In December 2016, the announced merger of IQNavigator and Beeline rocked the contingent workforce and services market. As the shape of the new firm takes form, Spend Matters caught up with Doug Leeby, CEO of IQNavigator + Beeline, to learn how customers have reacted, how partners are dealing the emergence of a “Big 2” and what he sees as the future of the VMS market. Stay tuned for Part 2 of this interview, in which Leeby provides an update on the combined product roadmap and competitive landscape.
Looking back on the past couple of months, how have customers reacted to the combination?
Since the merger was announced, my executive team and I have been on the road visiting with customers and partners. I’ve already met with 25 IQN and Beeline customers in person, with 20 more planned in the next few weeks. It is really important to me to connect directly with customers of both of our VMS platforms, as they are critical to our success; this is an attitude I’ve always had and one that the new company will continue to have.
The reaction has been positive. Our customers and partners see the obvious value in combining our two organizations but also have loudly told us that they don’t want to be forgotten along the way. They are excited about the speed with which we will innovate and with the fact that customers from both platforms will get quick wins from the other. I’ve structured the organization and the integration efforts in a manner that will enable us to keep our eye on the ball and ensure customers still receive the same level of support.
There were some anecdotes I found interesting. One of our large Beeline VMS customers just went live and told me they were excited about our merger because despite having not chosen IQN, they loved the vision and innovation IQN was bringing to the market. From an IQN VMS customer, I heard them express excitement over the fact that they heard great things about Beeline’s self-sourcing and support model. I believe all customers are eager to benefit from this union.
Two weeks ago, in London, we held one of our “Meeting of the Minds” events and it was, by far, the highest attended to date. Turnout was great but more important, the discussions were outstanding. We believe the market is ripe for expansion and growth, and that our merger had a lot to do with so much interest and such great attendance.
What are the advantages (and disadvantages) of private equity ownership compared with alternatives for Beeline? How is it different?
I have been in discussions with the folks from GTCR over the years and developed a relationship with them. I appreciate their philosophy is to empower management to run their businesses. The biggest advantage we now have is that we are independent. Adecco was a great steward of our business and invested heavily in us. However, some in the market struggled with Beeline being owned by a staffing giant. Our partners, in particular, have expressed great support for our new ownership model.
Last week we had our first board meeting. I expected the meeting with GTCR to be dominated by financials. In fact, it wasn’t. Certainly, we spent an appropriate amount of time on numbers, but they were more interested in our plans to grow the business. They purchased Beeline because they believe the merger materially changes the game and the growth curve. We agree.
Of course, it is still early in the game, but so far the transition has felt much more comfortable than I expected. I’m fortunate to have an experienced executive team, half of whom have worked with GTCR for years via IQNavigator. Joe Juliano, former CEO of IQNavigator, is remaining on the Board and he has been an invaluable friend and mentor through the process. I always respected Joe as a competitor but I never expected him to be such a great guy. He continues to hold a genuine interest in the health of the company and the employees and he has made the transition that much smoother.
Now, not everything in the merger has been positive. On Feb. 9, we initiated a reduction in force. This was extremely difficult for us due to our employee-centric culture. While the reduction accounted for less than 10% of our combined workforce, it felt very big to all of us due to our personal relationships. However painful, these initiatives are necessary and we had to target positions of overlap or that were on the ancillary of our core mission. It was a hard day for those directly impacted and I’m very grateful for the ways that my colleagues are supporting each other through this time; this kind of teamwork and camaraderie is something that I value above most things.
Could you address the issues of both investment (for the future) and rationalization of resources?
Going back to your question on the difference in working with a private equity, I would add that GTCR has been helpful in getting us to focus on a few key initiatives versus an array of ideas. Truthfully, when there are three big players in the space, you spend some time and energy on the periphery as you strive for more points of differentiation. We don’t feel that pressure anymore and are keenly focused on our strategy and innovation.
We will continue to invest (and hire) to support those key initiatives. Rationalization is part of business and is necessary when you surge in non-core areas. We had some of that. People talk about it as a balance. I’m not sure I see it that way. For me, the exercise boils down to being very disciplined about what is core and what isn’t. There are a lot of great and even fun initiatives, but they aren’t always core. We are focused on innovation and expansion for growth and customer retention.
How have your partners (i.e., MSPs) reacted to having essentially a "Big 2 and everyone else" in the market? Has it increased or reduced choice for their clients?
Similar to our customers, our partners have reacted well to the merger. They are excited that we’ll be able to better support them, offer combined best practices and develop more functionality, faster than we were able to when we were beating each other up in the market. It’s critical to us as a company, and to me personally, that we back-up our words with actions; we have to show our partners that we can deliver on the promises we’ve made. We have a strong reputation with our partners for treating them like customers and innovating in a way that helps their business as well. We must continue to earn their partnership every day and not take for granted the fact that we are now one of the “Big 2.”
In terms of choice for customers, I think it is fair to say there is a big change. It would be both arrogant and naive to act as if there are only two VMS companies in the space. There are a host of solid players, albeit much smaller, who are doing a fine job for their customers. It will be interesting to see who emerges as the potential third player. Regardless of who is perceived as No. 3, the market now has, without question, two massive and dominant players. Some companies appreciate the breadth of experience, financial stability and domain expertise of market leaders. Others want to be a big fish in a small pond. The choice depends entirely on the company’s needs and cultures. If a company is global and wants to manage its entire extended workforce in a VMS then I believe the choice has gone from three to two.
Could you share an update on your vision for the combined organization?
The vision remains the same. We want to enable customers of all sizes and geographies to capture, manage and conduct analysis on their extended workforce in a manner that allows them to achieve their business goals. VMS is a poor moniker for our solution. The contingent workforce is growing rapidly and we address a lot more than managing vendors.
Our role is to ensure customers have visibility into all types of contingent workers, can make both strategic and tactical business decisions about them and, ultimately, ensure they have the right mix of workers (both full-time and contingent) at the right cost and quality. Through functionality we’re building (or have already built) we’re looking to change the way that businesses and the workforce engage with each other. Self-sourcing is just one example of this. Artificial intelligence and user experience are more examples. You’ll hear and see more about this at our conference!
Stay tuned for Part 2 of this interview, in which Leeby discusses an update on the combined product roadmap, how companies should approach managing a global contingent workforce and the elephant in the room — SAP Fieldglass.