When Ice T wrote the lyric “99 problems…” he wasn’t contemplating the elaborate architecture of contemporary IT environments. Nor was Jay Z when he popularized the same line a few years later. If we asked either of those two legendary rappers to rework that famous hook for today’s CIOs, it might sound more like “999 problems” given the scale of complexity and confusion that many face at the end of 2023.
On hearing the announcement that Brian Duffy was leaving SAP after 18 years to join SoftwareOne, I had one question: Software Who? Some people may also have asked, Brian Who? But for those who don’t know, Duffy was formerly the president of cloud at SAP and was instrumental in leading SAP’s own cloud transformation and the RISE program.
Duffy is highly regarded both inside and outside of SAP and his decision to leave the German giant after such a long tenure came as a surprise. Even more surprising was that he had joined a company I had barely heard of.
“SAP taught me so much. But I felt that I could learn more elsewhere,” said Duffy. “The decision was more about joining SoftwareOne than leaving SAP. I wanted a new challenge and to test myself. The opportunity to take on a CEO role where I could really move the needle was attractive and the more I found out about the business the more excited I was.”
A little research reveals that SoftwareOne, based in Switzerland, started life in 1992 as Microware AG. After a series of mergers and acquisitions, most notably when it acquired a US entity called ‘SoftwareONE’ it adopted that name for the parent company.
KKR took a 25 percent stake in 2016 and later floated the business on the Swiss Stock Exchange. Since then, the company has continued to make acquisitions but has occupied a fairly anonymous position in the enterprise tech industry until Duffy joined and Bain Capital launched a hostile takeover bid just six months ago (more on this later).
Its modest revenues of $1bn belies the true scale of the company’s influence. SoftwareOne resells and manages more than $22bn of licenses for Microsoft and provides the backbone to more than 175 million Office 365 users around the world. In addition, it works with a further 7,500 software vendors to ensure that customers have access to a comprehensive array of technology solutions which are delivered by 9,250 employees operating in 90 different countries.
In addition to its impeccable Microsoft credentials, the firm has deep capabilities in application management, data and AI, cloud services and digital workplace solutions. It works with the biggest ERP publishers like SAP and Oracle and partners with hyperscalers including Azure, Google and AWS. It provides an end-to-end advisory service for customers through the full lifecycle of software consumption from benchmarking, negotiation and licensing to selection, procurement and deployment.
The decision to feature our first non-vendor CEO on the cover of ERP Today was inspired by our search for diversification. ERP software and consulting services are fast becoming commoditized products – SoftwareOne told us it had a different story to tell so we packed our bags for Zurich to find out more.
The mess we are in
At first, Duffy’s decision to leave the comfort of the world’s leading ERP brand to join a Swiss outfit that didn’t really do ERP seemed like an odd decision. However, during my three hours with Duffy and his team at SWON headquarters in Zurich, I discovered that the company he had joined may hold the answer to many of the conundrums that are dogging businesses around the world.
The relationship that SoftwareOne has with its customers is not underpinned by the need to sell consulting days for big ERP projects and that assures a level of authenticity that is vital in a very complicated environment.
Cyber threats, cost control, hybrid workforces, licensing agreements, quarterly updates, chatbots, green targets, GenAI, data privacy, application management, talent acquisition and ERP modernization – to name just a few.
It’s time for a reset. It’s time for technology customers to rationalize and optimize what they have before biting off anymore. It’s time to stop buying and start utilizing, then reinvest whatever can be saved in tech that can accelerate change. Legacy used to refer to mainframes and on-premise technology but today, many companies already have a cloud legacy and have spent fortunes searching for the optimal state without fully realizing the benefit from their investments.
“Many thought cloud was the answer to everything but it’s people and processes that define a transformation,” Duffy told me.
In every evolutionary step, there is a period where the final incarnation of the end state is unclear. For twenty years, that end state has been a mirage for many businesses – each new piece of tech promised to deliver nirvana and yet it just added another layer to distract and complicate. After two decades of groping for a solution, I see business leaders exasperated with their choices, frustrated by their returns and fearful that one missed step could be a terminal mistake.
“Many are caught in the middle; fearful of missing out and afraid to make the wrong decision,” said Duffy.
In all but the most extreme of cases, businesses need an ERP system that is stripped back to the bone, consumed through the public cloud and coupled with a platform for independent innovation. This halcyon state is a far cry from the chaos that most enterprise leaders preside over and SoftwareOne is on a mission to help navigate the journey, irrespective of a customer’s starting point.
“Most customers are at different stages: some need help to navigate from one place to another and some are genuinely confused and don’t know where to go,” said Duffy. “They trust SoftwareOne to support them through these critical decisions and to help them make the right choices.”
