EMTEC: CULTURE, ACQUISITIONS, AND CO-INNOVATION AS THE
UPSTREAM FUTURE FOR MIDMARKET FIRMS CASE STUDY
SOLUTION
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SYNOPSIS
Emtec Inc. (Emtec) is an informaton technology (IT) and digital services firm with over 200 corporate
midmarket customers in North America, generating over $140 million in annual revenue and employing over
n
1,300 people across the US, Canada, and India. The case leads the reader through Emtec’s challenges within
tio
the digital midmarket, a market that has been largely ignored in the case study literature. In filling this gap,
the case includes the fragmentation of the IT services industry, the unique perspective and style of the founder,
the diverse backgrounds of the key managers, and perspectives on acquisitions, company culture, cloud
lu
computing, talent, software development strategy, and co-innovation. Since many students work in (or have
worked in) midmarket firms, this aspect of the case should be of interest. Furthermore, since most firms today
contract with external IT services providers, understanding that market is important for students and faculty.
So
The key decision point in the case is whether the firm should stay the course and build upon established
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. Analyze the current IT/digital services market and identify new opportunities and areas for growth for
midmarket firms such as Emtec.
2. Why does Emtec focus on acquisitions (as opposed to other approaches, such as alliances) as a growth strategy?
3. What are the pros and cons of Emtec’s acquisitions strategy?
4. Using Emtec as an example, identify and explain the key factors to consider when acquiring a firm.
5. Analyze how Emtec acquires a new company. What are the potential pitfalls?
6. Why do acquisitions fail? What are some challenges faced by Emtec?
7. What resources and capabilities are necessary for the company to be successful in acquisitions?
8. Analyze Emtec’s acquisitions and merger strategy and the role of culture and identity.
9. What is Emtec’s co-innovation strategy?
10. Are co-innovation and co-creation different?
11. What are some of the challenges to building an innovation-focused culture and how do you find a
solution for them?
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12. What are the pros and cons of focusing on smaller, shorter projects, such as the ones that Emtec chooses
to focus on for the future?
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The Case Solution Starts From page 6
,1. Analyze the current IT/digital services market and identify new opportunities and areas for
growth for midmarket firms such as Emtec.
Suggested background reading: Gartner and IBISWorld publish industry reports that can provide the basis
for answering this question. Most university libraries today have access to one or both sources. A few
relevant publications are as follows:
Gartner
• Hype cycles for application services provide an annual overview of current technologies.
• Digital business consulting services10 offer an explanation of consulting services with a focus on digital
transformation.
• Continuous product-centric service is a relatively new type of service in which an external firm has a
long-term contract to supply personnel to build a digital product. This service could be contrasted with
e
Emtec’s co-innovation approach.
• IT services and solutions primers are how-to-guides for businesses looking to purchase services.
pl
• Market guides for digital business agencies are strategic positioning guides for IT/digital service
providers.
m
• Market guides for software resellers11 are analyses of software resellers.
Sa
IBISWorld
• Data processing and hosting services in the US12 datasets offer an overview and summary of
n
tio
lu
So
The Case Solution Starts From page 6
,12. What are the pros and cons of focusing on smaller, shorter projects, such as the ones that
Emtec chooses to focus on for the future?
