Identifying Value Creation Levers

Based on a survey of over 100 enterprise software portfolio companies’ leaders (CEOs, CTOs, CIOs, VP Product, VP Engineering, etc.) conducted in 2020, Zinnov found that PE firms are focusing increasingly on revamping product strategy to evaluate newer and cost-efficient ways to support top-line sustenance and expansion. With the Covid-driven acceleration of digital transformation, three product strategy focused value creation levers have emerged as priorities over others:

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How Private Equity is Mandating Change

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Product Portfolio Expansion

Product Modernization

Top 3 Product strategy-focused PE value creation levers along with their strategic priorities

This value creation lever is employed either through building or acquiring new products, and catering to different uses cases. 85% of enterprise software leaders from the survey preferred to reduce focus on legacy products, while 80% considered building new platform-based solutions as part of their new product development plans. The strategic priorities for these organization are:

Globalized Engineering Talent

Product Portfolio Expansion

PE firms also invest in modernizing existing software products and platforms to unlock value. As part of product modernization initiatives, 85% of the enterprise software leaders are undertaking initiatives around portfolio rationalization – reinventing existing products or platforms by incorporating digital capabilities, to offset the disruption to core offerings. The strategic priorities for these organizations are:

Product Modernization

Globalized Engineering Talent

Product Portfolio Expansion

Product Modernization

The third major value creation levers identified by PE firms within the product strategy category is adopting a distributed global services model in product development with a goal of optimizing the engineering talent and having 24/7 coverage. Seventy percent of respondents of the survey prefer restructuring the organization along with hiring talent for deep-technology roles, while 60% of respondents offer technology skills development for their existing engineering workforce, specifically in adjacent skills areas. The strategic priorities for these organizations are:

Globalized Engineering Talent

Source: Zinnov and Persistent. No part of this whitepaper/report may be quoted, reproduced or circulated without the explicit written approval from Zinnov or Persistent.

\ — by leveraging partnership models with system integrators, outsourcing (near shoring as well as off shoring), or relocating to a low-cost region. Cloud and enterprise?

\ — bringing innovation and accelerating returns through R&D investment

\ — moving away from siloed digital systems and building platform-as-a-service (PaaS) models to support product integrations and customization. This effort also includes building vertical-focused platforms that can exploit niche markets (by creating micro-SaaS products).

\ — getting ready access to industry-leading talent to develop best-in-class digital products

Leveraging global capabilities

\ Ensuring access to skilled digital talent for supporting product engineering requirements

Lowering talent overhead

\ Lowering tech debt and servicing it in time as it accrues to ensure long-term success. Otherwise, it will only compound, hurting long-term maintainability and making future technical changes harder to implement

Next steps

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Join a leadership roundtable

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Schedule a one-on-one discussion with our leaders who can help you identify value levers

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Identifying new value creation levers: 5 takeaways from our Private Equity Leadership Roundtable

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Achieving faster time-to-market

\ — by accelerating product testing, quality assurance and documentation processes

\ — by seamlessly integrating data and functionality with cloud to support product scale

Achieving scalability

Lowering expense

Platformization

Accessing best-in-class engineering talent

\ — by bringing best practices around product innovation, development, testing and deployment through either setting-up Global Centres of Excellence (GCoE) or establishing strategic partnership with technology leaders and service providers through flexible engagement models such as BOT, Captive Carve-out, Outsourcing, etc.

\ — by reducing the cost incurred in payroll, benefits, and training through optimizing the engineering talent across functions, locations, and time zones

Achieving business agility

Next steps

Private equity offerings

See how Persistent can help you drive transformational value within your portfolio companies

Learn More

Join a leadership roundtable

Register for an upcoming PE leadership virtual roundtable to discuss value creation strategies with other PEs and portfolio companies

Speak with an expert

Schedule a one-on-one discussion with our leaders who can help you identify value levers