Salesforce: Accelerating growth through front-office digital transformation

Building a front-office transformation roadmap early in the investment cycle accelerates time to value, says Salesforce’s global head of private equity practice, Sarah Walker

This article is sponsored by Salesforce.

In this interview we hear insights from Sarah Walker, Salesforce’s global head of private equity practice, to help private equity firms support their portfolio companies to navigate their front-office digital transformations.

The pandemic has exacerbated shifts in consumer behaviour and business operating models and exposed companies lacking the digital capabilities to adapt. Portfolio company executives, supported by their private equity operating partners, are doubling down on digital as a core value-creation lever to meet the growth targets formulating the basis of the investment thesis and value-creation plan. As Walker explains, this lever can help companies to set up for success, build a robust understanding of the customer, all the while serving their customer base in an agile and scalable manner.

Covid-19 has accelerated the shift to digital massively. How have companies adapted so far?

Sarah Walker

You are absolutely right that the pace of digital transformation for businesses all over the world has only accelerated over the last 18 months. Once a competitive advantage – to engage customers and clients across multiple online channels – digital has now become a core business imperative, essential to the very survival and growth agenda of a business.

As Salesforce’s chief revenue officer and president, Gavin Patterson, said, we saw five years of digital transformation in five months. The shift has occurred partly out of necessity, as offices and physical locations closed and businesses had to harness digital tools to engage with employees and create collaborative and transparent remote work environments.

As online activity grew, companies across all industries turned to digital tools to build a proper data integration strategy, removing manual processes and siloes and to help connect data from online channels and feed the data into the business to foster customer knowledge and better demand predictability.

From a front-office perspective, connecting sales, marketing and commerce activities – integrating all customer, suppliers, B2B partner touchpoints and manufacturing data across sites, improves precision, agility, speed and scale. As selling shifted away from the field, there was also a huge focus on harnessing digital tools for reskilling purposes, for example to train field reps to sell from home. As a back-office efficiency driver, intelligent automation and robotic process automation have also continued to drive ROI, quickly enhancing top line growth, time to market and operational efficiency.

At Salesforce, we saw some fantastic examples of shifts to providing a digital experience. Two great examples include Fike Corporation and Sonos. At Fike, a leading industrial safety manufacturer specialising in protection mechanisms and solutions, they were able to switch online in just two days and complete its digital transformation in 10 months. And Sonos, the world’s leading sound experience company, was able to digitally integrate its commerce solution across marketing and sales leading to an 84 percent uplift year-on-year in direct-to-consumer business.

For many companies, revamping their digital front-office infrastructure to be fit for scale and their long-term growth prospects still presents untapped potential. For example, one of the key issues we still see is technology investments occurring without a proper digital roadmap, ie, tech investments made in one-off stages, leading to siloes, lack of collaboration, disconnected knowledge of the customer, poor control over processes and leaving millions of dollars on the table.

How should private equity firms approach the task of supporting their portfolio companies with digital front-office roadmap and tech stack redesign? What criteria should be considered?

A front-office digital transformation programme has the potential to support a portfolio company in achieving sustainable profits over time. How? By scaling the business cost effectively (think IT systems, infrastructure, architecture and business processes), improving the customer experience, enhancing operational efficiencies and agility, and, ultimately, driving top-line growth and speeding up time to market.

But that alone is not enough. The ability to achieve both short and long-term objectives and value-creation targets requires that you have a scalable digital foundation in place. A very important criteria to be considered is for technology assets and integration assets to be built for scale and reusability.

To achieve that, private equity-backed companies will need to have the right integration strategy, alignment from within the organisation and a KPI-driven view of the vision, mission and success metrics of their programme. They will also need to build some in-house capabilities to implement the digital transformation roadmap and to steer compliance across the organisation.

A frequent hurdle we see companies face is deciding between a point-to-point integration versus a platform approach. While a point-to-point integration approach may yield short-term results (ie, you get your initiative out the door relatively quickly), it is often at the expense of long-term scalability.

What should private equity firms focus on first when assessing the digital opportunity at a newly acquired company? Is there a step-by-step approach?

Time is of the essence. Private equity firms that take an active role in the transformation programme agendas at their portfolio companies will see greater business value, sooner. What this means in practice is that we recommend private equity firms assess their portfolio company on their growth journey by conducting an audit, or a diagnostic of the digital front-office, ie, all processes and technology that impact customer experience. It is ideal if this is done at late-stage due diligence, but it should certainly be within the first 100 days post-close when there is an impetus for change.

The next recommendation is to evaluate which levers are needed to accelerate revenue growth, productivity and efficiency in the front office, and then identify what technology partners are there to provide best-in-class solutions for each of those levers. Private equity firms should think at portfolio scale so they can try to address the same problem across multiple companies where they see repetitive use cases.

At that point, private equity firms can build a staged digital front-office transformation roadmap for the portfolio company. They can do this based on impact-driven levers to ensure scalable EBITDA uplift, accelerated time to value and, crucially, should prioritise those initiatives that are customer-centric.

One extra element that goes across all these actions is that private equity firms should not forget employee engagement within the portfolio company. There is a risk that investors craft a strategy at the board level, align with the C-suite, pick the tech – but then take a step back. Don’t expect that to land with the portfolio company employees. A lot of the cultural change required for employees to adopt these digital tools will require an integrated plan, commitment from the top, probably a project management office and other specialist resources such as robust employee communications. This is crucial for bringing these programmes to life so that you can see the uplift within the hold period.

In summary, as great digital customer experience has shifted from an advantage to an imperative, there is a lot to be gained from early hands-on involvement in front-office digital transformation programmes.

Why is integrating data and, particularly, integrating customer data so important?

This reminds me of a quote from Brent Hayward, CEO of MuleSoft, who emphasises that the challenge facing organisations in 2021 is being able to deliver digital projects more efficiently, while still meeting customers’ growing expectations for truly connected experiences. And the devil is in the disconnected data. Integration brings together multiple business systems to operate as a collaborative unit. The inability to connect data across disparate systems and applications negatively impacts customer experience. At the same time, integration challenges slow down IT’s ability to deliver on the needs of the business lines and internal functions to create connected customer experiences.

Integrating data is so important, particularly in private equity-backed companies where M&A and buy-and-build strategies are in play, because meeting this growing demand for digital initiatives will only be possible if all organisations democratise access to their data. They must empower all employees with the ability to unlock and integrate data – no matter where it resides – enabling them to deliver critical, time-sensitive projects and innovation at scale. When iteratively repeated, this process has the potential to reduce the cycle times of bottleneck processes, improve data and decision quality, improve organisational alignment along with team morale and engagement, and, ultimately, improve the efficacy of the wider enterprise.

And in our ‘work from anywhere world’, the need for synchronised and democratised data has only been further enhanced as collaboration, transparency and agility have been at the core of organisations’ focus, shifting to hybrid work models all the while striving to continue to win every customer interaction.