Smaller projects typically have a smaller team working on them, so they are easier to manage overall. The
emphasis is placed on getting the project done, whereas with a larger project maintenance plays a bigger
role because it typically lasts longer. The more complex a project is, the more risks there are. Smaller
projects are typically straightforward and easy to understand. Shorter, smaller projects are easier to schedule
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -1: IT/DIGITAL SERVICES SEGMENTS
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pl
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So
EXHBIT -2: IT/DIGITAL SERVICES MARKET
Worldwide IT Services Revenue by Service Segment (Millions of US Dollars)
Segment 2020 2021
Consulting $201,411 $234,425
Application implementation and managed services $259,090 $296,537
Infrastructure implementation and managed services $305,993 $324,264
The Case Solution Starts From page 6
UPSTREAM FUTURE FOR MIDMARKET FIRMS CASE STUDY
SOLUTION
e
pl
m
Sa
SYNOPSIS
Emtec Inc. (Emtec) is an informaton technology (IT) and digital services firm with over 200 corporate
midmarket customers in North America, generating over $140 million in annual revenue and employing over
n
1,300 people across the US, Canada, and India. The case leads the reader through Emtec’s challenges within
tio
the digital midmarket, a market that has been largely ignored in the case study literature. In filling this gap,
the case includes the fragmentation of the IT services industry, the unique perspective and style of the founder,
the diverse backgrounds of the key managers, and perspectives on acquisitions, company culture, cloud
lu
computing, talent, software development strategy, and co-innovation. Since many students work in (or have
worked in) midmarket firms, this aspect of the case should be of interest. Furthermore, since most firms today
contract with external IT services providers, understanding that market is important for students and faculty.
So
The key decision point in the case is whether the firm should stay the course and build upon established
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. Analyze the current IT/digital services market and identify new opportunities and areas for growth for
midmarket firms such as Emtec.
2. Why does Emtec focus on acquisitions (as opposed to other approaches, such as alliances) as a growth strategy?
3. What are the pros and cons of Emtec’s acquisitions strategy?
4. Using Emtec as an example, identify and explain the key factors to consider when acquiring a firm.
5. Analyze how Emtec acquires a new company. What are the potential pitfalls?
6. Why do acquisitions fail? What are some challenges faced by Emtec?
7. What resources and capabilities are necessary for the company to be successful in acquisitions?
8. Analyze Emtec’s acquisitions and merger strategy and the role of culture and identity.
9. What is Emtec’s co-innovation strategy?
10. Are co-innovation and co-creation different?
11. What are some of the challenges to building an innovation-focused culture and how do you find a
solution for them?
e
12. What are the pros and cons of focusing on smaller, shorter projects, such as the ones that Emtec chooses
to focus on for the future?
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
,1. Analyze the current IT/digital services market and identify new opportunities and areas for
growth for midmarket firms such as Emtec.
Suggested background reading: Gartner and IBISWorld publish industry reports that can provide the basis
for answering this question. Most university libraries today have access to one or both sources. A few
relevant publications are as follows:
Gartner
• Hype cycles for application services provide an annual overview of current technologies.
• Digital business consulting services10 offer an explanation of consulting services with a focus on digital
transformation.
• Continuous product-centric service is a relatively new type of service in which an external firm has a
long-term contract to supply personnel to build a digital product. This service could be contrasted with
e
Emtec’s co-innovation approach.
• IT services and solutions primers are how-to-guides for businesses looking to purchase services.
pl
• Market guides for digital business agencies are strategic positioning guides for IT/digital service
providers.
m
• Market guides for software resellers11 are analyses of software resellers.
Sa
IBISWorld
• Data processing and hosting services in the US12 datasets offer an overview and summary of
n
tio
lu
So
The Case Solution Starts From page 6
,12. What are the pros and cons of focusing on smaller, shorter projects, such as the ones that
Emtec chooses to focus on for the future?
Smaller projects typically have a smaller team working on them, so they are easier to manage overall. The
emphasis is placed on getting the project done, whereas with a larger project maintenance plays a bigger
role because it typically lasts longer. The more complex a project is, the more risks there are. Smaller
projects are typically straightforward and easy to understand. Shorter, smaller projects are easier to schedule
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -1: IT/DIGITAL SERVICES SEGMENTS
e
pl
m
Sa
n
tio
lu
So
EXHBIT -2: IT/DIGITAL SERVICES MARKET
Worldwide IT Services Revenue by Service Segment (Millions of US Dollars)
Segment 2020 2021
Consulting $201,411 $234,425
Application implementation and managed services $259,090 $296,537
Infrastructure implementation and managed services $305,993 $324,264
The Case Solution Starts From page 6
