TEM Consolidation
Posted by: TEMIA in Mergers and Acquisitions on
Nov 17, 2008
Until the TEM industry undergoes more consolidation, the TEM customer will be underserved. The primary reasons have to do with lack of scale and lack of pricing power. This seems counterintuitive to some TEM customers since they enjoy pricing power in a very competitive market. However, lack of TEM supplier pricing power results in less or unprofitable work and results in lack of investment and hence poor service levels. The TEM customer should embrace TEM M&A and the resulting economic scale that enables the TEM vendor to invest more in R&D, customer support, and good people. The improved results will vastly eclipse the modestly higher prices paid to the TEM supplier and both sides of the relationship will be richer for it.
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ICOMM Consulting
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This is certainly something that will happen to a degree, and over the long term. As the TEM application sets become more advanced, smaller players won't be able to keep up from a functionality perspective. But there are support elements in the TEM space that won't ever be fully "application driven"; for much of this stuff there is no Easy Button. Because of that there will likely be smaller, niche players who provide an extra level of support to customers not merely looking for a software solution. Now that TEM has gathered momentum within large organizations, the value of TEM engagements is no longer being judged by "who is cheapest" but rather by what solution will best provide over the long term. As price is less of an issue (but still an issue, of course) TEM providers are able to spend more on not only application development but also on staff development, which greatly adds to the accuracy and efficiency of the work product. From a software perspective, I imagine in a couple of years, the BPO side of TEM will be using a small set of TEM software (licensing the software), as opposed to each company basically having their own app. In that case, both the TEM provider and the end-user customer will definitely benefit from it. But that does not necessarily mean that "consolidation" of companies must take place. It'll be interesting to see how things play out! |
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