Navigating Tech Due Diligence: Insights from Punit Goyal

In this insightful episode of "Fireside with Founders and Leaders," host Rupert McSheehy welcomes Punit Goyal, the Technology Director at Aurelius, a prominent private equity firm. Punit shares his impressive journey from starting as a software engineer to holding a pivotal role in technology due diligence and transformation within the private equity landscape. With over two decades of experience in technology, Punit sheds light on the critical factors that technology leaders must consider when preparing for potential acquisitions by private equity firms.

The conversation delves into the nuances of technology due diligence, emphasizing the importance of understanding the intricacies of a portfolio company’s technology landscape. Punit highlights common pitfalls in due diligence processes and offers actionable insights for tech leaders aiming to enhance their company’s appeal to potential buyers. He discusses the delicate balance between speedy decision-making and thorough analysis, as well as the importance of aligning technology initiatives with business outcomes. Listeners will gain valuable perspectives on how to effectively communicate the value of technology to stakeholders and ensure their organization is well-prepared for a successful acquisition.

What is Fireside with Founders & Leaders?

In this podcast, we talk to some of the greatest founders and leaders about their journey to where they are as well as discuss their companies and many other subjects depending on the guest.
We are aiming to create meaningful content that everyone can get value from. We hope you enjoy 😁

you're listening to the Far Side

with founders and Leaders Podcast

the podcast that gives you a behind the scenes look

of some of the world's most

amazing founders and leaders

looking at their journeys

and how they got to where they are today

hello everyone

and welcome to this latest edition of the fireside

with founders and leaders podcast

today

I'm delighted to be joined by the brilliant Punit Goyal

who is technology director over at PE firm Aurelius

so

we talk all about how he's got to that position today

of course but also

we go into some really interesting insights

around what it's like to work in that position

what he's looking for when he's doing due diligence

um

when they're looking to acquire new portfolio companies

as that private equity firm

we look at sometimes how due diligence can fall short

in the tech space what to look out for

if you're looking to be acquired

by a private equity firm

if you're a technology leader in that space

the things you can do to really carve out value

and the things that they're generally looking for

we also delve into what really happens after that P

deal is complete

and what it's really like to be on the inside

some super interesting insights in this one

so stay tuned and enjoy

so Punit welcome to the podcast

thank you for having me oh no

thank you for coming coming in

so look I think we've got some really

really interesting and exciting topics to talk about

through your career working with P E firms

um perhaps unlocking and demystifying some

some myths that

that we know of things that we've talked about um

before so before we get into all of that uh

I wanna talk a bit about you

your history and your career

so you're currently um

you're it and technology director for Aurelius

yes uh

you haven't always worked there

you've had a had a career history before that

so talk to us a bit more about

how you got into the technology sector

and then also how you got into

you know working with

with PE firms um

as your your first venture

sure I'm Punit

I started working in the field of technology

about 22 years back yeah

before that

I did my majors and bachelors of engineering

in information systems

I've always been intrigued by technology how it

it can help uh businesses and corporates in

automating things making life easier for everyone

I started my career as a software engineer uh

and a lot of work I did early in my career

was in the space of ERP delivery

uh and I was always intrigued by uh

why certain projects happen

what's the business rational for that

how are we creating solving a business problem

and that intrigue and curiosity always

drove me to understand

what's the business problem

why are we doing something

and throughout my career

I've evolved roles from a software engineer

to integration architect solution architect

project management then

delivering and managing large transformation programs

yup uh

enabled by technology large enterprise applications

uh ERP

Oracle specifically

I work with big uh vendors like Oracle Consulting

P W C and EY

and a lot of the works you do in ERP space

is a result of

a deal or a transaction mergers and acquisitions

either

it's carving out a business and making it stand alone

operationally from a big corporate

or

an organization has acquired another business

and integrating that within their own business yeah

so leading those programs from a technology angle

it's been I've been doing that for many years now

and most of those transactions were a result of a P E

buying something from a corporate or a P E

integrating

into a portfolio as a buy and build strategy

nice so that's what uh

brought me to Aurelius as well

and within Aurelius we have an Ops advisory team

which enables and helps all the

portfolio companies on the technology landscape

so we support uh

our deal teams throughout the deal life cycle

before even a transaction happens in technology

due diligence

where we look at

how easy or difficult it would be yeah

to carve out that business from a corporate

or to make it run independently

what would it cost yeah

what time it might take uh

what are the risks yeah

uh how we can use technology as a value creation tool

either reducing operational cost

mm hmm improving the processes

or using it as a value creation tool

of making a business omni channel digital

uh opening up new revenue work streams yeah

and that's what I'm currently doing

for the various portfolio companies being

leading some of the major transformation programs

as well as uh

stabilizing them carving them out uh

or making them ready for an exit uh

so that's where I am now nice

okay very good

so the and it's

it's quite a pivotal role right in an organization

as you say

there's lots of things that you need to determine um

with your team I'm assuming uh to

to make sure that you're weighing UPS