Today, every business on the planet is a technology company. From butchers to bakers and everything in between, there is only one business model. In the past, the recipe for success was simple: be good at making something and know how to sell it. Today, the list of requirements for a competitive business is long and convoluted – and it all rests on a company’s ability to buy, make, sell, distribute and service through digital channels.
The technology era was meant to make companies more efficient and our lives easier. From where I am standing it has increased costs, confused most business leaders and thrown workers into a maelstrom of digital dissatisfaction.
“There’s genuine confusion out there, and who can blame them,” said Duffy. “We’re seeing more demand from our customers because the landscape is becoming more complicated. Customers need our help to show them the way forward, which steps to take first and how to identify the real opportunities. We can help eliminate costs and strip out underutilized tech so they can reinvest in the technology that is going to accelerate their journey.”
This unique relationship with the customer is one that GSIs are unable to replicate because they are so intrinsically tied to the vendor narrative. Many customer relationships are ultimately owned by the audit partner or through a long-standing relationship with a consulting firm that has supported the business over many years. While these relationships are valuable, they are not without their challenges and customers cannot be assured that the advice they are receiving isn’t tainted by commercial interests.
Mid-market companies are also much more prone to decision paralysis where business leaders do not have the level of support and knowledge to make the correct strategic technology decisions.
The relationship that SoftwareOne has with its customers, many of whom are also customers of the same global consulting firms, is not underpinned by the need to sell consulting days for big ERP projects and that assures a level of authenticity that is vital in a very complicated environment.
“We’re not pitching for the biggest implementations,” said Duffy. “Sure, we can do some of that but our services and advisory business is designed to help customers navigate the end-to-end process and help steer them towards the right decisions. We’re agnostic and we can help you understand which is the best solution, that’s number one. Then we can help you think about how you might implement that solution. We help define the blueprint, we make a plan, we think about how we take this to market and find the right partner.”
This dynamic is unusual and a clear point of difference for SoftwareOne as they are not predisposed to push a particular product or steer the customer towards their own implementation services. You should think of SoftwareOne as an independent strategic advisor to CIOs. An advisor that measures every customer engagement on the outcome rather than the number of consulting days it has sold.
“The partnership we have with our customers is unique because we have very deep relationships with the CIO and the purchasing departments,” said Duffy. “Customers in more than 90 countries rely on us to help them navigate everything from buying software to complex migrations and you don’t get that end-to-end solution from anyone else, not even the GSIs.”
Duffy described his company’s role through a unique analogy that cleverly depicted his vision for the role SoftwareOne can play in supporting customers on their transformation journeys.
“Transformation is hard and customers need protecting at times,” he said. “It’s a bit like the peloton in the Tour de France; the team surrounds the elite riders on the uphill sections to shield them from the wind, to make sure the main rider conserves energy for the end of the race. We are shielding and protecting our customers and when the time is right the peloton opens up and the customer accelerates away.”
The fear factor
It is impossible for two similar companies to compete if they are not on an equal technology footing and this is felt most acutely in the mid-market. A superior technical deployment will outperform the alternative to many orders of magnitude, while market leaders can be plunged into darkness by new competitors with dominant technology.
The mid-market has largely been ignored by GSIs and many have moved ahead with cloud transformations deprived of the appropriate guidance. Still relatively early in their journey, mid-market companies are also much more prone to decision paralysis where business leaders do not have the level of support and knowledge to make the correct strategic technology decisions.
“They are dealing with challenges on all fronts,” said Duffy. “Most come with a legacy and that’s a ball and chain from the start. Then they are dealing with rising costs that they barely have sight of. Add to that the challenges of procurement, data, security and AI – it’s not hard to see why many are failing to get the most out of their investments.”
Aside from these fundamental technology decisions, CIOs know that the consequence of their choices has a direct impact on the company’s ability to win in the digital marketplace, for both customers and talent. Technology is no respecter of history: it matters not that a company or brand has a rich heritage or once-loyal customers. It can turn ardent and dependable buyers into forgotten memories and long-standing employees into disgruntled overheads.
This customer transience is a source of considerable consternation for business leaders who know that loyalty depends solely on their ability to execute in a digital world. Customer retention, employee satisfaction and the threat of new competition has created a fearful landscape for business leaders. They must invest in technology to reimagine their business, remain relevant in the face of new entrants and support employees with the tech they need; no small task at a time when every business is doing the same thing and you’re just a manufacturer that makes things in a foundry.
In a world that changes in days and weeks rather than months and years, there is no time to sit back, reflect and take stock. This relentless pace of change coupled with a crippling fear factor of making the wrong decision or, worse still, making no decision at all, has created one hell of a mess for countless companies around the world.
