First BARC, now CXP eats PAC. Om nom nom nom…

Om nom nom nom… This morning BARC, perhaps the largest analyst firm focussed on business applications, and its  French partner CXP, announced a merger with PAC, one of the top ten firms in our Analyst value Index, and perhaps now the leading European analyst firm for software and services. The merged organisation, to be called CXP Group, will be the major European-headquartered analysis and advisory group focussed on software and IT services. The press release says:

Capitalizing on 40 years of experience, and with 140 staff present in eight countries (with 17 offices worldwide), the new company – CXP Group – has become the leading European research and consulting firm in its category and stands as the region’s main challenger to Anglo-American research organizations.

The three businesses will continue to operate as separate brands, much as CXP and BARC have operated separately since their businesses merged in 2011. So, you might ask, what’s the big deal? Clients certainly won’t see much impact, beyond the joint activities announced already. The big advantage of these rollups are managerial. One of the things that impressed me when I worked  for what is now Omnicom’s Ketchum business was the way that, even if the businesses are separate, the group was able to produce substantial gains from more effective financial management, tax optimisation and management development. During my time at Octopus, which is similar in size to the new CXP Group, I also saw how strategic marketing, recruitment and back office services could be made really effective through common group services.  And for management-owned businesses like CXP, BARC and PAC there’s also a couple of personal benefits: it’s easier for them to share and sell their personal equity, and to scale up the whole business through similar mergers.

As we’ve seen from the successful merger between BARC and CXP, these mergers can unlock corporate value without having to change the customer experience. But if the CXP Group wanted to take further steps, there would be some substantial opportunities:

  • Develop a strategic, centralised, sales and marketing team for major accounts
  • Produce exchange and rotation programmes, to bring more originality and simpler processes into the business
  • Increase the translation of materials between French, German and English, which could almost triple the volume of content produced.
  • Extend the IT Research Board, PAC’s successful end-user service, to more markets.

It’s true: this is a modest move right now, but there’s a lot of potential. We’ll write more about that later this week.

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