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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Final thoughts on the Software Modernization Journey
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Within the realm of product modernization, there are pros, cons, and wide array of different approaches. Properly executed—at the appropriate Pivot Point moment and with the right partner—a modernization initiative provides an ideal, incremental route to leveraging the benefits of microservices to propel your product to an entirely new growth stage, delivering new customers, new profitable growth, new user experiences, and a longer sustainable life for your software products.
With this fresh perspective and new mindset, you are ready for a deeper dive into the technical and logistical details of the software product modernization journey. Please read Strangling the Monolith to Accelerate your Software Modernization, which explores the process and architecture of the product modernization transition in more granular detail—including Persistent’s 8-step plan for a successful product modernization journey.
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Putting the Two Pillars of Modernization into Action
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Challenging Common Assumptions and Misconceptions about Modernized Product Development
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Putting the Two Pillars of Modernization into Action
About Persistent
With over 16,500 employees located in 19 countries, Persistent Systems is a global services and solutions company delivering Digital Engineering and Enterprise Modernization. We combine deep technical expertise and industry experience to help our clients anticipate what’s next and develop solutions that create unique competitive advantage. Persistent was named to the Forbes Asia Best Under a Billion 2021 list, representing consistent top-and bottom-line performance as well as growth.
With over 16,500 employees located in 19 countries, Persistent Systems is a global services and solutions company delivering Digital Engineering and Enterprise Modernization. We combine deep technical expertise and industry experience to help our clients anticipate what’s next and develop solutions that create unique competitive advantage. Persistent was named to the Forbes Asia Best Under a Billion 2021 list, representing consistent top-and bottom-line performance as well as growth.
About Persistent
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