What Makes a Great Software Company?
By Joe Skorupa
Last week at the Aptos user's conference Jason Wright of Apax Partners, the private equity firm that owns Aptos, walked to center stage during the opening session and said, "No great stand-alone company exists in retail software today and we see this as an opportunity to become one." It was a bold statement and a couple of questions quickly came to mind: What makes a company great and why does it matter? Here’s my take on how the Aptos conference answered those questions.
At first I thought, surely there are great software companies in retail, right? But then I thought about the Wanamaker rule. It states that half of ad spending is effective but the problem is you don't know which half. This rule also applies to software deployments, according to my experience in the industry.
If you talk to veteran CIOs who have done a number of deployments they will tell you (off the record, of course) that 50% of all software deployments do not come in on time or on budget and there are studies backing this up. So, in that regard, much of the overall retail software landscape can’t really be called great.
Also, the same CIOs will tell you that once deployed, 50% of these projects do not make a meaningful difference in overall business performance. In fact, studies have shown that many CIOs cannot measure a significant overall difference after a major new software deployment goes live. So, that’s not so great either.
And finally, CIOs will tell you that hype and over-selling the promise of a software deployment, from timeline to budget to impact, is a well-known tradition in retail technology. So, clearly there is room for a “great software company,” whether it is stand-alone or not.
You Can’t Copy Culture
Wright made one further point in his brief appearance in the opening super session, which was a multi-media production featuring stagecraft and relevant retail characters. He emphasized the heart of a great company is its culture, its people, and he added this additional point to explain why this is important to the success of a business: “You can’t copy culture.”
As noted, a great deal of the Aptos conference, held at The Mirage Las Vegas Resort and Casino (May 2-5), was focused on embodying what it means to be a great company with a great culture. Here are some takeaways from the one full day I was able to attend:
- The official title of the head of Aptos, Noel Goggin, is CEO and Culture Leader, which has to be unique in the world of retail software. This means that the drive to create a “great culture” and execute it at Aptos comes straight from the top, which is the only way to ensure success beyond lip service, which is all too common in corporate America.
- Aptos recently completed a roll out of cloud software for all of its own internal systems. Every application used by Aptos at headquarters or in the field is in the cloud. This means that Aptos’ own account managers, field reps and senior executives eat the same dog food their retail customers eat. They walk the walk and talk the talk.
- The company has created a mission called the Aptos Way, according to chief culture evangelist Goggin, which aims to embody “the pioneering spirit, problem solving and a sense of urgency, a sense of community, collaboration and philanthropy, as well as authenticity, transparency and humility.”
- Retail ROI, a retail industry charity that intelligently distributes funds to organizations around the world to change lives of vulnerable children, played a prominent role at the conference both on stage and through a silent auction that raised funds. Aptos has committed people and resources, through its association with Retail ROI, to a long-term effort in Haiti to teach children to become self-sufficient and leaders in generational change.
- During the award ceremony, a staple at technology users’ conferences, Aptos turned the model on its head by getting retail customers to nominate Aptos representatives for outstanding achievement. The winners were kept in the dark about their awards and totally surprised when they were called up to the stage. In fact, Goggin had to invent some tall tales to ensure several of his folks attended the event and were on hand to accept their awards.
- By “great stand-alone company” Aptos is referring to its sweet spot, which Goggin describes as retailers who have revenue between $100 million and $2 billion. There are a few great mega-software companies that serve retailers with revenue of $2 billion and up, but their orientation toward big customers can cause friction for smaller retailers. Aptos aims to be “great” and differentiate through its culture while playing in its sweet spot, although as Goggin points out, the revenue ceiling is getting higher.
- One of the great business authors, Pat Lencioni, was a major keynote speaker brought in for inspiration. Lencioni wrote “The Five Dysfunctions of a Team,” a bestseller that is required reading for many leadership teams. “Organizational health is the last largely untapped potential in business,” said Lencioni. The problem isn’t lack of intelligence. Every company is smart or it wouldn’t be in the game, he explained. The health of the organization, based on reducing politics and confusion to a minimum, is what leads to success. In fact, it is a multiplier of success. It seems clear that the five lessons outlined in Lencioni’s book have taken hold at Aptos.
There was lots of news at the Aptos users’ conference, including new hires for CTO, CFO, product management and customer-facing solutions, as well as many notable retailer roll outs (True Religion, Boot Barn, Plow & Hearth, Art of Shaving). But the main story is that Aptos is a new company, about a year old from the time of its spinoff from Epicor. How does a new retail software vendor get off the ground in 2016?
Its challenge is not just to learn how to stand on its own , but to build a company infused with a strategic vision that enables it to stand out in a crowded field. Aptos is very clear about what it wants to do and where it wants to go. It wants to serve companies differently. It wants to be customer-centric as opposed to product centric, authentic as opposed to spreading hype, outcome oriented instead of sales oriented, and great instead of good.
Does all of this really "amount to a hill of beans," as Bogey asks in the movie “Casablanca”? It does if you are trying to build a new company from the ground up and need help in getting customers to become collaborators in your success. Another way to state this aspirational goal is to quote the closing line of the movie, “I think this is the beginning of a beautiful friendship.” Aptos has a long way to go to meet its "great company" goals, but with a beginning like this it appears to be off to a beautiful start.