There’s Gold in ‘Urban Mining’
There’s Gold in ‘Urban Mining’
Supply Chain World
Private equity in the hi-tech aftermarket services industry
I read an article in the New York Times Dealbook section by Stephen Davidoff titled, “For Private Equity, Fewer Deals in Leaner Times.” The article has a lot of interesting information on the changing times in the private equity markets. The author lists the primary forces driving this turbulence.
Too few “good” merger and acquisition opportunities are being seen. “Deals” are greatly overpriced. There are fewer sellers in the market, and the ones that are making themselves available are being snatched up by strategic buyers (those from the industry, and not financial buyers), who can drive offer prices higher, leaving them with little or no margin. But what swung my head around the most was that the private equity industry’s biggest problem is having too much money to invest.
You read that correctly — too much money to invest. To be clear, Davidoff does an excellent job of articulating the state of private equity and the hurdles that are changing that industry. Nevertheless, when I read the phrase “too much money to invest,” it got me thinking about the high-tech aftermarket services industry and how underserved it has been from a private equity standpoint.
Having worked for a private equity-owned high-tech aftermarket services business and now as an adviser to that space, I see plenty of really good platform companies (ones that can be built upon) with strong footholds in service or geographic niches that truly make them unique (read: “valuable”). What they lack are the funds and guidance that a responsible and possibly patient private equity firm can offer. The recent historic activity would make you think it is an active marketplace, but aside from a few high-profile transactions and the most recent Blue Raven deal with Leading Ridge Capital Partners, LLC, the activity is spotty at best.
Not only do these platform companies in the high-tech aftermarket services space make for attractive investments, but it seems to me that the financials in these “niche companies” are there to support private equity interest, as well. These businesses typically have gross margins in the 35-40 percent range and net margins that are really attractive when compared with the overall high-tech space.
Combining or rolling up companies with expertise in adjacent service and/or geographic areas into a “newco” with broader reach and a deeper service offering will surely deliver financial results that private equity would consider better than not investing. That said, I know I am taking some liberties in describing the process and its complexity, but I do so to make a point. The high-tech aftermarket services space is a fractionalized marketplace with accomplished participants, quality customers, and better than traditional financials when compared with the overall industry averages. To this, I say, “Hey, private equity guys, look over here.”
Establishing a Successful BYOD Corporate Strategy Policy
The bring-your-own-device (BYOD) revolution in the workplace has thrown a curve ball to those responsible for safeguarding your company’s data. Your colleagues are now accessing corporate data from their own computer, a tablet, even their mobile phone. Although the corporate finance groups are singing the praises of the trend, due to its inherent reduction in costs, it’s not all rosy in the BYOD world. It’s crucial to format a corporate strategy policy that will be inline with your goals.
Here’s why: With so many of us bringing more and more smart devices inside our office environments and hooking them to our corporate networks, the potential for data leakage grows exponentially. Combine that with the tablet revolution and the mobile/remote employee trends, and it adds up to a potentially dangerous data-leak train wreck. Technology is now mobile.
In a study conducted by the University of Glasgow, 63 percent of used smart devices purchased through eBay, other online marketplaces, and in second-hand stores, still had data on them. This data included personal information as well as sensitive business information. We can only imagine the increase in sensitive data leaks when you include the road-warrior’s best and newest smart device as they trade in for the next best thing.
The problem is there’s no chain of custody in the BYOD world. Think about it. When the corporations owned your cellphone and your PC or laptop, they controlled its issue to you, how you used it, what software you put on it, and when and how it was turned in and destroyed. A solid internal tracking of electronic assets coupled with a solid electronic asset disposal solution provider meant that, for the most part, the corporate crown jewels were safe.
In the BYOD world, the corporation does not own the IT equipment. Personal smart devices are being hooked up to corporate IT environments. This mating of personal and professional equipment and data is happening everywhere. Your corporate data is being commingled with secure and non-secure access points to the Web, cloud, etc. Not to mention the fact that those devices metaphorically walk in and out of your office every day, and you have no control.
