The client is a global IT leader with hundreds of product offerings across hardware, software and services. They regularly acquire mid-sized software firms and seek to integrate and optimize their product portfolios.
The Challenge
The client had acquired a data warehousing software company with 400+ enterprise customers. Revenues for the legacy on-prem solution were beginning to decline as SaaS solutions captured greater market share. The client needed a trusted partner for extended product and customer support, who could deliver improved cash flow/cost savings and better CSAT and upsell/cross-sell opportunities. Maintaining a strong focus on SLAs, delivery excellence, and customer satisfaction was also important for the client. Looking to the future, the partner would need to build tools for migration from the existing data warehousing app to a modern SaaS version, to accelerate revenue growth.
The Solution
To deliver successfully on this multi-part challenge, Persistent employed all six of its proven “levers” — including scalable engineering, captive center evaluation, legacy carve-out and professional services, R&D IP creation/co-fund innovation and enterprise access.
At the time of the acquisition, Persistent had been actively engaged with the data warehousing software company for more than twenty years, accumulating a wealth of product development and support experience. We had also supported the larger (acquiring) firm across hundreds of products and clients. It was clearly advantageous to all stakeholders for our engagement to continue.
Persistent proposed an engineering ownership-based partnership based on these pillars:
An ensured, risk-mitigated transition while delivering the inflight product releases
Leveraging Persistent’s Global Delivery footprint to deliver more efficiently
Leveraging Persistent’s technical expertise, and our existing long-term relationship
Source code license for the data warehousing application(s) to be purchased by Persistent
Persistent took over product support and developed a roadmap for predictable, declining year-on-year costs to support the product roadmap. Next, we produced an accelerated roadmap for development of the re-imagined data warehousing app. A key element in the cost control strategy was optimizing team resources: Persistent re-badged 100 of the client’s headcount (72 in the US and 28 in Poland). Further, Persistent invested in a shadow team for four months to enable effective knowledge transfer from the client’s engineering teams.
The Outcome
Our agreement with the client projected a 40% cost savings over five years, starting in Year One; to date, our engagement has yielded total savings of more than $124M, with projected five-year savings of $200M. This includes Persistent’s payment of $21M over three years for source code licenses, with Persistent receiving a 20% royalty share for signed contract value. Currently, 100 FTE resources continue to work on next-gen data warehousing development for the client.
