In late April, TBR attended SoftwareOne’s inaugural Global Analyst Summit in Milwaukee for two days of presentations, break-out sessions, and — because it is Milwaukee — baseball. The following reflects the presentations and discussions in Milwaukee, as well as TBR’s ongoing research around SoftwareOne and its peers in the IT services, cloud services and VAR markets.
SoftwareOne exists at the intersection of IT licensing, IT advisory, IT services, IT management and commerce
On May 17, SoftwareOne announced its acquisition of Calgary-based ServiceNow boutique consultancy Beniva Consulting Group. According to SoftwareOne, the 75-person firm generated more than 70% of its revenue from Canadian clients and the rest in the U.S. SoftwareOne informed TBR that while Beniva focused on ServiceNow engagements, the firm’s revenue came from equal parts IT Asset Management (ITAM) and IT Operations Management (ITOM).
To set the stage, SoftwareOne is an approximately $1 billion per year technology company with revenues roughly evenly split between software value added reselling (“Software & Cloud Marketplace”) and services (“Software & Cloud Services”). With global headquarters in Switzerland and North America headquarters in Milwaukee, the 30-plus-year-old company has about 9,000 employees, 16 global delivery centers and 65,000 clients. The SoftwareOne leadership team repeatedly reminded analysts at the event that the company operates in 90 countries, stressing that lessons learned in delivering software across borders proved critical to overcoming data governance and compliance issues. Combined with a well-established track record, SoftwareOne has positioned itself as a trusted, highly capable technology partner, with both global reach and local knowledge, much like the Big Four tax, audit and consulting firms.
Further, SoftwareOne provides clients flexibility in commercial arrangements, a point made in all of SoftwareOne’s presentations. Neil Lomax, president of Software & Cloud Marketplace, in particular, highlighted clients being “able to buy any way they want, including directly” from SoftwareOne’s partners.
Intimate knowledge of clients’ IT
During every session, SoftwareOne executives stressed that their understanding of clients’ pain points and needs comes from deep, intimate knowledge of their clients’ complete technology architecture and environment. Bernd Schlotter, president of Software & Cloud Services, stated outright that SoftwareOne’s “services business is based on what we know about our customers through our [software reselling] business.” Chris Chesley, North America growth leader, Digital Workplace, explained to TBR that SoftwareOne’s Digital Workplace solution starts with “really knowing what’s being bought and used” currently and building on that knowledge to make recommendations.
CMO Susanna Parry-Hoey noted that SoftwareOne works with clients that are buying, building, and managing software and cloud across their enterprises, including procurement professionals, IT directors, business line leaders and CTOs. This defining SoftwareOne trait — which TBR describes as, “We know our clients’ tech better than anyone else” — could simply be a marketing pitch, but the company’s leaders repeatedly demonstrated how their approach fundamentally relied on a track record of steadily building and leveraging knowledge of their clients’ technology ecosystems.
The value of leveraging compelling events
Part of knowing their clients extremely well includes knowing clients’ software and cloud purchases, entitlements and contracts anniversaries and using the “compelling event,” as multiple SoftwareOne executives described it, to optimize their spend through improved terms, right-sizing and negotiated pricing, among other levers. In Lomax’s words, SoftwareOne helps clients “scope the best deal” for their software and cloud needs through SoftwareOne’s knowledge of current discounts and comparable contracts, as well as broader market trends. Funds the client saves through better relicensing can then be applied to the costs of SoftwareOne’s services, including cloud migrations, FinOps, SAP preparation for cloud and S/4HANA journey, IT Asset Management (ITAM) programs, or digital workplace enhancements.
Elliot Robia, global product manager MSFT 365, noted that SoftwareOne’s sales teams use “every compelling event to find ways to engage in a new conversation and unlock new opportunities,” looking at what business decisions their clients will face in 12 to 18 months. While not unique in the IT services space — every consultancy and IT services vendor probes for expanded footprint at existing clients — SoftwareOne’s approach begins with that relicensing or replatforming event, which few other players in the ecosystem either track or can match SoftwareOne in terms of the level of assistance in reducing clients’ software and cloud spend.
