Solving The Value Equation

300 sessions, 300 brands at the Microsoft Envision Conference April 4-6 in New Orleans

Microsoft Envision 2016 Conference Recap 

About the Conference "Designed for CxOs and their senior department and functional leaders, Microsoft Envision provides an opportunity for attendees to hear from some of the most forward-thinking minds in business and technology, with each day featuring prominent industry visionaries and business experts who will share the latest ideas, trends and innovations. Participants can explore the latest solutions, and discover the strategies that will help them, their teams, and their business achieve more," the company said.

The inaugural Envision event will take place on April 4-6 in New Orleans, La., replacing Convergence 2016, which had originally been planned for April 4-7. The old Convergence 2016 Web site now directs readers to the Envision 2016 site. Microsoft CEO Satya Nadella will deliver the opening Envision keynote.

Unlike Convergence, which was known for being Microsoft's stage to announce its Dynamics roadmaps and discuss new product features, Envision appears to be more focused on broader business topics. According to the Web site, Envision sessions will fall into three areas:

• Business trends and themes -- including Internet of Things (IoT), big data and analytics, cybersecurity, productivity, mobility, and more.
• Industry trends -- including Manufacturing, Retail, Financial Services, Public Sector, Consumer Packaged Goods, Hospitality and Travel, Professional Services, and more.
• Leadership growth in key business roles -- including sales, operations, IT, marketing, finance, customer service, and more.

Microsoft's major North America conference schedule for 2016 now stands as follows:

• Build: March 30-April 1
• Envision: April 4-6
• Worldwide Partner Conference: July 10-14
• Ignite: Sept. 26-30

 

Links & Sources:

https://rcpmag.com/articles/2016/01/13/microsoft-axes-convergence-for-envision.aspx

2016 Microsoft Conference Calendar

https://rcpmag.com/articles/2016/01/05/2016-microsoft-conference-calendar.aspx

Cloud MSP Market Update 2013 from #WPC

During this week's Microsoft Worldwide Partner Conference, #WPC #WPC13 there was plenty of buzz about the growing market demand for cloud managed services. One of the most amazing stats shared during the presentations was that the spending for cloud services is equal to or greater than the spend for hardware and software. i.e. For every dollar spent on hardware and software there will be a dollar spent on services.

#WPC News & Highlights: 

• One in four of Microsoft’s enterprise customers has Office 365, and with an annual revenue run rate of >$1 billion Office 365 is on track to be one of the fastest growing businesses in Microsoft history.

• Microsoft has seen over 40% growth in enterprise cloud businesses. Windows Azure alone is outgrowing the overall cloud market by >150 points.

• Nearly 50 percent of employees indicated that using enterprise social tools has increased their productivity, and many employees stated they would pay for these technologies out of their own pockets!

• 89 percent of Microsoft's existing business customers are still not yet using any products in the Microsoft cloud (meaning primarily Office 365, Windows Azure, Windows Intune and Windows CRM). While about 30,000 of Microsoft's "managed"/largest customers across all geographies are currently annuity/subscription clients, the remaining 40,000 or so have no annuity relationship with Microsoft today, officials said.  LSP revenues grew in the double digits last year. Along with Microsoft's own salesforce, partners helped sell 11,000 new Enterprise Agreement volume-license deals last year, along with 8,400 volume renewals, officials told the LARs/LSPs today. http://www.zdnet.com/microsofts-top-eight-business-priorities-for-fiscal-2014-7000017844/

• CEO Steve Ballmer: "Cloud is the future of innovation. It’s the biggest growth opportunity for channel partners." Partners selling cloud-based solutions benefit from higher gross profit, at 1.6x percent; 2.4x new customers; 1.3x more revenue per employee; and 2.4x faster overall business growth.  Cloud OS Accelerate: Microsoft, with key partners Cisco, Dell, Hitachi Data Systems, HP and NetApp, will invest more than $100 million to accelerate the delivery of new privateand hybrid cloud solutions to customers. Effective Oct. 1, Microsoft will offer partners a 30% discount on Windows Intune. Microsoft cloud partner program changes looming

• Cloud MSP services is on pace to be 220B in 2014 and >500B by 2020 (Gartner).

  Worldwide business spending on cloud, which will reach $98 billion by 2016, according to a  new IDC study (44% in the USA). 82% of net new commercial apps will be developed specifically for the cloud in 2013. IDC Study: Successful Cloud Partners
  

Related links:

Video recaps from #WPC 2013.

Microsoft Partner Awards List.

