As technology advisory firms eye expense management software that will make them stickier with customers, John Alexander Consulting is offering a partner approach.
The New York-based firm launched a program that lets fellow TAs use its digital platform, client engagement process and back office services as their own, JAC Founder and CEO Alexis Pomierski told Channel Dive. In August, the company hired Steve Braverman as director of sales, and tasked him with recruiting and supporting partners. The program’s elite tier will onboard a handful of independent TAs that use “Powered by JAC” branding and give JAC a share of their commissions.
In return, Braverman and Pomierski said, partners get technology expense management software that JAC has used to help Fortune 100 customers govern their IT, cloud and telecom spending. JAC has gone deeper into cloud infrastructure projects than many of its peers and has recently capitalized on building comprehensive roadmaps for VMware migrations.
“We talk about bridge licensing, repatriation of the infrastructure, the applications and security, along with contractual obligations and hardware amortization,” Pomierski said. “It's a very long process, but a very profitable process.”
The TEM software and the staff that runs it helped JAC win enterprise logos over much larger value-added resellers, consultancies and system integrators, Pomierski said. Those wins came during an era where most TAs didn’t have software or maintain inventory for their clients. As the market shifts to value ongoing services and TAs use private equity investments to build their own TEM platforms, Pomierski bets the company can identify ambitious partners who don’t want to build such a platform on their own.
“They start to hit an inflection point somewhere over $1 million to 2 million where they're going to have to invest in staff and software and process, otherwise it becomes more difficult for them to service that many clients, keep that many clients and also grow within that base,” she said.
JAC, on the other hand, needs sellers. The company’s relationships with large businesses appealed to prospective private equity firms, but those same potential investors consistently told the company it needed to widen its customer base.
“It's a double-edged sword,” Pomierski said. “They love the logos, but then they also want 30 other people doing small to mid. They could easily buy other people and bring them into the platform, but instead of waiting for them to do that, Steve has been brought on to take TAs and give them the platform and give them our back office.”
JAC is also hiring its own salespeople, but partnerships with independent TAs are a faster way to market. On the other hand, those TAs are leery about hiring operations roles.
“They've already survived some of their bumps,” she said. “They've learned the value of what operations could help them improve, and they're looking to not have to hire someone for $65,000 a year, train them and still be learning a process with that person for the next two to three years.”
Braverman was advising JAC on the M&A landscape before deciding to officially join the company. A co-founder of X4 Solutions, which sold to tech services distributor Sandler Partners in 2016, he has been consulting channel companies for the last decade. He said he knew from experience that JAC was more sophisticated than the average TA.
“You discover that they're 1-, 2-, 3-person selling businesses with almost no level of sophistication in sales, marketing, financial, value creation, account management, project management and sales engineering,” Braverman said of the average TA. “They're pushing back on the TSDs who push on the suppliers, and that's great to a point. Then it's, what do I do to scale?”
Pomierski, on the other hand, built JAC with operations and auditing in mind. The former BCM One managing director recalled navigating the ins and outs of the Affordable Care Act while working on mutual accounts with Deloitte.
“I think that is almost one of the predicates of starting my firm 11 years ago — that there was a different way to do it, rather than having beers with people or having a Cisco rep feed you leads,” she said.
JAC’s original clientele were holding firms that consistently acquire companies and add technology. Without a platform in place, Pomierski’s team couldn’t keep track of all the vendors and SKUs.
While at BCM One, Pomierski developed a legal retainer that her clients sign stipulating that, in exchange for her services, they run their procurement through her. The model has persisted at JAC, and it is slowly catching on in the TA market.
“Nothing feels worse than working really hard and then losing a deal to someone's cousin,” she said. “I started this when this was very much not the norm, but the TA industry was less saturated, and my clients tend to be bigger, and I think they appreciate the professionalism.”
Legal retainers are common among another type of company: global systems integrators. That’s where companies like JAC are likely headed at the M&A road, Pomierski said. GSIs are envious of the residual commissions TAs earn but are uncertain of how to establish that revenue stream organically. As private equity investors flood the TA market, the once-cottage industry has been validated as a worthwhile target, Pomierski said.
“It seems logical that they'd want to get into our space, but they don't want to take the liability or decimate their existing revenue stream,” she said. “So that's for someone smarter than I to figure out how to bridge that gap, but it's always seemed logical.”
