Small and mid-size organizations in the information technology industry are increasingly placing an emphasis on scaling their enterprises to meet demands and redefine success in their markets. Synergy 2023, a gathering of over 2,200 member companies of ITServe Alliance, reflected that focus with a variety of speaking engagements and networking opportunities designed to cultivate further innovation among IT business leaders. Phaneesh Murthy, founder and CEO of business agility consulting firm Primentor, took center stage as one of the keynote address speakers during Synergy 2023, speaking on the topic of “Strategies for Scaling and Sustaining a Successful IT Company from One to One Hundred Million Plus.
Phaneesh Murthy in the Spotlight
No stranger to attention and leadership, Phaneesh Murthy has nearly three decades of experience in IT business application and strategy. Throughout his career, he has overseen the restructuring and management of Fortune 500 outsourcing deals, helping brands maximize their infrastructure with the right balance of talent and technology capital. He advises corporations on how to increase their own agility during times of change by looking into new ways to apply technology and operational efficiencies to create connected value chains that thrive in the face of uncertainty.
Rather than waiting for global trends to impact corporate business, Phaneesh Murthy is an advocate of using intentional business disruption to drive growth. Under his direct leadership, companies have experienced multi-fold revenue growth through the use of new business models, leadership transformations, and optimized tech-ops footprints. In addition to overseeing Primentor’s own growth, Murthy continues to consult for multiple private equity firms and take on speaking engagements focused on helping entrepreneurs and leaders convert their organizations into high-growth companies.
Creating Value from the Ground Up
Taking the stage at Synergy 2023, Phaneesh Murthy emphasized the importance of creating value in service companies with an eye toward an eventual exit. To do this, he noted that discontinuity in business models brought about by IT disruption has often led to opportunity for firms to grow, evolve, and exit successfully. “If you look at various discontinuities in the market, you can almost identify that companies which latched onto some discontinuity, either a business model, a technology, or an operating model, are the ones who have created real greatness,” said Phaneesh Murthy.
Murthy mentioned the unique perspectives leaders can take when it comes to revenue and margins. While most leaders can hyper-focus on revenue figures, top entrepreneurs explore the quality of revenue and the strength of their growth engine. Firms looking to acquire other businesses place a special focus, and are often willing to pay a premium, for service companies that can demonstrate they are high growth. In tandem, establishing a solid margin structure can help businesses achieve outstanding marketplace value. Both revenue and margins, Murthy posited, can benefit from the application of newer age services, which have been proven to grow budgets for Fortune 1000 companies. By being open to and flexible enough to embrace digital services across the cloud, brands can open themselves up to higher valuations and a growing budget line.
Measuring Your Place in the Value Chain
Phaneesh Murthy takes both a narrative and calculating approach to helping companies determine where they can expect to place when it comes having their worth evaluated. During his Synergy 2023 presentation, he showcased his methodology for helping leaders determine where they fall on the value chain. This included exploring a number of different operational areas including organizational value add per employee and staffing. Specifically for services companies, he noted that there are several different layers to consider from project management to specialized and advisory services. Each of these will have a different sponsor or interested party advocating (or not) for that aspect of the business.
Understanding how to position these advantages and offerings to potential buyers can give service companies an advantage in the marketplace. The ability for leaders to go up a value chain to achieve better valuations starts by understanding how to move up from the bottom layer of that chain. “The bottommost layer unfortunately is treated as largely commodity. It’s treated as non-sticky revenue,” said Murthy. By changing the equation and going up the value chain, companies can change the equation and take more control over their destinies.
Phaneesh Murthy on Service Providers’ Futures and the Application of AI
Any IT leader would be remiss not to touch on the impact that artificial intelligence and machine learning are having on worldwide industries, and according to Phaneesh Murthy, service companies are no exception. While AI stands to change how companies do business, Murthy cautioned that the key was how organizations practically implement it and whether those uses are internal or client facing. Organizations face a unique opportunity to hyperscale and expedite their revenue growth by taking advantage of the efficiencies that AI has on offer.
To do this effectively, Murthy referred keynote attendees to two services: prompt engineering and reliability and validation engineering. Prompt engineering holds potential for organizations to optimize the prompts of AI training models, guiding them to deliver the right value to a company. Validation engineering confirms that AI is providing a benefit that matches, or replaces, the effort that could have been put forth by a human resource. Murthy notes that while AI can provide a bevy of benefits, leaders should ensure that they are applying these systems and services in a way that answers whether or not the technology is doing what they expected for the objective they have in mind rather than having their objectives rerouted or driven by the technology at hand.
Getting Ready to Pivot
In closing, Phaneesh Murthy entreated listeners to consider whether they are truly ready to pivot their businesses by changing their operational models. To create and demonstrate value across revenue and margins poised for growth, many leaders may find themselves on the verge of requiring organizational changes that implement technology and techniques to supercharge their evolution. He asked the audience to consider, “Are you comfortable doing something which will change your current model to a much more leading-edge model and take advantage of the leading budgets?”
While the answer will vary from business to business, Murthy believes that, ultimately, fast and hard work are critical for service companies to survive in competitive markets and perform profitable exits. Those able to pivot and adjust to the technology and demands of the times are likely best positioned to succeed in generating enhanced value for their companies through everything from technology application to revitalized business strategies and restructuring efforts.