How Private Equity is Mandating Change
Enterprise software companies and ISVs have demonstrated incredible resilience during the pandemic with the deployment of playbooks designed to adapt and accelerate recovery. These software companies are evolving by realigning their product portfolio to meet future customer demand, offloading unprofitable assets, and driving their digital transformation initiatives. Software companies across the world are accelerating product development by leveraging digital capabilities such as Artificial Intelligence (AI), Machine Learning (ML), automation (RPA and Low Code/ No Code), Big Data and analytics, and Cloud-native technologies to deliver best in class customer experiences and efficient maintenance.
Eager for growth, private equity (PE)- owned software companies are leading this trend. With fresh fund infusions through primary/secondary buyouts or recapitalization they are mandating product innovations, modernizing existing product suites, expanding platforms to include new products and scaling engineering, product and GTM teams. For example, one of the focuses of software companies has been building AI capabilities into existing products as well as new developments of AI/ML-enabled products to drive product acceleration. Incidentally, AI companies raised a record $33B in equity funding in 2020. As commercial applications of AI and automation scale rapidly, enterprise software companies are looking to overhaul to become digital-first.
With deep change management experience, PE firms traditionally deploy a distinct set of value levers across growth, cost and product strategies for enterprise software companies to generate higher returns. Zinnov has investigated over 100 PE software exits on the different value creation levers they applied to unlock value from their enterprise software investments. Revenue Enhancement was found to be pivotal in unlocking value, used in a greater number of deals compared to other levers, such as working capital and cost optimization, capital efficiency and tax optimization. Digging deeper, product acceleration (in portfolio expansion and modernization) takes a comparatively low time to create an impact in unlocking value, while being easy to medium in ease of execution, when compared to the other drivers of revenue enhancement.
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All three of these platforms work in concert to create a more seamless overall system, which benefits users with a better experience—while giving developers and other members of the IT team far more latitude in delivering functionality and scalability.
Product Modernization Across
Three Platforms
5 minute read
The “X” Platform
Successful product modernization requires the entire product ecosystem to be transformed into the three platforms shown in Figure above:
360 User Experiences
as a Service
The Business Platform
Successful product modernization requires the entire product ecosystem to be transformed into the three platforms shown in Figure above:
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Challenging Assumptions and Misconceptions
Previous
01
Harnessing the Modernization Mindset
360 User Experiences
as a Service
The Business Platform
Business Capability
as a Service
The IT of IT Platform
Hybrid / Multi-cloud IT
provisioning as a Service
(e.g., self-provisioning
database, IAM etc.)
3\ Third is the This is a critical piece that brings together the product, engineering and customer success to help scale the platform, accelerate feedback loops, increase efficiencies, and improve user adoption. Today you may have one user; tomorrow you may have one million. To accommodate this, most modernized products are built on hyper-scalers, using hybrid/multi-cloud provisioning as a service, with fewer and fewer architected using on-premise data centers due to the high capital and maintenance costs and low scalability.
2\ Second, there is the This is the layer that enables or supports creation and management of business processes and capabilities, a.k.a., business capability as a service. A general example would be booking a ticket online, which requires a combination of three separate transactions or microservices to orchestrate:
1. Ticket fields input
2. Payment processing
3. Booking commitment and confirmation delivered back to the user at the UI level
Each of these services can be viewed as an individual business capability that is enabled by the business capability platform.
The “X” Platform
Business Capability
as a Service
The IT of IT Platform
Hybrid / Multi-cloud IT
provisioning as a Service
(e.g., self-provisioning database, IAM etc.)
All three of these platforms work in concert to create a more seamless overall system, which benefits users with a better experience—while giving developers and other members of the IT team far more latitude in delivering functionality and scalability.
Partnerships
Resilience, relationships, and reinvention also reflect our work with our partner ecosystem.
With the complexities and challenges brought on by the pandemic, we realized how critical our partnerships were and how much we would have to further lean on them to maintain continuity for our clients. As clients across every industry demanded new ways of engaging with their customers and employees, we were able to work in lockstep with our partners to continue to deliver exceptional results. The changing landscape also brought to the fore the need for new relationships that enabled us to keep improving the way we solve client problems — and more cost effectively. We therefore expanded our partner ecosystem in key strategic areas. Finally, we continue to reinvent the way we work with our partners and clients. With the urgency of moving to a new way of business, time to value became ever more critical. Automation and speed became the mantra. We closed the year with a stronger partner ecosystem, deeper relationships and with goals firmly focused around client value and centricity.
Third is the IT platform. This is a critical piece that brings together the product, engineering and customer success to help scale the platform, accelerate feedback loops, increase efficiencies, and improve user adoption. Today you may have one user; tomorrow you may have one million. To accommodate this, most modernized products are built on hyper-scalers, using hybrid/multi-cloud provisioning as a service, with fewer and fewer architected using on-premise data centers due to the high capital and maintenance costs and low scalability.
Enterprises are modernizing their data for the next 10 years of innovation. The DataStax and Persistent partnership brings leading enterprises and developers the open data stack and the domain and implementation expertise that accelerates their success.
Second, there is the business capability platform. This is the layer that enables or supports creation and management of business processes and capabilities, a.k.a., business capability as a service. A general example would be booking a ticket online, which requires a combination of three separate transactions or microservices to orchestrate:
/ Ticket fields input
/ Payment processing
/ Booking commitment and confirmation delivered back to the user at the UI level
Each of these services can be viewed as an individual business capability that is enabled by the business capability platform.
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Table of
contents
Previous
01
Harnessing the Modernization Mindset
business capability platform.
1\ The “X” (experience) platform
responsible is responsible for delivering the 360-degree user experience as a service regardless of how or where that experience is consumed. Because of the many ways that content can be consumed, it generally requires adapting the platform to multiple different types of UI: on mobile devices, on a laptop, or through smart device interfaces such Alexa, Siri, etc. This is the only part of the platformized product that is externally visible.
IT platforms.
Next steps
Re-imagine software products
Leverage our expertise in next-gen MACH software architectures to modernize your software products quickly.
Learn More
Rejuvenate mature products
Focus on improving revenue, efficiency and customer delight with our intelligent sustenance engineering framework.
Learn More
Re-group with our experts
Schedule a discussion with our modernization and sustenance experts who can help you chart a path forward.
Contact Us
Next steps
Re-imagine software products
Leverage our expertise in next-gen MACH software architectures to modernize your software products quickly.
Learn More
Rejuvenate mature products
Focus on improving revenue, efficiency and customer delight with our intelligent sustenance engineering framework.
Learn More
Re-group with our experts
Schedule a discussion with our modernization and sustenance experts who can help you chart a path forward.
Contact Us