Lane Erickson - stock.adobe.com
Software AG’s leadership team has affirmed progress on a growth strategy named Helix, which was launched in 2019.
CEO Sanjay Brahmawar told a press briefing before the firm’s Capital Markets Day in Darmstadt, Germany, that in 2019, “we had great people, customer base and technology, but we lacked a growth mindset and a growth platform to match it – as a result, we hadn’t grown for 10 years”.
Germany-headquartered Software AG’s 2021 revenue was €833.8m, in 2020 it was €834.8m, and its declared ambition is to hit €1bn by 2023.
In December 2021, the supplier accepted €344m in funding from US private equity firm Silver Lake. The deal saw Christian Lucas, managing director at Silver Lake and co-head of the firm’s activities in Europe, and Jim Whitehurst, former CEO of Red Hat, joining Software AG’s supervisory board.
In the press briefing, Brahmawar, who joined the company in 2018, said: “To get the maximum benefit of this partnership, we will focus on our go-to-market in North America and M&A.
“Our North American market is about 50% of our total addressable market, and about 37% of our revenue is from there. One of the things that has held us back in the past is not enough visibility. Here in Germany and Europe, people know Software AG and our capabilities. In North America we are building that, and the partnership with Silver Lake helps us become known a bit more widely.”
The business process improvement tools supplier’s strategy, dubbed Helix, includes moving from a perpetual licensing to a software-as-a-service subscription service. The company provides applications integration software, WebMethods; process mining software, Aris; and internet-of-things (IoT) platform software, Cumulocity. Described by the supplier as “cloud-native products”, these cover hybrid integration, business transformation, and IoT and analytics.
In the press conference, Brahmawar drew attention to three recent customer wins – ExtremeNetworks with WebMethods against Boomi; Maersk with Aris against Celonis and SAP’s Signavio; and the Dubai Electricity and Water Authority with Cumulocity against PTC.
During 2021, he said, Software AG won 237 deals in integration, 255 in business transformation and 93 in IoT analytics.
Stefan Sigg, the supplier’s chief product officer, said in a statement: “These three growth areas form the foundation of our digital portfolio. They can be seen as a digital backbone for further software development that leads industry players to new business models. This is enabling them to keep their digital sovereignty as our offerings run on all major cloud stacks.”
In the press briefing, Sigg said digital transformation encompasses the creation of a new business model and process optimisation. “This is also a new breed of data, machine and sensor data as well as structured data like ERP [enterprise resource planning] data,” he said. He cited as examples “smart products, smart equipment and new output-oriented business models, such as a company that produces compressors is selling compressed air”.
Matthias Heiden, the supplier’s CFO, who joined in 2020, said in a statement: “The momentum behind our organic growth drivers gives me confidence that we’ll accelerate successfully towards our 2023 ambitions. We exited 2021 with strong results and the quality of our revenue stream has increased substantially in the last three years. Thanks to our subscription shift, we have achieved consistent double-digit ARR [annual recurring revenue] growth.”
In the press conference, Heiden said: “Digital transformation is not just about buying digital technology, not just about adopting cloud technology, it’s also about doing a shift in the ways of working that is to do with the cultural transformation that is needed.”
He said North America and Asia Pacific customers are more used to moving quickly with minimal viable products, whereas in Europe there is more of an industrial mindset of getting the product completely right first time, which can retard digital transformation programmes.
“But it’s not all dark and gloomy,” he added. “There are some fantastic examples of adoption that we have seen in Europe and I’ll name one of our customers, DHL. It’s phenomenal to see how DHL has undertaken digital transformation for many years now and put itself into an amazing position to be able to deal with the pandemic.”