The Shared Performance (SP) Opportunity

By: Matthew E Meehan, October 11, 2023

Document Purpose and Highlights

Shared Performance requested my services to independently assess market opportunity and Go-To-Market (GTM) strategies for the company.  Enclosed are my research and findings.

Key Highlights

  • Impressive Track Record: Shared Performance has an industry-leading 14 years of experience in the field of Enterprise Outcome Management (EOM), that the founder invented.
  • Industry Agnostic with no Customization: SP has proven case studies in private, public, nonprofit and government with no customization.
  • Valuable Patent Protections: SP has been awarded patents that have built a moat since 2010 and which last until 2030.
  • Category Creation Potential: SP has the potential to create a new category similar in scale and success to that of Enterprise Resource Planning (ERP).
  • Customer Executive Access: SP gains access to boards, CEOs, and profit and loss owners that most software companies crave opportunities to engage with.
  • Market Size Opportunity: SP’s estimated market size for just public and private companies and nonprofit organizations is greater than $14.5B annually (without including the government market).
  • Multiple Go-To-Market (GTM) Strategies: SP’s default GTM has been direct sales, but significant opportunities to partner with consulting companies, software companies, private equity companies and advisory companies now exist.
  • Significant Growth, Licensing and Exit Opportunities: Shared Performance is well positioned for significant growth, partnerships, investment and/or strategic sale.
  • Differentiated Artificial Intelligence (AI): SP’s data is not just where you have been, it is also where you are going. Predicting outcomes with AI will be a major differentiation over other AI models.

Shared Performance Summary

Vision

Shared Performance is a technology company transforming organizational impact by offering leaders real-time insights into critical outcomes that dictate the achievement of their organization’s strategy and purpose.

History

Over the past 14 years, the company has built an impressive track record validating its outcome-based management approach in combination with proprietary technology within private and public companies, government institutions, and nonprofit organizations.

Outcome management dictates that, for an organization to achieve its strategy, it must achieve a series of outcomes, which are inherently cross-departmental in nature. In the current world, many organizations do not know how many outcomes they must achieve to successfully execute a strategic plan, how various outcomes are related, nor the real-time status of various outcomes. Taking an organization’s strategy and building outcomes back from this starting point will provide organizations with insight on whether their strategies are achievable, and—if not—how to either modify, invest, or re-prioritize to have the greatest success.

SP has developed proprietary software, SP Attain, to enable real-time and ongoing management of outcomes. On a high level, this software allows organizations to 1) visualize the outcomes and activities that are important for them; 2) align, link, and track outcomes in a live, collaborative environment to ensure that progress is being made towards key outcomes; and 3) predict achievement by understanding the status of critical outcomes in real-time.

Why it Matters

Outcome management matters because we live in a world with more software systems/tools, Key Performance Indicators (KPIs), and Objectives and Key Results (OKRs) than ever before—and yet 90% of organizations report an inability to deliver on their strategic plan. What we have gained in granularity has provided interesting (and often rear-view) insights. While this granular information is important to digest and utilize to modify tactics on an individual action level basis, it rarely can provide insight into the likelihood of achieving an organization’s stated strategy.

Despite a general increase in data, there has and continues to be a lack of instant visibility into critical outcomes that tie back to a strategic plan, how these outcomes are interconnected, and where risks to achievement lie. If an organization can see this bird’s eye view, drill down into it, and use the resulting perspective to understand what will happen instead of what has happened, the significant risk of failed objectives can be averted while productivity can be bolstered.  The practical implication of this capability is that it will allow leaders to see where outcomes are at risk months in advance, giving teams the necessary time to make changes to ensure outcomes can be achieved.  In any given year this impact is meaningful, and, on a compounding basis, it can allow an organization to be far ahead of its competitors and ensure realization of mission and vision.

SP is the Game Changer

Shared Performance provides real-time insight into what matters, allowing organizations to align performance, operations, and strategy in one system for the first time. SP Attain features the “HUB” which unites an extensive array of third-party system data into its real-time outcome management platform. This allows SP to:

  • Create entirely new datasets based on achievement of outcomes
  • Link individuals, teams, and systems to achievement ratings
  • Build an achievement network based on the above
  • Use achievement data to predict the success of an organization’s strategy

In an age where “data” is the new oil, what could possibly be more valuable than understanding those team members and systems that are most highly linked to critical results and—by extension—realizing an organization’s strategic plan?  This data will revolutionize HR approaches to staffing and the justification or elimination of tools that have significant overhead, but which are often hard to link to impact.