of the risk versus reward

as you say

and the cost and the opportunity and the benefit

and how easy is it to implement these things

into the portfolio companies

can they turn it around quickly

how do you how did you get into that

going from someone who's starting as a

a software engineer and then as you say

sort of working with other companies

always in the ERP system so

you're obviously a bit of a domain expert

with ERP systems that

that's quite clear

how do you go and transition into that role

that you're in now from

from where you were before

so I think the few things some of our

some of these were deliberate and some of them

life happened and I've been uh open

curious and adapting to situations

so and as opportunities present them

I see I think it's a good area for me to learn more

it's interesting

exciting for me and this is where I can make an impact

this is where I can add value

so that curiosity of making an impact

creating value

and understanding why we are doing certain things yeah

before jumping into the what's and how

that always

and that why always keeps the focus as well

mm hmm of what are we trying to achieve

and sometimes you get uh

distractions noise

but once you have the clarity of why

we are doing something it helps to uh remove that uh

ambiguity or noise

and focus on what should we prioritize

where should where can we get the best value yeah

nice

and it is as you say for you about solving problems

right that's how you started

and that's how

most people start in sort of engineering of any sort

whether that's software or physical engineering

I think even drawing comparisons from that

so it's problem solving at its at its core right

yes problems solving and solving for who

yeah is it making life

a few clicks easier for somebody in the business

yup or is it really creating value by automating

reducing risk uh

making the platform attractive for potential buyers

making

uh

true efficiencies are

not just saving one or two hours a week for somebody

that in my terms is not actual value

because if you are not

taking the cost out from an organization yeah

that's not efficiency

it's just making somebody's life a bit easier yeah OK

and and you spend a lot of time

like with portfolio companies right

working working with them to

to either go and buy their buy their business

buy the product buy into it from the P firm um

like what are the the things that

when you walk into a portfolio company

that you're looking at that go

tell you this is either gonna be a great

you know product or great

uh great business to implement

or if this is gonna be messy

like

what are the first three things that you're generally

looking at in that scenario

so I think I look at three things all in combination

so you can have a great product

but if you don't have a great team

mm hmm uh

that may wither down because we cannot enhance

improve the product uh

for the evolving market needs

or where the competition is heading

or where

uh it might be disrupted by others

uh huh we also need a good team

good leadership

who can provide direction and management

to deliver those outcomes

and sometimes we just need to marry up

those leadership with the shareholder values

or shareholder goals of where we see the best value

sometimes modernization or moving to cloud yeah

seen by a lot of technology leaders as a Panacea yeah

but that may or may not always create value

so if you're moving something from on prem to a cloud

or moving from

uh physical hardware to Amazon or Azure

you're doing a lift and shift yeah it may reduce

certain cost but you are just doing the same thing

what you're doing in the old system in a newer

brand new application or brand new infrastructure

so in my head the main thing is why are we doing it

where do we see the best value

hmm in context of NRP

yup

implementation or transformation

it's how are the processes going to be different okay

how are they going to be more resilient

yup

how do we reduce shadow it

and people working in Excel around as workarounds

yeah

uh

and how do we standardize across

if our corporation or companies

spread across countries or divisions or departments

do they have the common understanding of

what revenue is what margin is what costs are

and if they are

following a similar or standardized processes

across the country

because everybody says we are unique

we are different we do things differently here

but most businesses

80 to 90% is the same yup

they buy something from their suppliers

yup add some value and then sell it to their customers

yup and there that's where they create value yeah

yeah so a lot of it is

could be standardized could be fit

fitted within a solution from a software vendor

be it SAP SAP

Oracle Workday or Microsoft or any uh

it just

that aligning those people to what the vision would be

what the processes would be

and with that processes what's a target operating model

from a people perspective

yeah I can

and taking those people on that journey

that how it's beneficial for them

how it will help them deliver the values

yeah nice

so it's a lot about the people then that are in

in that organization yes

so I never find technology as a challenge

yeah I think the biggest challenge is

uh having clarity on that

the outcomes how it would look yeah

okay and then how it would be a win win

it's not a zero sum game

that somebody wins or somebody loses

it could be a win win for the colleagues

employees that they have experience of working on

delivering large ERP programs

which they can add to their CV

mm hmm it could mean

uh the organization is more resilient

adaptable flexible

yup and even the vendors who are helping implement

it's not a one time job

uh once you implement an enterprise application

once you go live the job is not done yeah

that's just the first stage

that's the uh

starting point of how

uh where you can further incrementally uh

make minor improvements on a ongoing

continuous improvement basis

yeah okay

and that's where I think uh

some organizations think

we have done a large transformation program

we have handed life

that's where the journey ends yeah I think that's a

myth

and also sometimes that's what a wrong notion to have

yeah okay

and especially I think that's the reason

like

a lot of vendors have moved on to a SAS cloud version

where they continuously provide new functionality

every quarter every six months

and it's for those organization to pick and choose

