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Working on big, expensive, complicated technology problems.

Unconsidered Needs

Triathlon kits and Technology value creation, reducing the friction.

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Here’s a short story that might resonate from working with your portco tech teams to value creation programmes.

I’m part of a local Triathlon Club; we set a goal for 2022 to increase member engagement; we already have enough members; we just needed them to do more stuff with the club.

We decided to do three things to increase engagement: communicate more, reduce fees and introduce a new club kit!

Triathlon kits aren’t inexpensive; the average kit costs $200 and lasts a long time; our last new kit was 12 years ago!

We wanted to incentivise people to buy a kit now by offering: A simple online shop, buy-back if you got your sizing wrong and subsidising the kit, so it would only cost our members $50.

They had two weeks to order.

After one week, there were only two orders.

One of them was me.

One email to our members changed everything, “Reminder on club kit; we have only five more discounted Tri suits left!”.

Within 2hrs, we had all the orders we wanted and more!

What does this have to do with technology value creation?

We’ve talked before about how ‘when your site fails, it can be great for business!’

FOMO can be a key-value creation ingredient, but would they still have ordered if the fiction to buy was too high: If they got the wrong size and couldn’t exchange or if they had to fill out a form, they could only get on the 2nd Tuesday of the month or if they had to pay $200!

Tech value creation needs to do to reduce friction, both in complex technology change and for your customers.

What fiction do you usually encounter with your tech teams? How does this affect their customers, internally and externally? Could you make the whole process that much simpler?

If you can find and eliminate sources of friction in your portcos tech estate, there could be considerable value made as a result.

Keep leading; it matters.

–

Thomas

What costal town farmers and technology value creation have in common in 2022.

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This morning I went on a cross-country mountain bike until the world’s end, in Maldon, Essex, UK; here’s a picture and a map.

On the left was the sea, and on the right farmers’ fields.

One hour in, I came across a sign, no exit from sea wall for 4 miles (6.44 km); when you exit, it’s another 4 miles to the main road; consider turning back, 3 miles (ca. 5 km).

Every hundred meters, I was greeted with a trail that would take me back to civilisation along with a ‘private, no access’ sign. It might as well have said trespassers would be shot.

I was desperate to get back to the main road; I was supposed to take the kids to school…

It got me thinking about the value that could have been created if these farmers had done something different.

There is a significant footfall on this long coastal path and a lot of nothing in the middle.

What if instead of ‘turn back now’ the sign said, “access to the main road here, via our farm shop and café”? Or what if they sold maps and rented bikes for the intrepid traveller who might have walked there!

What a difference would that make to the weary traveller looking for a quick drink or a spot of lunch?

When it comes to technology value creation, the value of doing something different is massive.

Challenging the technology status quo in 2022 typically falls into three categories:

Improving the overall customer experience

Increasing practice efficiency

Acquiring and onboarding new firms, brands, or customers.

How will you challenge the status quo?

What value could you bring to your customers?

What might you not even know they are missing?

What’s your farm shop equivalent?

Keep leading; it matters!

Thomas

How do you deliver a low-cost technology solution at scale without capital?

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This week, I watched a friend pitch for investment on Dragons Den (the original British version of Shark Tank).

Their company offers online accessibility tools to help disabled users use the internet in a way that works for them.

Their pitch was high quality, coherent and well-executed.

Their business model didn’t work for the dragons.

Peter Jones, Dragon – suggested they offer their service for free, build an affiliate model, and charge companies per transaction. I liked this idea.

But, as they say on the show, they left with nothing.

We talked a few week’s ago about how rapid growth can often create structural technology challenges

You can read that article here.

The same applies to the cost of supporting these transactions for a SaaS business.

The Growth paradox.

Imagine my friend’s company could grow their user volumes by, 20000% overnight, but with no revenue for 12 months, that without capital wouldn’t be possible.

On the other end of the scale, the demise of Fast, the one-click checkout.

As recently as last week, Fast was inking deals such as one with big companies to implement one-click checkout for its customers (TechCrunch, 2022).

They had forecast growth upon growth but failed to deliver, leaving them with little to no fund-raising options. As a result, they decided to call it a day.

When you talk about growth with your portco tech leaders. How do you perceive its impact?

What concerns do they have, and what plans are they making?

  • Do they look at the impact of changing business models at different scales of their growth journey?
  • Do they look at ways to reduce the scaling cost impacts using technology?
  • Do they have a well-defined strategic plan for this?

Keep leading; it matters.

Thomas

You can sign up for more ‘unconsidered needs’ below.

Putting a $ value on Cloud Cost Optimisation in 2022

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If you missed the IMPACT Virtual Conference 2022 then this briefing is for you. As a Tech Value Creation follower, you might be surprised to learn about the trials and tribulations of putting a $ value on cost optimisation for your portcos. 

Here are three insights you’ll get from this write-up:

  • Why value being left on the table at the exit for sellers is an opportunity to jump-start technology value creation for the buyer.
  • How one firm tuned the cloud cost equation on its head and the upside they achieved as a result 
  • First-hand experiences of working with some of the most extensive and most expensive cloud estates in the world

Let’s dive in.

