UC4 Software Acquired by Growth Investor. What Do You See?

UC4, the world’s largest independent IT Process Automation Company, yesterday announced thatEQT Private Equity Investors agreed to purchase the company from The Carlyle Group. EQT is the leading private equity group in Northern Europe with nearly $18 billion in raised capital. When asked, “What do You See in UC4?” EQT said, “We see a highly attractive growth company.” This is a great first outcome for UC4, a highly successful, but relatively unknown company. Here’s why.

UC4 is in a great position to rapidly accelerate through an opportunity to lead a new, important, valuable IT category. A growth investor (versus a value investor) will clearly benefit the company. UC4 created its leadership opportunity by making smart, time-tested moves. These moves are highly repeatable, and offer lessons to all.

1. Move: UC4 aggregated a number of automation tasks onto one unified IT automation platform. UC4 even named the single platform, ONE Automation.
   Lesson: Category leadership always comes from a single, unified platform not from a loose collection of point tools. This holds true for all major software categories, and is even true in other industries.
2. Move: UC4 needed to lead a category important enough to be seen as strategic. IT Process Automation is that category. UC4 built the business case to prove that automating processes is more effective than automating tasks. Chasing tasks, argued UC4, is about efficiency whereas driving process automation across the board is a way to create top and bottom line value.
   Lesson: Category development is key if you can pull it off. Categories happen through the combination of efforts by industry leaders and analysts. In every case you need to be the thought leader for the category. You need to be seen as the company that has it figured it out. You need to be seen as the trusted guide.
3. Move: UC4 used it customers to help communicate to the influential analysts so they would a) see the strategic value of UC4 in IT process automation, and b) understand that UC4 has functionality leadership that can translate into market leadership. Indeed, UC4 achieved leadership status according to the top analyst firms and reports.
   Lesson: Analysts are incredibly influential – especially in IT. You have the power to help them see (and feel) the value of the space and your role in its development. This requires time and effort, but it’s well worth it.
4. Move: UC4 challenged the status quo and those who represent it, namely the largest system management companies in the distributed computing space. As UC4’s CMO likes to say “It’s UC4 vs. the Big 4”. By naming ‘the enemy’ clearly, the debate and choice becomes clearer. By using provocative statements such as “ONE Automation” and “OpsDev not DevOps” UC4 makes its anchor points and differentiation central to the debate or choice. UC4’s CMO inherited a good, but not great tagline, Rethink Automation. ‘Rethinking’ anything is a challenging action but the tagline lacked both context and identity. So, the tagline was modified to Rethink IT Automation with the reason(s) in front of it such as “Cloud. Rethink IT Automation”. The four major trends affecting IT are the reasons to rethink: Cloud, Big Data, IT as a Service, and DevOps. A unified process automation platform is UC4’s answer to helping IT effectively manage through its transition from distributed architectures to virtual and cloud architectures.
   Lesson: Challenger brands have to be clear and provocative in relation to what and whom they’re challenging and why. In so doing, challenger brands also must be compelling in how they convey why their solutions are smarter and better.
5. Move: UC4 had very little name recognition especially among strategic decision makers in IT operations. It was easy for the unknown UC4 to be seen as a risk relative to the Big 4. UC4 understood it needed to rapidly get its name known within the context of its challenger positioning. So, it used the simple device of putting its name in all communications off of the reference:
   This theme is creatively brought to life with sunglasses, whiteboards, posters, see-through business cards, videos, and hologram-like reveals. As a flexible but consistent creative platform it reinforces UC4’s identity, which awareness-wise is UC4’s biggest challenge and opportunity.Lesson: Brand recognition is critical. Working it into the essence of a challenger brand and creative campaign is rare, but really cool.

Disclosure: UC4 has been a client of 21Weeks since 2011.

Thomas Butta