what works for them and how

uh

they can

derive the benefits of the investment they have made

yeah and technology is changing of course all the time

right so as you say

to think you're doing this big transformation

and then that's it done

we're out uh

it's not really the case for the

for the business because technology is gonna change

so they're gonna have to keep

keep changing and evolving as technology

transforms itself ultimately yeah

I think I just take uh

analogy from personal health goals and stuff

like you can go on a crash diet

lose some weight

or go to a fitness class for six months and

be slightly fitter but it's about the habits and the

things you do on a daily basis around discipline

consistency

around uh

making that one person incremental improvement

uh every month

every week yeah

you'll be better than what you were six months back

12 months back

and you can apply that in any corporate scenario

or organisation as well that uh

it's the journey doesn't end

it's continuous improvement

and you need to be consistent persistent

there'll be

challenges mm hmm

uh you might have to pivot

you might have to pivot because of

geopolitical or competition

or changing strategy because

the organization decided to

sell off a part of the business or yup

have a another acquisition uh

but I think having that consistency and deliberate

focus on

how we can improve making uh

small incremental improvements

yep so I'm really influenced by the book Atomic Habits

yeah yeah

I was gonna say this

sounds a lot like stuff that I've seen from Atomic

Habits

those small incremental changes that really helps

and yeah also like sometimes making uh

short term call versus uh

medium to long term sustainable things

so sometimes you can make short term cost efficiencies

or things but that may harm the organization

and being a sustainable resilient organization or

creating unnecessary risks or yep

making the business less scalable and

and you see obviously a lot of uh

sort of your deals go through and you know

companies that

the firm will be looking at any one time

like what's the

the reality between like what's being offered as

as a sale as a business versus the reality of what

what you might be buying yeah

do they differ quite wildly sometimes

uh majority of the time yeah

so and it happens uh because once you're buying

the seller is in a sales mode yeah

so they're polishing up a old car yeah

so what's looking a spanking

well polished car may have a failing engine

yeah

secondly like when you're doing a due diligence uh

it's a short period of time 4 weeks

6 weeks so you can go to the surface

and the people who are available for you to question

or examine that's asset may not have the details yeah

you might look at the application landscape and see

you have a

a modern system

but you can't

know exactly what

functionality of that system is being used

and what's being done outside the system in Excel

and manual workarounds

also uh

when you're buying a bigger complex target

they may have operations

different in different countries

or different applications in different countries

and you cannot get all the details

uh up front

yeah and third is there's a gap between when you

the seller has prepared a due diligence report or

the architecture and the roadmap

when you do a due diligence

and when the deal is signed

and the deal is closed yeah

so sometimes that can be period of three months

or up to a year or 12

18 months and during that time things evolve

mm hmm uh

either due to external factors like tariffs yeah

gas prices tax

uh

or

market cycles

let certain products which were selling amazingly well

yeah when we did the due diligence

may not be doing that well

once we have the ownership of that asset

does that happen yeah

reasonable amount of times

usually it happens yes yeah

is that just

purely down to the length of time it takes

to go through the

so it's not just that it's also like uh

also because sometimes some of the numbers

some of the things metrics are presented in a way

which may not be a true reflection as well okay

it's a mix of combination

so and the third thing I would say is like

when you're doing a due diligence

there might be people

you think are capable and running the business

mm hmm but when you do acquire a business

some of them may or may not be part of the transaction

transfer of the company yup

especially the leadership

uh huh or they might leave

because they are not aligned with the new ownership

or the new goals of the new organization

yup and when they leave

they leave a gap knowledge gap

experience gap

or sometimes

they have been running that business for far too long

say 15 years 10 years

so they can't think outside the box of how to do

things differently yeah

yeah or they can run the business in Bau

yeah but they don't know how to transform

yeah yeah

which is and that's the biggest

biggest thing

for anyone who's been leading and running a business

for that length of time ultimately as well

they're giving up their their baby

yeah potentially it alters my

one of their children for some people

giving up that business

and you're relinquishing a lot of control

and then it's a different way of thinking

like a P E mindset is quite different

in the sense that it's very commercially minded

commercial acumen is quite key

yeah and a lot of

technology people are not that commercially

able to explain or create the narrative of how

a certain initiative could be creating value

in the terms of

a bit up yeah

or growth revenue growth and things like that

so they might see uh

migrating from a 20 year old system

it needs to be happen yeah

and they might create a five year road map

to move all their applications

from

older version of SAP or Oracle to yeah

the latest version of SAP

Hana or Oracle Fusion Cloud and things like that

that needs to be looked at

what's the business benefit

and sometimes if you have a investment cycle of

from a PE perspective

a exit horizon of three to five years or seven years

uh huh

uh from a PE shareholder perspective

you're looking at could we deliver value sooner

mm hmm and we have to deprioritize things

which we may or may not feel confident around

will it give the value in the over holding period

yeah so it's a balance between the shareholder uh

priorities versus for the organization needs

in a medium to long run sustainable business

yeah and what would you say are the most overlooked

factors in due diligence that are done on deals

