Unconsidered Needs

The rebel, the artist, and the literary. A short story about technology value creation.

Thomas Ballard · January 21, 2022 ·

This is a nicely edited version of a discussion with a prospective client.

An example of an intangible technology value creation in practice.

My personal favourite strategic visionary was and is Steve Jobs. You might be thinking, great, nice to know, what does that have to do with technology value creation.

Steve Jobs was a pioneer of designing, building and marketing technology products based on the customers desired state. Making you feel an emotional connection to an inanimate piece of technology.

Apple designs products for the rebel, the artist, and the literary.

We probably all remember “1000 Songs in Your Pocket” at the launch of the iPod in 2001. You imagined the freedom you would get from owning an iPod. You no longer need to pre-load your MP3 player overnight; carry a spare memory card or CDs in a binder. You could buy an iPod, all the songs you would ever need, in your pocket.

Making people feel emotions toward technology is a critical part of Apple’s success, however, tangible value can be derived from these intangible experiences.

How do you put a value on intangible experiences?

Do your portcos customers desire your service or product? When they log a ticket to your tech support teams, do they come away with a warm feeling? When they use your SaaS platform, are they raving to their friends and colleagues about how it changed their life?

Intangible experiences are almost always measurable. If you can measure the impact, you can put a $ value on it. If not, what are you going to do about it?

Until next time.

Thomas

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P.S My first Mac was the iMac G4, c.2000, the ‘iLamp’.

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Money is no object; where do we start?

Thomas Ballard · January 14, 2022 ·

I was asked an interesting question this week. ‘Ok, money no object, we have 18 months to maximise our value creation plan. What does the technology side of that look like?’

You probably say something similar to your portco management teams. How long does it typically take them to get their head around creating value? A week, a month, the second or third board meeting? What about your technology teams and leaders? Is it the same, or does it take longer?

Reducing friction in making change is key to creating technology value in 2022

You might recognise these symptoms from working with your portco tech teams (we also mentioned them last week). These are all signs of unwanted friction in the technology change-making process:

Tech change is hard. Cost is increasing while user experience is degrading.

The benefits of being in the new platform or technology aren’t realised.

Service outages and platform Instability are occurring despite increased investment.

Acting on these early in the investment will keep your value creation programmes on track. As a result, you can work toward creating a frictionless technology change platform.

Frictionless technology change means being able to react, predict and adapt to changes in the market fast!

You’ll know you’ve created a frictionless technology change platform when:

The value of change can be easily measured and forecasted.

New platform or technology programmes are predictable, even when the cloud is involved.

Your customers/users receive an excellent experience; you can react to their changing demands when and before it’s needed.

Where does frictionless chance sit on your value creation plans for 2022?

Where do you see the next unconsidered value being created for your portcos? Is it with technology, data, or it is somewhere else? Please let me know your thoughts.

Until next time.

Thomas

P.S Of course, within reason money, is an object, but at the same time… I’ve just repainted the walls in my living room from Sage green to Pistachio crème. Inexpensive change. Big difference.

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Building high-performing portfolio companies are complex. Building high-performance tech platforms are just as difficult.

Thomas Ballard · December 17, 2021 ·

When it comes to technology platforms your technical teams need to have a firm grasp on three key levers. Your job is to choose which levers to start playing with.

You can decide where to invest and where you do not.

Performance means looking at how fast your platform is—understanding how this compares to competitors. You are seeing how this maps to your user’s expectations.
Efficiency is a measure of where to invest technical time. What operations are essential to your users? What needs to happen now or later?
Stability is what happens when more users are on your system. Does it impact speed? Do you have intermittent outages? Do things start to fail?

If you have a handle on these three levers you should feel confident enough to make radical business change. You can get really creative with your value creation approach.

Let’s say one of your portcos sells a $40 per month subscription product. What would this mean if you went to a $0 per month advertising revenue model?

You think that will mean significant user volume increases. Volumes might increase by, let’s say, 22 times, which is a substantial uplift for most organisations.

Not if you have a handle on Performance, Efficiency, and Stability. You’ll be able to make whatever change you like without having to worry about what the underlying tech is doing.

That’s where the unconsidered value is.

Until next time.

Thomas

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The value creation upside being green in 2022

Thomas Ballard · December 10, 2021 ·

One week on from AWS re: Invent 2021. Something Werner said toward the end of his Keynote has stuck in my head.

He talked about how tech leaders are just as responsible for their carbon footprint as any other industry leader.

Surely, this narrative extends to their Private Equity firms.

Are carbon emissions now on your firm’s radar?

Last year, Blackstone announced plans to cut carbon emissions by 15%. This is in the first three years for new investments of buying the asset or company.

That’s a good start.

Green savings are often overlooked in technology, particularly the cloud.

Cloud providers are doing most of the heavy lifting, reducing emissions for you.

1) Planting trees to offset carbon

2) Putting data centres underwater

3) Using AI to decide when to cool or heat servers

Even with the cloud providers doing all the hard work, the cloud still has a big impact on your green credentials.

This is where the new Sustainability Pillar for AWS Well-Architected Framework comes in.

For those who don’t know about the well-architected framework (WAF).

The Well-Architected Framework is AWS’s way of getting you thinking about developing services in the most efficient way.

There is a push in this area as a reaction to customer concerns about cost, performance, and security. I’d like to see Amazon commit more in this area.

The challenge they have, for example, spending less money, goes against how AWS incentivises their account managers. But, being green changes the game.

Being green has the added benefit of saving big $’s.

Consider how much value reducing tech costs and emissions could create for your portco. Performance Efficiency not just in increases to EBITDA, but improves your ability to change the way your portco does business. All while not having to worry about the underlying technology is doing.

If being green isn’t on your PE firm’s agenda yet, it will be next year.

Until next time.

Thomas

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The next frontier of value creation.

Thomas Ballard · December 2, 2021 ·

If you asked most people what they were most excited for at re: Invent, they would say Werner Vogels technical keynote. He does not disappoint.

AWS has invested heavily these last 12 months to improve network latency.

Creating new regions, local zones, relays to connect to space and outposts in the Antarctic. The goal of this is to improve the performance of the applications your portcos build.

You might be thinking, how is network latency and value creation linked?

Simply, it comes down to improving performance.

Good performance improves customer retention, reduces critical bottlenecks and helps you to build new products.

These metrics should be translated into $ growth in revenue or $ increases to EBITDA.

Great performance drives efficiency at scale

Performance efficiency is a way of creating not just fast but cost-effective and scalable systems. AWS’ recent investment to reduce latency will make this easier.

There are typically 6 steps Portcos should take when creating efficient, performant applications.

Monitoring and fixing stability issues in dev.
Consistently instrumenting their design, using data to influence their roadmap.
Creating small, flexible, mutable services and application that can be scaled up, down and across.
Forecasting and provisioning the right type, level, and placement of capacity. Moving workloads with the sun.
Building scalable resilience into applications before it’s needed.
Knowing how fast their application should be and how many things it should do at any time.

Portcos that drive Performance efficiency will be able to make whatever business changes they want without worrying about what the underlying tech stack is doing.