Unfortunately, there is no easy answer to this problem. I have seen it addressed via software solutions at the enterprise level (think Blancco or BlackBerry enterprise), at the device level (think solutions like Apple Find My Device, etc.), and at the human resources and legal levels with policies and procedures that prohibit users’ use of corporate information. But the truth is, without a chain of custody model incorporated with these other solutions, once the corporate data is accessed or downloaded, it’s already gone — you just don’t know it yet.
The reality is that it’s going to take some time for the corporate world to catch up with what I like to call the “semi-private information revolution” like the cloud, Facebook, or social media. Secure file sharing, essential for an organization’s BYOD guidelines, is one of your best options. Services are now available to help with cloud encryption and it’s changing the way we share and monitor files. Encrypting data is crucial and minimizes the risk of sharing sensitive data and having it tampered with. And rely on your electronic asset disposal provider to help develop a strategy and process that is aligned with your corporate information sharing guidelines. Right now, your corporate data is only as safe as the process that you create.
Five ways to optimize strategic sales
The role of strategic selling in an organization is one of the toughest and most difficult. It is also one of the most expensive line items in any company’s financials. In my role as a strategic advisor, I get to see a lot of sales teams and their go-to market skills. There are a lot of great strategic sales teams out there, but there’s an equal amount of selling teams that could use some advice.
Here are five ways to optimize your strategic sales teams and, in turn, increase their revenue producing effectiveness.
- Make no mistake, the strategies listed above are not easy to instill in a sales organization. By doing so, your true opportunities will increase, they will have greater value, and your chances of success will increase. No hard work goes unrewarded. Strategic selling is a process. Like any process, discipline and milestones mark the way. Only through uniform use, iteration, and formal improvement will your organization, the sales team, and the salesperson become more effective. I don’t care what the process looks like…yet. Get a process that everyone can track inside your organization and stick to it. No loose cannons or end around players….they devalue the process.
- Your strategic selling process must include the following characteristics:
- Assessing the selling opportunity
- Developing a competitive strategy
- Identifying the key decision makers and their motives/agendas
- An action plan
- Sales plan testing and improvement
- An organization implementation process (it takes a village to raise a child…it takes an aligned organization to sell your solution)
- Create a compelling event inside your target customer. If your sales process relies solely on responding to RFPs, you are not strategically selling….you are responding to opportunities that every qualified organization will see and compete for. The easiest sale is the one that your competitors never knew about in the first place. Creating a sense of urgency and need inside a customer is hard work and takes time, but that’s what makes it valuable to your client and your organization. Knowing your customers’ needs and how your solution fits makes you more valuable than a traditional “RFP responder”. Be there first, be relevant, and be action oriented and your customers will rely on your solutions more often.
- Time is money and both are scarce resources. Make the most of these precious resources and never fall in love with an opportunity unless it meets the following criteria. If it fits, engage fully and engage to win. No half efforts. Ask yourself these questions:
- Is there a true opportunity that has been clearly identified and agreed to within your customer’s organization? Said another way, is there a “compelling event” as mentioned above that everyone involved is aligned around?
- Can you compete to win? Does your solution or unique business differentiator align to produce customer benefit? Can it be aligned?
- Can you win? Are there any commercial obstacles that would stand in the way to your winning? These can be politically driven, relationship driven, or even solution driven.
- Is the opportunity worth winning? Does it have the desired ROI for the investment of selling resources? Does it contain enough profit to engage your organization? Is it too risky a fit (a force fit to your solution) or does the risk and reward balance? Can your customer pay for the service? Have they allocated funds?
- Stay away from “free trials” or “free pilot” engagements. In fact, run from them. If your customer is headed down that path, revisit number 4 above. It could be that they do not completely understand your solution and how it fits, or simply that they have no funds to undertake the engagement. In either case, time is money and it’s time to move on.
Is an Interim Management Strategy Right For Your Company?