so sometimes in a due diligence

uh technology is not considered as a key driver okay

so

just the commercial value or the market or the sector

uh but sometimes technology can be a deal breaker

or a red flag in the sense that

it could be overtly complex to separate the business

or run it as a stand alone

because either they do not have the capacity capability

uh or

the right tools and applications mm hmm

and the transition of ownership

creates a bit of uncertainty

insecurity for the initial three to six months

yup and that is a challenge

yeah and

and have you ever seen

sort of deals where the technology looked OK on paper

but when you sort of lift the

lift the hood up so to speak

it's crumbling yes

a lot of the times because uh

usually it's a combination of factors

so when a seller

a corporate seller is usually trying to divest

a non core asset

either that's either a non growth area

slow growth area or it's not profitable area

yeah so

and they start that thinking process 12 months

18 months 24 months down the line

so in that process what they usually do is

reduce the investment and modernization expense okay

uh so they do not start a big ERP transformation

just before they're about to sell

yup

so a lot of times when we acquire assets or companies

they would be having a 20 year old ERP

which is out of support

is a security risk or has a low availability goes down

yeah during peak seasons or peak periods

which reduces the ability to sell more

or invoice the customers on time

yeah or get the uh

best discounts from the vendors and stuff

so that happens all the time

I was gonna say it probably sounds like it's

it's quite a common theme if you're

if you're going in cause your whole

purpose and plan will be to go and

transform and upgrade everything

so I'd imagine it's probably sort of

cracking at the seams quite often

yes it is yeah

and and do you find that is it

is it a challenge

or does that make things easier to go in and say

well look

it is what it is

we know we can get more value out of it

because I can see instantly where I can make some

some change I was gonna say quick changes

it's not necessarily quick changes

but some you can easily spot those changes

and then you know how you're gonna get that value add

look at the increasing the EBIT Dar as you say

all those sort of things that you're trying to do to

to drive more revenue into the business to get

you know maximum out of it when you

when you eventually sort of look to

to move it on so yes

there are two aspects to it

so when we are looking at a due diligence

we form of a investment thesis

of how we could scale the business

grow the business

what would the potential exit look like yeah

that may change over the period of time

but we have those investment theses to see

this is how we'll create value either by reducing cost

adding new digital channels things like that

and so once we have after day one

once we have owned the company

we go into the details

look at where are we spending every penny

mm hmm

what are essential what are non essentials

what major programs

and projects are aligned to the strategy

we have yup

and sometimes

we are very ruthless to reduce the portfolio

projects to bare minimum

so that we reduce any unnecessary spend

any contracts long term contracts

we don't get into them and then first three months

we have a good understanding of the capability

yup within the organizations create come up

with a transformation road map for next 12 months

24 months

look at what capabilities we need to build it

uh either through leadership interim rules

uh partners

either system implementation partner consultancies

boutique consultancies in those areas

yup and create a road map 12 month

24 months and sometimes we take some

make some early quick wins of uh

making tactical things so one things

which is

quite critical in most of our portfolio is data

and dashboards and reporting

yeah around how are we doing on a daily basis

so in some corporates when we acquire them

it takes them weeks to understand

how did the business did two weeks back

three weeks back yeah

uh having that real time

or near real time visibility

helps on how the business is heading on a daily basis

weekly basis

then we can make informed decision in our buying

for the next season next year

yup how to procure or what to target to our customers

so having some tactical dashboards

using simple tools like Power BI

with data from their legacy ERPs or excels

yeah and then in the meantime working on a roadmap

how to make that a production ready

standardize automated a BI platform similarly like a

in corporates it takes a lot of time to decide what

product to go with or what vendor to go with in ERP

yup

and that exercise of vendor selection can take 6 months

9 months mm hmm

but having worked long enough in P environments

I understand that you have your thesis

you have your gut feel and you never like get 100%

all the data you need to make a decision

yeah okay

so don't sacrifice uh

good for perfection yeah

start with something yeah

even if you have 60% 70% and then we can course correct

yeah okay

so things which are reversible

make easy quick decisions

yep move ahead

things which are irreversible

have it think through take your time

but not too much yeah

is that saying of sometimes done is better than not

right yeah

so

you get paralyzed by wanting everything to be perfect

and then you don't start and that

that could be worse than making a few mistakes

and then going as you say

you make some quick decisions on those mistakes

and go back and reverse them pretty quickly

yeah and also it's also around uh

having that agility of Mark evolving market situations

things like that

sometimes you have to look at conserving cash

uh to have the business operational in current 3 months

6 months rather than looking at 3 years

5 years window uh huh

and sometimes it's looking at that long term horizon of

uh

and mixing that up yep

okay nice

and in terms of those those um

sort of deals and so

it sounds like sometimes it can be like

12 months before you even start making any changes to

to the organization does

that generally sort of shock leadership people when

when they when you're going in

or they think things are gonna happen instantly

like what's the feeling normally from the inside

so it's a mix some people are energized

yeah because they are

sometimes frustrated with the sloppiness

