Key Takeaways from Baird’s Private Company Technology & Services Conference
MILWAUKEE – April 22, 2019 – Baird, an employee-owned, international wealth management, asset management, investment banking/capital markets and private equity firm, recently held its fourth annual Private Company Technology & Services Conference in New York, featuring 55 presenting companies from more than 20 subsectors. Following are key factors and trends that executives believe will be prevalent among technology and services (T&S) companies throughout 2019.
Higher Level Outsourcing
The sale of T&S solutions ismoving up the value chain to C-suite executives, and process optimization is driving outsourcing to leverage third party expertise and technology. One CEO of a private equity-owned governance, risk and compliance company commented: “In an increasingly complex regulatory environment, where the C-suite are liable for non-compliance, companies are leveraging specialist third party providers to ensure processes and audit trails.”
Additionally, many small and medium size enterprises (SMEs) are outsourcing for the first time and purchasing the appropriate software/SaaS for their businesses, creating significant revenue opportunities with millions of SMEs throughout North America and Europe.
Business-to-Consumer (B2C) Expectations for Business-to-Business (B2B) Solutions
Many B2B companies find that customers expect the same ease of use with B2B mobile applications as they would with B2C mobile apps, and they also expect a hyper-personalized experience. B2B companies need to provide “on demand” content based on consumer data similar to what Netflix, Amazon and YouTube have done.
Leveraging Data and Analytic
T&S companies are leveraging big data and analytics more than ever. One CEO of a private equity-owned SaaS company commented: “Data is the ‘new oil. You need pipelines to transport the data and refineries to convert unstructured data into value-added insights.”
Many companies have huge amounts of disparate data that is critical to integrate across their client’s CRM, human resources and finance and accounting platforms. This information allows them to run data analytics on B2B clients to determine personality profiles of prospective end customers, and increase ROI for clients rather than just keeping data on file as a system of record. However, companies must also consider data ownership restrictions. If the data belongs to clients or the end users, it cannot always be used.
Robotic process automation is automating repetitive tasks and allowing companies to save on labor costs, and tech-enablement of service and solution delivery is driving scalability of business models. Similarly, artificial intelligence (AI) and machine learning are providing end-to-end, and ever personalized. AI’s natural language processing is also providing predictive insights by analyzing content already consumed.
“B2B clients want intelligent enterprise, frictionless business and cost efficiency. Tech-enablement, such as digital dashboards, provides a real-time holistic view of client operations, from customers to suppliers,” said a CEO of a founder-owned, BPaaS company.
Many T&S companies are partnering with global platforms like Microsoft or Google to leverage technology and global distributions, which creates entirely new ecosystems. Companies are building private B2B ecosystems for clients to connect to employees, suppliers and customers, benefitting all parties involved and providing “win-win” marketplaces. In some B2B marketplaces built on data aggregation, clients are able to search, book and bill. This model has seen a higher conversion rate on aggregator booking sites versus individual suppliers.
Accelerating Growth via M&A
T&S companies continue to upsell or cross-sell to grow. For many, a significant portion of revenue growth is driven by upselling to existing clients rather than winning new clients. Similarly, value from M&A is often driven more by cross-selling to existing clients versus finding cost synergies.
Private equity has also accelerated buy-and-build strategies and benefitted from multiple arbitrage. Some platforms made a software acquisition for a specific complementary technology.
"We operate in a highly fragmented market,” said one CEO of a private equity-owned information solutions company. “Private equity ownership has accelerated our buy-and-build program with 25 acquisitions in the last 18 months, helping us to target local SME customers."
For more information about Baird’s Private Company Technology & Services Conference, visit www.bairdconferences.com.
Celebrating its 100th anniversary in 2019, Baird is an employee-owned, international wealth management, asset management, investment banking/capital markets, and private equity firm with offices in the United States, Europe and Asia. Baird has approximately 3,500 associates serving the needs of individual, corporate, institutional and municipal clients and more than $208 billion in client assets as of Dec. 31, 2018. Committed to being a great workplace, Baird ranked No. 16 on FORTUNE’s 2019 100 Best Companies to Work For list. Baird is the marketing name of Baird Financial Group. Baird’s principal operating subsidiaries are Robert W. Baird & Co. Incorporated in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s website at www.rwbaird.com.