Issue 4 In this issue Growth Ambitions - Sheffield Haworth€¦ · Issue 4 In this issue Welcome to the 34th edition of GS-insight, ... In fact, growth and internationalisation have

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Issue 34

In this issue

Welcome to the 34th edition of GS-insight, the magazine of international technology sector Executive Search specialists, Gillamor Stephens. This is a unique edition as it is the first to be published under our new ownership structure; we were delighted to be acquired in early 2018 by Sheffield Haworth , a leading global talent consulting firm. Established in 1993 with ten offices throughout the Americas, Europe, Middle East and Asia Pacific, Sheffield Haworth provides Executive Search, Consulting Solutions and Talent Advisory services to clients in the Financial Services, Real Estate, Business & Professional Services and Technology industries.This acquisition is already having a positive impact on both entities and most impor-tantly for our clients. Our businesses share a common capability and passion to solve clients' talent needs and being part of a bigger group, Gillamor Stephens are now able to provide a wider range of services to our clients as well being able to better serve them on an international basis. Gillamor Stephens is continuing to trade under our brand and being part of The Sheffield Haworth Group is allowing us to realise our shared ambitions in the Technology sector and accelerate growth.In fact, growth and internationalisation have certainly been key themes for many of our clients in recent months. Despite the ongoing uncertainty over Brexit, debt and equity financing are still readily available to UK headquartered technology businesses and this has certainly meant we have been extremely busy supporting companies to ensure they have the right leaders in key roles to shape and execute their business strat-egies. There has been considerable senior level hiring activity in a sector of the market that we broadly define as Deep Tech – these are innovators and industry disruptors in areas such as battery technology, auton-omous vehicles, space tech and industrial IOT. Many of these companies were borne out of academic research at leading univer-sities and have moved through seed capital funding, then secured significant A/B round

investments and are appointing experienced executives to drive their commercialisation and market development plans with the majority being global searches for the best talent.The enterprise software sector has been equally busy and while in recent months we have worked on many search assignments in several of the key functional areas (sales leadership, CMO, Customer Experience) we have noticed that two key roles are in particular demand. Firstly CTOs, to lead the Agile development of intuitive applications, harnessing digital technologies to transform how businesses work and collaborate. Secondly CFOs, who have the ability and experience to provide insight, analysis and constructive challenge to the CEO and Board, influencing and persuading to make the right strategic and investment decisions that will impact the growth, direction and profitability of the business.In IT services we are seeing the rise of some very innovative companies that are trans-forming organisations with new customer centric AI products, delivered with agility and speed as well as migrating organisations to the cloud – these companies are hiring entrepreneurial leaders who understand how to define and sell new value propositions and have a track record of scaling services businesses. Finally, we are still seeing European growth ambitions from well-funded US headquar-tered SaaS businesses and as an example recently supported one of these companies to hire VPs in five countries.Paul Gillespie and I founded Gillamor Stephens in in the heady days of the dotcom era and now, 20 years on, as part of Sheffield Haworth our commitment to recruiting leadership talent for Technology companies remains as high as ever.I hope you enjoy this issue and I welcome your feedback.Steve Morrison

Steve Morrison, Managing Director, Gillamor Stephens [email protected] GS-insight can be viewed and downloaded from www.gillamorstephens.com

For more information on Sheffield Haworth, please visit www.sheffieldhaworth.com

2 Non-Exec InsightAudrey Mandela, Chairman of Women in Technology and Telecoms (WITT)

4 Entrepreneur InsightPhil Brown, CEO of Causeway

7 Company InsightSimon Bransfield-Garth, CEO of Azuri

9 International InsightChris Shearmon, Senior Consultant at Sheffield Haworth

11 Leadership InsightAnne De Kerckhove, CEO of Freespee

13 Investment InsightPietro Strada, Managing Partner of Silverpeak

15 Sound ByteJo Price, Managing Director of Resurgo

16 Innovation InsightDr Graeme Smith, CEO of Oxbotica

17 Megabuyte InsightIan Spence, CEO of Megabuyte

19 Talent InsightAdam Jackson, Executive Director at Sheffield Haworth

Growth Ambitions…..GS-insight explores some of the latest trends and opportunities in the international technology industry

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MultiTalented Ms MandelaAudrey Mandela shares her experience in entrepreneurship, breaking new ground in the technology space and making investments.

“A number of start-ups try to save money by not making use of strong lawyers and accountants and holding off on recruiting Non-Executive Directors for their Boards. We considered that a false economy”

Audrey Mandela, entrepreneur and Chairman of Women in Technology and Telecoms

Audrey Mandela has a wealth of experience in the world of business and technology. Creating a successful business with her partner that was years ahead of its time, becoming Chairman of a Women in Technology networking group and having made numerous investments in new age technology companies, especially those with female founders, has given Audrey a unique insight into the hitherto male-dominated world of technology. In this article we explore these three key themes of her career as she shares her experiences and advice with us.

Life as an entrepreneur Sean, my partner, had the idea for Multimap while he was working at KPMG and I was working at the Yankee Group. We were fortunate in a few ways. We’re older entrepreneurs, for one thing, so we had both had careers. We knew what it was like to be in business. We were also lucky enough to have financial freedom from an exit, so we could play around and see what worked. Once Sean put the maps up online, they generated a lot of interest as there weren’t many other maps online at that time except for MapQuest in the US.

We started out with flat-rate pricing for maps on others' sites, but then Bertelsmann wanted not just the maps but to advertise on our consumer site and partner with us, and that relationship grew rapidly. In a way, we were able to experiment with which models would work and which ones would not. We had boot-strapped the company, but once it was clear that it had real potential, we raised about £1.75m from Flextech, now part of Virgin Media, which was a decent amount for having had no seed round. A lot of this funding went into adver-tising and hiring people. We grew

rapidly after the investment; each year brought many new features, new people, new teams, and fortunately new B2B customers and users of the public website. Flextech invested about £1.75m, which was a decent amount for having had no seed round. Every year there were a lot of new things, a lot of new people, a lot of new teams, so it was rapid after the investment, because there was a lot of interest.

Hiring was definitely a challenge. We

hired what we thought was a great salesperson but quickly discovered that he was problematic, but also found that employees affected by his behaviour didn’t feel they could come to us about it. That was a surprise, so we worked harder to ensure that the team saw us not just as their employers but also as people they could turn to. We didn’t exactly slow down, but we spent more time talking to the people that we were hiring, and having other people talk to them, to make sure that they were a good fit.

We have always seen the value of good professional advisors. A number of start-ups try to save money by not making use of strong lawyers and accountants and holding off on recruiting Non-Executive Directors

NON-EXECUTIVE INSIGHT

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for their Boards. We considered that a false economy. It makes more sense to bring in people who are experts in an area. John Bates, who ran the entre-preneurship programme at London Business School, was our first NED and later became our board chair. He was on board from the start. We also followed Howard Palmer, the lawyer who supported us during the Flextech fund-raise, when he moved from law firm to another. He and his firm then acted for us throughout the life of the company and during the sale to Microsoft.

In 1987 the business was doing well, continuing to grow, when Google decided to enter the market. They began to provide services for free that we had charged for, and it became clear that mapping services were going to become something of an arms race. And if it was going to be an arms race, we need deeper pockets, so we went out for funding. While we were out there looking for investment, Microsoft and another company offered to buy us. At first, we thought, “It’s not what we want. We want to keep competing.” But then, with every passing day, something happened that pushed us more towards selling — two of map data suppliers were sold, tax on the sale of shares was about to change, etc. In the end, we had three offers to acquire the business, and, although one of the other offers was slightly better from a financial perspective, the fit was better with Microsoft. We were already a Microsoft partner and had a good working relationship. The final deal was for $60m.

Women in Technology‘Women in Telecoms and Technology’, the networking group I have been Chair of for six years now, was started by two friends, both Americans. One, a lawyer, had arrived in London and said, “Where are all the women?”. When they set up the network, the group would get together once a month to hear another woman talk about her career, and how she got to be what she is. I hosted an event where I talked about building and selling Multimap. Shortly after that, they asked me to join the Board. WiTT fits with what I said I would do once we had some time from operating a business. I went to a women’s university, Wellesley. The motto of the school is ‘Not to be minis-tered unto, but to minister,’ so to help others, not to have others help you.

WiTT creates an environment where women can talk to each other, network with each other, maybe find work with each other, and learn something about an industry area at our events.