With patent protection since 2010 (and extending to 2030), SP is uniquely positioned to deliver a new category to the market: Enterprise Outcome Management (EOM). The universality of its approach and impact across numerous types of organizations provides tremendous opportunity for partners and investors:

  • Shared Performance is well positioned for early partnerships, investments, or strategic sale—as well as licensing opportunities—within the remaining 8 years of its patent window.
  • SP is industry agnostic, with no customization required per industry (i.e. private, public, non-profit, and government).
  • A direct Go-To Market (GTM) approach has already proven successful, and significant opportunities to partner with consulting companies, software companies and private equity firms offer additional short-term growth potential.
  • SP’s outcome-based focus generates an audience with boards and high-level executives, to which partners of all types crave access.
  • A market greater than US $13B in annual sales potential exists for SP just for public and private companies and nonprofit organizations —with significant market expansion as organizations include more employees, contractors, and partners in the process.

New Category Potential

It is imperative to dive into category creation, as SP is truly bringing a new category to the market: Enterprise Outcome Management (EOM). While more siloed project management tools, highly specific Return On Investment (ROI) tools, and general management frameworks exist in the market, there is no other product which can deliver an outcome-based platform to ensure the delivery of strategic plans for organizations. Category creation of this nature is a challenging effort that is not just about selling a product; it is about selling a new perspective or way of doing things, and often involves a combination of both education and marketing. SP has been on this journey for several years, and we will explore it further in a dedicated section. We will also explore how Enterprise Resource Planning (ERP), a similarly ambitious category at the time, scaled to become one of the largest enterprise software markets globally—thus highlighting the potential for EOM.

Enterprise Outcome Management (EOM)

To summarize, category creation in the business sphere can be likened to pioneering an uncharted territory. Rather than merely launching a novel product or service, it is about establishing and defining a completely new market category—one that is led and epitomized by an innovative offering. This process entails a departure from conventional norms and requires leading a consumer base towards a groundbreaking method of resolving issues, fulfilling needs, or satisfying desires.

The process of category creation commences with identification or invention of a unique solution that transcends the bounds of existing market categories. Following this, the challenge is to delineate this novel category in a manner that resonates with potential consumers, partners, and possibly competitors. Achieving this often necessitates a coherent and persuasive narrative that expounds what the category entails, its necessity, and how the novel product or service aptly fulfills these criteria.

Attracting consumers and partners to this nascent category is arguably the most formidable challenge. This is not merely about product promotion; it involves advocating a novel perspective or methodology. This typically necessitates a combination of education and marketing—akin to narrating a captivating story that envisages a superior future brought about by this new category. And in this narrative, the novel product or service emerges as the linchpin that makes this future attainable.

In conclusion, as a category creator, SP’s competition extends beyond features or price; its goal is to change the paradigm entirely. It involves persuading stakeholders to perceive a problem, need, or desire from a fresh perspective.

SP is taking the entire market on a journey from a non-unified world where strategic plans exist in an ivory tower and individual departments are managing discrete projects in siloes often disconnected from larger objectives to a place where real-time communication around the status and achievement of key outcomes needed to deliver on the strategy and vision of an organization are constantly aligned. This category is Enterprise Outcome Management.

Enterprise Resource Planning (ERP) Comparison

An Analogous Transformative Management Tool

The Enterprise Resource Planning (ERP) market provides an interesting study on a transformative category that has gained adoption in a widespread manner across all verticals and organization types. Its origins began in a specific vertical, the manufacturing segment, where the need to manage inventory and materials was a critical component of the basic activities (or outcomes) in which these firms needed to be successful. While the use case was straightforward, the technology was anything but; systems were custom designed, expensive to create, required a team of experts to maintain, and took up a lot of space. Eventually, several large software providers, including SAP, Oracle, and JD Edwards, set out to make this software accessible to more businesses.1 The initial Material Requirements Planning (MRP) revolution occurred in the 1970s.

In the 1980s, MRP II was an evolution of these critical yet complex systems that evolved beyond procurement-related concerns of inventory and raw material management to other departmental functions, unifying data into a broader operational context that increased company performance beyond just a few elements of the supply chain. Keen operators of companies in non-manufacturing verticals began to observe the benefit that integrating data from various operations had on the optimization of manufacturing businesses and began to explore how they may utilize a similar approach to increase performance. These companies collaborated with technology leaders like SAP to create a new category of software which linked data from various financial and operational systems to give a more complete lens into real-time performance than was available previously. This data could be used to improve planning decisions that used to require multiple years and reduce that timeline, enabling superior tactical performance and return on shareholder value. This collaborative effort between technology vendors, companies, and integrators/consultants spanned the better part of 10-20 years and fundamentally shifted what level of insight and data was acceptable for modern management of an organization.

