Martin Wygas, partner at Lyceum Capital, explains how including automation in your product stack can boost the value of your software company.
Business functions are ripe to benefit from accelerating developments in automation. Across sectors businesses are investigating or trialling automation in customer service systems, human resources processes such as prioritising job candidates or in financial services, where insurance companies use automation to triage claims and automatically calculate the cost of damage repairs. Even services typically viewed as bespoke to the customer, such as legal advice, can adopt automation if the underlying data set is sufficiently large.
Businesses in the B2B software market stand at the vanguard of this change where the rewards can be huge. But there is also risk. Turning a blind eye to the revolution in the provision of business services means your software business could face obsolescence, or at the very least marginalisation, as the market moves on.
Lyceum Capital is an established investor in software businesses. Our portfolio company Totalmobile is an example of a company that has successfully integrated automation into its software solution, which co-ordinates the workflow of mobile workers across sectors such as health and social care, utilities, local and central government, construction and facilities management. At its heart sits an AI enabled dynamic solution called Optimise, that examines multiple activities and data sources across an organisation to ensure the right staff are at the correct location, at the required time with the appropriate tools and information to do the job. Workers can complete forms, take photos, capture signatures and access supporting information, allowing them to make informed decisions in real time and provide the highest level of customer service possible. Critically, the automated intelligent software responds to changes in circumstances, including priorities and traffic, and removes the need for clients to hire administrative staff to manage schedules.
With the right commercial model, partnerships or M&A, the introduction of market-leading automation to the product stack is within the reach of all well capitalised software vendors. However, we know that is easier said than done.
We have seen many B2B software vendors jump ahead and introduce an automated service to a product with little thought about how changes will be received by their customers, and critically, their customers’ end-customers. For example, a retailer would send e-mail alerts following a recent purchase of removal boxes, promoting similar products, even long after the move happened. In our experience, implementing new automated features requires the vendor to communicate with their users and offer guidance, or else alterations threaten to overwhelm and wrongfoot clients and jeopardise that customer relationship.
Areas where we have found customers respond to vendor assistance with automation include determining the types and quality of data sets they require; the processes they apply it to; what functional specialism each end-user needs; how best to commercialise the new capabilities; and, most importantly, how the benefits of automation can be communicated through the customer chain. This input is essential to ensure any new product feature is successful, and ultimately profitable.
As an investor in companies where we see dynamic growth potential, Lyceum shares the goals of ambitious entrepreneurs to boost revenues and gain scale. For owners of B2B software vendors, we see the inclusion of automation in your platform as an increasingly critical driver of both.
Some management teams take a short-term view regarding investing in automation, held back by concerns about the immediate impact on the P&L and day-to-day operations, rather than recognise the potential for long-term growth and the possibility of increasing the value of the business. However, with the appropriate capital structure, right levels of investment and an experienced partner, B2B software businesses are able to position themselves ahead of the pack.
Incorporating automation into a business’ commercial strategy promises a return on investment and is key to creating value for both the business and its customers. In 10 years’ time, a business without it will struggle to remain competitive.