Business in focus: Somo
Tim Holbrow joined Somo, a digital product accelerator, in 2015 to help lead the company as it grew into a larger, more global phase.
Tim was selected in 2013 as one of the Hot 20 FDs in TMT by BDO LLP and holds a BSc in Maths and Computer Science from the University of Exeter.
After spending four years at PwC, Tim spent eight years leading the finance function at Symbian, the market-leading smartphone operating system at the time, and would see the company grow from a start-up to a global business and eventual acquisition by Nokia in 2008. Following the sale to Nokia, Tim managed the operational launch of the Symbian Foundation and joined as its CFO.
More recently, he served as CFO at B2B eprocurement network Procserve, where he led the operational separation of the company from PA Consulting, and its acquisition by Basware for €25.9 million in April 2015.
So what is a Digital Product Accelerator?
Businesses in every sector and every geography are experiencing significant disruption from new digital technologies. They’re finding themselves facing competition from new entrants to their markets as well as from advances made by their traditional competitors. On top of this, they find it hard to develop the skills internally and, critically, to build the digital product culture required to build strategies and products to take advantage of the opportunities technology presents, and to deal with its threats.
Somo answers this problem by providing a ready-made team to help clients build their digital strategy, work with them to design the products and experiences that will add real value to their businesses, and then build and deploy these products in the most efficient and effective way possible.
We accelerate our clients’ ability to deploy the digital products that will transform their businesses: we are a Digital Product Accelerator.
We use our Rapid Actionable Innovation (or RAI) engine, a process for digital transformation honed while developing over 400 products and experiences for mostly large blue-chip clients.
The RAI engine delivers three key components of success for our clients: rapidity, actionability and innovation:
- Rapidity – clients need a strategy that can deliver quickly, which is essential in order to stay in line with fast-moving technical innovation and ahead of competitive disruption. We deploy Modern Engineering processes that regularly deploy products in months that had previously been expected to take years.
- Actionability – products need to deliver real value to the customer journey. This is not technology for its own sake but instead impactful technology delivering real advantages in experience, effectiveness and efficiency.
- Innovation – Somo is uniquely positioned to bring real innovation to the products we develop. We work across multiple sectors and geographies and so can bring that diverse experience to a new product in a way that would be very difficult for an internal team.
How big is the company? And what kind of people do you need?
The people we have at Somo, and the culture we’ve built here, are the key to the success we’ve had and to the niche that we have in the market.
We have a team of around 140 with deep experience across the digital and technology industries. Somo people tend to be ‘T-shaped’ in that, whilst they have this deep expertise in their field, they also have broad knowledge and experience across other technologies and sectors. The team is underpinned by a values-based digital culture which fosters innovation and continuous development.
Industry: Information Technology and Services
Company size: 51-200 employees
Ownership: Privately held
What kind of projects do you take on?
Whilst every product we build is unique due to the breadth of clients and experiences we’re delivering, you can broadly categorise them by the type of interaction that that are digitalising.
We deliver products to allow the customer to self-serve. These are the more traditional customer interactions with a brand, such as with an app or a website. We also deliver products into the hands of staff better to serve the consumer and make their buyer journey more efficient and enjoyable.
Increasingly, we’re seeing product requirements that place technology directly into the interaction between staff and customers. For example, we developed a tablet-based retail application for a global luxury brand. They were able to use this platform to rethink their retail space around a true luxury experience, removing PCs and fixed desks. Handheld access to live inventory data from their SAP system, presented beautifully, allowed them to increase their sellable range and customer conversion and resulted in a clear, significant ROI.
So you sit at an interesting inter between tech and creativity.
Absolutely! Digital products and experiences are a relatively new market, growing up in the interface between the more traditional digital marketing (selling to the CMO) and IT systems (selling to the CIO) markets.
The incumbents of those two markets are each trying to enter this centre ground: global digital marketing brands are acquiring technical skills, and IT systems vendors and systems integrators are adding creative and design.
And you offer the best of both worlds?
Yes - we have Modern Engineering, Product Leadership and Design Culture already baked into our DNA. This is a big competitive advantage and allows us to punch above our weight in a market where others are trying to add these to their legacy offering.
We often go into meetings with clients, pitch and win against larger, more established agencies, because we’re able to deliver world-class experience design blended with strong, innovative product engineering.
So it’s about deploying the right tech to facilitate those seamless user experiences?