By 1990, industry analysts (Gartner) launched coverage and named the category of Enterprise Resource Planning (“ERP”). These systems linked finance, accounting, sales, engineering, and human resources (HR), to serve as a single source of accurate data for the organization. Currently the ERP software market is one of the largest business software markets in existence, with annual sales of ERP software estimated between US $50-60 billion in 2022 and projected to grow to US $130 billion annually by 20302.

So, what is the reason for covering the ERP market evolution and creation of that category in this report? Well, MRP started because manufacturing firms realized that they couldn’t accurately (and cost effectively) fulfill a core outcome of delivering finished products to end markets if they did not have a clear picture of inventory and the material components of supply chains. Increased competition dictated that they do better. With capital markets evolving in the past 30-40 years—encouraging disruptors and increasing competition—this is no longer true just for physical goods producers but is now key for all companies. Hence, MRP transitioned to ERP and is ubiquitous across industry verticals. We are now at a crossroad where all companies that are seriously competitive in the market have access to data across their

operations—that is the new table stakes. These table stakes are also tactical in nature, even if the data feeds are used as input to strategic planning. Most companies can tell you what happened and have the numbers and figures to back it up. They can frequently tell you “where” success or failure emanated from (although this is frequently confused with “why”). When asked to pinpoint a driver that is connected beyond a KPI that reports past events, however, many executives can’t cogently explain why their strategy was not realized, or how to fix/improve it.

Enterprise Outcome Management (EOM), and SP’s associated software, will provide answers to these questions, much in the way that MRPs and then ERPs provided visibility into the data inside an organization. As 90% of organizations fail to achieve their strategic plans3, the market for this is universal, and we will explore different motivators for different market participants in subsequent sections after a brief review of the competitive landscape and market size.

With current focus and hype on Artificial Intelligence (AI), Shared Performance data may provide unique insights others can’t. Access to data about where an organization has been will help AI learn and recommend what that organization should consider moving forward. When AI can recommend how to increase outcome achievement, or even predict the best outcomes for achieving your strategy, those organizations will be ahead of the crowd.  EOM data through Shared Performance’s patent technology can enable this and will provide valuable context specific training for AI models.

Competitive Landscape

The competitive landscape is full of adjacent technologies that tactically solve specific project management, strategic planning, or performance management concerns—but which are not unified at an organizational level. This statement is not to be meant as critical of such applications, as they do help organizations realize ROI or increase productivity. They are not, however, linked back to a holistic view of strategies and outcomes on a holistic organizational level.

One such tool, Celonis, engages in an activity called “process mining.” Celonis states the following4:

  • The average company runs its processes over hundreds of systems that don’t play nice together.
  • This leaves a lot of room for process inefficiencies.
  • These process inefficiencies hurt your business performance.
  • Celonis is the system of performance.

Admittedly, Celonis is an impressive tool that has garnered US $2.4 billion in funding from a credible roster of investors, including Accel and Qatar Investment Authority.5 They break their solutions into: Process Excellence, Supply Chain Transformation, Shared Services Transformation, Systems Transformation, Finance Transformation, and so on. Their solutions have driven hundreds of millions of dollars individually in return to numerous companies that have invested in their software (which is an outcome). Regardless, Celonis is all about efficiency; this software does not assist organizations with setting and monitoring achievement against strategic plans. Celonis would likely be an ideal partner to SP, and it is not focused on the “what” and the “why.” Rather, Celonis optimizes the “how.”

Project management and workflow tools are abundant, with Jira, Microsoft Planner, ServiceNow, Zoho Projects, and PlanView Enterprise Agile Planning as prevalent players in the market. Similar to Celonis, these tools are largely about execution of already defined plans and are about improving the “how” as opposed to iteratively defining and re-defining the “what” and the “why” through the design, tracking, and iteration of outcomes linked to a central organizational strategy. Modifying these platforms to take an outcome approach is certainly possible, and represents the largest competitive threat to SP. However, SP patents represent a protective moat here—such a move would likely result in infringement.

The focus of these platforms is also largely tactical, not strategic. For example, Planview talks about an agile approach for a whole company and touts “DRIVE AGILE TRANSFORMATION YOUR WAY6.” Like Celonis, this is about execution of discrete tasks only and is not linked to strategy. As such, certain of these players may again be favorable go-to-market partners for SP, as SP can elevate the tangible (yet tactical) focus of these platforms and connect their efforts directly to key organizational strategy.

Performance management and traditional HR solutions, from players such as ADP, Workday, etc., also exist in the market. Like many of the other software solutions highlighted above, these are more point-solution oriented in nature, and will be taking inputs from departmental KPIs/OKRs etc. Again, an outcome management approach that SP can bring may enrich such solutions.

