When 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.
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?
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?
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