or the inability to take decisions and move ahead

so they are energized and they are uh

aligned to what the new owners would do

mm hmm it's also a fact that

uh within a PE environment when a business is acquired

majority of the leadership and the exec

or the C suite changes within the first 12 months yeah

I think I was reading somewhere at

the figure is between somewhere to 70 to 90% okay

fairly fairly sizable yeah

so that's a big change yeah

the whole leadership change and uncertainty around that

and when they move the second layer

they usually take them with them as well

so managing that transition

mm hmm uh

with communication managing with

providing them the comfort that it's

for the better of the organization

and also creating that balance between

creating a win win situation for both sides

mm hmm

yep and

and that's what it's gotta be right

it's gotta be everyone's getting something out of it

it can't just be this uh

like one person smash and grab

otherwise

it all falls down because people are not then on board

you've got one person going against the other

and it's a loggerheads have you ever seen that

that sort of scenario play out

uh not in that sense

but in the sense that sometimes when uh

pre deal or just before a deal

somebody will come up with an investment thesis

and a roadmap for value creation

yeah they are usually external customer

consultants or advisors who have not

never worked in a business before

right

so sometimes that strategy may or may not work in

real life scenarios okay

so that's one of the challenge

uh and secondly

uh sometimes you have

a different kind of incentives for vendors and partners

so they want to maximize their own revenue

yup

uh but I work with them in a collaborative fashion

to say it's a long term relationship

it's not just you do one piece of job and you're away

yeah it's a long term relationship

not just within that portfolio

but other portfolio companies

if they do a good job in one portfolio company

we use them massively in other portfolio companies and

so we create the right incentives for each vendor

either through is it a fixed price or is it yeah

diamond material with milestones

and where they have a skin in the game as well

yeah

in the outcomes rather than just a time and material

yeah it makes sense

because then everyone's driven

to work towards that outcome

right

rather than just everybody working on their own silos

or towards their own goals

yeah exactly which

which can be uh

detrimental to the whole thing

I think it's the as I mentioned

like previously like it's a main thing of uh

working in leadership role is alignment

and alignment of the stakeholders

the shareholders uh huh

they're executing the portfolio companies

and from that driving the vendors and their

junior teams to work towards that outcome

yeah nice

and it talked earlier about um

like data and getting data out and looking at the data

seeing what it's telling you

using platforms like Power BI

obviously the data is what the data is

you can't control the data

that's been there historically

um but I'd imagine things have become

slightly easier over the last couple of years

especially with

with AI modernizing how we can read data

get access to it quickly analyze it

has that has that helped

so speed up transactions yes

also it's massively helped

mm hmm and a lot of the leaders

operating partners are the exes

are now quite fluent in some of the generators

yeah and they try

a cloud or a co pilot to

analyze large amount of data themselves

and the

uh and sometimes it's very good

because that provides them the visibility

either good or bad yeah

and also sometimes it uh

opens up all the challenges the business had

because if you have poor data in

you'll get poor insights correct yeah

so a sales team may have a different view of revenue

versus a finance team or accounting team

yeah or the margins

yeah or

our organization may have the same customer names

at three different ways in three different systems

uh huh

uh somewhere it may be an IBM

somewhere it may be an IBM Limited

or somewhere it may be IBM UK

I've seen that before and

they can't get a clear view of

how much are they spending

with a single vendor yeah

or how much is a single customer buying from them

yeah it's really

that's a really common

uh sort of issue

I think a lot of across a lot of businesses

no matter what they're doing is that sort of

especially across multiple customer

large scale organizations

different countries

they're really trying to get on different systems

yeah all on different systems

it's uh

it's

I think it's more of a governance and operational topic

rather than a pure technology topic

hmm so it's around who is owning that data

yeah who is owning that process

yeah

once there's an ownership and accountability

within the business

uh

technology falls into place

yeah the technology works right

ultimately as you say

it's not the technology you're normally looking at

it's the it's the people and how they

how they're utilizing the technology

and the systems that are in place

to get the most out of it

and also

like a lot of these tools are helping in the sense

like especially the AI tools are helping

uh

in making that analysis quicker

mm hmm uh

the initial drafts easier to make previously

something which used to take 4 weeks

6 weeks can be done in a matter of hours yeah

so if I look at software delivery or ERP delivery

like I remember programs which were 3 years 5 years and

there are team of five or six colleagues working on

preparing test scripts and test documentation

for 3 months five months yeah

that can be done in hours because AI can generate you

first draft which is 80% 90% there

then you just need to tailor it

for your specific organization

for your specific use case

that can accelerate a lot of it things

but you still need that human judgement human

lenses on top of it does it cover everything

are we missing some

gaps or are we overlooking some blind spots

or what have we Learned from our experience

or what may or may not work in

within this specific context

or within this organization

and do you think it can become an issue whereby people

you say AI is great at getting you to sort of 80

maybe 90% of the way there

but there's sometimes an over reliance on uh

not not checking the work that AI is doing

people that I've seen have

have sort of looked at it and go well

I'll just use AI and it's fine and then pump it out

not really looking through using your human

