing employees and temporary workers? Do these different software modules all share the same buyer? If not, the selling effort becomes complex.
  • Faulty software roadmap. New product offerings could be delayed in the pipeline, as everyone focuses on improving the integration aspects first. In addition, strategic decisions with regard to the company’s current and future positioning of its services could fail to address the specific needs of the customers who were inherited with the acquisition.

Returning to our supermarket analogy – smart consumers know what they want and how much they are willing to pay for it. Scrutinize the bundled approach, asking if you are getting a best-in-class solution with each module to address each of your needs, or a compromise solution in which each component is sub-optimized in order to create the bundle. It is good to have access to a supermarket, which offers all kinds of products and services conceivable, but niche players may offer higher quality and value for money. Shop around for the solution that is specifically designed for your needs!

Would you agree?


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.