Duffy told me that the pressures on the C-suite have never been greater and the burden on CIOs is increasing. “To tackle the challenges all at once is impossible,” said Duffy. “CIOs should start with the thing that is keeping them awake at night – and in most cases that’s spiraling costs. You can’t save yourself out of a problem but you can use those savings to invest in technology that’s going to really help you get to where you need to be.”
Duffy the CEO
Duffy is a first-time CEO and his introduction to SoftwareOne could not have been more challenging. Three weeks after taking the helm, an unsolicited takeover bid was launched by Bain Capital. Duffy and the board rejected the offer but it’s impossible to ignore how unsettling this must have been. A revised and improved offer was also dismissed and, since July of this year, there has been no further public update on the status of the approach.
Most compelling of all is the concept of “self-funded” technology investments where a customer can, with the help of SoftwareOne, rationalize its current landscape and divert those savings towards different and more effective tools.
Duffy put a positive spin on the news, saying “Bain is interested for the same reason that I joined – it’s a great company.” Recently, Reuters reported that several further bids had been received as part of the firm’s ‘strategic review of options’, including a bid from Apax Partners. However, it is understood that Bain is now the only interested party and the specter of an aggressive VC lurking in the wings will be an unwelcome distraction from the job at hand.
The job in question has several elements for Duffy to wrestle with, including an internal transformation and a move away from a federated operating model to one that has a coherent North Star. I asked Duffy how he planned to transform SoftwareOne from its legacy of licensing and what experience he brought to help reshape the company.
“There’s some work to do on our internal transformation for sure. When I traveled the world in my first 100 days, I asked as many people as I could ‘What’s the purpose of our company?’ and I got 100 different answers. I’m building that North Star and we’re making great progress but there’s still work to do, as there would be with any transformation in a company that employs 9,500 people.”
Duffy’s source of inspiration for many of the changes required will come from his experiences at SAP. In most cases, he will be able to pattern the scale mentality needed from the structures and processes that were inherent in Walldorf, but he will also use lessons learned about the impact change has on individuals.
“I learned a lot at SAP, especially on the sales side – building pipeline, creating the right governance and building teams to execute against a plan,” Duffy told me. “SAP was brilliant at doing that and I am definitely bringing some of that forward into SoftwareOne. But there was also my experience of going through SAP’s internal transformation and the RISE program which gave me a great insight into how it affects individuals and the need for clear and continuous communication. I’ve been talking to customers about transformations for a long time but when you go through one yourself you get a new perspective on the challenges.”
The internal changes that Duffy needs to make are underway with several new senior hires in place and a revamped brand as a starting point. Cultural change takes time, but steps are already being taken to reinvigorate the teams and align everybody with some common messaging and purpose. There’s also a drive to broaden the scope of the company’s partnerships and Duffy’s status in the industry provides the platform to throw doors open that have previously only been ajar.
“I’m giving our teams the confidence to walk with a bit of swagger – if you just take our partnership with Microsoft – that’s a $22bn account,” Duffy said. “Make a list of their partners and we’re right at the top. Then you think about the millions of Office 365 users out there because we brought that product to their doorstep. Our reach and scale in just this one ecosystem is incredible. So it’s about being proud of that and thinking which other partners can we go deeper with? Where else can we build a similar business?”
I asked Duffy if he felt he had all the skills and experience required to make the kind of changes needed and his answer was refreshingly modest. “I feel like it’s a step up in terms of responsibility and what is expected for sure,” he said. “It’s also a step up in terms of the buck stops with me. That doesn’t overwhelm me – I may not have done everything before but I know what good looks like.”
Duffy’s considerable experience at scaling and building big will be a significant asset but so too will his relative naivety. Not in terms of business acumen or his ability to get the job done, but simply that being a CEO is a new gig and he brings the kind of enthusiasm that can be beaten out of more long-toothed execs. Duffy is a young and energetic leader who is energized by the opportunity and keen to test himself. His history in the upper echelons of SAP has equipped him with an incredible foundation of knowledge, experience and contacts. Couple that with the foundation that already exists within SoftwareOne and you start to think about a company that has the potential to really influence the next phase of global digital deployments.
Customers will place a premium on trust when they come to make these decisions having had some of their hopes dashed by previous technology investments. SoftwareOne’s extensive reach into the office of the CIO and the purchasing departments at 65,000 customers provides a foundation of confidence and dependability that can be the catalyst for a new phase of growth. This growth and demand from customers will in turn pave the way for new and deeper partnerships with the biggest vendors – perhaps leading to business units that can rival the current status of its Microsoft practice.
Most compelling of all is the concept of “self-funded” technology investments where a customer can, with the help of SoftwareOne, rationalize its current landscape and divert those savings towards different and more effective tools. At a time when budgets are under more pressure than ever, while the need to accelerate has never been greater, a partner that can help you get there without increasing the cost burden could be exactly what many thousands of mid-market companies are crying out for.