Will Boomi’s strategy succeed with new management?

It is always hit or miss whether a blog post will solicit dialogue from readers. TBR’s recent blog post Who is going to want Boomi? certainly struck a chord. The blog focused on the actions of the private equity firms intending to acquire Boomi, which ultimately led Boomi to provide TBR with deeper insight into its most recent achievements, activities and aspirations as the company moves to new corporate ownership. Boomi has a sound growth strategy with a high chance of success, assuming the company and its new owners are in strategic alignment.

Evaluating the business using an inside-out/outside-in construct provides a reasonable framework for the market implications Boomi ― and really any integration PaaS (iPaaS) vendor ― will face in the years ahead. The situation starts with a universal fact: Digital businesses gain a competitive advantage against peers if they automate the flow of data across their organization. Any step where a business has to add labor when a peer does not is a cost disadvantage. In this respect, Boomi’s value is twofold: 1) automations can be built into the process and tightly integrated so that they don’t break as applications evolve, and 2) organizations can create even greater advantage when they are discovering data from all of their sources and understand the data and applications involved in the automation process.

Figure 1

Outside in: The rise of data management and asymmetric competition

Our initial blog on the sale of Boomi referenced UiPath and startups Kong and Entefy as potential asymmetric challengers to Boomi’s core value proposition. Additionally, you have the basic PaaS offerings from the exascale cloud platforms providing prebuilt connectors and myriad additional services for security, data protection and data management. SaaS players, as mentioned in our prior blog, offer prebuilt integrations to popular, adjacent applications. Numerous vendors vie for what they generally call single-pane-of-glass management in multiple forms, with all vendors stressing analytics and automation in some manner.

Just as paramount is the economywide war for talent. Qualified talent versed in new technologies and tools are sought virtually everywhere, making it an employee’s market. As is the case with any acquisition, talent retention and recruitment will be key to the innovations Boomi has charted out in its development road map. In acquisition parlance, it is called putting “the golden handcuffs” on essential personnel to ensure they do not jump to a competing firm. Locking down key engineering talent will be critical.

Situationally, iPaaS tool sets can be acquired either in best-of-breed fashion or by standardization on one platform that is expansive enough to solve an immediate need and evolve with the organization. In large enterprises, there could be a mix of tools based on those brought into the organization via acquisition. In this way, iPaaS brands can be pigeonholed for what they have been offering and not necessarily given consideration for their go-forward innovations. In turn, tool purchases are often a derived decision as part of a broader initiative. The cost is justified in terms of the time savings for the business initiative rather than how the purchase will make the life of the IT department easier.

It is for this reason Figure 1 references “Strategic Alliances; ‘White Label.’” Externally, many global systems integrators (GSIs) are pivoting to managed services offerings, especially the advisory firms with deep tax and audit credentials, whose distinction comes from the tax and audit knowledge base they can automate to address data management, governance and compliance rules.

By underpinning GSI software development with its own tools, Boomi can gain a distinct selling advantage into large enterprises as it will have these influencers and quasi sellers  at its disposal. Tighter relationships will also help Boomi keep an ear to the ground on the emerging technology vendors that GSIs and early adopter enterprises are considering and those that pose an asymmetric threat to the Boomi core.

Furthermore, Boomi made clear it does not aspire to substantially grow its consulting and services operations. GSIs will find this clear swim lane delineation refreshing considering the ways in which traditional services and software firms are beginning to encroach on one another’s core offerings.

Inside out: Transforming direct selling and creating new demand through ‘add to cart’

As a technology firm selling technology to IT departments, Boomi has sound, traditional selling motions. Increasingly, however, we hear the clarion call of selling business outcomes, and that move to consultative selling to lines of business will be necessary, given technology matters less and less while people and process matter more. In turn, studies show buyers want to self-research products and then self-provision those products from online portals.

Boomi has made steps in that regard with the availability of its AtomSphere Go edition, which aims to give customers a frictionless buying experience, at an early entry price point of $50 per month. AtomSphere Go also gives Boomi a way to disaggregate the various services in the existing offer to allow Boomi to move down market to reach late-majority enterprises. Additionally, Boomi recently announced AtomSphere Go is available on Amazon Marketplace, the mecca for seamless, add-to-cart ordering.

That type of selling, often called “land and expand,” has a very different set of operating best practices than traditional direct, or blue suit, selling. The aspiration of this kind of selling is lifetime customer value (LCV). It requires a different type of telephone support that is part technical advisory and part consultative selling for cross- and up-sell opportunities with smaller enterprises.

It is also a business model where revenue and expense do not align to the 90-day quarterly reporting cycle. This requires a leap of trust to embark on such selling approaches, as costs will far outweigh revenue until scale is achieved and the “flywheel effect” kicks in. For startup operations it is a very prominent challenge, and for Boomi the challenge will come more from setting up the operations with different motions and finding a way to balance investing in selling motions with awaiting payoff of the new add-to-cart operations.