human eye to to

really sort of your fact check and make sure that it's

it's giving you the right information

that you're looking for yeah

I think uh tools are maturing

it's a new landscape and AI tools are probabilistic

they are not deterministic

so if you ask the same question two different times

you might get a two different answers

and you're never sure

what's the calculation being used

or what's the logic being used yeah

or what was the logic you used two weeks back

you have a new version of a model every few weeks and

uh

what they calculated two months back

versus what it calculates

or shows you the data may be totally different yeah

and it's also like how you prompt

or how you ask a specific question yeah

so I'll give you an example

like if you ask any GNI tool

what's the benefits of Ozempic for example

yeah yeah yeah

it will give you that it's a Panacea for diabetes

it's a Panacea for weight loss

and it has so many positives

mm hmm but if you ask the same genie I told

what are the side effects

it will show you all doom and gloom

yeah yeah

here we go sunny says you're right a lot

it tends AI tends to agree with us

to make us feel positive about how we're

how we sort of interacting with it

so it's also like what questions you ask

how you ask yeah

and it is probabilistic

it is a best guess or based on that experience

it may or may not have the full set of data

yup it may not be nuanced enough

uh based on the context you are in

do you think we'll see some

some issues coming out of this though

as we go down the line

I say deals being done by people using AI to

to do some of their due diligence

and not doing their own due diligence on

on the AI so let's not say it will be because of AI

it's again back to the human diligence around

uh

have you cross checked everything

yup also around

and it can happen without AI tools as well

like yup

there's a lot of things to consider when you're doing

making a decision mm hmm and

I think AI will help reduce some of those things

because

uh as a human

you can do as much as possible

like when you're doing a diligence

and looking at hundred contracts

each contract is 50 page or hundred page

you can't go through a single

every single line and find that out

yeah but if you turn that through an AI engine

which can process hundred contracts line by line

and look at what things to look at uh

the red flags

or things which might impact the long term journey

yup so I think it will help more on the positive side

rather than the negative side

yup there's always some potential bad actors

especially in the space of cyber or hackers and stuff

which would try to

uh

misuse it but I think

every technology has more good than the negatives

just making sure that people are prepared to

to use it in a correct way

where they're not just relying on it 100% blindly

exactly that and they

and they need to question it uh

and just say how are these numbers right

what was the calculation used

where did you find this fact

yup or did you just made it up

yeah OK

yeah that yeah

sometimes it does have a habit of making things up

and also you talked about going through contracts

you need to make sure you're

telling it what to look for

you need to know what you're looking for

you can't just say to an AI

well you can just say to an AI platform

look through this contract and show me some red flags

but

you need to want it to tell it what the red flags are

that you're potentially on the lookout for

yeah um

rather than just expecting it to know

and that comes from experience

that comes from having you burned your hands few times

yeah yeah yeah

I think that's that's the key right

you only get you only learn from experience

by actually going through

getting your hands burnt through some of these things

and going I didn't see that in there

so you

need to make sure you're going back and double checking

and sometimes it's not humanly possible to

like some people are extremely diligent

detail oriented

and they can go through every line and make it out

lawyers and legal teams have been doing that

paralegals have been doing that for long

yup but humanly

it's impossible to look at every possible detail

every TS and CS

and the caveats or assumptions and things like that

so you'll never be hundred percent there

but I think it will help uh reduce the risk

yup and you've worked with tech leaders in

in various of PE backed um

firms that that you've

you've had as a portfolio companies

what do you think

makes the difference between a tech leader

in a PE backed organisation that thrives

versus one that struggles

in a PE backed environment

tech leaders needs to be commercially minded okay

as a lot of tech leaders are great

tech leaders who can deliver

could take outcomes

but they may or may not be commercial

in the sense of how is it adding value

how is it reducing risk

and being able to communicate to stakeholders

uh

in terms of the language they understand yeah

so if a tech leader

circumstances will modernize from on prem

hardware to cloud

uh P s holder may ask what does that mean why yeah

what does that mean yeah

or how is adding value or reducing risk or uh

adding to your exit

multiples or how is it attractive to a buyer

yeah so I think being able to communicate

to the stakeholders in the terms they understand

to the CEOs

to the Chief operating Officers that this is how

this is why we're doing this initiative

this is how it will create cost reduction

value creation

growth or reducing a cyber risk which can impact

either operations and things like that

yup if you look at recent examples

last year of marks and Spencer's or co op and others

the business was uh impacted massively for a quarter

because they were not able to sell online

and things like that yup

so not to create panic

but also to put that a number to say okay

if we do this we're reducing the risk by this

this will create a resiliency

or we are able to operate during peaks

they won't understand okay

if we increase the capacity of a server by xgb RAM

or what our processing power by this

what does it mean so yeah

they need to be translated into a language

uh financial leaders or yup

people's for number crunching understand

so it's being that having business business savvy

so next commercial acumen

commercial acumen and being like operationally

the second thing I would say is being

on top of their operational numbers

yup having their KPIs understood that uh

