Cass-Efftel Deal ‘Is Going to Create Uplift’
U.S.-based TEM provider Cass is buying Britain’s Efftel in a deal that represents significant momentum for the telecom/IT management market as a whole. Indeed, it demonstrates that vendors can support TEM on a global scale, said Timothy C. Colwell, senior vice president of Efficiency First® Adoption at AOTMP.
That’s an important point. Since its inception, TEM has remained popular mostly in North America. But as enterprises continue to expand throughout the world, so must their vendors. From that perspective alone, a Cass-Efftel combination makes sense.
“Europe is an emerging market where there is more acceptance, interest and viability for TEM services, so this adds global capabilities,” Colwell said. At the same time, he added, bringing Efftel into the fold complements Cass’s proficiencies well within its traditional territory.
Depth of Insight
The roots of the Cass-Efftel merger go back to 2015 when the two companies began a delivery partnership. As Cass expanded into the UK and
Ireland, “we recognized there are people who have been doing this a lot longer across the EU, and American knowledge of European telecom management is only so deep,” said Josh Bouk, vice president of sales and marketing for Cass’s expense management division.
“So we went out and intentionally found a partner that could help us build that business.” Several telecom management facets differ in Europe compared to the United States, including how mobile contracts are billed, legal differences, taxation and so on.
“Sure, we can advise somebody on what carrier they should consider and we can audit bills based on contracts, but to provide depth of insight, it was necessary to have in-region resources,” Bouk said. Cass and Efftel then spent about a year delivering to each other’s customers to see how an acquisition would work, before announcing the marriage.
The strategy bodes well for Cass – TEM competition is “tight,” Colwell noted – and for enterprises. As one entity, Cass and Efftel likely will see a new level of growth and maturity in their services, a big plus in a sector not known for innovation.
“Many TEM providers have plateaued in North America,” Colwell said.
Instead of trying to build knowledge and experience on one’s own, Cass is taking the more effective approach of buying a company that already holds the expertise Cass needs. Efftel knows the European carriers, customers and regulatory environment better than Cass could if it tried to go the course alone. “Experience is very powerful in this market space because the learning curve is steep,” Colwell said.
With Efftel by its side, Cass now can accelerate its global growth and execution “much quicker than if it was organically growing the knowledge.” To that point, Bouk said Cass continues to increase its presence in Asia-Pacific with a new office in Singapore. The company has India in its sights but cannot make forward-looking statements because it is publicly traded. However Cass executes its strategy, enterprise can expect to see the company tackle “one country, one region at a time,” Bouk said, rather than taking a rapid roll-up approach as competitors have done to their detriment.
What Enterprises Can Expect
Enterprises should expect “exponential positive impact” from the Cass-Efftel deal, Colwell said. Often when TEM vendors merge, enterprises take a hit – they lose account managers who know them, service quality drops as people are laid off and so on. Colwell does not anticipate this kind of fallout from Cass as it integrates Efftel.
“There’s likely little crossover in the customer base between Efftel and Cass,” he said. “So for North American companies that have operations or presence in Europe, this is going to create uplift because it’s an expansion of capabilities.”
Likewise, Efftel clients in North America stand to benefit from Cass’s expertise. Bouk agreed. “European clients now can feel comfortable in our ability to give them one centralized view of their telecom spend while providing regional and in-country reporting and control,” he said.
That’s partly because the system accommodates 11 languages and processes invoices in local currencies. “But the real expertise in TEM requires knowledge of carriers, and that’s what significantly increased with Efftel,” Bouk said.
Of course, none of that means Cass or Efftel users won’t want to keep an eye out for changes. There will be some. “Any time there is a merger or acquisition, whether you’re a client of the acquiring company or the company being acquired, the merged company is looking for operational efficiencies, looking to leverage the capabilities of the other vendor,” Colwell said.
In the case of Cass-Efftel, enterprises that stay proactive should come out all right. Understand account management and process/procedure changes. And use the M&A to get some price concessions or a renegotiate the contract.
“Create some improvement even if things are good,” Colwell advised. Also, over the course of Cass and Efftel’s integration work, know that if your enterprise has few outstanding issues, you may be pushed to the back of the line. During acquisitions, situations crop up where “account teams are triaging and some folks might be neglected a smidge,” Colwell said.
Financial terms of the deal were not disclosed. While Cass is publicly traded, Efftel is privately held. Efftel was founded in 2001 and has offices in Amsterdam, Basingstoke and England. Cass is based in St. Louis County. Cass is re-branding Efftel as Cass Telecom Europe.
— Kelly Teal, Editor-in-Chief, AOTMP Telecom Management Industry Update