Andy Strickland Looks Into Two of the Biggest Factors Shaping the Tech Market in 2023
Andy Strickland, Partner and Tech lead at Palatine looks at Customer Experience (CX) and Cyber Security – two of the biggest factors shaping the market in 2023.
Tech services is a fast-paced and ever-changing sector. It is a market, constantly being disrupted by innovation or impacted by external factors.
These can range from the introduction of new ‘game changing’ applications such as ChatGpt – the revolutionary AI (Artificial Intelligence) tool impacting the CX market, or Managed Detection and Response (MDR) services for cyber, or even major societal changes such as the pandemic, which brought dramatic change, at fast pace, to how we live and work.
To stay ahead of the curve, maximise growth opportunities and provide customers with business-critical systems, service providers have no option but to continually invest in additional capability to future-proof their offer.
Palatine has extensive experience and understanding of the sector. As an investor our role is to partner with the management teams to help them grow by spotting strategic opportunities for bolt-on acquisitions, forming a clear plan, and then executing it.
We have a strong track record in buy and build in the sector. With managed services provider Acora, which we successfully exited in 2022, we delivered five acquisitions in a three-year investment period, and have also supported acquisitions for current portfolio companies FourNet and CyberFort.
As well as providing M&A support, we assist management with organic growth initiatives such as a significant investment in people and technical skills to build new products and services.
In terms of our tech sector priorities for 2023, we are keen to explore new opportunities within the tech services vertical and see customer experience and cybersecurity as key growth opportunities both organically and via acquisition.
FourNet has completed one acquisition to date and has a pipeline of acquisition opportunities that will be progressed in the next 18 months . It has also invested significantly in customer experience with the key hire of Oliver Bareham from Capita in July 2022, who is now leading a consultancy offering for FourNet – which is helping their clients meet customer expectations, and at the same time control costs by deploying the right technology solution.
CX Expert view
Oliver Bareham says:” We see our investment in CX as a means of differentiating FourNet from its competitors and developing deeper, more value-added relationships with our clients. By having much more than a transactional relationship we can help them find the right solutions, whether that is around technology, their people, or processes.
“It’s taken nearly a decade for customer experience to be taken seriously, moving from it being a ‘nice to have’ to being the first line on the tender document. It feels like we are now in a golden moment in time where it’s understood that if businesses treat their customers well by deploying the right technology, they will see less churn and see more sustainable profitability. In short, businesses have now decided that customer experience is important, and they need to be investing and transforming.”
He believes CX is much more than a passing trend.
“I don’t see customer experience as a trend, it’s more of a behaviour. I don’t see it going away from the corporate agenda. We are seeing that CX directors are now sitting on company boards – and are not just part of marketing where they historically sat. Customer experience is being taken extremely seriously by shareholders, investors, and organisations. That’s not the sign of a trend, it’s the sign of change.
“COVID was a massive driver of this, businesses had to make changes and they had to do it fast, they are now reflecting on the changes they made, in some instances very quickly. They invested in technology because they felt they had to, they invested in people because they felt they had to, and they are now looking at whether this was right, and whether they are maximising these investments.
“It’s only becoming more expensive for companies to operate, so we are helping them to use technology to reduce costs, without impacting the services they are delivering to their customers. This opportunity is significant and is not going change anytime soon.”
Cybersecurity is in these troubled times of heightened geo-political tension rarely out of the headlines, be it household names like WH Smith or Royal Mail coming under attack from hackers, or news of spy balloons being deployed and destroyed.
Cyberfort is a business where we backed experienced sector leader Andy Hague to build a new ‘best of breed’ cyber security company.
While we made two acquisitions early in the investment, the recent focus has been on organic growth as the company, which is based in a former Ministry of Defence command bunker, has focused on building new products internally.
Cyber – Expert View
Andy Hague, CEO at Cyberfort says: “For our industry 2018 was a watershed moment. The introduction of GDPR legislation meant that any organisation holding customer data and suffering a breach had 72 hours to contact them and notify the ICO (The Information Commissioners’ Office). From this point cyber security became mainstream, a standing agenda point at every board meeting. Our industry matured overnight.
“Over the last five years we have continued to invest in our people and services as cyber threats become ever more sophisticated – state-sponsored hacking of commercial IP is increasingly prevalent.
“At best we are only ever about level with the ‘dark side’, which has almost unlimited resources.
“Responding to the needs of our customers – which range from Government departments to mid-size corporates – we have invested in developing a unique set of cybersecurity products and services including a 24-hour Security Operations from where we deliver an internally developed MDR service to monitor and safeguard a clients tech estate”
“Our investment ramped up after the pandemic – which, as the country switched to virtual working almost overnight , introduced risk into the corporate estate at the fastest rate ever.”
This strategy is paying off. Cyberfort is on track to have doubled revenues from £13m in 2019 to £26m this year.
If you would like to discuss how we can help you scale your tech services company or would like to discuss an opportunity to work with FourNet or CyberFort, please contact us here: TechHub@palatinepe.com