Organized to succeed in combining software VAR business with technology-centric services
SoftwareOne’s operational structure and go-to-market strategies reveal an important characteristic that has been fueling its success in growing services alongside a vibrant VAR business. The company organizes around five service lines: Cloud Services, Application Services, Software Sourcing & Portfolio Management, SAP Services, and Digital Workplace. Embedded across all five service lines, SoftwareOne brings Cybersecurity, FinOps, Data & AI, and Adoption & Change Management practices. This arrangement fuels what Schlotter described as SoftwareOne’s “Superpower No. 2, the SoftwareOne flywheel,” which essentially accelerates and maximizes clients’ return on investments by leveraging technology-neutral licensing and application rationalization to center SoftwareOne’s services around customer outcomes.
Software & Cloud Services: Half of SoftwareOne’s value proposition
Of SoftwareOne’s services business, Schlotter said many customers have realized they are paying higher-than-expected costs for IT infrastructure, IT services and cloud, and turn to SoftwareOne for help with “commercial excellence,” based on SoftwareOne’s broad ecosystem knowledge and experience. SoftwareOne provides services to roughly 30% of the company’s 65,000 customers, leveraging knowledge of pain points purchasing patterns, and cloud and software needs. For example, one client approached SoftwareOne for help consolidating SAP instances and moving them to the cloud, specifically Amazon Web Services (AWS). SoftwareOne’s success in this effort, according to Schlotter, came in part from being exceptional at SAP on AWS Advisory, particularly the consulting and preparation necessary before migration. Schlotter said SoftwareOne helps clients regulate how they migrate to cloud without compromising any freedom around what the client wants to do with its processes and data.
Going further, Schlotter said cloud advisory services is SoftwareOne’s “Superpower No. 1.” In TBR’s view, SoftwareOne’s assertion in its event materials that it has a “broad portfolio combining software and cloud buying, cloud financial management, cloud infrastructure services, and application solutions — our Digital Solutions—selectively provided to our most promising clients” gains credibility through the use cases SoftwareOne provided and the methodical, staying-within-strengths approach described by Schlotter and his colleagues.
Diving deeper into FinOps, SAP, ITAM and Digital Workplace
SoftwareOne’s FinOps practice, which cuts across all service lines, provides insights to “help measure and maximize value from cloud spend,” according to Dan Ortman, global director of FinOps. We see this practice as critical to SoftwareOne’s future success, especially as many IT buyers are realizing that using a cloud-based subscription model is not as inexpensive as originally promised, a sentiment confirmed by a CIO of a multinational electrical distribution company in a recent interview with TBR who said, “A year and a half back I was in the same situation where I thought that my monthly spend for clouds will be close to about $1 million. And what we were seeing based on how quickly we were transitioning our workloads to cloud, it was shooting up and it became $1.2 [million], it became $1.4 [million], it became $1.8 [million], and that’s where we felt like, ‘OK, this is going to blow out our budget.’
And, we really needed to rethink our cloud migration strategy.” The need for education and change management among organizational buyers on the value of cloud can elevate the role of SoftwareOne’s FinOps practice as the company relies on its legacy relationships to identify business optimization gaps throughout the cloud adoption life cycle. Deploying the FinOps Discovery framework, spanning diagnostic, platform experience, cost optimization proof of value, and results, recommendations and next steps through FinOps-certified bench, allows SoftwareOne to renegotiate client contracts for optimal value, but the company needs to stay vigilant about potential frenemy-type relationships especially with the hyperscalers, which often provide clients with credits for using their infrastructure that can be applied to improved contract pricing and workload optimization services.
The answer for clients looking to solve an IT challenge is far from horizontal and requires an understanding of a client’s current state and desired outcomes to effectively meet its needs. Service partners that do not simply default to recommending technology partners’ desired deployment strategy, but rather recommend the strategy that best aligns to the buyer’s objectives will be rewarded with clients’ long-term trust.
This is a mindset that Pierre-Francis Grillet, Global Service Line Lead for SAP Services, has sought to ingrain across his team of over 500 SAP consultants. SoftwareOne’s differentiation comes in the form of combined expertise around commercial licensing know-how and technical capabilities within the SAP services, with the depth of knowledge spanning the entire SAP catalog, from legacy on-premises software systems to a growing array of SaaS and PaaS assets.
