Beeline Customer Conference Update: “Growing 40%” and “Not For Sale”

Doug Leeby, Beeline’s President and CEO, kicked off Beeline’s 2014 Customer Conference this morning by sharing a few facts about the event and his organization, as well as a broader vision for competing and serving customers in a consolidating landscape. This year, Doug noted 36 companies are represented in the audience. Beeline’s MSP and staffing partner ecosystem is out in full force as well – KellyOCG, Tapfin, Pontoon, Randstad, Sourceright, Vendorpass, Allegis, Volt and parent company Adecco are all in attendance.

At the start of this talk, Doug singled out a particular partner, PIXID, whose executives were also in attendance. PIXID is the unique French VMS provider that has a dominant market position in the heavily regulated French labor market. Doug noted that Beeline’s partnership with PIXID focuses on taking advantage of their unique systems and compliance approaches to facilitating blue collar staffing and contingent workforce management (whereas Beeline is focused more on white collar labor France, with its own system).

From a company growth perspective, Doug noted that Beeline’s revenue was up 40 percent in 2013 and that Adecco is putting the earnings back into the business. This approach “represents a different mindset from PE firms,” Doug noted. In short, Adecco has “left Beeline alone.”

This also extends to selling the VMS provider. Adecco’s leadership told Doug that “you never sell your strategic assets” and that “Beeline’s valuation today supports our previous decision to buy MPS Group [inclusive of Beeline].” Based on comparable valuation metrics, Adecco is leaving quite a lot of cash on the table in its decision to hold the Beeline asset – roughly $600 million according to Doug’s back-of-the-napkin math.

Less than 20 minutes into his talk, Doug put up a graphic of a giant elephant on the screen and suggested that we all know the elephant in the room within the VMS market at the moment is Fieldglass (given its acquisition by SAP). Doug said, “We congratulate them on an obvious but good move.”

But as for Beeline, “the acquisition doesn’t affect us too much … but we find interesting that a software company can sell at 10-12X revenue and 40X times profit.” Doug questioned what is truly behind the move and what will happen once the acquisition is integrated – in regards to pricing, service, and production innovation. Competitive rhetoric no doubt, but fair questions to ask.

As for Beeline, business continues as usual with a focus on a number of core areas:

  • Building “bullet proof” technology.
  • Developing data and analytics capabilities that are predictive and sensing.
  • Delivering a comprehensive non-FTE solution to “get all non FTE talent into the VMS.”
  • Continuing to differentiate on services. In Doug’s words, “services are how you differentiate [within services] procurement. Service is an obligation beyond just supporting transactions.”

Doug’s candor and grounding was refreshing throughout his talk. But no doubt Beeline faces many challenges competing in a market that is rapidly consolidating and one in which a key competitor (Fieldglass) has driven down VMS costs. As our coverage of Beeline’s customer event continues, we’ll report on what we learn as well as share our analysis of how Beeline is likely to differentiate and compete in a future where fewer and fewer VMS providers will stand alone – and one in which the largest provider and competitor is controlled by an ERP and procurement giant.

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