In general, though, I’m not sure I see a lot of improvement for women in tech — I’m still hearing a lot of negative stories. The whole ‘brogrammer’ thing, I think, does not help. Where you get a group of guys in a space who think in a particular way and don’t spend a

lot of time with women, don’t know a lot about women, and make it very uncomfortable for them. They don’t realise that they’re creating a hostile environment because women don’t interact that way. I find it odd because when I was at university, I spent a lot of time at MIT in what became the Media Lab, hanging out with the nerdiest of the nerds, and those guys were not like that. They didn’t have many female colleagues, but they definitely were not resentful towards them. They didn’t want to keep women out.

Investing We made the first angel investment while we still had Multimap, because someone who had been a partner of ours, then went on to do an MBA at London Business School, came up with an idea of a business. We'd had a good experience working with him, and the business, which focused on carbon off-setting, fit our values. Once we sold Multimap, we wanted to give back by helping others to start their businesses, and investing was a part of that. We’ve done now something like 27 invest-ments, in a variety of areas, although

all are tech-focused. They range from antenna systems to recipe-sharing websites to data science services and recruitment waterless toilets. There are areas where we don't invest: we don’t invest in start-ups that target children, because this isn't an area of expertise and we find it difficult to differentiate one from another. We don’t do betting, although of course some people have made plenty of money from these websites. We generally don’t invest in consumer products, because we don't have backgrounds in product design or distribution.

We tend to invest as part of two angel networks: Cambridge Angels, and Angel Academe, which is focused on investing in women-led businesses. Many, but not all, of the investors are also women. Sarah Turner, who started Angel Academe, wants to teach more women to invest in this way and help each other to learn about seed funding. Recently, more of our investments have been through Angel Academe. Women-led businesses aren't neces-sarily a key focus, but supporting women is one of the things that we try to do.

We do sometimes get hands-on with investments; there are also instances where we haven’t invested but we will sit down with the founders and act as mentors or sounding boards or provide introductions. I recently went to a pre-pitch meeting that didn't go well. I offered some input on the issues I'd seen with the presentation and the pitch materials, and later the founder emailed to ask if I could help her to fix the pitch deck. I’m usually happy to help in that way. Aside from Board roles, we’ve never actually gone and worked in any of the businesses we've invested in, but we’re always happy to help.

Any advice for a budding entrepreneur?I would advise working at least a couple of years in a business, learning what the roles are, how to sell, gaining some operational knowledge, deter-mining how you figure out whether you’ve actually got a product, rather than just reading ‘The Lean Startup’ and going from there. I think a little bit of experience goes a long way.

“The whole ‘brogrammer’ thing, I think, does not help. Where you get a group of guys in a space who think in a particular way and don’t spend a lot of time with women, don’t know a lot about women, and make it very uncomfortable for them.”

NON-EXECUTIVE INSIGHT

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Causeway: constructing a different pathway to successSteve Morrison met with Phil Brown, the CEO of Causeway, to talk about the history of the company, the challenges they faced over the years, their unique ways of tackling them as well as their latest project with Gillamor Stephens.

ENTREPRENEUR INSIGHT

Phil Brown, CEO of Causeway

Could you give us a brief overview of the history of Causeway?Causeway was borne out of a business I sold in 1998. I took a fledgling product and three people from that business to form Causeway in 1999 with the idea of providing enterprise-level site based project systems to the construction sector. Then, as it still is now, Construction was the laggard of technology and IT adoption. It’s a very sophisticated industry, but because of the nature of their business model, where they are regularly working on very tight margins, investing in technology has often been a bit of a luxury.

Causeway was initially self-funded and we turned over £1.5m in our first year. We soon became involved in the dot-com phenomenon and raised funds from external investors and leading industry partners such as Arup. This enabled us to scale up our ambitions and we grew headcount from 30 to 150 people in one year. We aimed at providing a project control system that integrated disparate functions across the project lifecycle,

from estimating, procurement, costing and valuations, all integrating with whatever ERP finance system each particular customer had in operation.

At that time, we rented our software; typically, it was for the length of the project (two, three, five years). Once a customer had a number of projects on our system we flipped them from rental to a traditional Enterprise licence and took a larger up-front licence fee.

As we grew we started spinning up some new technologies, particularly around e-commerce. Our e-invoicing platform, Tradex, was borne out of that; the idea we had centred on connecting the industry’s fragmented supply chain to remove friction from company to company transactions - there are nearly 300,000 companies in the UK construction supply chain and project-based relationships lead to inefficient and clunky order to invoice processes.

Things changed in 2001, the dotcom bubble burst and we were faced with a bit of a cliff edge. Investors offered to help us out with another round of funding, but it came with some very heinous conditions attached. I was faced with either accepting the condi-tions or downsizing the company. So, we took a tough decision and did the latter - we restructured from 200 people to 100 in one week.

From 2001 to 2005 we just had to generate enough revenue to pay the bills, but by the end of that period, we still had the overhang of multiple shareholders and a precarious cash flow. In truth, we never really recovered from the dotcom bust. So in 2005 we invited Pete Nagle, with whom I had owned my previous business, to join our Board. His involvement culmi-nated in the business being acquired by a new Irish Holdco from the existing shareholders.

How did you make that happen?Pete arranged for a capital injection and secured bank finance from Barclays Bank to meet an independent valuation commissioned by our Board.

Soon after this we downsized to a safer level, reducing our cost base and deliberately reducing revenues from £10m to £7m in 2007. Since then we have grown organically and had a few acquisitions backed by Barclays in 2009 and 2010.

By 2013, we said to ourselves, “Right, how do we release some capital for shareholders? Do we bring in private equity, do we leverage further, or do we sell outright?”.

That was the decision point. In the end it was decided that a new UK based Holdco would acquire the Irish Holdco for a fair market valuation of £43.5m, to be settled primarily in loan notes.

“We can now leverage more money and have additional lines of finance with Guggenheim that is allowing us to bid against Private Equity on acquisition projects with all the same instruments and tools that they have.”

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From 2013 through to 2016 there wasn’t much excess cash floating around as the EBITDA generated was being leveraged fully to secure further debt from Barclays to be taken on-board in order to settle loan notes from the 2013 deal. We were also in the throes of converting our model from perpetual licences to annual recurring subscription fees. Whilst this put pressure on top line growth and immediate EBITDA, it did significantly increase recurring revenues and with that profit predictability.

This created a very solid financial foundation and we decided to test the financial markets again in early 2017. At that point our Barclays debt was circa £16m and the loan notes outstanding from the £43m deal were standing at circa £20m, so we had £36m in borrowings in total on the balance sheet.

We again considered private equity but given the success of our nascent subscription conversion we felt it was too early. So, we investigated the private (corporate) debt market.

We engaged Tomorrow Partners, a specialist advisory company. We were the first owner-managed business that they had ever worked with, even though we were the 46th debt raise for them overall. Thus, there was more selling to be done to make them feel comfortable with us and our business. The irony is that the people they went to, were the institutions that provide the debt to Private Equity; organi-sations like Guggenheim, Alcentra, Goldman Sachs, EQT, Ares, CVC and Ardian.

In the end we went with Guggenheim in the form of three facilities; Facility A was a straightforward £36m replacement of the combined Barclays debt and Shareholder loan notes, Facility B is a further £50m of EBITDA backed leverage (including EBITDA from acquisitions), and Facility C is a mezzanine instrument that sits outside of our covenants and helps us top up Facility B for acquisitions. All the facilities are based upon servicing interest only with a seven-year term for repayment of the capital.

Did you have a backup plan?We always had Private Equity taking interest in our business and it was good because we were able to use their indicative valuations alongside our rock-solid recurring revenues to

secure six-times EBITDA leverage. Given that traditional senior bank debt is offered at two or at best three-times leverage, securing support at six-times was a great result.

The underpinning strategic business change from perpetual licences to annual recurring subscription revenues was instrumental in this. It took a couple of years of hard work to get it right, but it helped us move from being a 60% annual recurring revenue (ARR) business to an 87% one.

In essence, we went out to all our customers and addressed them with various propositions to enable them to sign new five-year subscription agree-ments that replaced the rolling annual software maintenance contracts they had with us.

By doing this, the lifetime contracted value (LCV) on our books increased from £29m to £46m in 18-months, which is why we got so much interest from the debt finance providers - it gave them massive comfort. Today our LCV stands at £82m, a dramatic increase in three short years.