Finally, and briefly, there are numerous organizational frameworks for managing an organization. As these are higher level management frameworks, one could call them more strategic or executive in nature. Examples would include The Table Group. Organizations will pay for Table Group consultants to help fix alignment and strategic focus, but there is no product, data linkage, or outcome linkage associated with The Table Group. Departing from the consulting lane, organizations may use frameworks like Balanced Scorecard or Hoshin Kanri to attempt to rank, link, and evaluate many objectives that tie back to organizational strategy—but, these methods even with software products do not provide live views of how various efforts are progressing across and down the entire organization. Again, these organizations and approaches provide a potential go-to-market path for SP. The Table Group is a consultancy whose relevance will increase should they be able to demonstrate outcomes, and firms using a Balanced Scorecard or similar approach represent potential customers that have already adopted an orientation towards strategic planning and thinking, and thus would be ideal early adopters of outcome management software.

Setting organizational strategy is a challenging endeavor, and while SP does not judge whether an organization’s strategy is sound at the outset, the ability to evaluate outcome achievement in the context of multi-year strategies helps to reveal where strategy may be sound or lacking.  This can enhance the utilization of other strategic frameworks such as the Three Horizons model of strategic planning that evaluates current, adjacent, and net new markets.

As the above illustrates, many entities are active in and around outcome management tied to company strategy, but no firms directly attack the linkage of outcomes to strategic objectives. SP is creating a new category, and we will briefly outline some key elements of category creation below before evaluating the drivers that will help SP motivate players in select categories to become co-creators of this game-changing approach to managing organizations and “systematizing achievement.”

Market Landscape and Sizing

The first place to start is a bottom-up analysis of companies that may seek to purchase and implement SP Attain. We will also look at the statistics of another category winner in the ERP software space to triangulate our market sizing.

We have begun with data from the US Census Bureau on companies of a size greater than 500 employees.

Based on information shared by David De Spong at SP, we are making the following assumptions:

  • Average amount of seats purchased by a client has ranged from 18%-75% across the sampling of SP clients; for purposes of this report we will conservatively assume 10%, which leaves considerable Net Dollar Retention upside:
  • Utilizing client data, average cost per seat per month does scale as organization sizes scale, and ranges from $200 per month to $50 per month; these are estimates as SP is not widely commercialized. Costs can include both products and services as organizations request
    assistance to become self-sufficient with this approach.
  • The US market for public and private companiesrepresent, and is forecasted to represent, ~50% of the total market; we have good data from the US Census Bureau on firm counts by employee size, so we start with US market sizing and extrapolate from there 7,8
  • Europe and APAC currently represent about 20% each of the current ERP market, and APAC has higher growth potential 9,10

Shared Performance Projected Market Opportunity

Company Size # of Firms in US Seats Cost Per Seat Annual Contract Value Market Size
03: 500-749 employees 6,891 62 $200 $148,800 $1,025,380,800
04: 750-999 employees 3,459 87 $200 $208,800 $722,239,200
05: 1,000-1,499 employees 3,467 125 $150 $225,000 $780,075,000
06: 1,500-1,999 employees 1,762 175 $150 $315,000 $555,030,000
07: 2,000-2,499 employees 1,070 225 $125 $337,500 $361,125,000
08: 2,500-4,999 employees 2,152 375 $100 $450,000 $968,400,000
09: 5,000-9,999 employees 1,101 750 $75 $675,000 $743,175,000
10: 10,000-19,999 employees 587 1500 $50 $900,000 $528,300,000
11: 20,000+ employees 554 2500 $50 $1,500,000 $831,000,000
Total 21,043 $6,514,725,000

As seen above, an estimate for the US public and private market size for SP attain is US $6.5 billion annually, based on firms above 500 employees as being the ideal target market. This is a market of 21,000 customers. Assuming that the US represents roughly half of the market, this would imply a Total Addressable Market of US $13 billion today for organizations globally. As complexity escalates, including multiple locations, time zones and remote workers, even companies of less that 500 employees will need some form of outcome management to remain competitive.

Again, this data applies to the public and private end user market only.

In the US, there are roughly 4,000 nonprofits with greater than 500 employees,11 and, if we assume that the US is half of this market this would imply roughly 8,000 nonprofits of this size globally. While granularity in this data is not as complete as the US Census data, we can assume an Average Contract Value (ACV) of US $ 200,000 across this set. Adding the size of this market to the public and private market, this would imply a total market size globally between non-profits, public and private companies of greater than US $14.5 billion on a bottom-up basis.

It is important to note a few things:

  • This does not contemplate the size of the federal and local government markets in the US and globally; these are likely to add several US $ billions to annual market size estimates.
  • This is end-user count based; while this is good for understanding the potential market size, the path to market may be through partners in software or consulting arenas.
  • This would imply a current market size of roughly 25% of the current global ERP market; this is not unreasonable given that this market is creating a new category, and, as such, we would not expect a Day 1 market sizing to show comparable spend. That being said, there is likely significant growth in this market size as adoption increases over time.

