IT expense management solution provider Tangoe Inc. announced this week it entered into a strategic partnership with telecommunications company Vodafone. Details of the deal include Tangoe taking ownership of Vodafones telecom expense management (TEM) technology and bringing the majority of TEM Vodafone employees in-house. Tangoe will service Vodafone’s current TEM customers as well.
President and CEO of Tangoe Albert Subbloie said Vodafone’s TEM business fits well with Tangoe’s solution suite, according to the company’s press release. Vodafone Global Enterprise Chief Executive Jan Geldmacher also said the partnership was mutually beneficial.
“Telecom expense management is an important element in Vodafone’s total communications strategy,” Geldmacher said. “All parties stand to gain as Vodafone and Tangoe combine their reach and expertise to deliver world-leading TEM services to enterprise customers.”
Spend Matters Analysis
Pierre Mitchell, chief research officer at Spend Matters, weighed in on the announcement, noting how, typically, he would be leery of strategic partnerships between technology platform providers and participants in the actual supply chain. Such partnerships usually increase supplier “stickiness,” which is another way of saying higher switching costs and fewer best practices, he said. However, the strategic partnership between Tangoee and Vodafone is different.
Here is his take:
- First, Vodafone is realizing that its core competency is not developing telecom expense management applications. Since it obviously already has a huge market advantage in integrating to the TEM solution that it's divesting to Tangoe, it can let Tangoe grow the app and the market and then realize the downstream spoils from that effort.
- Second, it also lets Vodaphone be a true network that is agnostic to the proverbial handset (the TEM application in this example), so that it can engage Tangoe's competitors (e.g., IBM's Rivermine) more easily. It also avoid any potential for the "fox watching the henhouse" scenario -- something that still exists in other complex services spend categories like marketing (where agencies of record sometimes provide and configure analytics packages providing insight into their actual and relative/competitive performance)
The more TEM solution providers that don't view Vodafone as a competitor, the more it will help Vodafone in the end. We wish more providers in the procurement and supply chain would choose to focus either on the network (and partner with application on-ramps similar to what Amazon Business has done) or focus on their own "apps" and connect them to all the networks that they possibly can (in addition to direct-connecting to suppliers via APIs rather than using an intermediated model).