Market Hill | a northdoor group company |

Working on big, expensive, complicated technology problems.

Unconsidered Needs

What does building a wooden deck and technology value creation have in common?

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Early this morning, delivered to my house by a crane where all the parts you’d need to build a wooden deck in my garden.

I spent far too much time measuring, re-measuring, re-measuring with a friend, re-measuring with a family member, drawing a scale model of the deck before ordering parts needed.

Here are some pictures of the model if you are interested. Top picture. Base picture

You are probably thinking, nice pictures, but what does building a wooden deck and technology value creation have in common?

Here’s a short story based on first-hand experience. PortCo A decided that all current apps and data needed to be migrated to AWS. AWS pitched an approach to them, 12 months, lift and shift, we start tomorrow.

After six months, they had migrated 10% of their applications and data into AWS.

This 10% accounted for 30% of their total technology spend. Straight-line math would have seen them increase technology spending from $20m P.A to $60m P.A.

When they reassessed their position, they found that they already had 4x the capacity they would ever need in their data centre. This migration project was shelved after 12 months.

The message here, measure five times, cut once or twice.

Had Portco A spent more effort measuring, re-measuring, getting a second opinion, they might have saved themselves $10m, 12 months of project time and the time to hire a new technology leader.

Where do you see the next value step-change created for your portcos? Is it with cloud migrations, or it is somewhere else?

Keep leading; it matters.

Until next time

Thomas

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

Revenue multiples, rapid growth and Mergers & Acquisition in 2022.

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Now that the Saharan dust has settled, we’re in for a heatwave here in England, at least for the next few months! A rare occurrence.

The other week, on the subject of heat, someone told me ‘the M&A market is so hot now’. If someone has to tell you something is hot, how hot is it?

We’re currently in a market where people are paying significant revenue multiples.

Typically, your portcos will be chasing these increased revenues aggressively; it’s considered sexier or perhaps more straightforward for firms to go after more revenue. With M&A, you can even buy yourself more revenue.

This might be OK for the growth investor, but surely, you can’t solve all your problems with revenue?

Rapid growth can often create structural technology challenges, compounded by M&A

These structural challenges can manifest themselves as bottlenecks in how applications function. Performance issues at scale. Slower or more complex product development cycles.

When you talk about revenue growth with your portco tech leaders. How do they react, what concerns do they have, what plans are they making?

Do they know the scaling limits of their systems today? Do they have well-defined non-functional requirements? Do they look at ways they can meet growth targets using technology?

Keep leading; it matters.

Thomas

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

Ultimate performance. Ultimate efficiency. F1’s new budget cap

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Today it’s my Birthday, which means it’s almost time for the Formula 1 session to start.

Formula 1 is a great model for ultimate performance. Every car, driver, and team element is fine-tuned to be the best of the best.

2022 is the first year that a total budget cap will be used, alongside many new car designs and regulations.

The idea is to use the budget cap to bring the mega and minor teams closer together in performance. The goal is to drive innovation and competition.

If you are an F1 team, you can no longer throw money at your problems. Efficiency is the only way to go while delivering the ultimate performance when needed. F1 teams have jumped on this challenge, and each looked to solve this problem entirely differently.

When you think of budget planning with your portco, tech leaders. How would your portco tech teams react when budget restrictions are placed on them?

Do they jump at the opportunity? Do they challenge the cost gap? Do they look at ways they make you portco more efficient using technology?

Keep leading; it matters.

Until next time

Thomas

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Try, test, fail, repeat—early morning as a technology value creator.

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This morning was up and on my mountain bike at 5:50 am, before Sunrise, the best time of the day for exercise.

Yesterday I’d decided to replace an axel on my rear wheel; 5 minutes into my ride, I’d realised it had failed.

Last weekend, I decided to replace my disc brake pads, a routine change, it failed; I noticed it was a problem when a Nun quickly overtook me on her pushbike!

You’re probably thinking, what does this have to do with Technology Value Creation?

When it comes to fixing my bike, I can do what I like. I can try, fail, or even take it to the mechanic.

You might recognise the similarities between this and how Tech leaders execute technology transformation programmes. Technology leaders are often tinkerers by nature, ‘Tinkering may be a great way to solve a problem, sometimes by accident’ (Castel, 2020).

https://www.psychologytoday.com/gb/blog/metacognition-and-the-mind/202004/tinkering-can-lead-creative-insight-and-innovation

The tinkering try, test, fail, and repeat method might eventually work for me and my bike. But it’s not a sustainable approach to value creation for enterprise technology programmes.

That’s probably why 84% of tech transformation fails.

And why operating partners avoid working with their technology leaders, with <30% of all value creation being tech-led.

Technology has become an essential element of value creation for those who know how to leverage it

Some things to consider.

How easy or difficult is it for someone to disrupt your business using technology? How much would disruption impact you? How can you make it even more complicated?

Opportunities to leverage technology can be both offensive and defensive.

Value creation that involves technology needs to reduce the friction of change.

Doing this right alongside other value creation strategies could mean a step-changes to EV.

Keep leading. It matters.

Thomas

For more ‘unconsidered needs’ you can sign up below.

What is the incentive for the companies being sold to become more than just good enough?

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This week, I’ve struggled to find something insightful and pithy to write and share. This is probably a symptom of all the distractions that are going on in the world right now.

So, instead, I’ll share a short story about value creation.

This week I had an interesting conversation with a firm regarding their approach to M&A. Their M&A advisory firm was telling them this was the time to buy; the market is hot right now.

Do you wonder if someone has to tell you something is a hot property if it really is?

They were questioning this themselves; Valuations are still high, there is a great deal of completion to close new acquisition deals in 2022, what is the incentive for the companies being sold to become more than just good enough?

Did you and your firm spend most of 2020 and 2021 working on new buyout deals?

Are you finding that in 2022 value creation is that much more challenging than it used to be?

What value creation initiatives will be a priority for you in 2022?

  • How important is increasing EBITDA compared to revenue multiples?
  • Where does M&A sit on that plan, and how will you get good value for money?
  • What do you see as the most significant value creation differentiator this year?

Thomas

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