What was the reason behind changing the licensing? And how did you do it?We moved from perpetual licences to ARR subscriptions because we had the standard uncertainty around the timing of signing new initial licence fee deals. For example, to achieve £4m of EBITDA on revenue of £21m required us to do one or two big initial licence fee deals every year, and they are hard to come by. Missing

a deal places immediate and direct pressure on EBITDA forecasts, so profit predictability is hard. Just look at what’s happened to Alpha Financial Software; their market value has collapsed from £1.5Bn to £370m in the space of a year due to delays in signing large licence fee deals.

We were in that same risky territory. In 2015 we realised that we had a great business that made money, but the valuation was impaired because of the vulnerability around lack of predicta-bility of initial licence fee revenues.

So we went to our customers and said, “If money was no object – how many licences would you want to have?”. Effectively, if they wanted to increase their licences, we asked them to pay us an annual uplift of circa one-and-a-half times what they currently paid but, on the condition, that they signed for five years on a subscription plan.

It was a “no-brainer”, as they would traditionally have had to pay tens of thousands of pounds for the Initial licence fees on the additional licences, whereas we converted them to the new model and they paid us a reasonable uplift on an annual basis. We called this our Essential subscription.

For example, for one product we converted 200 out of 300 customers who were collectively paying £2.5m in rolling annual software maintenance to £3.7m per annum in Essential Subs’ on five-year contracts, thereby increasing the ARR by £1.2m and our LCV for these customers from £2.5m to £18.5m.

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We also launched Pro and Enterprise subscription bundles that included further software modules, all for an incremental per-user-per-annum uplift. So we now have a pathway and journey for each customer that can see us convert them to Essential Subs’ and then over time through to Pro, then Enterprise and then (for some products) Cloud. We’ve increased ARR from £15m in 2016 to £23m going into 2019, but we estimate that we still have £10m of ARR uplift to go for in our existing customer base.

From a technology point of view, were there any big challenges in that?A big challenge was licencing, as we were wrapping a lot of modules and products into a single licensable bundle, with single sign-on licence control for our customers that can be managed by them from one place. So, we spent a long time building a cloud-based licencing platform that supports this to keep our customers up to date with their licences and their deployment.

There was also the incentivising of the sales team. We had to put in new commission plans to incentivise them to come along with the changes. They were initially sceptical but in time loved it! They were able to re-address existing customers who had become passive.

Overall this has been transforma-tional for us and has had a dispropor-tionately positive effect on EBITDA growth. As I mentioned earlier, we can now leverage more money and

have additional lines of finance with Guggenheim that is allowing us to bid against Private Equity on acquisition projects with all the same instruments and tools that they have.

Have any other players in the construction sector moved to the subscription model?I think one or two may have, but most are still trapped in a tradi-tional perpetual licencing model. The message I will give to anybody is, you should spend a year or two putting a subscription offer to existing customers to convert and uplift your historic maintenance contracts from them BEFORE you turn the taps off Initial licence fees from new sales. I say this because you’ll need to build up a buffer from the existing customer Subs’ conversions that deal with the inevitable drop in cashflow from Initial Licence fee sales that you had hitherto relied upon. If you get this wrong, moving to an ARR subscription model can be disastrous.

What is the ultimate goal for Causeway? Where are you looking to go in the next three years?Well, our ambition is to build a great

British technology player in the global Construction Industry. If we’re ambitious enough we think we can get to £100m revenue by the end of 2021. We have a number of acquisi-tions on the go, which we would hope to close in the coming months and reach £40m revenues next year. We can continue to grow by additional acquisitions, but embedding the current acquisitions and moving them to an ARR recurring revenue model should see £60m revenue and £20m EBITDA by 2021. So we only need to find another £40m of revenue!

How are you aligning the organisation plans with this business growth agenda?To really give focus to our key customer segments and maintain an entrepreneurial orientation we are moving to a Business Unit structure with each BU led by a market facing BU Owner who will own the product strategy, proposition development, “go-to-market” sales – all supported by central functions. This has resulted in hiring external candidates who have operated at MD or CEO level. I also needed to be certain that our existing management team (including myself) have the requisite core competencies to scale as we grow. The assessment programme by Gillamor Stephens and your business psychologist has been instrumental in getting the answers to those questions. Two of the senior team recognised that the journey ahead would be too difficult for them, and in all cases I have been able to get a more analytical understanding of the current team’s strengths, weaknesses and development needs. It’s now much easier to identify who is the best fit for each role in the new management structure, as well as identifying gaps in the current leadership. It is critical that a high performing team is in place moving forward in order for Causeway to deliver on our growth ambitions and it has also been good to work with you to supplement the team with external hires, recently hiring a CMO and a Business Unit Owner whilst continuing the search for a CTO. The addition of the people you are bringing to Causeway is as instrumental to our success as the strategy. We now have those three essential elements; a good strategy, access to significant finance, and great people.

Causeway software used on site


“We now have those three essential elements; a good strategy, access to significant finance, and great people.”

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Simon, your career has been a fascinating journey with an unusual start?It started at school in Bedford, when some friends and I were interested in these new things called micro-processors. We wrote to a company called Texas Instruments in Bedford, telling them we would like one but couldn’t afford it. Coincidently they had a prototype board that needed fixing and said, “If you guys fix it, you can have it.” So, we did, and then we built our own computer system. That led to a relationship with TI and I ended up working for them before I went on to do an engineering degree at Cambridge, and then was offered the opportunity to do a PhD. By this point however, I had already secured a job with TI. I explained this to my potential PhD supervisor, and we ended up going to talk to TI who agreed to employ me while I did my PhD, which was really kind of them! I then got a Royal Society Industrial Fellowship and a University Research Fellowship and ended up effectively having an R&D team attached to Texas Instruments’ central research laboratories in Dallas. We developed some technology for doing very high-speed computation, however around that time, Texas Instruments closed the Bedford site.

So how did you find your way to Azuri?It was quite a long path. Having left TI, I set up a business developing and selling advanced computers for imaging and real-time simulation which we sold in 1996. I then worked in several other industries including the automotive sector, mobile phone operating systems, early big data companies and a business offering encrypted communications over smartphones. When that business moved its focus to the US, there was an opportunity with a young company in Cambridge, that had just completed its first major funding round, which was designing flexible solar panels.

Power to the people – literally

That seemed quite interesting, so I joined as CEO. About the same time, the bottom dropped out of the solar panels market and it was clear that the new technology was not going to compete with existing solar for many years. So, the problem became less “can we make it?” and more “what applications can this technology solve, that conventional solar can’t?”

After looking at various options, we discovered that the off-grid markets - low-income customers without electricity (particularly in Africa) were a huge untapped commercial opportunity. With the advances in technology, we were able to combine pay as you go phone and solar technology to make a home solar system where we could essentially do a ‘rent-to-buy’ business model. More importantly, customers were paying so much for kerosene and candles to light their homes that we could set the weekly cost of the system lower than their existing spend for lighting. So, from the end consumer’s point of view, it was net-free.

This was the transformative break-through. Its easy enough to bring new technology to low income consumers but it’s hard to do it at an affordable price. For generations, customers had

Providing clean energy to the remote areas of Africa is the mission of Azuri. Paul Gillespie spoke to Simon Bransfield-Garth, CEO.

been using highly-toxic, highly-flam-mable kerosene because there were no options and it was the cheapest of the cheap. But we could undercut the price with clean solar. This was the foundation of the systems that we do today.

What is the proposition that you take to a village or a villager?It is a little like when your Sky guy comes around with their set-top box. So, for our basic system, you have a solar panel which is about the size of an A4 book that goes on your roof. You have a yellow box about the size of a bag of sugar which goes on the wall with a battery in it and it’s has all of the control electronics. You typically have four lights, a rechargeable radio and a rechargeable torch. There’s also a USB port for phone charging.

And the concept of free electricity supply was key?Yes, we do an ‘all-you-can-eat’ offer so there is no incentive to minimise the system use. As people get more and more used to the benefits (and frequently are able to earn more income as well, for example keeping a small store open into evening hours), there comes a point where they want to upgrade to something bigger and more capable. Customers can go from a lighting system to a larger system, for example with a television. They can then move to a system that’s got a smartphone. In the future, they’ll have a system that’s got an irrigation pump or a fridge and other devices.

In doing this, we have come to realise that we’re becoming the gateway between our customers and the digital economy through the smartphone, the television and so on. And because people are paying for the system on a regular basis, they effectively build a credit record with us, so we can offer a range of over-the-top services much more cheaply than individuals could ever possibly get themselves. Adding a few cents to a weekly payment, that

Simon Bransfield-Garth, CEO of Azuri

COMPANY INSIGHT

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COMPANY INSIGHT

you do anyhow, is no big deal, and that allows Azuri to offer a whole series of financial inclusion services such as low cost medical or crop insurance.