Yes. Somo started off focussed on mobile but has evolved with the market so that mobile now is just one tool among many that we use to solve challenges in customer journeys. We have products live on augmented reality, virtual reality and IoT. In addition to these form factor choices, we utilise a very broad range of technologies under the surface. Our Technical Architects will often guide our clients to new embedded technologies to deliver more suitable, or more flexible / future-proofed solutions.
Part of your secret sauce is that you have developed a framework that enables you to get from concept to reality very quickly…
Yes. This is our Rapid Actionable Innovation engine.
Essentially there are two phases to our product development: product conception and product realisation, with one flowing into the other.
Product Conception engages with a broad client team, helping them to create their innovative vision for deploying technology into their staff and customer life cycles. We will then build a product road map, conduct any required proof of concepts then accelerate towards building an actionable prototype. All of this can happen within a few weeks, giving the client a prototype to try out, share and explore options. This process is focussed on tying down the actionability of that product to make sure it is finely tuned to deliver value to the business.
We then go through rapid launch and get ourselves to what we call the minimum loveable product (or ‘MLP’), a complete product with enough substance and wow factor to it that you can put it into the hands of staff.
Following the roll-out and review of that MLP, we move into Product Realisation. Continuous improvement and hardening of the product ready for launch and scale. We use Agile development to stay very close to the client, getting constant feedback to ensure that we remain on track and are delivering RoI.
Finally, and perhaps unique to Somo, we move to self-sufficiency. We work with the client during the transition period to guarantee ongoing success, including services to help embed a digital product culture. Unlike other consultancies we have no desire to bill for support and maintenance, as we know they can do this more cheaply elsewhere, and we’re confident that we will roll into the next innovation programme with the client.
What role has investment funding played in the growth of Somo?
Somo remains a majority owner-managed business. We have one institutional investor (MMC Ventures), but otherwise have managed to grow the business without taking additional capital investment (and hence diluting the equity owners). We’ve made use of asset-backed lending where required for working capital.
How has the business grown? And how do you manage growth?
In recent years we have a compound growth rate of around 25%. Of course, in a consulting business it is harder to grow at exponential levels than it is in a product business; the organic growth is rarely going to exceed that kind of rate.
The challenge is to manage the friction between revenue growth and profitability,. It is tempting to cut prices to buy revenue growth, but this quickly causes problems as you find your overall margin under pressure.
Our approach in the main has been to stick to our value proposition and win the right business at the right margins for continued sustainability. Over the past couple of years we’ve focussed on improving our controls and reporting to give us very fine-grained visibility on profitability. This has allowed us to raise margins back to target levels by careful management of resourcing.
Managing margins, revenue growth and also investment in business development are key areas where we spend a lot of time getting the balance right for long-term sustainability. It’s imperative in a services business like ours that we maintain the right profit levels – we’re selling time so there’s no going back if we miss profit targets.
How do you maintain an innovative culture against the pressures of product delivery and the requirement to grow?
You have to be deliberate about placing value in the right things. At Somo we have a values-based culture, and we set a framework around our core values: Love Innovation, Create Success, Lead with Knowledge and Be Brave. These are communicated and reinforced by the management team, we celebrate them by awarding Values Champions, and they give Somo people confidence to prioritise activities that help them achieve and grow.
Specifically on innovation, this is a core part of our product, Rapid Actionable Innovation. In order to maintain this, we have to invest in it. In our business that means ring-fencing time for development and innovation that could otherwise be used for client work. This is counter-intuitive to the short-term need for growth, but more than delivers in the long term as we can offer better products to clients.
So even when the pressure is on to raise utilisation levels and gross margins, we ensure that Somo people have the time and space to be able to go to conferences or spend time understanding a new platform release.
We also set aside time for particularly innovative products, including non-profit work in some cases. We’re working with a number of start-ups and are able to give them access to senior technical expertise that they would not be able to hire direct, but on a very flexible basis to suit their funding. In several cases our Technical Architects have found technical solutions to problems that were looking like showstoppers for them. The mutual benefit of this is that we can engage our teams in a wider variety of work and this experience often benefits our larger clients.
In what ways does tech make your own job easier?
We deploy technology in the supporting processes wherever we can. Almost everything we use is cloud-based and mobile friendly which has obvious advantages for our people who are regularly out of the main office at client sites. It also brings significant cost savings.
From a finance perspective, we’ve automated much of our day-to-day processing so that we’re very lean. We have a small team of senior staff as a result, focussing on more strategic and value-additive tasks.