3 questions to smart minds

Digitization of portfolio companies

For this 3 questions to Marcus Brans

Triton Part­ners
Photo: Marcus Brans
13. Febru­ary 2018

Compa­nies are hoping for new oppor­tu­ni­ties through digi­tiza­tion. Still very few people are prepared for the tech­no­lo­gies of the future. Many people also find it diffi­cult to find their way around the new tech­no­lo­gies and to select suita­ble “digi­tal tools” that can be used in their own company. The private equity inves­tor TRITON has taken the solu­tion and advice on these topics into its own hands and is actively pursuing the digi­tiza­tion of its port­fo­lio companies.

For this 3 ques­ti­ons to Marcus Brans, Foun­ding Part­ner Digi­ta­liza­tion Group at Triton Part­ners in Frank­furt am Main, Germany.

1. Triton has moved to send its port­fo­lio compa­nies on their own digi­tal jour­ney. What does this look like in detail?

The digi­tal jour­ney of our invest­ments star­ted years ago and in all sectors, see the global deploy­ment of sales confi­gu­ra­tors at Alimak­Hek, Aven­tics or Flokk, the IoT appli­ca­ti­ons of Fläkt­Group or in the drone deploy­ment at ARVOS Group. We believe that all busi­ness and tech­ni­cal areas are affec­ted and the speed of disrup­tion of exis­ting busi­ness models is still steadily incre­asing, see Mehi­lä­i­nen in health­care. Nor do we curr­ently see any signs of the digi­tal trans­for­ma­tion slowing down. Our goal is for Europe’s SMEs to reco­gnize the oppor­tu­ni­ties arising from sustainable digi­tiza­tion at an early stage and be prepared to act quickly and focus on their strength, namely the ability to indus­tria­lize services and products. We quickly lear­ned that the effects of digi­tiza­tion cannot be gras­ped with clas­sic fore­cas­ting tech­ni­ques and analyses.

The key buil­ding blocks of our response to the chal­lenges of Digi­tal Trans­for­ma­tion are: 1. analy­sis of the “digi­tal matu­rity level” of all compa­nies in our port­fo­lio, 2. iden­ti­fi­ca­tion of poten­ti­als, prio­ri­tiza­tion and imple­men­ta­tion of concrete measu­res, 3. Active support for the trans­for­ma­tion from rigid value chains to dyna­mic value networks that commu­ni­cate with each other in real time (digi­tal supply chain, smart factory), and 4. under­stan­ding and apply­ing analy­sis of enorm­ous amounts of data (Big Data Analy­tics). Added 5. ensure global and perma­nent access to these data sources, 6. provi­ding limit­less and afforda­ble storage space; and 7. The networ­king of machi­nes in real time.
For exam­ple, the “Sales Confi­gu­ra­tor” was a key value driver in an IPO in Sweden.

2. How is the digi­tiza­tion process shaping up for you?

Digi­tiza­tion is now more of a fuzzy catch-all term for the acce­le­ra­ting trans­for­ma­tion of our society and economy that has been taking place around the globe for years. We are expe­ri­en­cing the inter­con­nec­ted­ness of all areas of life and, as play­ers in society and the economy, must ques­tion and adapt oursel­ves anew every day and under­stand and embrace the incre­asing comple­xity and acce­le­ra­tion resul­ting from the digi­tal trans­for­ma­tion as an oppor­tu­nity. Triton, as an inter­na­tio­nal invest­ment firm, was an early adop­ter of the possi­bi­li­ties of networked systems with real-time data exch­ange, novel opti­ons for evalua­ting choices, and poten­tial conse­quen­ces. To this end, we have estab­lished a digi­tiza­tion group made up of experts from various disci­pli­nes to iden­tify the bene­fits of digi­tiza­tion in a stra­te­gic and well-foun­ded manner and to incor­po­rate them into the respec­tive busi­ness plan­ning at an early stage as a key growth driver. We invest time, know-how and capi­tal in the sustainable digi­tiza­tion of our port­fo­lio companies.

Why? The digi­ti­zed economy not only opti­mi­zes exis­ting busi­ness models, it above all opens up new poten­tial for value crea­tion, at least for those who can look. In our view, the four most important drivers of digi­tal trans­for­ma­tion are: digi­tal custo­mer access, access to digi­tal data and its analy­sis throug­hout the entire value chain, real-time networ­king with incre­asing storage capa­ci­ties, new types of produc­tion methods, and automation.

Our inves­tee compa­nies go through a multi-stage and inter­ac­tive process, ensu­ring that know­ledge, metho­do­lo­gies and succes­ses, as well as soft­ware solu­ti­ons, are shared within the inves­tees. To this end, we regu­larly invite so-called Digi­Days and expert round­ta­bles within our Sectors, where CEOs report on their measu­res, succes­ses and experiences.

3. What impact have you seen through digi­tiza­tion of the port­fo­lio compa­nies? In gene­ral and in terms of value enhancement?

In gene­ral, we can see that busi­ness models and stra­te­gies have “digi­ti­zed”, i.e. digi­tiza­tion is fully opera­tio­nally inte­gra­ted in all busi­ness plans. Even compa­nies that are still at the begin­ning of the imple­men­ta­tion phase provide answers to the right ques­ti­ons: How can our busi­ness be approa­ched disrup­tively? Can I get it from the Triton network or do I need third party colla­bo­ra­ti­ons? A parti­cu­larly posi­tive aspect is that the exch­ange between compa­nies has increased consider­a­bly. Know­ledge and expe­ri­ence, as well as cont­acts, are readily and actively shared across sectors and geogra­phi­cal boun­da­ries. Compa­nies achieve value growth by incre­asing reve­nues through winning new markets and service offe­rings, as well as more effec­tive innovation/production manage­ment. In addi­tion, these days you need a resi­li­ent digi­tal stra­tegy with demons­tra­ble succes­ses when you exit.

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