Armed with this expertise, Grillet’s team of consultants first establishes buyer trust by taking a customer-centric approach to ascertaining what the best SAP technology strategy is for a prospective client. First, to both maximize the client’s existing SAP investment and place the client on a path to achieve the best possible TCO, the practice conducts an audit to understand the client’s existing SAP landscape and associated licenses. From there, the team can establish multiple well-defined business cases to understand the ROI and TCO across multiple SAP deployment scenarios, be it through the RISE with SAP program or stand-alone implementations of products like S/4HANA Public Cloud or Private Cloud. Given the current macroeconomic environment, the marriage of SoftwareOne’s SAP portfolio expertise with its IT audit and advisory business will be compelling to prospective buyers, particularly those in the upper midmarket — SoftwareOne’s sweet spot — that lack the budget and buying power to elicit the same degree of focus of Tier-1 IT services providers.
TBR feels SoftwareOne’s customer-centric, hands-on approach, which emphasizes client cost above all else, will allow the company to establish itself as a go-to partner for a growing number of organizations seeking to modernize their SAP landscapes. In one of the use cases Grillet detailed for TBR, he stressed that the initial preparation stage was too often overlooked by clients and their IT services partners. He advised that customers must “get fit before moving to cloud or S/4” and insisted change management, which SoftwareOne can advise on and assist with, “has to be owned by the customer.” TBR has previously reported on SoftwareOne’s SAP practice, noting: “TBR sees SoftwareOne as smartly leveraging its strengths, including 14-plus years of delivering pragmatic, incremental migrations that help clients with successful transformations.” The breakout sessions in Milwaukee confirmed TBR’s assessment.
Software Sourcing & Portfolio Management
In a breakout session, Shadi Khoshab, Global Service Line Lead for ITAM & Sourcing Services, described SoftwareOne’s ITAM Insights, a role-specific dashboard solution that allows clients to understand the ongoing value they are deriving from their software. The dashboards demonstrate “key data points, risks and opportunities, plus value realized from services” and will be built into every SoftwareOne services engagement going forward. The full extent of SoftwareOne’s capabilities around software sourcing and portfolio management came through in a use case presented by Khoshab. After responding to an RFP, SoftwareOne was engaged to conduct a cost-takeout project, which then funded the client’s add-on projects and broader ITAM and sourcing initiatives with SoftwareOne, around application rationalization and analysis as well as e-procurement and software catalog integrations. Further savings funded additional software integrations and eventually an entire suite of software life cycle services, including procurement and vendor consolidation.
In TBR’s view, this use case stood out for the clear and direct value SoftwareOne brought to the client and the methodical approach: know the customer’s pain points and where immediate cost savings can be found, then deliver incrementally (not a big bang transformation). By combining IT asset management and software sourcing and portfolio management capabilities with deep knowledge of the customer’s IT and software uses and needs, SoftwareOne brings additional value through technology-centric IT services. In the coming months, TBR will explore how clients see IT asset management and software asset management evolving and revisit SoftwareOne’s services.
One of SoftwareOne’s larger service lines continues to execute well on its go-to-market strategy rooted in understanding the pain points of its customers’ end users, creating a model but also a burden for the rest of the company to replicate. This is not an easy approach, but SoftwareOne Digital Workplace’s ecosystem of stakeholders allows it to address common pain points through industrialized frameworks centered on people, process and technology and enabled through high-performance workplace solutions. With the majority of Digital Workplace opportunities starting through Microsoft Advisory workshops and given the upbeat market sentiment around generative AI (GenAI) and ChatGPT, SoftwareOne has a strong starting point to accelerate its service line and the company’s performance provided it can bring in line-of-business-aligned use cases to the masses. This challenge and opportunity is not unique to SoftwareOne, but the company’s position within the ecosystem as both client adviser and software reseller arms it with the necessary insights to leapfrog many of its partners and competitors that might be disrupted by the ongoing noise around the implications of GenAI on staffing models and rightsizing of workplace solution portfolios.
Note: TBR also met with SoftwareOne’s SVP of Cloud & Application Services Craig Thomson and will publish a separate assessment on that breakout session.
Where it matters most: SoftwareOne’s clients
For the last session of the summit, Ashley Baird, president of North America, welcomed three SoftwareOne clients on-stage for a panel discussion around how SoftwareOne is helping them meet challenges they are facing. On the first point, all three clients agreed that recent buzz around GenAI and sustained interest in emerging technologies (such as 5G, edge, blockchain and others) will become more meaningful to businesses across a wide range of industries only when use cases get to scale.