In the long term, I would imagine that we will go the same way as satellite TV, where, in the early days, you bought your TiVo box and you were paying for the equipment; today, you’re paying for a whole load of services and there is an incidental piece of hardware that comes along and delivers it for you. In other words, we will move to selling the benefit rather than the product.

One innovation that is fascinating is your funding model, could you explain the structure and how it works?One of the challenges with a business like Azuri is that we’re not a leasing business, we’re a service business, but there’s a significant amount of capital that goes with every customer, and so the faster you grow, the more of your cash is tied up in all these yellow boxes in households spread across Africa.

We call our asset financing model ‘receivables financing’ where we are able to secure working capital finance on the expected future customer revenues. What that means is essen-tially, our growth is not limited by our ability to be able to finance the units. For every unit that is put into a customer’s hands, we get enough debt finance to cover the cost of the equipment, in effect financing the next

customer. And the process repeats. So, the whole process is self-sustaining.

It’s only because we have an extremely reliable product and we have an effective distribution network that we can get the asset finance in the first place. And it’s only because we’ve got the asset finance that we can then find the distributors who can then distribute the product at scale. The distributors will do the distribution, but they don’t have the capital or the risk appetite to be wanting to finance the product themselves. So, by being able to provide that capital, we have access to even the “Unilever”s of this world who otherwise wouldn’t go there.

How did the Unilever partnership come about and what does it mean for Azuri?Unilever has probably the most extensive distribution network in Africa. FMCG companies in general have very good connectivity to the channel but it’s much more difficult to have a day-to-day conversation with the end-consumer. Because customers pay through their mobile phones, we have a routine electronic conversation with our end-consumers. So, strategi-cally, the partnership is interesting to both companies as a means to access a massive existing distribution channel and understanding customers better to be able to offer higher-quality services to our customers. We’re still at a very early stage in the market, but nevertheless, big companies are

beginning to see the strategic oppor-tunity of being able to reach what is, in effect, the last unserved consumer in the world. The off-grid consumers - the billion or so people off grid – are more or less the last group of people who don’t routinely have access to digital services, financial inclusion, quality healthcare, you know, all of these sorts of things.

Do you think providing digital capabilities to rural areas is stemming urban migration?Urban migration is a fact and it’s not our job to go and change the dynamics of African consumers. But you must look at why people are migrating to cities. They’re migrating to cities because the perception of opportunity is much greater in a city. Our view is that the more that you can bring the digital economy into rural areas, the more you offset that need. It levels the playing field of opportunity, and that’s going to become critical for many countries in Africa.

And the future?When we started, it was entry-level lighting systems. Now, we’re looking at 32" solar-powered televisions with 60 channels of satellite TV being sold to somebody living in a traditional-ly-built off grid home in a village miles from the nearest paved road. Our customers in Africa are getting things that are every bit as good as you would have in Europe or US. That, to me, is an important feature of what we’re doing.

We’ve chosen to focus on five countries. We’re in Kenya, Uganda, Tanzania, Zambia and Nigeria. Africa has 55 countries and we are in five. For now, we’re pretty content to stay with the five countries we’re in. Over the next few years, we’ll probably grow that by a few and then, progres-sively, we’ll expand further. But there is so much to be done where we are, there’s really no advantage in going somewhere completely different. Its more important to do a great job in a smaller number of places first.

At the last count we had sold about 150,000 systems. It’ll be more than that now as we’re growing very strongly but with 600 million people without power, we are not going to saturate the market any time soon.

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The rate of change has never been so highChris Shearmon, from the Sheffield Haworth Singapore office, looks back at 2018 and reflects on the key changes this year has brought.

INTERNATIONAL INSIGHT

Chris Shearmon – Sheffield Haworth, Singapore

I lead Sheffield Haworth’s Technology projects in APAC for our clients across Consulting, Financial Services and Government-Linked firms. Over the past year we have worked with their leaders to leverage our executive search, talent advisory & consulting solutions to truly understand the talent required to deliver these programs, whilst executing programs to engage and onboard them. Key focus areas for these clients continues to be how can they leverage new technologies, data and people to create new products and services whilst becoming more efficient. Although these focus areas remain consistent, there is broad spectrum of projects across ASEAN, Greater China and Oceania.

This time of year presents us with the opportunity to reflect on the activity in the markets we work in, whilst looking to the year ahead. Across the markets we operate in, we observe that products and services are becoming more technology driven and hence more connected. The consumer demand for these services is increasing exponen-tially, creating opportunities for new and incumbent firms and the advisory and technology firms who complete the ecosystem. The APAC region has seen significant changes in 2018, with increases in external investment and the internal funds committed to enable change to happen.

One major statement this year came from a senior executive at one of our payments clients, who noted that the rate of change had never been so high. The global leadership team are particularly bullish on growth, despite the already stellar stock performance and increasing competition in every part of the value-chain.

Year of consensus, alignment and actionLarge legacy firms such as banks are also driving their share value by effectively communicating the success stories within their digital

transformations. They are taking cues from the digital-first firms’ strategy of using new metrics to predict future success, such-as the engagement of digital customers and the number of ecosystem partners using their APIs to build new integrated services. This momentum is helping firms fund these huge transformation projects, drive employee engagement across the whole organisation, whilst helping change the firm’s perception as an employer of choice.

These early successes and failures are helping certain trends to really gain traction, making 2018 a year of consensus, alignment and action. Consensus is a term I have come to appreciate greatly in APAC, where-by important decisions are reached through group discussions, which isn’t unique to these markets, but seems particularly important and often inter-twined with cultural nuances.

For example in a conglomerate client, the senior leaders required more data before re-launching an ecommerce platform, but when they did so, the scale of investment was many times larger than a start-up venture. Then there is an example of a generational change within a large family owned business where legacy needs to be respected, yet the business can only survive through modernisation or in a start-up. Outside investment comes with new conditions, ownership or opportunity, hence the culture also needs to evolve.

Fortunately, the successes experi-enced through digital investments outweigh the previous caution which brings new challenges regarding alignment. Alignment has been particularly important this year, as the market opportunity for success or failure when deploying new technol-ogies is at a high. We have observed that all of our clients have been placing a greater emphasis on digital talent at Board level, with each firm tackling their own challenges with a different

flavour of executive. The emphasis this year has been on action and building scale, from the customer facing touchpoints all the way through to the people, processes and systems within the firm.

To scale, transform or both?This has meant that 2018 has been a year of deep technology, data and change projects to build the future organisation. The market forces are driving several new trends, from digital-first firms building new platforms to create new services leveraging existing customer relationships, to large incumbent firms building brand new platforms where they had no legacy technology to replace, to firms who are deploying technology to manage their transition to the new using APIs and middleware built around legacy technology.

There is a greater emphasis on people, how they are empowered, diversity, creating structure whilst giving the freedom to fail and discover the new. Empowerment has been a driving force of the transformations we have supported this year, with the ability to

9


deploy technology and reorganise team structures at the top of most executives’ wish lists. For instance, we observe that the role of a Chief Digital Officer is becoming increasingly technology focused, where-by firms have pivoted away from siloed innovation labs which generate long-term visions, to hiring technologists with deep product experience who can set the digital strategy and build it.

With the need to be more collaborative and t0 increase in scale comes a greater need for diversity, which remains a key topic for all companies to address. From diversity of thought to gender, ethnicity, sexuality and beyond, there is data to show that diverse teams are helping firms imagine and deliver their transformations more effectively. We see this particularly within our consulting clients, who recognise that clients expect them to have diverse teams, which challenge thinking and bring new perspectives to projects. Our corporate clients also recognise this value and have made significant steps to make more diverse hires, whilst investing in their future leaders.

Questions around structure and leadershipThe ability to bring structure of thought also remains high on the priorities of the leaders in large incumbent firms when hiring new leaders, or when promoting from within. The need for and definition of structure continues to develop too. Firms now seem to have a better grasp of how technology influences their customers’ behavior and are able to glimpse future states by observing their data, other geographical markets or parallel industries where change has already occurred. The structure they require here is that of someone who can focus the business on building what’s important quickly, hence the demand for technologists who build products using more open sourced tools and methods, such as agile. The structure here also comes from the ability to get products and services in customers’ hands quickly, where they can be tested and improved using real data, which allows the business to become more customer centric.