Why this is a hard problem to solve for your portcos, especially in 2022.

  • Statistics suggest 50-70% firms utilising cloud infrastructure overspend 70-90% for those firms in their own data centre. 
  • Most firms approach an increase in demand with step changes to capacity. 
  • It is not as straight forward as simply ‘cutting spend’. 
  • Issue with overspending is this missed opportunity to allocate money more effectively. 
    • For example, to grow development teams, bolstering product offerings etc.
  • More effective cloud cost model developed based on the idea that enterprise firms are typically over provisioning infrastructure and services.

Data Centre versus Cloud Infrastructure

  • Data centre = Scale for peak periods for capacity management 
  • Cloud infrastructure = scalable on demand and flexible

We’ll look at an example scenario as a launching point to drive conversations with your business leaders and colleagues in your business context.

Example Scenario: SaaS service provider with $100m annual revenue

  • Typically, 20% of revenue spent on technology, including licensing, people, services and infrastructure ($20 million).
  • Assuming 30% of $20 million is allocated to technology infrastructure and services ($6 million spend).
  • Referencing the statistics of 50-70% overspend (cloud) and 70-90% overspend (data centre) that equates to $3m-$4.2m p.a and $4.2m-$5.4m p.a respectively.
  • Further, for some companies this money would be allocated to EBITDA – and therefore a multiplier would apply to these figures and savings further maximised. 

Case Studies

Case Study 1: World’s largest Online data matching Company

  • Spent $20m p.a. in their data centre to $60m p.a. after migrating to the cloud.
  • Company was already overspending, and this was compounded by an issue in how they sized the workload based on a calculation error.
  • Challenge:
    • Identifying where to cost save.
  • Proposed:
    • Rationalising the process that was followed with each new user. 
  • Outcome: Spend was reduced to $25m p.a with a growth upside of 40%.

Case Study 2: World’s largest messaging platform

  • Challenge:
    • High level of service incidents (200+ per week) 
    • Demand for instances could not be met.
  • Proposed:
    • Identifying patterns within the incidents to be able to target their approach. 

Case Study 3: Europe’s 2nd largest finance SaaS platform

  • Challenge:
    • High management report load
    • Siloed development teams 
    • Linear increase in cloud cost as growth occurred. 
  • Proposed:
    • Analysing underlying data to identify what was being used (and why) and how users reacted to the provision of additional capacity.


Addressing cloud cost optimisation in your business requires breaking things down into:

  • The technical component 
  • The business operations component

Technical Component


Efficiency: Measure where to invest technical time.

  • Consider:
    • What operations are essential to users? 
    • What needs to happen now or later?

Performance: How fast your platform is.

  • Consider:
    • Understanding how it compares to competitors.
    • Explore how this maps to your user’s expectations. 

Stability: What happens when more users are on your system.

  • Consider:
    • Does it impact speed? 
    • Do you have intermittent outages? 
    • Do things start to fail?
  • Suggested approach:
    • Look at your data to get an idea of the efficiency, performance and stability.
    • Good place to start is outside your APM or monitoring tool.
      • Can you gain access to CPU, Disk (I/O), Disk read/write and memory statistics?
      • Do you have this monitoring set up already? This is priority if it doesn’t currently exist. 
      • Aim to access data for a 2-week period (at a minimum) and a 1-minute granularity.

Business Operations Component

  • Take the technical data and map it directly to your business metrics. 

Examples include:

  • Orders per second
  • Customers on your platform
  • Concurrent users
  • Once you have a handle on performance, efficiency and stability you can make changes without the need to worry about underlying technology. 
    • The outcome = reduced cost.
https://cmgimpact.com/putting-a-dollar-value-on-cloud-cost-optimisation/

You can sign up for more ‘unconsidered needs’ below.

To the moon and back; how technology enables extraordinary demand

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Last Saturday morning, I landed In Rome with my wife, ready to run the Marathon Sunday morning.

We had a simple plan. Collect the race number, drop our bags at the hotel, and buy my wife one of those new Swatch x Omega watches.

After lunch, we arrived at the Swatch store to find that the whole world had been queuing overnight.

Instead, we went for gelato.

While these watches were available globally in only a few stores; their website saw considerable increases in demand!

Their website kept going even though traffic, according to cloud flare, had increased 20000% in the last 24hrs.

What’s the point of all this, and what does it have to do with Technology value creation?

One of the biggest challenges for portco tech teams is technology performance at scale.

While occasionally, your website failing is a good thing.The value is in choosing how to deal with extraordinary events without worrying about what the underlying technology is doing.

Great PE firms run strategic technology performance programmes with their portco tech leaders to create the flexibility to do extraordinary things like Swatch.

How would you benchmark your pottos technology performance capabilities?

How would their tech platforms deal with a 20000% increase in demand?

What cool things will your technology programmes enable you to do?

Thomas

You can sign up for more ‘unconsidered needs’ below.