Situation analysis: Never confuse a clear view for a short distance

TBR has laid out Boomi’s situation analysis levers as 1) talent retention and ongoing innovation to continue evolving a traditional space (iPaaS) that is being encroached upon by startups and established vendors on all sides, 2) heightened partner selling, and 3) a challenging shift to the add-to-cart selling model primarily to move down market, which requires fiscal patience. Provided there’s a vision match with the new owners, Boomi has solid platform depth and breadth with a reasonable innovation road map to survive and thrive in this ever-accelerating business pivot where automating data management, seamlessly moving data and empowering the right users to engage with data are paramount to maintain a persistent competitive advantage no matter the standard industrial classification (SIC) code.

So, what do you think? Will Boomi’s strategy succeed with new management?

In TBR’s newest blog series, What Do You Think?, we’re sharing questions our subject-matter experts have been asking each other lately, as well as posing the question to our readers. If you’d like to discuss this edition’s topic further, contact Geoff Woollacott at [email protected].

Who is going to want Boomi?

In TBR’s newest blog series, What Do You Think?, we’re sharing questions our subject-matter experts have been asking each other lately, as well as posing the question to our readers. If you’d like to discuss this edition’s topic further, contact Geoff Woollacott at [email protected].

What Happened

Boomi will be sold to Francisco Partners and TPG for $4 billion in yet another in a series of asset sales, spinoffs and engineering measures Dell EMC has been making to cover the debt load from Dell’s acquisition of EMC in 2016. But this is not about Dell and the efficacy of its strategic actions. This is about Boomi. Who is going to want Boomi?

It is a broad question in terms of customers and potential buyers. Ultimately, the acquiring equity firms that shelled out $4 billion for the assets will want to “optimize” Boomi to resell the operation in whole or in part for more than $4 billion after having added their “value.” Rarely are these equity firms eager to sink money into long-overdue R&D to align an aging portfolio to the current market situation. If they were home flippers, they would want to put a fresh coat of paint on the clapboards for a five-year fix, not strip the bottom four rows of siding, replace the sill damage, reside it and paint it for a 15-year fix.

Customer Situation

Boomi lags with API tool sets in an era often called the API economy. Even those with sound API management capabilities such as MuleSoft are now being called into question for not having API automation for push-button development capabilities. There are a lot of emerging companies, such as Entefy and Kong, getting serious evaluation in early adopter enterprises as the next leap forward in the iPaaS tool set space while UiPath receives mention in TBR’s discussions with customers as having the capabilities to swing into this space as well.

Boomi’s sweet spot seems to be the late majority large and midsize enterprises, with most of these customer applications residing on premises and many of them bespoke or highly customized. These data transport vessels are like the African Queen steamboat chugging along in the data river.  These data center leaders will not find out-of-the-box API integrations into their bespoke applications from the leading SaaS apps they may be adopting at the start of their slow roll to native-cloud applications and data center consolidations that are a threat to Boomi as well as the traditional hardware manufacturers such as Dell, Hewlett Packard Enterprise and Lenovo.

Those are the customers that will likely want Boomi, but the number of potential buyers will rapidly dwindle as the market trends that threaten that sweet spot support the continued acceleration of cloud migration, sparked by the pandemic. Specifically, Salesforce’s 2018 acquisition of MuleSoft provided the SaaS front-office leader with an integration layer to tie together its proprietary solutions, in addition to integrations with AppExchange, its app partner ecosystem. While MuleSoft was born in legacy IT, its combination with Salesforce provides MuleSoft with substantial capital to innovate and evolve its offerings for better alignment with Salesforce by enhancing its tool sets for cloud application integration. Boomi’s challenge is to take these core strengths for business-to-business/EDI management and easy self-service reporting and integrations and build out the API and AI/machine learning capabilities sooner rather than later.

Buyer situation

In terms of who may want Boomi in their portfolio, the current owners likely eye Salesforce’s $6.5 billion acquisition of MuleSoft as the kind of pinata they hope to crack open with this $4 billion swing at a payoff. To TBR, that is likely a swing and a miss due to the aging portfolio issues referenced. Yes, SaaS players will increasingly bake in iPaaS tool sets, but emerging SaaS players will be less inclined to worry about on-premises and bespoke integrations where Boomi excels as they will be to have out-of-the-box connectors to market-share-leading SaaS apps in other segments.

This leaves buyers looking to consolidate aging assets to profitably manage opportunity in declining markets. A sound firm such as Informatica can follow the acquisition strategy deployed to great success by Computer Associates (CA) in the late ’80s and the ’90s as minicomputer consolidation started. In essence, CA became a software distributor of disparate, stand-alone utilities and tools for the various proprietary install bases that started their slow decline into irrelevance as Intel/Microsoft ate the data center. The CA acquisitions in that era were often asset sales, however. Ultimately, that consolidation caught up to both CA and BMC. While they are in operation, they likely lack the cash flow to justify adding Boomi to their boneyard — unless, of course, the equity partners decide to cut their losses if the financial pinata fails to crack open.

So, what do you think? Who is going to want Boomi?