The Integration Economy

Over the last decade, private equity has flowed into technology funds at an alarming rate.  The process continues in a world of COVID as technology companies seem to be faring better than other industries.  According to a WSJ article on July 6th, tech-focused private equity attracted $30.1 billion through July 6th, the 3rd highest amount raised for that period.  In an article published by the Bocconi Students Private Equity Club (BSPE Club), fundraising in 2019 totaled $894 billion in private capital, all in search of a return.  According to this article, PE firms arrived in 2020 armed with a record level of cash with almost $1.5 trillion in unspent capital.  Despite the lofty valuations in the technology sector, money is still flowing into tech in record amounts with a focus on cloud and mobile solutions.

What does all of this mean?

It would appear that too much money is chasing too few ideas.  Hmm.  I saw that movie in 2000. In fact, there is some argument that productivity in U.S. corporate is decreasing.  While this study was published in 2016, “The U.S. State of Enterprise Work” outlines that workers spent 7% less time on their primary work function than the previous year.  Despite the rise of tools like Ryver and Slack, time spent on email increased from 12% to 16%. Finally, 92% of workers say they are productive and it’s their co-workers who are not!  This statistic is impossible but interesting.

My summary of all of this information is that islands of technology are proliferating throughout the corporate enterprise and we are getting inundated with new tools at an increasing rate.  Now, with COVID, the home is now part of the enterprise, and so it continues.  These islands are proliferating for many reasons. 

  1. The first reason is that they are affordable and can be easily paid for by an individual or a department. 
  2. The second reason is that the tools today are much more intuitive and user friendly as companies spend a lot of time, effort and money making them usable on mobile devices. 
  3. The third reason is that in order to raise capital, a start-up needs a very narrow focus like time entry (Harvest), collaboration (Slack), or communication (Zoom).

In his book “Inside the Tornado,” entrepreneur Geoffrey Moore, espouses high tech companies attack niches that are not dominated by any other player.  The rule of thumb is to dominate functions and niches that are very narrowly defined.  By definition, these become islands of technology and the price of entry is low.

No wonder enterprise productivity is declining.  We may be optimizing the productivity of a task or a set of tasks, but we are sub-optimizing the enterprise.  While this debate is raging, islands of data are building.  Data in different formats, different databases, different places. Then, what happens is an executive asks a question and everyone brings their version of the analysis on their laptop running Excel.  Multiple sources of truth.  Hmmm.  I’ve seen that movie before.  Everyone shows up with their own data telling the story that justifies their point of view.  Some of that data is critical to get from the sales system to the billing system.  Manual rekeying of data.  Hmmm.  I’ve seen that movie too!  Errors galore!

The Present Day Integration Challenge

Today’s enterprise challenge is integration. The enterprise has become fragmented with shadow IT everywhere, data everywhere, truth everywhere.  We need to take a step back and figure out how we integrate between these point solutions so that companies’ information flow and decision-making capabilities are optimized across the enterprise, not just the department.

This is why Salesforce (NYSE: CRM) purchased Mulesoft in May of 2018.  Mulesoft’s Anypoint Platform comes equipped with out of the box connectors and APIs to address this challenge at the enterprise level.  Companies like Coca-Cola, Barclays and Unilever use this integration architecture to deliver “differentiated customer experiences and increased operational efficiency. “In the words of Marc Benioff, Chairman and CEO of Salesforce, “every company is undergoing a digital transformation and integration has never been more strategic.”  They must have thought so because they paid $6.5 billion for the acquisition and today, Mulesoft is contributing greatly to the Salesforce growth. The challenge with Mulesoft is it is targeted at the Fortune 250 and it is expensive.  Everyone seems to be getting in the game from Dell Boomi to Jitterbit and Oracle.

Cyber Group’s Integration Solution

At Cyber Group, we believe this is such an important problem to solve that we are partnering with Salesforce through their Heroku platform to build a middle-market solution called Ignite.  This way, when salespeople from Salesforce go to market, they don’t have to sell one of their competitors’ products to solve the integration challenge for their middle market clients.  Creating out of the box connectors that integrate with Salesforce and other leading APIs will be critical to solving the enterprise data problem.

Optimizing data flow between critical systems and between production and ecommerce solutions are the problems to solve in the coming years.  If retailers are going to pivot more directly to online, then they must integrate store systems, supply chains and eCommerce systems.  If wholesalers and manufacturers are going to go direct to their customer, they need to change the way they market and package their products so their marketing, eCommerce and social media channels connect to their customer data.  We cannot have islands of technology anymore if we want to be nimble businesses.  My prediction is that a flexible integration architecture will be critical to survival over the next 12 months as companies figure out how to change in the world of COVID, changing behaviors and recession.  Having accurate enterprise data from disparate systems will enable executives to make better and more timely decisions based on a single source of truth.  The economy will be created through and by enterprise integration. 

Hence, the integration economy is here to stay!

Written by John Humphrey, EVP & CRO

John is a serial entrepreneur with experience in starting businesses ranging from restaurants to consulting and software. 

In 2012, he created a client acquisition strategy for services companies called Connect for Life. This methodology, supported by a soon to be published book of the same name and software, assists technical individuals in building their personal brands in the market. In 2003, John co-founded Pariveda Solutions Inc, a technology-consulting firm. In just 9 years, the company grew to close to 300 consultants without leveraging a direct sales force. Leveraging his Networking for Life methodology, the company taught all employees to network and sell, creating exceptional value. He sold his interest and left Pariveda Solutions in 2012 and is implementing the same methodology at Cyber Group.

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