Structure is also required on the business side too, particularly when a new capability, product or service is being brought to market. This has been most prevalent when digital-first or advisory firms have wanted to extend what they already do for their

clients, where there is no shortage of technology or connectivity. Structure here addresses several factors, from credibility with new or existing investors, connectivity to external stakeholders such-as regulators or policy makers, to the executive presence needed to get buy-in for, sell and execute large strategic initiatives.

This year we have observed that these strategic initiatives often use emerging technologies which were previously the subject of white papers or narrow use cases until recently. We are fortunate to work with clients who are bringing new products and services to market in the form of robo-advisors, through to IoT and Block Chain, which are already gener-ating real value. Artificial Intelligence has gained real traction this year and is being deployed across businesses to aid better decision making, whilst integrating with automation programs to deliver more efficient digital opera-tions with data at the core.

Challenges around talentWhilst the promise of the new is enticing, people challenges are still cited as the main roadblocks. When clients reflect on the talent required, there is the need to break each situation down. The talent needed to address current challenges is often in short supply and this increase in demand drives increases in cost. In order to satisfy demand and hire at scale, compromises inevitably have been made, presenting challenges further down the line. Whilst acquiring new talent is important, firms are working harder than ever to bring their whole organisation through change and break down the silos across their organisations. We have also observed that firms have found it challenging to assess new talents using existing KPIs and integrate talent who have often been hired from outside of the firm’s traditional talent ecosystem. There is also a shift in employee expectations, from understanding their employer’s “mission”, to greater empowerment to make decisions, ownership through equity and greater financial expecta-tions. Companies often find it difficult to engage talent across generations, which has resulted in short tenures and a lack of real delivery in the younger generations, and lack of opportunity for learning or ability to lead new initi-atives for the more senior colleagues. However; these challenges have

become better understood this year, allowing business and HR leaders to more effectively plan their workforces over the short to medium term.

Firms are positively responding to these challenges, by combining top-down board sponsored directives with employee led initiatives. For firms who have needed to engage technology talents from beyond their traditional ecosystems, creating enticing new digital hubs which mirror the environ-ments of tier-1 tech firms, has been one of the biggest focuses. Incumbent firms have also benefited from lever-aging methodologies such-as agile, to drive productivity, impact and employee satisfaction. This has led to rewarding opportunities for senior leaders to come into large firms and make a big impact quickly. With scale and market opportunity comes the ability to prove value, which has led to a significant increase in compensation packages, attracting more global talents to the APAC region. As digital channels mature, so does the scale of the teams and therefore the need for strong governance and leadership.

The futureWe see 2019 as a year for building and scaling the existing strategy, improving what is already in the hands of customers, whilst continuing to build the foundations for future innovations. We believe that this puts greater emphasis on skills which may have been overlooked during times of rapid scaling or innovating. Leadership, resilience, personal brand, commu-nication, empathy, decision making, accountability are featuring more frequently in client discussions as we move into 2019. We now require more rounded talents to build the future, creating vast opportunities for those with these skill-sets and those who are willing to invest in themselves and their organisations.

While we believe 2019 will be a year of delivering, we also foresee that products and services will become more human, where design will play a greater part of the experience and the technology disappears into the background behind interfaces such-as voice assistants. Greater connectivity and more seamless experiences will also present firms with the ability to create more integrated partnerships, drive bigger mergers and acquisitions, capturing more value for economies, investors and customers in APAC.

INTERNATIONAL INSIGHT

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Anne, you have had a fasci-nating career journey –how did you get to where you are now?I never really planned my career and instead of specific roles, I focused on the things that I’m passionate about. In my first job in finance, I was lucky enough to get a mentor, who helped me realise that I was more interested in the innovations than the financing part. Thanks to him, I ended up in the project financing department where I could explore my passion for innovation.

From then on, I started looking for roles where I could co-create with other people and push the bound-aries; where I could work with amazing people who think differently, create new things and build tremendous projects. I equally wanted to be an investor and after my second IPO, I was lucky enough to build my own portfolio of companies as a business angel investor.

For many people, it is a one-way street – you become a CEO, you make money, and then build a portfolio. You on the other hand, have been an investor and now come back to the frontline with Freespee as a CEO. What made you take that turn in your career?You are right. Every time I sell a company, people ask: “Are you done now?”, but this is so much fun! Why stop? And with Freespee, there were three factors that made me take this opportunity.

Firstly, the product and the technology are superb and have true impact! Secondly, we are very lucky to have 22 nationalities across 5 locations in Europe, a hugely talented team that is open to doing things differently. I get fantastic energy from a team that is super motivated to innovate every day.

Using diversity to breed innovation

Third was the relationship with the founder. It is always hard to take over from a founder, as you are taking or at least sharing their baby. With Carl, I felt a genuine connection and saw a way to continue this journey together, as well as with the board of investors. There is an alignment of the vision that starts from the executive team and continues to every single person within the company.

Were you looking at a number of CEO roles before you decided or did you know that Freespee was right for you when we came knocking on your door and said, “What about…?”Bizarrely, Gillamor Stephens knocked on my door the same day I was signing the terms sheet to sell my last company, and I remember laughing about it and thinking, “Do they have a hidden camera in my office or something?”.

I believe that in taking on roles like this, you have to follow your instinct. When it’s right, it tends to be right from the beginning – starting with the first call with the head hunter, through meeting the executives and the conversations

Paul Gillespie sat down with Anne De Kerckhove from Freespee, a self-described start-up addict, to discuss her exciting journey in the technology sector, her most recent challenge as the CEO of Freespee and inclusivity in the workplace.

“There is this energy that you get from a team that is super motivated to innovate every day.”

Anne De Kerckhove, CEO of Freespee

LEADERSHIP INSIGHT

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LEADERSHIP INSIGHT

you have with the rest of the team. It really should feel like you are home, and that is how I felt throughout the process with Freespee.

Who are Freespee and what happens now you have closed your B-round funding?Currently, there is a great disconnect between the digital self-service journey and the sophistication that consumers encounter on digital platforms and the moment you engage in a conver-sation with a brand. When a consumer calls a service centre, they start at square one and have to tell their story all over again. At Freespee, we create the bridge between the digital experience and the call to create a seamless and contextual user journey. We create a unique user journey for every single person, routing the call to the right person and giving the agent all the information on the consumer’s previous digital journey.

We are growing at about 80% year-on-year, so we are in what I call the ‘hyper-growth mode’. It is always a super exciting period for a company. You have found your market fit, you are having a huge impact on clients. Now it is all about expansion and scale. Since I joined, we have brought on board about 45 people and we have 30 more to recruit before the year end. There is no part of the organisation we are not scaling up - the research and devel-opment team, the sales teams, the customer success department... The demand is there, and we will continue to grow to keep up.

Taking a slightly different turn, you are recognised as a major flag bearer for female entrepreneurs. First of all, how hard has it been for you? I guess I was always the only female in my tech executive positions since I was 27, or the only female investor and it was not an issue for me personally as I took leadership roles so early on.

It took me until I was in my 40’s to realise how it could be a problem

for other women. I had this lack of self-awareness around how it could be hard for other people to be the only women on the board or executive room etc. Now I am making up for the lost time!

I have realised how important it is to have mentors and to fund female-male mixed start-ups, for example. I am super vigilant about this and I talk, write, and make videos about it. In Freespee, I encourage diversity and it works - you need to pay attention to it and pro-actively make changes!

In tech firms, it is one of our most important challenges to resolve, because diversity produces better results. If you only hire people that look like you, talk like you, went to the same school as you - you don’t have different perspectives! No one challenges you properly. At Freespee, Our 22 different nationalities challenge each other every day and produce better results because of it.

You are also a mentor, how do you fit that in?Well, there is a famous saying which goes something like – “if you want something done, get a busy person to do it”. Meaning that if you are passionate about something, you will always find time and with mentoring, it sometimes takes just a coffee. I mentor about 10 women a year - some just need to have a sounding board, others need perspective. Most of the women

I mentor are part of the mentoring programme at INSEAD or Accelerator programs where I volunteer, but I also get approached on LinkedIn, sometimes on a daily basis.

Many of the most successful female entrepreneurs are in B2C or B2B2C companies. Why is this? Empathy?You took the word out of my mouth. It might be a stereotype, but I strongly believe that it is empathy. Women tend to naturally think of others and this will play a role because there is a certain value and skill that comes with empathy. As we move towards an obsession with customer experience, more companies will search for it.