TBR has heard similar sentiments in our Voice of the Customer research, putting a damper on enthusiasm around GenAI while confirming the opportunities for consulting around disruption. While adopting emerging technologies may be an emerging challenge, all three clients said cloud and software sprawl within the IT environments led to much higher spending levels than they anticipated. This trend, of course, opens the door for SoftwareOne, which provides clients with talent — through staff augmentation and subject-matter experts — and trust, which one client said came from having “no reservations about picking up the phone” to ask SoftwareOne for help. Further echoing comments TBR has heard from other IT services, cloud and software buyers, all three SoftwareOne clients talked about differentiation coming through a vendor’s willingness to bring in new ideas and solutions, not simply fulfilling orders and closing tickets. The featured clients all agreed SoftwareOne distinguished itself through its combination of VAR reliability and technology-focused consulting expertise.
One last note on the clients’ comments: TBR has often heard that automation within IT services creates an opportunity for a client’s IT personnel to focus on higher-value tasks. This assertion almost always comes from IT services vendors selling the benefits of automation and assuring clients’ IT teams that they are safe from redundancy and layoffs — something TBR has considered with growing skepticism, increasingly so as GenAI comes into the mix. One SoftwareOne client proved to be an exception, noting that automation allows IT staff to spend more time “in the field,” interacting with internal clients and understanding how IT gets used (or not used), looking for opportunities to enhance IT’s value.
TBR assessment: SoftwareOne is up for the challenge
Growing services alongside an established software VAR business should be difficult. Margins in each business are considerably different. The staffing models — including recruiting, retaining and compensating talent — are different. The brand promise does not easily translate from selling software to advising on cloud migrations. Even partnering across the technology ecosystem requires different approaches, expectations and contracts. In TBR’s view, few vendors have successfully married — at scale — a VAR business to IT services and technology consulting. SoftwareOne’s blueprint, therefore, must be exceptional for it to work. It certainly is ambitious, and, according to Schlotter, SoftwareOne is “redefining how the world buys, builds, migrates and manages everything cloud.” And SoftwareOne certainly faces competitors across the entire ecosystem; Parry-Hoey listed six different groups SoftwareOne meets head-to-head in various client segments, including global systems integrators and consultancies (which TBR covers extensively).
TBR anticipates SoftwareOne will increasingly face two substantial challenges. Neither is unique to the company, but together they could potentially limit growth. First, services fundamentally depends on people, even in the age of automation, AI and analytics. SoftwareOne has recruited some exceptional leaders, with the experience and credibility necessary to build a vibrant services business. The challenge will come in continuing to build professional staff, even as clients and competitors chase the same talent and as SoftwareOne builds its brand beyond being a VAR.
Second, TBR has noted IT services vendors and consultancies have increasingly invested in more smartly managing their technology alliances ecosystems, finding new ways to partner and building business groups dedicated to specific technology vendors. SoftwareOne remains steadfastly technology agnostic, even while developing market-leading skills and capabilities around SAP and AWS, Microsoft including Azure, and Google Cloud Platform. In TBR’s view, SoftwareOne may reach a point in the next few years when leadership must make a bet on a handful of strategic technology partners — a bet backed up by investments in talent and marketing.
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At a minimum, SoftwareOne will need to evolve its partnering strategies as services begin to bring in an even greater percentage of revenue than value-added software reselling. In addressing both challenges, TBR believes SoftwareOne will need to convince potential employees that the company does more than just sell software and convince clients that SoftwareOne has the skills and capabilities to deliver beyond relicensing and simple migrations. What Schlotter described as the SoftwareOne “optimize to modernize” journey — align, advise, purchase, migrate, modernize, manage — should resonate with every software, cloud and IT services customer, provided SoftwareOne can continue to both credibly make the case that it has the talent and scale as well as deliver results to clients.
Every software, cloud and IT services vendor and consultancy that TBR covers has evolved its brand and managed through massive change, either self-inflicted or market-driven. One key element separates SoftwareOne — and is perhaps what TBR would consider the company’s superpower — understanding “compelling events.” SoftwareOne has insights into clients’ compelling events, particularly software relicensing, that few other technology or IT services providers have. Being deep in the weeds of software contracts and having developed a foundation of knowledge around what technology and software is used, and not used, gives SoftwareOne a considerable advantage. TBR will continue watching closely as this company builds on its advantages and strengths and successfully merges its software VAR and IT services businesses.