The Smarter Path to Legacy Tech Modernization
When your tech is your core advantage, handing it over to a third party can mean giving up control and leverage of the very thing that made you successful in the first place.
Video Transcript
Mike Cottmeyer
So, if you were walking into a private equity firm to give a pitch or you were going down the elevator with somebody who did this kind of work within a private equity firm, what would be the top couple of things that you would say to get their attention? Because one of the things I struggle with, so I think the first thing I struggle with is that this stuff, it feels obvious, but it’s not, right? So, I ask myself the question sometimes when I say simple things, why don’t people understand these simple things? And then the other side of it is that sometimes when you say simple things, there’s nuances that allow people to think they’re already doing it or so it’s like, so how would you say something simple in a minute that caused somebody to go, wow, that’s a really different way of looking at it. Any thoughts?
Guy Beaver
Yeah. So, my nature is to ask a question. How good is your technology? If private equity has invested in a company, the company’s doing something right? So, I would want to know, is technology one of your constraints and tell me why. And then if the path of that conversation quickly goes to, we’ve got a secret sauce technology, but we’ve grown too fast for it. It is 10 years old. There’s a lot of good technology out there and we’re struggling trying to modernize it.
We’re hearing that it’s more common than we think that a company gets successful because of some business process that they have that’s amplified by the technology they have. That’s why they’re successful, and that’s their differentiator over their competitors. So, if there’s nothing wrong with that approach, the business processes are right on. But the technology it’s built on that they built it on has aged and it’s not able to scale to match their growth.
So, then they’re at the crossroads of, if we want a liquidation event in the future, but our software’s not going to scale for us to 2x where we are, is it a SaaS product that’s going to save us? Probably not. You’re going to be spending money on all the features that you’re not going to use in that SaaS product instead of focusing on further amplifying your advantage by building just what you need but build it right?
Mike Cottmeyer
So, the playbook is, well, we have a lot of success just yanking it out and putting it in Salesforce or something like that. Why wouldn’t I just do that?
Guy Beaver
Well, that absolutely might be the answer, but if it’s your secret sauce, then by using an off the shelf SaaS product, you’re giving them your data, you’re losing leverage on what made you successful in the first place, and you’re now relying on a third party to customize it to do well what your homegrown technology did. If it were an easy move to go to a SaaS product, they would’ve already done it.