There has been a major change in leadership compared to 15 years ago, when people would use brute force to drive results and squash partners and clients. We can see the fiasco of Uber’s founder leadership, where that sort of style is not accepted anymore. Both internally and externally, people look at the CEO and expect them to have good values and for them to commu-nicate those values and to adhere to them. I think it’s a great time for women to make it to the top of tech companies, because they bring that added perspective.

Could it be that the entre-preneurial world is more open and receptive? It is, “What’s your proposition?” as opposed to, “What’s your gender?” Completely! If you think about it, I’ve only ever been hired by men, so clearly, men don’t have an issue hiring strong women. What I brought to the table, was a drive. I teach a lot of women to have a clear identity and proposition, because that is what entrepreneurs are looking for.

They do not care about your degrees or your background, or your skin colour or gender. They care about the impact you are going to have in the company.

“I guess I have always been the only female in executive positions, or the only female investor and it was not an issue. It took me until I was in my 40’s to realise how it could be a problem for other women”

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When it comes to tech M&A, Silverpeak is growing in recognition and deal count. How did you get here? The founders of Silverpeak, of whom I am one, were already running their own independent firms. It was time to grow so we could serve bigger companies. Through 2015-16, we joined forces to create a 45-strong global team that delivers what we all believe in – optimal results for the client.

We have one of the best teams of tech-bankers on the planet providing both local support and global reach to increase the chances of success for our clients. Whether it’s independent advice, negotiation strategy or strategic perspective on a particular segment, we’re here to execute and complete even the most complex deals and achieve the objective of our mandate: to deliver the best result for our clients and make more money for everyone in the process.

You’re known for deep sector knowledge and publish in-depth reports. How do you stay on top of market changes? A lot of our intelligence and sector knowledge comes from deal-making and speaking with many of the key players. The founders of Silverpeak each have more than 20 years of experience exclusively focused on tech.

We also look over the horizon by taking a view about future developments in the technology landscape: where will the next big wave of investment go? In which area is a certain large player likely to make acquisitions? What are the main drivers of valuations to achieve strategic premiums? How are investors and buyers behaving?

Our sector knowledge is definitely one of the things our clients value in our

Upcoming Tech Trends from Industry Giants

Pietro Strada, Managing Partner of Silverpeak

services: they do not have to explain their business to us, because we get it, and we can represent their companies in the best way in front of potentially interested parties.

For example, we recently published a report that analyses the acquisition behaviour of the large “software giants” and their interest in European software companies. The insights gained are valuable in many of the deals that we are working on.

Your latest report focuses on European tech M&A. If you had to choose one piece of insight, what would it be? There’s a traditional assumption in our industry that when it comes to an

exit, a European software business will automatically turn to US buyers. That assumption isn’t always right. Buyers of European software firms are not always US giants, as the report shows.

2018 has been a dynamic time in the industry, and we’re seeing increased M&A activity by the software giants: in 2017 we saw 216 completed or announced acquisitions by global software and SaaS giants; based on activity in the first half of this year, Silverpeak is projecting over 230 deals for 2018.

Of the largest global software companies, the top six are HQ-ed in the US or Canada. Overall, 64 per cent of the industry’s giants are American.

However, repeat buyers of European

GS-insight talks with Pietro Strada, Managing Partner of Silverpeak, the technology investment bank, to uncover today’s state of play in software M&A in Europe and to get the lowdown on how opportunities for buyers and targets are changing.

INVESTMENT INSIGHT

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INVESTMENT INSIGHT

software companies tend to be more European than US-based. The US titans are under-represented.

Only nine acquisitive software giants are among the top 30 repeat buyers of European companies, and they’re not all American.

What is the role of financial buyers? Strategic buyers dominate most of the acquisitions. But there is an upward trend in the involvement of financial acquirors: in H1-2018 14 per cent of the acquisitions of European software companies were by funds (only 3 out of 16 are American), double the 7 per cent seen in 2012–13.

The lines between strategic and financial buyers are also blurring, with some of the strategic buyers like Constellation Software and J2 Global

behaving like financial investors.

Which European countries do best in the sales tables? British, German and French targets account for over half of European acquisitions. Most sales are cross-border almost by definition because Europe is so fragmented; a lot of European countries are too small to have a local pool of buyers.

Are any upcoming groups of buyers of interest to software firms? China’s share of the global software giants is growing and now stands at 14 per cent (i.e. 12 large software companies, many of which are relatively unknown) Whilst the Chinese have tended to acquire local software targets, this is starting to change

and their appetite for quality assets globally is increasing.

Might US industry titans be missing an opportunity? There are an increasing number of quality software and SaaS companies in Europe. But some of the US large players have limited local knowledge of European markets and to develop such knowledge they would need a presence on the ground. In that sense they may be missing an opportunity to expand internationally by acquisition.

Read the Silverpeak report Are US software giants missing out on European targets? here: www.silverpeakib.com/Silverpeak/media/News/Silverpeak-report-Are-US-software-giants-missing-out-on-European-targets-July-2018.pdf?ext=.pdf

Buyers of European software & SaaS conpanies (>– 5 acquisitions)

Global software giants (>10 acquisitions)

Source: S&P Capital IQ, Silverpeak analysis

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Tell us about your charity Resurgo, the Spear initiative and what you’re striving to accomplish?Resurgo is a non-profit organisation that links unemployed young people with businesses. As part of Resurgo, the “Spear” initiative is an award-winning programme supporting socially disadvantaged young people to help improve their employability. It’s about teaching the right mind-set before they write a CV or go to a job interview. We provide the tools and behaviors to support young people build their confidence, tackle the barriers that prevent them getting into work, and make a positive impact on society.

Who is eligible to apply for the initiative? Socially disadvantaged young people – 16 to 24-year-olds – including those with a criminal record. Our belief is that everyone can overcome whatever barriers they face to succeed. People with low confidence, mental health problems, a criminal record, or no qualifications can overcome these barriers to get into meaningful work and build a career.

What can the students expect to learn? Spear covers areas like CV writing, job applications and interview technique,

but most importantly we work with students on issues like attitude and building self-esteem. It’s not about us telling them what to do or how to act in front of potential employers, rather we provide the platform and the tools they need to improve their employability.

What has been achieved so far? Around three-quarters of Spear students get jobs or enter education and are still there a year after leaving the course, and it has helped 5000 young people into employment over a decade. 75% remain in work a year later.

How can organisations participate? We work with many types of businesses and have received backing from high-profile organisations like Marks & Spencer, Unilever and Accenture. There are many ways organisations can support the initiative, for example mock interviews, company visits, as well as financial sponsorship, and of course job offers!

What does the future hold for Resurgo?

We are expanding over the next two

years, including to Brighton – watch

this space!

For more information about Resurgo/

Spear, or to support the programme

please contact Jo Rice, Managing

Director at [email protected]

or visit www.resurgo.org.uk

Tackling social challenges by connecting creativity, talent and resourcesWe discuss Resurgo’s ‘Spear’ initiative, an award-winning programme supporting socially disadvantaged young people.

Jo Rice, Managing Director of Resurgo, and founder of the Spear programme“We work with many types of businesses and have received backing from high-profile organisations like Marks & Spencer, Unilever and Accenture”

“Around three-quarters of Spear students get jobs or enter education and are still there a year after leaving the course, and it has helped 5000 young people into employment over a decade”

SOUND BYTE

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INNOVATION INSIGHT

Why are Oxbotica focussing on different types of autonomy when most companies are just special-ising on autonomous cars?Our technology works in quarries and mines, supermarkets and warehouses as well as in passenger cars. The automotive domain isn’t realistically going to pay off until the mid-2020s which for a small company is a long time to wait for real revenue. The diversity of our tech team means that we have the competencies and capabilities to address more than one vertical.

Is full, level-five autonomy still the holy grail, or is the aim more about being able to drive, write text messages and eat lunch whilst on the road?It depends on the market. We’ll definitely see progressive improvement towards full autonomy in the cars that you and I drive today. Achieving full autonomy in this area however, means you can start to fund fleets of autonomous vehicles. Mobility as a service will be the big societal game changer.

We’ve been approached by companies in China, for instance, that are building greenfield cities, with fully autonomous cars. There’ll be no traffic jams, parking, garages or pollution, and all vehicles will be owned by the city.

Could this transition create a potentially chaotic mix of autonomous and standard cars on the roads?It could, and when we get to that point, I don’t think it’ll be long before we start to see exclusion zones in the middle of cities where only auton-omous vehicles can ride. Discussions

have already started on how we need to redesign cities to enable more autonomy.