Triangulation

It would be reasonable to triangulate this market sizing against a few vectors. SAP is a market leader in ERP software, with roughly 30% market share12. This market share is consistent with category winners, and SAP is the category winner in this market. SAP has over 24,000 business partners as clients and 71,350 direct and indirect customers13,14. Assuming the US market size for public and private clients in our bottom-up estimate is 50%, that would imply a market size globally of 42,000 potential customers for Shared Performance. Adding the 8,000 non-profits, that implies a market size of 50,000. One-third of 50,000 comes out to 16,667. Given SAP’s market adoption and client counts, it would seem that our bottom-up market sizing is valid (and perhaps conservative). It is also interesting to note that SAP boasts 24,000 business partners, which is roughly 1/3 of their total direct and indirect client count.

Adoption Drivers

Why is this Important for All Constituents?

At this stage, we are now ready to dive into the key motivators for constituents to adopt SP. Continuing in the vein of category creation, we will explore how SP is helping various constituents solve problems they didn’t even know that they had. This narrative creation will not be finished in this report alone, but this is a start. Telling the story of SP and why it is changing the world is critical to gather constituents that are more than just early adopters; they will become champions with megaphones. It is my belief that SP, through outcome management and its platform Attain, is doing more than just managing outcomes and unifying strategy, performance, and operations. SP is systematizing achievement, both its measurement and realization… for the first time.

Prior to drilling into each constituent, this report will present some factors that came up on a recurring basis in conversations with investors, operators of businesses, and consultants when discussing why outcome management and SP’s platform would matter to them. Factors that arising for key executives or professional services partners were a) accountability to results, b) urgency, c) ability to execute rapidly, d) the need for differentiation, and e) outcome obsession. While some of these factors are self-explanatory, certain merit a bit more explanation. For instance, urgency came up in the context of survival, evolving landscapes and competition. The need for differentiation came up in the context of how important it is as a part of their business success to look novel in the specific field of management methodologies/how they manage the business (this is different from differentiation of the brand and market in the marketplace, which could be considered part of strategy or an outcome in and of itself). Outcome obsession is not only about winning, but about how these constituents feel that they must prove achievement of strategy or quantitative results to earn the confidence of their stakeholders. Based on these conversations and research, I have summarized findings in the below table. Not shockingly, these matters were relatively important to all constituents, suggesting that there likely needs to be market development in each of the areas. That being said, some potential paths to market show almost universally high ratings. Of note, I will cover industry analysts, but did not have the opportunity to have sufficient conversations with this segment and have thus omitted them from the table.

Shared Performance Adoption Drivers by Constituent

Drivers Direct Enterprise Companies Software Companies Consulting Companies
Accountability to Results 5 5 4
Urgency 5 5 4
Ability to Execute Rapidly 3 5 5
Need for Differentiation 3 5 4
Outcome Obsession 5 5 5
Total 21 24 23
1-Very Low Priority, 2-Low Priority, 3-Medium Priority, 4-High Priority, 5-Very High Priority

Go-To-Market (GTM) Opportunities

By design and based on the solution, Shared Performance benefits from multiple GTM options, each significant on their own and even more significant when working together.

  1. Direct Enterprise Companies
  2. Private Equity Companies
  3. Software Companies
  4. Consulting Companies
  5. Advisory Companies

1. Direct Enterprise Companies

On the direct go-to-market path, the drivers for company adoption are relatively straightforward. Executives are held accountable for their results by shareholders, and will be hired, retained, or fired on the basis of what they achieve. The motivation for a C-Level executive to get a better understanding of why certain outcomes are being achieved—or why they are not—in his/her company is compelling and clear. These executives are also expected to deliver results faster than ever before, partially as a result of the proliferation of data that is at the fingertips of the modern enterprise organization.

Current State

  • Root cause understanding of delays or risks to key outcomes is difficult to obtain
  • KPIs tend to be departmental and function-specific in nature, and thus do not give an indication as to the overall achievement of organizational strategy
  • There is a lack of visibility and transparency as to how different departmental outcomes impact each other
  • Metrics can be hit without achieving the strategic plan

Challenges

  • No systems unify outcomes across departments with real-time visibility into interdependencies, risks to the strategic plan, and status of organizational achievement
  • Different teams often use their own software tools that others can’t access
  • There is a lot of data to consume, but it is poorly organized relative to outcomes and achievement of strategy
  • Cross-functional reporting tends to bubble up through PowerPoints and spreadsheets that become immediately stale (and may even house manipulated data)

Feedback from executives:

Many executives find it difficult to drive certain outcomes and execute change, and many have talked with me about the difficulties that they’ve had in modernizing product architecture (and the resultant impact on sales and market position). On a high level, these accomplished executives know what must be done, but there is significant opacity as to where or why a project is delayed. Oftentimes, product and technology teams are challenged similarly and share that “we discovered some new challenges in the architecture that will take longer to investigate.” What it comes down to is that these companies often have a strategy; however, they can’t tell you a) how many outcomes they need to achieve in order to execute that strategy, b) how certain outcomes are related, and c) the real time status of these outcomes. In a technology specific context, they may look at KPIs like sprint points, burndown charts, sprint velocity, and release cadence, just to name a few. These indicate what happened and can reveal issues, but they do not explain the presence or lack of “achievement.” There are similar stories with quota attainment and realization of sales and bookings goals, as well as for the top of funnel with marketing. Many of these teams react reflexively, tactically orienting around how they can change the result of a KPI in a forward period. They are thus completely missing the outcomes that got delivered or failed to be delivered, and how this impacted performance.

How SP Benefits Enterprises

  • Real-time insight through SP Attain into how outcomes across an organization are connected, revealing potential risks to achievement of a strategic plan
  • Ease of determining root causes of risks to achievement
  • Data is placed in the context of achieving strategy
  • Cross-functional data is real time
  • Third-party system data feeds into SP Attain, and teams can continue to use their own software tools without creating a silo for data that becomes inaccessible to the rest of the organization
  • Enterprises can gain insight into which individuals are associated with successful outcomes that move organizational strategy forward (not just hitting KPIs and metrics)

Now, many executives will tell you that KPIs can be both leading as well as lagging indicators. In this sense, KPIs give a glimpse into what is likely to happen. These may even include a light shading as to “why.” However, SP Attain gives executives a management framework and visualization tool to understand what needs to happen in order to achieve an outcome. This system reveals the real-time status of what must be done and allows you to predict success or failure as well as remediate root causes in real time.

This is not just about data, which is critical for insight and benchmarking, but, rather, it is about what the most important asset at the vast majority of companies—human capital—is achieving. Data tells an executive about performance, but outcome management can tell the executive team about achievement, and make sure that they can systematically identify the individuals, systems, and methods that are supporting achievement.

Furthermore, executives can also reduce investment and shift away from those resources that are not supporting achievement of outcomes. This is a revolutionary shift in management approach. For purposes of this report, I would call this “systematizing achievement.” Laser focusing on achievement is the key to getting these executives to join SP in the rally cry of this new category. This is critical because, as we have seen from earlier, 90% of companies fail to achieve their strategic plans.15

Many executives have also noted that their companies are poor at systems implementation. This is mentioned because a path to market through implementers and consultants should be considered as a joint market development effort along with direct sales. Often channel, or indirect and partner sales, occur after a company has achieved a certain amount of direct sales success. The overarching nature of an outcome management approach and platform does suggest that this partner and indirect approach should be pursued in tandem.

2. Private Equity Companies

How does outcome management apply to the razor-sharp world of Private Equity? While this industry has had significant success since its inception, including in the past decade, new challenges have emerged (and even newer ones are on the horizon). For example, hold times for portfolio company investments had reached an all-time high by 2020 (5.4 years vs 3.8 years in 2010).16 As if this trend weren’t enough, hold times are extending further in the current uncertain economic environment.17

Current State

  • Most portfolio companies of private equity firms are missing targets and re-forecasting down
  • Growth prospectively is challenged for many portfolio companies
  • Economic uncertainty brought on by interest rate and economic cycle concerns makes deploying capital challenging and brings risks to the valuation of large portfolios of assets built during the last cycle
  • Exits and the pace of realized value is slowing

 Challenges

  • Longer hold times mean IRR thresholds are harder to hit
  • The growth slowdown for portfolio companies demands that private equity firms find ways for their portfolio to create novel value
  • Company performance is not a function of any single department, and private equity firms often have a lack of visibility into how interdepartmental issues are leading to successful achievement of strategic plans
  • Executives inside the portfolio companies struggle to articulate the root cause of missing a strategic plan
  • A decline in exits and uncertainty makes fundraising difficult

Further context into current state and challenges:

Extended hold times mean two things. First, true value creation strategies are critical as maintaining the internal rate of return (“IRR”) metric that is the benchmark for private equity firm performance requires greater increases in the magnitude of company performance the longer the hold time. Second, strategy is even more critical, as the risk of competitive displacement and disruption to companies over longer hold times is higher. A deeper focus on strategy to understand where to position these companies for traditional financial growth—as well as market positioning—creates a need for connecting private equity investors to operating executives more closely than ever. A real-time, granular understanding of what is being achieved is critical in this environment.