where are they spending

are there still room and being

constantly monitoring their spend

on various initiatives mm hmm

and third is having a focused portfolio

so sometimes they start too many initiatives

all in parallel yeah

which are vying for the same human resources

or decisions

so I always work with them and to say

have a shorter list of focused programs

uh

which deliver value so it's better always to do

deliver three programs well done

rather than 10 programs which are faltering yeah

yeah and

and do you see that often when you go into

to portfolio companies yes yup

especially if uh

they're acquiring a business from a big corporate

where they have higher standards of governance

or red tape and bureaucracy

mm hmm and they want to be extra cautious on everything

decision making

everything has to go through multiple change boards

enterprise architecture security architects

uh that decision takes time

so need to create a balance between speed and safety

and and how do you do that

because there sometimes there's pressure

right to get things done quickly

especially in the modern world

and when you've got timelines of uh

you wanna get through a transformation program in

so however however long that it's gonna do

or implementing new ERP

whatever it is that you're you're going through alright

how do you balance that that speed versus uh

so due diligence

of making sure you're doing the right thing

so there are two things I usually do

one is like

things which can be reversed easily

or without much impact mm hmm

make quick decisions things which require

thought through like

if you're signing a three year contract with a vendor

mm hmm think through properly

yeah so things which are irreversible

think through properly yeah

but more time

things which are easily reversible

or without major impact make quick decisions

and the second would be around

don't wait for a perfect answer

yup you will have a good picture and good gut feel

judgement when you have 50 to 60

70% data yeah

and with your experience uh

uh having worked in this field

most leaders understand they can make a decision

it's just that aligning those stakeholders to say okay

this is a risk we are carrying

yup are we ready to accept that risk

or if not how do we mitigate

yeah okay

no so it's about sort of either you gotta go okay

there's some risk here and we have to

we have to take it on board

and try and ultimately reduce the

the risk as much as possible

but just by doing the thing that we need to do

yeah I think action speaks louder than the long plans

yeah strategy

because a good plan or a strategy is as good as uh

preparing as much for a boxing match

until the first punch hits your face

yeah yeah

yeah yeah

so true and then suddenly your face hits the canvas

and that's it the strategy's out the window

and then how you pick up

and how you stay resilient and pivot or yeah

uh course correct as you go along

so start working on it make actions

uh

go for some quick quick wins

early wins show value

mm hmm gain confidence in your stakeholders

yup and then once you show them that value

once you have that confidence

you get a bit more uh room

mm hmm uh

and in parallel

you work on the medium to long term strategy of

have production ready resilient solution nice

and and we've talked a bit about um

like the balance between so technology and the people

and we've talked about creating value EBIT Dar

like where does technology

do you think actually move the needle on EBITDA

how can how can it create more value

because

we talked a lot about the people in the organization

the strategy the systems

but where does the technology actually move the needle

do you think some things are quite simple

yeah uh

so some places where

uh moving from

a older technology stack to a new technology landscape

say moving from an on prem to Saas ERP

you can get value by reducing

uh single person dependencies in the business

who know how to operate a specific function

within that

uh ERP

DBA or BL interpret uh

integration person

who knows how these integrations work

yup

uh to the vendor doing it or the uh

software doing that process for you and uh

reducing that people cost from the business

yup

uh

or like moving where you have on premise

applications or infrastructure

which takes a expensive real estate

maintenance and specialist skills

which you may or may not have because people retire

move on

so we are removing that risk as well as the cost okay

those are the easier and quick ones

mm hmm but other changes

especially in the space of ERP technologies

or digital transformation

come more from your operating model and process

yeah okay

how are you doing things differently

if you're just

lifting and shifting from an old application

to a new application

or old hardware to a new infrastructure

yeah that will not give you the best value

yeah OK

it's just around

how are you going to do things differently

yeah how are we going to change the process

how are we automating things

hmm that's where the value lies

so I'll give an example where uh

moving from uh

manual paper based field sales solution

where the sales people are going from

customer to customer taking orders

giving them prices brochures

moving them to an iPad Pro with a field sales system

which again give them real time stock

real time prices customized for that customer

and they don't have to do paperwork

and come back to their office

in the later in the evening and type that order in

yeah uh

can reduce it similarly

like moving from that to a self serve ECOM platform

where customers instead of

relying on salesperson to visit them once a week

or once a month

can place an order whenever they want to yeah

they can check the availability price

and if they have a question

they can call somebody and say okay uh

can I get a discount or whatever

yeah

similarly like uh

a lot of things which happened

uh in a lot of

common back office functions can be automated

uh we'd say

and voice processing accounting function of automating

uh month end processes of reducing the time from say

10 days to 3 days yup

uh similarly

a lot of things

I'm seeing a positive improvement in the

field of customer care con contact centers

okay yeah

so I don't know like

how many retailers or things you have interacted

in the recent past

you'll be able to connect to a human

yeah it's very difficult

so and a lot of those

customer journeys are consistent across

most retailers