As we enter this New Year, we do so with the realization that we still suffer from the economic hang-over left from the 2008 downturn. Long gone are the days of abundant resources. Our current and future economic reality consists of scarce resources and a shrinking opportunity base. Even the best managers are having sleepless nights as they wrestle with how to grow their businesses in the face of such constraints. The good news is that these last five years has taught us to do more with less, stretch our thin resources, and continue to delight customers. So how is this getting done?
Economic uncertainty has challenged companies and management teams with expanding their business and reducing their spending, while still making meaningful progress now and into the future. Whether you are a small, mid-market, or Fortune 500 company, you will recognize the challenge of reconciling your management needs in the face of budget reductions. Doing things the same old way just “won’t do”. You need a way to quickly turbo charge your business without breaking the bank. The question remains – how? Leading companies have used a secret weapon against these challenges for years: interim management services strategy.
Interim Management Questions to Ask Yourself
- In your current or last budget cycle have you been asked to raise your profit targets with flat or reduced expenses?
- Do you have a customer or market segment that is a good fit for your company, but you don’t have the resources or time to explore, define and win that business?
- Do you need management expertise in a specific area, but don’t want to make a full time hire or can’t afford to make one?
- Do you have a window of opportunity to make a meaningful business move but can’t afford the ramp up time or learning curve to make the most of it?
If you answered yes to any of the above questions, an interim management services strategy is a weapon you should think about using too. Think of it as “management as a service”. A model designed to provide specific executive, management, sales or operational expertise when and where you need it, for exactly as long as you need it, at a fraction of the time and cost expense of hiring, assimilating and assigning a full-time professional.
Interim management services allow you to make meaningful progress in your strategic initiatives without incurring a large upfront investment in time, people, or budget. It allows you to easily navigate unique challenges, fill leadership voids during transitions, or obtain expertise on special projects and initiatives. It’s effective and efficient talent, when you need it, for how long your needs exist.
Add an interim management strategy to your strategic arsenal and watch your business grow….you’ll also sleep better at night knowing you are making the most out of this current economic environment.
The Benefits of Utilizing a Strategic Advisor
If you are the CEO of your company, a business unit manager, or an executive tasked with developing your company’s strategic plan, it’s likely that you have learned that from time to time you need to rely on an expert to help tackle the business problems that can “make or break” your year or your career.
Savvy executives understand that not all business challenges can be resolved from inside your organization and are not afraid of the phrase “not invented here”. They rely on external experts or strategic advisors to know their internal business, know the external marketplace, and have the domain expertise to combine this knowledge into strategies that will work for today and the long term.
Why Use a Strategic Advisor?
- If you have ever thought about getting some help from the “outside” but weren’t sure of the value it would create for you and your organization, here are some benefits that should make your decision really easy. Strategic Advisors fill the “holes” in an organization that exist in a particular discipline, experience level, or accumulated knowledge base. As a result, they can speed decision making, time to market, or cost reductions with proven solutions and without the pain of trial and error.
- Strategic Advisors offer a viewpoint based on facts and real experiences; not on politics or prejudice. The advice they can offer is “agenda free”. Yes, the truth sometimes hurts, but savvy leaders know that the intellectual honesty that a strategic advisor brings drives innovation and growth.
- Strategic Advisors know when to stretch the targets. Whether cost reduction, sales growth or both. They have the experience to know when to step on the gas and when to apply the brakes…without driving you off the road. Their external expertise can put you and your team in a position to be successful for the short and long term.
- Strategic Advisors are always “up to speed”. They have a niche, know it well, and spend time and resources keeping abreast of the trends and the companies driving those trends. This “multiplier-effect” cannot be duplicated internally without a significant addition to headcount and expense.
- Strategic Advisors are extremely cost effective. They allow you to buy the highest level of experience, personal network and know-how, applied to your toughest challenges, for just the right amount of time.
Combining the best from inside your organization with the brightest from the outside is a winning formula. Smart business leaders solve this equation time and time again and reap the benefits listed above.
Interested in using a strategic advisor? For more information contact Fronetics here.