In the short term, I think we'll start to see shuttle-size, driverless vehicles – maybe 4 to 8 passengers – working in defined areas, where there is no interaction with high-speed traffic. They might be in retirement commu-nities, town centres and maybe some city centres with bus lanes. Besides that, we're looking at mixed usage, for example, in a warehouse environment where forklift trucks will be fully autonomous, while people carry out the more specialised tasks.

What has Oxbotica achieved so far?We’re the only company in the UK demonstrating full autonomy on the public road. We’ve already got a vehicle running around Oxford, for which we’ve provided the computers. By the middle of the year, we’ll have more vehicles in Oxford and will have expanded into London. We've also now licenced our technology stack to several major automotive companies. Over the next eighteen months, we plan to further develop the software and its capabilities, but our focus is very much on tight urban environ-ments. Oh, and we’re just preparing our first car for California.

A major USP is the small amount of processing power Oxbotica’s software needs - how are you achieving such a small footprint?

We’re unique in that we use camera based localisation rather than GPS. In fact we don't use GPS at all because it doesn’t work well in cities, or places like under-hotel parking and garages. We use LIDAR to detect obstacles and people and we have our own patented, low-cost vision-based system, which can localise down to a couple of centimetres. We're getting a lot of interest in this because it uses a camera, which most cars already have anyway and therefore it’s only software.

Is Oxbotica’s positioning simply a level-five solution for car companies?Our product is an autonomy platform – with an operating system and a suite of modular autonomy appli-cations that we’ll integrate with our customers’ vehicles. Unlike other companies, we're not fixated on offering a full monolithic system to customers when we can licence small pieces of IP, localisation is just one part of our stack. Not all our customers are just looking for full autonomy solutions and we’re comfortable engaging with those that aren’t.

We have about 80 pieces of IP in our solution, and we like to let customers have access to all of it, before helping them decide which bits of the solution best suit their needs.

What are your plans for Oxbotica in the future?We will be accelerating the growth of the company, probably doubling headcount to over one hundred. We will also see more autonomous pilots underway across a number of sectors with another 10 cars on the road in London plus a very large off-road project. An exciting year ahead!

For more information on Oxbotica; www.oxbotica.com

Oxbotica: Building an Autonomous WorldOxbotica is a British pioneer in the autonomous vehicle arena. The company has maintained a low profile to date but are now accelerating their growth on the back of strong commercial success. Paul Gillespie, spoke with Dr Graeme Smith, CEO.

“There’ll be no traffic jams, parking, garages or pollution, and all vehicles will be owned by the city”

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In search of the Next Generation ApplicationIan Spence, CEO of Megabuyte, shares his views on the SaaS sector.

MEGABUYTE INSIGHT

Ian Spence, CEO of Megabuyte

In the early days of Megabuyte, immediately after the financial crisis, I remember very clearly when the industry started to talk more about the arrival of SaaS and its likely impact on the software sector. Salesforce, which was already eight years old, was making a lot of noise about SaaS with its “no software” battle cry but there was little change for most software companies at that time. Indeed, many software CEOs I spoke to at the time saw SaaS as nothing more than another buzzword that they could safely ignore, while some simply saw it as a move away from initial licence fees to some kind of recurring revenue model.

Fast forward 10 years and things could hardly be more different. In many parts of the market, especially where the customers are SMEs, SaaS delivery is considered to be the norm. That said, there are also parts of the market where there has been much less movement in that direction. Nevertheless, there is a much wider understanding of benefits of SaaS delivery to the customer, and how running a SaaS company is very different from a software company with a more traditional technology platform and revenue model.

However, there still seems to me to be less understanding of how SaaS can potentially be a much broader facil-itator of digital transformation. If we think about it in simple terms, software has really been an automation tool up to now. Its speed and efficiency may have improved dramatically over the last 40 years, but it still essentially automates the same tasks as it always has. However, the inherent intercon-nectedness of SaaS and the simplicity of its delivery through a web browser makes it capable of so much more. In this article, I will outline some of the key elements of what I believe SaaS can become; I call it the Next Generation Application.

SaaS by defaultBefore we dive into the detail of now the next generation applications might evolve, we first need to have some

terms of reference about what a SaaS application actually is. Hopefully I don’t need to spend too long on this but it’s important to be clear that SaaS means a single instance of the product and almost certainly multi-tenanted. Why is this so important? Simply because so many of the growth opportunities afforded to those SaaS companies that embrace the concept of the Next Generation Application are only available if the application in question is a genuine SaaS product. With that definition clear, we can now look at the key elements of the Next Generation Application.

Data analytics, Automation and AII will start with the one area currently receiving the most hype; Data analytics, automation and AI. Lumping these three potentially massive areas of development into one bucket may seem like a gross over-simplification but, bear with me, it does make sense. First of all, to state the rather obvious, the term AI has become grossly over-used as the true instances of artificial intelligence at work in

the enterprise are extremely rare. For the most part what is optimisti-cally described as AI, is actually the clever automation of data flows and processes using algorithms. In no way is the machine learning for itself, it is merely applying a clever algorithm in an automated environment. There are of course some very exciting AI devel-opments AI healthcare, transport and many other industries but much of what is called AI is actually more mundane data analytics and automation.

Having said all of that, exact definitions are not actually that important in the context of an undoubtedly substantial opportunity to create new data analytics, automation and AI appli-cations. But perhaps an even greater opportunity is for existing SaaS companies to embed this function-ality into their applications in order to enhance existing areas or to create whole new areas of activity. Take an accounting application, for example, that understands the task you are trying to do – such as creating an invoice or setting up a new supplier and is able to fully automate that process for you. Or a customer management application

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that can not only triage incoming calls more effectively but can then complete the required action without human intervention. Or an application in the legal sector which can automat-ically understand which information is client confidential and which is not. There are an almost unlimited number of such examples and the number is growing all the time.

IoTThe Internet of Things is perhaps less of a buzz word than it was a couple of years ago but, in my view, it is actually now becoming more prevalent and mainstream. The notion that data on the location, condition and environment of a large number of assets can be captured remotely by embedding a very low power device transiting a low bandwidth message is well on the way to becoming pervasive. Think smart meters, pay-as-you-go insurance, logistics, retail, smart buildings, indus-trial maintenance and many more.

From the perspective of a SaaS appli-cation, IoT data is just another stream of data that must be managed through the software. Here again, we can see new applications being built specif-ically to manage IoT data in a given scenario or existing applications being extended to enable them to manage this data.

Social, communication and collaborationI mentioned earlier that interconnect-edness is at the heart of the Next Generation Application and perhaps the most obvious manifestation of this is how collaboration technology has been embedded into many SaaS appli-cations, or is has been the basis of new applications. Many would argue that Skype is the granddaddy of collab-oration applications, but there have many since then. And the functionality of these applications has developed substantially over time. At the collab-oration end of the spectrum, one of the most high-profile application in this field currently is Slack, which is a fully-functioned collaboration appli-cation, while, at the communication end of the spectrum we have appli-cation such as Twilio.

But it is not just collaboration that is important in this category; we can also include here the increasing integration of Social into applications. The obvious example is Microsoft’s acquisition of LinkedIn; while it remains a stand-

alone application for now, it seems inevitable that it will be integrated into the Microsoft application stack at some point. Another key element within this category is Cloud storage. For example, while Dropbox is clearly primarily an enterprise storage appli-cation, is also includes some very neat collaboration technology.

Distributed ledgersI will conclude with perhaps a bit more of a long-term opportunity, but possibly the most significant of all; distributed ledgers. This technology, of which Blockchain is the most well-known, enables secure transac-tions without the need for a trusted third party and has fuelled the recent bubble in cryptocurrencies. However, many in the industry believe that it will become the basis for much of the world’s commerce over the coming decades. We are now starting to see the early signs of this technology being applied to more mainstream financial services and even enterprise applications. For me, it will probably be at least five years before we see distributed ledger technology really coming to the fore but, on a 10 year view, this one could be the most disruptive trends of all.

Embrace change; before you think you need toHaving looked at the key elements of the Next Generation Application, it is also important for SaaS CEOs to understand the how and the when of developing these elements so as to capture the growth opportunity but not over-invest. My take on this is fairly simple; invest in new product elements just before your customers realise they need them. This is of course easy to say and much harder to do and requires a strong product management function to execute effectively.

