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Analysis / Enterprise

Automation: Injecting Value Into Your Software Business


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.

By implementing automation software, businesses can increase productivity and save costs. Take remote working management, for example. Deploying AI across a workflow platform, means a business can examine multiple activities and data sources across an organisation to ensure staff are at the correct location, at the required time, and with the appropriate tools and information to do the job.

Workers interacting with the platform will be able to 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. This also reduces the need for administrative staff to oversee employee activity.

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, this is often easier said than done.

In recent years, many B2B software vendors have jumped ahead and introduced 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.   Implementing new automated features requires the vendor to communicate with their users and offer guidance, or else alterations threaten to overwhelm and wrong-foot clients and jeopardise that customer relationship.

Areas where customers typically 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.

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.

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Martin is part of Lyceum Capital’s investment team sourcing, structuring and executing both platform and portfolio add-on acquisitions. Since joining the firm in January 2009, Martin has worked on more than 20 software & technology platform and add-on investments. He currently sits on the board of Totalmobile. Martin has a MA in Law from Cambridge and is a qualified solicitor with over 15 years of deal experience.