A deeper look at this current environment reveals that, despite private equity achieving its two best years ever in 2021 and 2022, rising interest rates led to a significant downturn in deals, exits, and fundraising in the latter half of 2022, likely indicating a shift in the cycle. This situation necessitates that General Partners (GPs) innovate in terms of value creation and risk management.18

Amidst the backdrop of a war in Europe, continued supply chain issues, and persistent concern over inflation, uncertainty is a key problem affecting momentum, deal velocity, and exits. The prevailing economic uncertainty acts as a barrier to deal activity, particularly large transactions requiring significant leverage, although smaller transactions are finding some creative solutions. The drop in new deals and exits is likely to continue, impacting fund-raising. Limited partners (LPs) are managing portfolio imbalances due to market fluctuations and a slowdown in realized returns (exits) from previous allocations, making new commitments challenging, especially after years of high allocations. Midsize generalist funds will find it particularly challenging to raise new capital, as LPs increasingly favor vertically focused or niche players and mega funds with top track records.19

Historical patterns indicate that having clear prospects—rather than perfect economic circumstances—will revive dealmaking activity. If interest rates stay elevated, private equity firms can adapt; however, if ambiguity continues, a reluctance to commit will also persist. As 2022 concluded, the industry was sitting on a record $3.7 trillion in uninvested capital, which these firms are keen to utilize as soon as practicable.20 Yet, all parties involved—buyers, sellers, and lenders—are awaiting clearer indications of GDP direction and the extent of further interest rate hikes.

How SP Benefits Private Equity:

  • SP Attain will improve the performance of portfolio companies and create a higher success rate of achieving strategic plans
  • Higher achievement means more value creation, better growth and profitability, and will lead to more exits
  • Superior portfolio company performance will give private equity firms an edge in attracting good deals and raising capital from Limited Partners through a difficult point in the economic cycle
  • SP Attain will help the executives inside portfolio companies of private equity firms, and help retention of these executive teams

The conclusion here is that superior performance in portfolio companies owned by private equity is the only clear answer to separating from the pack, being able to exit more deals successfully, and subsequently raise additional capital for new funds. The visibility that outcome management provides can give private equity firms a far better lens into why their portfolio companies are succeeding or failing, allowing private equity investors to bring their significant pattern recognition skills across diverse portfolios of businesses to bear, impacting results faster.

Voices from the Industry:

Several private equity principals and partners have repeated some variant of the same sentiment:

“Once we write the check, we really lose control. Sure, we have board control and can hire and fire executives, but it’s not our model to go in and hands-on operate these businesses. We need them to succeed. And oftentimes, when growth is slowing or plans are not met, it is hard for us to get at an underlying reason. “We need more pipeline” or “bookings are delayed” do not really answer the question as to why a company is performing or not. Even capable executives in our businesses can frequently have trouble getting to the root cause of these issues, and, even if they can, coming up with a clear plan to fix these often-interconnected issues is a challenge.”

Underscoring the importance of this issue, the private equity executives that I had discussions with indicated that 60-80% of their businesses are behind revenue plans for this year—the worst rate they have seen in their careers.

This is a tailor-made moment for outcome management to gain adoption in private equity, as determining the outcomes that are necessary to support a strategy of distancing from competitors, and keeping track of the pace of that execution, is more critical than ever now that a rising tide is not lifting all boats in the market. This is no longer about hitting a general growth percentage or EBITDA margin; winners in private equity will deliver the outcome of helping their portfolio companies gain distance from their competitors. This will improve achievement—which is all that matters for exits—and therefore subsequent fundraising cycles that are the lifeblood of these firms. Private equity firms don’t just need to win on “the deal,” but, rather, they need their companies to win in a bigger way than ever. This is a journey from financial engineering and smart entry and exit to engaging in deeper true outcome-based value creation for their portfolio.

3. Software Companies

Software companies have experienced tremendous growth amidst the advent of cloud and Software as a Service (SaaS) over the past 15 years. At this juncture, however, many software businesses are experiencing slower growth and declining retention statistics as a result of a saturation point in the market for such tools. The number of SaaS apps that organizations are using has doubled from 2015, and organizations of more than 1000 employees use an average of 177 SaaS apps.21 A large amount of B2B SaaS tools road the benefits of an automation journey in which ROI was obvious, and, as the market has matured, the value propositions and specificity of tools do not offer the same obvious ROI. As such, investments in these tools are becoming harder and harder to defend.

To a certain extent, some of these software businesses are searching for problems that do not exist or are not large enough problems. Others may simply have a difficult time articulating exactly how they produce superior performance in companies, and this will become an increasing challenge to their survival. There are entrenched giants in the space, with companies like Microsoft, ServiceNow, SAP, Oracle, etc., that have become critical plumbing and infrastructure for many businesses. These companies are further threats to the rest of the software market, as their ability to acquire and “bundle” offerings becomes an impediment to the success of smaller niche players.