Cloud Optimize Your Business from #MMS20 13 Microsoft Management Solutions Conference

Cloud MSP Service Provider Market Landscape

Breaking Silos to Improve Performance : The Social Management of Work

People are inherently social. The trouble is, organizations typically do not harness this natural inclination well. Rather, they create barriers that hinder how employees engage with one another, and limit agility in how they collaborate
and make decisions.

They do this by forming complex hierarchies and reporting structures, excessively layering new processes and controls without reviewing or removing existing ones, as well as creating functional silos with defined yet competing interests.
In an effort to control and converge the way people work, organizations have hindered their productivity and increased bureaucracy—so much so that traditional management think is no longer working. Employees and employers alike are looking for a new way of interacting that’s more productive, more efficient and more responsive to what’s happening here and now—not what was happening when all these processes and hierarchies were created.

By redefining how we manage, and by striving to better reflect how people want to work in an information-based knowledge economy, we can improve communication and collaboration, and eliminate waste. This is what social management at work is all about and we’re already doing it ourselves.

Read the full paper here:

The Social Management of Work whitepaper

The silos present in many traditional business structures have the effect of limiting access to critical communication—not only vertically but also horizontally.

While some hierarchy is necessary—the buck has to stop somewhere—social management ignores the idea that “cascades” must only occur within silos. Instead, it embraces a more transparent and flattened business structure, facilitated by perpetual (rather than linear) processes, and by social technology.

It’s new technology and a new mindset.

Businesses willing to implement social technology and to adopt the mindset necessary to support its complete adoption have seen the greatest gains. Those that implemented social technology in one vertical only, or for just one process, have seen fluctuating gains and inconsistencies.

 

Perpetual management processes, aided by social technology, allow organizations and managers to augment event management with process management. In an organization that follows an event management approach, the goal is
business as usual, and only the exceptions are exceptional. However, in an organization driven by a perpetual management approach, the goal is continuous
improvement on every front. When social technology is integrated into this approach, the gains can increase productivity up to 25 percent. However, the danger of social technology is similar to any other technology— companies that see the tool as the solution will stumble. It is critical that
innovation and advancement occur simultaneously.

Organizations that are interested in seeing the benefits must be bold enough to bring both the social technology and the management tools to their employees in parallel.

The way we work is changing, and businesses must be ready to tailor social technology to their own needs; integrate that technology into their business processes; and manage the people, the technology and outcomes effectively.
Instead of holding fast to linear, control-driven ways of working and managing, organizations must find ways to integrate social technologies across all areas of their business. They are now being challenged to manage differently, and in
a way that better reflects how people want to work in an information-based, knowledge economy.

Ultimately, social management—and the technology that facilitates it—is about improving communication and collaboration and eliminating waste. It’s about
finding ways to make better business decisions, to engage employees in the strategic intent of the organization and to improve performance.

Social management has worked for us and for many of our clients. If you’d like to know more, please get in touch. @ephorG

YTD 2013 M&A Transactions Recap

YTD 2013 M&A Forecast & Landscape:

We anticipate M&A activity to be quite robust over the next 9 to 18 months as SaaS technology expands and as service providers consolidate to become solution providers.

 

Mergers and acquisitions in the B2B software, information technology and BPO services continued at a fast clip in Q1 2013 (# of 2012 deals rose over 2011 levels).

• Strategic acquirers have been focusing on complementary acquisitions, with the majority of transactions less than $100M and seeking complimentary assets/capabilities and also distressed or stagnant businesses without access to capital (stuck in the growth capital liquidity trap).

For companies with less than $10 million in EBITDA there is a shortage of financial acquirers as private equity firms have focused predominantly on companies with $10 million in EBITDA or more.

The Bottom line: The race is on for both IP and market share dominance as BPOs and solution providers as well as enterprise software vendors look to fill gaps in their product and service strategies.

 

Related articles:

2013 Marketing services M&A Valuations, Multiple Outlook

How Cloud Computing Is Redefining the M&A Landscape

PWC 2013 US technology M&A insights

Useful Capital Strategies for Growth in 2013: Preserving Equity for Entrepreneurs

While growth capital is readily available for large scale profitable enterprises and venture capital is focused on a narrow segment of industry sectors (life and bio sciences, high tech and software, and energy); useful capital sources for asset light service businesses are bridging the gap for companies looking to jump the chasm from a small and medium sized business with limited financing options to a market leader. And jumping the chasm creates the opportunity for wealth creation for founder’s not readily available via other financing instruments.

Useful Capital Funding
An alternative to venture capital funding is useful capital financing that preserves the founder’s equity and has flexible payment terms controlled by the entrepreneur.

Historically, startups have raised seed funding from friends and family money and/or angel capital to create an initial product or service in the market to validate the initial idea.