most customers are looking at where is my order

when will I get it yup

I've returned it I've not received my refund

yup

when can I expect a refund or I ordered a replacement

yup do you have that in red colour or size 10

yeah yeah

that can be automated

and that can take away a lot of manual work

from the organisation

reduce cost which impacts your profitability

yeah and sometimes

a majority of the time

also creates a better customer experience

so yeah like if you look at Amazon

the return processes refund processes are so brilliant

that creates a customer stickiness

and long term loyalty

but that's what they've done with everything

isn't it

is they've just created a really simple process to

very simple to buy stuff simple to return it

simple to solve our problems on the most part

uh so it's about creating

they've created systems like you say to

to simplify everything and make it really easy

yes and it makes customers stick because they

they have a good customer experience

yeah and it reduces the manual labour from day to day

we still need people but they

are we dealing with exceptions

where you need a human judgement

yeah to look at patterns

are somebody misusing those systems

are

continuously improve those systems

and solutions to reduce either fraud or leakage

yeah and so you make a lot of this sound so relatively

relatively simple

I'm sure it's the way you're explaining

I know full well that there are

you know complex parts of the things that you do

otherwise it wouldn't be so simple to do it

and things wouldn't go wrong

um but I see so still like tech investments failing to

um create financial outcomes for firms

so why do you think that still happens

like when it's if you can create the systems

it should be fairly simple

like why why do issues still happen

where it doesn't create the financial outcomes

that people want so

I think one of the main thing is

people who start those initiatives

may not live towards the end of the initiatives okay

uh so they

they go with a vision mm hmm

or a strategy or the outcomes in mind

yep so

but either

they're not involved throughout the life cycle of that

transformation journey to follow through and say

are we delivering uh

working towards the same outcomes

yup because

somebody in the leadership may

decide that we are doing this transformation

for these outcomes but

the people actually delivering that program are

junior teams within the business

or Sai partners or vendors

mm hmm and having that constant feedback loop to say

are we going on the right track

why are we doing it uh

sometimes create the gap

and sometimes people who are creating that vision

are bit

away from reality of how things actually happen

yeah and there are challenges on the way

or things evolve during the life cycle of programs

which are like 2 years 3 years program

uh decisions made at the beginning may not hold true

two years three years down the line

because the business has evolved

markets have evolved

and the third thing I would say is

not tracking the benefits yup

from day one to say okay

these are the benefits we are trying to gather

or achieve yup

documenting them

and having that clarity to all the stakeholders

these are the benefits we want to achieve yeah

this is how we'll track them

these are the KPIs

so having that transparency mm hmm

or not having that transparency yeah

can be a deal breaker yeah

and third is sometimes some of these initiatives are

confidential or some of the outcomes are confidential

because a lot of these programs may result in

a reduction in workforce for example yeah

OK so or could result in a yeah

reduction in workforce so how do you communicate

what do you communicate and when do you communicate

it impact people's roles responsibilities

and some people see it through yeah

sometimes they be maybe become a blocker

or if not a blocker but maybe uh

not as cooperative

and so a final couple of questions for you punit

before I let you let you go um

someone if they are a technology leader in a

in a business at the moment

they're looking at potentially

going through some sort of P acquisition

like what are the

the top things that they should get in order

to make sure that they're prepared for

for any you know

potential sale or or purchase

so think uh

for a P buyer

what they're looking at is transparency in numbers

mm hmm what are they spending

where are they spending yep

how much of that is critical

how easy or difficult would it be to run that business

in a stand alone

and giving them that confidence

that they have the people

the capabilities and the maturity

having that commercial acumen and

being operationally astute

so it's a combination of these

yes you need to know your technology

you need to know your

core tech skills yeah

but over and above that I think having that uh

business acumen and

stakeholder communications

yeah okay

and if you could fix one thing

in the way that PE firms think about technology

businesses what would that be

good question let me think about it

uh so it's that marrying up of

the vision that organization has for medium to long run

balancing that with short term efficiency

cost out or value creation things and

making informed decisions

yup you may take a decision

uh

and as long as you're aware that these are the

pitfalls or risks of taking that decisions

of either letting go of some people who have the key

skills expertise

knowledge or domain expertise or

thinking that certain feature or product

is not as beneficial for customers

yeah customers may start

you stop using that product or service

because we took away certain thing

because they were expensive to deliver

yeah OK

so it's really

really sort of making sure that you're giving

giving everything to everyone they

they want not everything

but making informed decision that yes

sometimes we want to sell things which we are

are profitable yup

but sometimes you need to make a judgement call

if you don't give this small thing freebie

yup the customers will walk out yeah

okay so haven't got that value without anything yeah

nice fantastic

well

it's been an absolute pleasure having you here today

thank you so much for

for sharing your insights and your wisdom

uh I think we've we've

you know busted a couple of myths along the way um

and unlocked some some things that people won't know

so again

really appreciate you taking the time to talk to me

thank you Rupert

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