value creation

This week I was turned on to the book ‘Scrum: The Art of Doing Twice the Work in Half the Time’ by Jeff Sutherland and J.J. Sutherland. For context, Jeff Sutherland was one of those who signed the Agile Manifesto in 2001.

Can you believe that 2001 was 21 years ago?!

In 2001, the Agile Manifesto set out a ‘new’ way to help software developers build solutions. Faster and more efficiently, reducing the friction in making a technology change.

In 2022, tech leaders are moving away from Agile into DevOps.

DevOps is simply an evolution of the agile manifesto. They are focusing on development teams being responsible for the lifetime of their development. i.e. maintaining their product when it reaches production.

However, tech teams can quickly lose sight of the why when it comes to changing their development approach.

Are they moving to DevOps because it will make us more cost-effective? Does it reduce the time to react to user change? Will it bring greater accountability and quality? (Or does it look good for their CV?)

There is considerable unrealised value in reducing the friction to technology change

Development methodologies, such as DevOps, are a vital piece of the puzzle. For your PE firm, your portfolio companies and their customers.

The goal of DevOps should be to reduce the fiction in making a technology change. This reduced friction will mean that the value of technology change can be easily translated into terms your portco board and PE firms can relate to—e.g. Reduction in Churn, NPS improvements, cost reduction etc.

Where does DevOps sit on your value creation plans for 2022?

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

Please let me know your thoughts.

Until next time.

Thomas

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Here is a short, true story that you might recognise from working with your portco tech leaders.

PortCo A is a PE-owned business creating a Multi-tenant SaaS platform. They also have a monolithic application that they want to unify with their new cool application. They ‘need’ to migrate to AWS.

To date, they have migrated 10% of their applications into AWS.

OK, so what does this have to do with value creation?

They already have 4x more infrastructure than they need.

The 10% they migrated to AWS accounts for 30% of their total tech spend.

Some straight-line math would see their tech infra spend grown from $10m P.A to $30m P.A, overnight.

Why did they ‘need’ to migrate to AWS in the first place?

Was it for cost efficiency? Or performance? Or bringing new applications or services to market quicker? I don’t know because they didn’t.

Most tech teams in 2022 are running significant change programmes in the form of migration, transformation, or refactoring. Why?

Here are three great examples from the best tech teams as to why you might embark on significant tech change

To remove barriers to growth, bringing innovative tech solutions to the board. Removing the friction in making creative business change.

To reduce the cost to service an individual user. The cloud might be the key ingredient to make this happen long-term.’

To improve technology-related churn, NPS changes and customer survey results. New services and features might be missing; getting them to your customers faster is critical.

Where does tech change sit on your portcos agendas for 2022?

How easily can your portco tech teams describe the value of their technology change? How does this information get shared with the board? Who is challenging the why?

The status quo won’t change itself.

Thomas

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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

—

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

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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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