Annually there are approximately half a million businesses created in the USA, and only 600 to 800 companies receive venture capital funding as it requires a significantly large market opportunity. For startups driven by innovative founders venture capital can be the perfect marriage of funding coupled with ongoing management support necessary to transform the company into a market leader. But for most entrepreneurs venture capital (VC) is simply not available as the company focus is too narrow and/or the industry is not sexy.

Growth Capital Funding by Industry via NVCA 2013 Yearbook PDF Report:

Growth Capital Funding by Industry Sector via NVCA 2013 Yearbook PDF Report:

Once a company is beyond its rapid growth stage multiple types of private equity capital are available to profitable enterprises with significant EBITDA in the form of mezzanine and growth capital instruments in order to recapitalize the business. A recap is most often used for the purposes of succession planning and/or to pursue expansion.

For asset light businesses venture capital is simply not available. Entrepreneur friendly capital is more inclined to invest in low-tech industries, multi-location service companies, and franchises than venture capital.

Did you know that the top quartile performing VC’s over the last decade returned their investors on average less than a 10% return ?

VC’s swing for homeruns, but only average 10 to 24% percent investment returns. Investment risk and coupled with the legal responsibility to maximize returns to their shareholders and not the invested company shareholders capitates funding flexibility for entrepreneurs. At the end of the day VC’s are fiducially responsible to their investors and not to their companies.

Creating Wealth Through Growth

Did you know that from 1995 – 2009, privately funded capital backed companies grew sales by 133%, while the United States grew sales by 28% and grew jobs by 82%, while all other companies in the U.S. economy grew jobs by 12%?

Looking to grow and create liquidity?

There are better options for asset light service businesses. Most business owners have heard all about venture capital funds as a source of funding for startups and early-stage companies. But what about profitable companies who want to preserve their equity— where can they go for their millions?

 

Jumping the Chasm from a Subscale Company to a Scaled Enterprise

Jumping the chasm from a “sub scale business” to what financial investors and strategic buyers consider a “scaled enterprise” is really difficult.

 

Did you know that less than 1% of new businesses achieve $10 million in annual revenues in their first ten years?

Of these, six out of every ten fail to “jump the chasm from subscale or scale”. For any businesses, growing beyond subscale requires a smart plan for growth.

 

Related downloads from Ephor Group:

Useful Capital Funding Growth Options

Attracting Capital Investment and Institutional Funding

The Founder’s Dilemma and Overcoming Barriers to Growth

 

Technorati Tags: Useful Capital,Entreprenuer Friendly Capital,Growth Capital,Capital Funding

What Does SMB Really Mean?

"What it means depends on whom you ask. There are simply so many more SMB companies there! Millions of them.

The key has always been hands-free selling. ADP and a few others have figured out how to make money sending salespeople to talk to small companies, but few others have. The secret to success is keeping customer acquisition cost low, which for other vendors has largely meant “freemium” offers via email of 30-day free trials, self-provisioning for SaaS products and self-implementation with a little telephone support." Read more from Bill Kutik at HRE Online:

 

Based on data from census.gov there are a lot of small businesses!

# of Business by Firm Size Class by Year:

For many companies that have historically focused on selling to only large enterprises, the advancement of technology solutions and business processes has expanded the market opportunity to include medium sized mid-market businesses. These companies represent a significantly large market opportunity. 

Small Business Annual Budget Spending Estimates:

Related: Selling Small Business in 2013 Effectively, Selling SMB Buyers eBook, Bill Kutik

2012 M&A Transactions Recap

We anticipate M&A activity to be quite robust during 2013.  Mergers and acquisitions in the software, information technology and BPO ... read more @ 2013 M&A Forecast & Landscape - The Value Equation -

2012 M&A Transactions Recap:

The Value Equation : CRM BPO Services 2012 YTD MA Transactions. Dec 2012 ... CRM BPO Services 2012 YTD M&A Transactions.

The Value Equation : 2012 YTD HR software MA transactions

Nov 2012 ... HR Software M&A Transactions 2012 YTD Recap The marketplace for workforce management software and related HCM (human capital services...

 

M&A eResources:

Baird M&A Market Analysis

Mergers & Acquisitions Trends (Tables) – CapTarget

EY Global Technology M&A Update

Grant Thornton M&A Update

Human Capital Services Report - Winter 2013

HydePark Capital

KPMG’s Sourcing Advisor Pulse

KPMG Merger Deal Stats by Region

M&A Industry Updates from Generation Equity Advisors

Merrill Corp. - M&A Insider (May 2012)

PE Breakdown - Q2 2012 (Merrill Corp.)
Peachtree Capital Advisors Blog

PEG M&A Updates

Software Equity Group SaaS M&A Transactions

Strategic M&A Analysis | M&A Sector Insights by Industry

StreetInsider M&A News

Thompson Reuters Global M&A Report - Q2 2012

Top Tech M&A Deals in 2012

VC Backed Investments and Exits - National Venture Capital Association

Venture Deal Alert Blog

Venture One Million Blog

Useful Growth Capital M&A Corporate Development

Are you seeking sales?