This is especially true of established software companies looking to make the so-called SaaS transition. Getting the timing right on this has been central to shareholder returns for many estab-lished software companies over the last decade. Develop too slowly and you may make more profit in the short term, but your competitive position will be eroded with a concomitant impact on your longer term growth prospects. But develop too quickly and you risk wasting shareholders’ money and, even worse, cannibalising your existing products unnecessarily.

Perhaps the most high-profile example of developing slowly is Sage. I remember attending a conference many years ago and listening to Paul Walker, the then CEO of Sage talking as though nothing had changed and that Sage could continue the same strategy as it had pursued though the last two decades in order to remain successful. In some ways he was right, Sage shares have trebled over the last 10 years and the company is more profitable than ever. But for those of us that have watched the software sector over that time, it has been abundantly clear that Sage has been on the wrong path for many years, underinvesting in its product and losing market share to SaaS newcomers and old adver-saries alike. The result more recently has been slowing growth and investor pressure as it has become increasingly clear that it may be too late for Sage to effectively make the SaaS transition.

Looking at the other end of the spectrum, AIM listed provider of asset management software Statpro is a great example of over-investment in SaaS transition. More than five years ago, the company embarked on an aggressive SaaS transformation strategy and invested tens of millions of pounds in the endeavour over the following years. Statpro also prematurely curtailed development on its existing core product in order to switch it out in favour of the SaaS version. And the result of all of this investment on the growth trajectory of the company? Effectively nothing. The transition to SaaS did not extend Statpro’s addressable market, as the management team had origi-nally hoped, and it does not appear to have given it a meaningful compet-itive advantage with which to drive enhanced growth either. The result has been substantial underperformance of Statpro shares against the broader technology sector.

So, in conclusion, I believe that all software company CEOs should be looking at how they can embed the four key elements of the Next Generation Application into their longer term development roadmaps. How much emphasis they put on each area, and how rapidly they develop will depend on the dynamics of their part of the market. But one thing is for sure, if they wait to see a tangible financial impact of new competitors on their businesses before making a change, it may well be too late.

MEGABUYTE INSIGHT

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Corporate Restlessness: Evolving Businesses and the Perpetual Talent ChallengeAdam Jackson, an Executive Director at Sheffield Haworth, looks into how disruptive technologies have impacted organisational design and the ways in which talent functions can create robust strategies to handle further change.In a professional environment where business models, technologies, attitudes, trends and markets are always shifting, a state of constant corporate evolution has become the norm. As the pace of business increases relent-lessly, there’s a clear need for corporate leadership teams to ensure they have the strategies to remain flexible.

Under such challenging circum-stances, organisations’ abilities to effectively manage and deploy talent is of paramount importance. It is in this context that the talent function is being asked to answer increasingly sophis-ticated questions; questions whose answers will impact upon their organ-isations’ commercial viability and have a far wider impact than was previously the case.

So, what is driving this change in the way business is done, and how can your business and its talent functions respond and cope with such a dramatic increase in demand for agile, flexible solutions? For a talent function to be successful, companies must under-stand the strategic direction of the organisation, the talent plan required to satisfy this strategy and the challenges which may derail execution.

To do this, companies need to find new and agile ways of approaching the talent environment. Most importantly, they need creative strategies to attract, hire, engage, retain and develop their employees in this new and chaotic world. In a business landscape of

perpetual change and unpredictable futures, there’s a pressing need to create an agile talent framework.

Long term strategy vs action now Corporate leaders are becoming aware that a rigid 3 to 4-year strategy time horizon may undermine the organisa-tion’s ability to respond to the need for fast-paced change.

If leaders ignore technological innovation, business will suffer. But, equally, accepting that technological disruption will eventually benefit share-holders, strategies could be placed in to stasis as the corporate future is reima-

gined. It’s therefore clear that having a long-term strategic vision in a period defined by continual and unpredictable change is no longer, appropriate.

However, having a corporate vision which simply states “subject to the winds of change” does not inspire market confidence. So how do business leaders provide investors with certainty, and employees with a strategic vision that, despite being subject to change, is motivating?

The most progressive organisations are answering this question by clearly communicating corporate strategy from the top-down, whilst incentivising employees to innovate and drive change

Adam Jackson, an Executive Director of Sheffield Haworth

“Companies need to find new and agile ways of approaching the talent environment.”

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from the bottom-up as a federated and empowered workforce.

Change from the traditional top-down style of corporate management is dramatic, although its benefits are clear. In a Tesla-wide memo, Elon Musk said, "Instead of a problem getting solved quickly, where a person in one department talks to a person in another department and makes the right thing happen, people are forced to talk to their manager who talks to their manager who talks to the manager in the other department who talks to someone on his team. Then the information has to flow back the other way again. This is incredibly dumb. Any manager who allows this to happen, let alone encourages it, will soon find themselves working at another company."

However, one of the key issues associated with such a bottom-up, corporate model is that coherent

communication from leadership is often lost and the tail begins to wag the dog. So in response to this agile problem-solving approach, the role of “leader” must, therefore, also change from one of “knowing best” to someone who stipulates strategy, clarifies reasoning and mobilises change.

Crucial to this is the trust and empow-erment given to the workforce. This change in corporate attitude from leadership to partnership is fast becoming one of the key character-istics determining an organisation's ability to successfully navigate change. This style of corporate governance not only signals an innovative organisation who can embrace change if appro-priate, it also acts as an effective talent attraction and retention tool.

As Mr Musk states: "Anyone at Tesla can and should email/talk to anyone else according to what they think is the

fastest way to solve a problem for the benefit of the whole company."

For most organisations, this approach to problem solving requires a departure from the operational and cultural norms associated with their business as it necessitates a huge rethink of their organisational design and talent strategy. In an agile and progressive environment, the role of corporate strategist therefore becomes one of:

Setting corporate goals, objectives and associated metrics

Understanding and reviewing the impact of potential change on the focus/strategic direction of the organisation

Shaping future talent strategy accordingly

Talent as a strategic functionThe role of the talent function is no longer limited to a tactical necessity reacting to the demands of the business in a predictable environment. As a firm’s ability to adapt to unexpected market opportunity becomes increas-ingly important, the primary function of talent management and HR teams is to deploy and redeploy internal and external talent where it is of most value.

To understand and realise this “value”, talent functions must be a key part of the business planningprocess.

This transition from HR as a support function to a core strategic necessity is well under way within progressive, talent-orientated organisations. It comes as no surprise then, that effective talent management is now being viewed as one of the key areas where competitive advantage can be gained when industrial shifts take place. Understanding corporate/techno-logical innovation and its impact on talent's supply and demand therefore becomes critical in any successful response to an ever-changing business environment.

Broadly speaking, there are 4 key areas relevant to this discussion that change an organisation’s appetite for talent:

Technological innovation

Simplifying TOM

Push for innovation

The introduction of new products

In a similar fashion, there are 4 key areas impacting the supply of talent to an employer:

Skills shortages in “new” capabilities

Push for diverse and inclusive talent pools

Advent of millennials/increasing trend of entrepreneurism

Ineffective/inappropriate hiring processes

For a talent function to operate effec-tively, there needs to be both an understanding of what the current requirements of the business look like (talent acquisition “now”, onboarding and engagement) and a strategic appreciation and planning of what is to come. This may include diversity initia-tives, workforce planning, future talent engagement and sourcing strategies, attrition and retention methodologies, competitor insight and employee lifetime value and wellness.

Talent functions must also make the strategic decision as to whether they continue recruiting skillsets which satisfy current business require-ments, or if they look for talent with the cognitive dexterity and problem-solving capability required to satisfy the demands of unpredictable future challenges.

ConclusionTalent leaders must prepare their workforces to evolve rapidly in unpre-dictable environments.

Pre-2008, organisations could create talent plans based on a small number of likely scenarios directly extrapolated from their current position. In such an environment, creating mid-term training, hiring and development plans was relatively straightforward.

However, in today’s world, more emphasis must be placed on an organ-isation's ability to effectively adapt its culture and talent to an unpredictable and ever-changing market environment.

“It comes as no surprise then, that effective talent management is now being viewed as one of the key areas where competitive advantage can be gained when industrial shifts take place.”

“This change in corporate attitude from leadership to partnership is fast becoming one of the key characteristics determining an organisation's ability to successfully navigate change.”

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Issue 4 In this issue Growth Ambitions - Sheffield Haworth€¦ · Issue 4 In this issue Welcome to the 34th edition of GS-insight, ... In fact, growth and internationalisation have