If you are in Houston on May 17th, join us for the upcoming TeXchange event with special focus on sales and marketing revenue growth tactics that are working in this slow growth economy.
(to attend email us and we’ll add you to the guest list)

Panelists will include:

• Mr. Colby Thames, a greater Houston native, whom has led and advised multiple software and service companies as is now the founder and managing partner Stryve Advisors. 
• Mr. Rich Barfield, clinical lab scientist by training, who works with healthcare and medical technology companies, national laboratories as well as hospitals across the nation.
• Mr. Austin Goings, Sales Director Upstream Group at GE Smart Signal with 20+ years of solution-based, enterprise software sales in both large established companies as well as smaller, start-up organizations.

Read more about TeXchange here.

 

At Ephor Group, we partner with our clients to accelerate growth and achieve best-in-class performance that results in better wealth creation for the founders and employees. 

There are many ways to grow, but which will ensure the business increases its profitability, sustainability, and value?

If you cannot attend TeXchange, then checkout our Video Series on Revenue Strategies for Growth in 2012.

1. More efficient cost of customer acquisition than the competition.  Alternative Distribution including Alliance Partners, Joint Ventures, Channel Strategies, inside sales, and ecommerce.
2. Boost lead generation via Internet Marketing, Inbound Marketing, and Online Advertising and boost demand generation via market research and brand building campaigns.
3. Migration Expansion via distribution channel, geographic expansion, product expansion, or vertical segment expansion.
4. Useful capital strategies for growth capital expansion.
5. M&A Corporate Development.

For more information on TeXchange or revenue growth strategies contact Charles Bedard

Management Science Reporting: The Ultimate Business Analytics

Management Science Reporting bridges the gap between disparate systems and processes to connect data to actionable intelligence via automated dashboards, scorecards, and reporting via the cloud, web, or SaaS.

“Information is a competitive advantage in the Internet era.” – Tim O’Reilly

Information and databases that get richer as more people use them is a building block of management science reporting which is fundamental to connecting operating performance to financial performance via business analytics and intelligence.

“The process of laying out the right combination of meaningful numbers or business metrics …. requires an understanding of the business, knowledge of the application(s) which contain the numbers, a mastery of various number crunching and presentation mechanisms, and the acumen for creating something that people will not only use without impunity, but take action from.” via Chuck Vigeant from In Chuck’s Business Performance and Technology Corner

 

Read more here about reporting, metrics, and business analytics:

The Ultimate Tool for Business Analytics.

The benefits of synching CRM and Financial Management.

Video Case Studies

 

The Future of Management Science resources:

The future of business analytics and intelligence video

The future of business intelligence infographic

Cloud Financial Management

Maturity Model for Cloud Business Decision Matrix

Revenue Multiple Valuations: Company Valuation Resources for Solving the Value Equation.

Solving the Value Equation for B2B Technology, SaaS, Software, and Outsourcing Providers.

The primary valuation drivers for emerging fast growth B2B technology, SaaS, and outsourcing providers primarily include: a SWOT of the recurring revenues, operational & service delivery model KPIs (key performance indicators), and the assets and liabilities of the company. 

B2B BPO Outsourcing Market Landscape and Valuations:

The outsourcing industry sectors are highly fragmented across regions and industries, rich in opportunities for consolidation and therefore attracting both private equity investment and increasingly active corporate and strategic buyers. Transaction multiples are currently pegged around 4-8X times EBITDA (pretax profit) and 2-5X times revenue multiple for deals greater than $20 million for technology based firms and 1X to 4X revenues for smaller, growth oriented labor intensive firms (based on Ephor Group deal sources for private company transactions and public sources for public company transactions).

BPO Outsourcing Valuation Comparables:

 

SaaS Valuations by Industry Sector:

By 2014, $1 of every $5 that will be spent on software will be spent on cloud or SaaS solutions. 

 

Maximizing valuation and wealth creation “Yellow Brick Roadmap”:

2011 and 2012 saw a spike in revenue multiple valuations for SaaS and cloud software companies. In the future B2B technology, SaaS, and outsourcing companies that are growing aggressively with low customer acquisition costs and high retention rates with realize the highest revenue valuations.

 

Looking to increase your valuation? i.e. increase the value of your technology, SaaS, or outsourcing company?

For more information contact charles bedard at ephor [at] ephorgroup.com