Current State

  • There is a proliferation of software tools, and companies are having a hard time rationalizing their ever-expanding software budgets
  • Most software companies can’t tie their system’s performance to organizational performance and the achievement of strategic outcomes

Challenges

  • Tying software product capabilities to P&L performance is very difficult for most software companies
  • Explanations as to how a certain software product is integral to company strategy are generally not grounded in evidence or proof and are narrative-driven
  • Large, incumbent enterprise software players can bundle offerings and copy individual software solutions; proving that these “copies” are not as effective is next to impossible

How SP Attain Helps Software Businesses

  • SP Attain links the systems and tools (i.e. software) used in an outcome to that outcome
  • This outcome linking will allow software companies to point directly to how their systems enable a company to achieve its strategic plan
  • Hard data on linking achievement of outcomes to a software product allows that software company to defend its position in a company budget
  • Beyond budgets, linking software to outcomes can elevate the conversation, moving software companies from discussions with Information Technology (IT) and procurement to the executive and board level

Further Information on the Industry Landscape:

At first blush, the landscape of software companies may appear to be a troubled area, with a mix of stragglers and large winners, alongside tools that already offer very clear value propositions.

Indeed, software giants like Microsoft, ServiceNow, Oracle, and SAP could likely rest on their laurels and gobble up innovative new technologies via acquisition. Even these companies, however, are obsessed with helping their customers articulate how the use of their product suite drives outcomes. And yet, they do not have a very clear way to prove this—and, in fact, often have clumsy how-to guides on trying to teach their customers on how to articulate that their software and platform is generating outcomes linked to strategy.

As a tangible example, Service Now publishes a guide for its customers out of its success team to help them articulate and “understand the business outcomes ServiceNow will help you achieve.”22 In reviewing this document, ServiceNow is trying to educate the customer on how to tie the use of ServiceNow products to the achievement of strategic goals through outcomes. ServiceNow is not unique, as other software giants are looking to tie usage of their platforms to the realization of business outcomes. The parlance of outcomes has achieved widespread acceptance as the rationalization or purchasing software products. However, not even the large players have an outcome management software suite like SP Attain—and patent protection ensures they will not for at least 8 years.

Given that many of these major software players are speaking a similar language to SP already, they are ideal partners in helping SP to create this category. While these players clearly understand the importance of outcomes, they have not grasped outcome management as a separate discipline to be embedded into a software offering. This is not a major leap, and makes them prime candidates to help co-create this category with SP. The journey here is from selling software tools and platforms that accomplish discrete objectives to contextualizing how critical software tools deliver not only task completion, but also the outcomes that are linked to business success and achievement of the strategic vision. This is “standardizing efficacy” of software and is a measuring stick that cannot be manipulated or avoided. Similar to achievement ratings, these efficacy ratings are transparent and clear. It is possible that, in order to achieve such ratings, organizations may even evolve the customer success approach that they take in order to ensure that their customers achieve the highest efficacy.

In addition to the giants, there are opportunities with niche up-and-comers like Celonis, as well as with project management suites. Being able to directly validate efficacy is a motivator for these players, some of whom are owned by the software giants.

At the end of the day, encouraging software companies and platforms to join the SP movement is all about making it clear and obvious for them to defend their value proposition in an increasingly crowded world of software tools. The best products and market leaders will jump at this opportunity, and it will increase their market share. Emphasizing that this will help better products is a key pitch to build excitement among top constituents.

4. Consulting Companies

Consultants should be a natural fit for SP. After all, outcome management is a methodology and manner of running a business, and not just a technology. The challenges in courting consulting companies are that they are frequently approached by technology partners that claim to help these advisors and implementers “increase their efficacy and deliver results faster.” In other words, there is a lot of noise in this partner ecosystem. Additionally, beginning back in 2007, McKinsey led the way in the consulting space by developing its own software suite, a practice quickly copied by other major consulting firms, and these firms now have in-house product and technology teams designing software and systems to not only help their teams during engagements, but that are positioned to be leave behind systems that generate revenue and are one of the benefits of working with the consultant.23

Given how saturated consultants are with partner requests and given that they are building their own technology, why are they a good go-to-market path for SP? Well, even though the impact has been gradual over the past several years, major consulting firms are starting to feel the impact of disruption too. Shockingly, for consulting firms, the “share of work that is classic strategy has been steadily decreasing and is now about 20%—down from 60% to 70% some 30 years ago."24

Current State

  • Consulting companies are doing less strategy work than ever before
  • Consulting companies are looking to diversify revenue by creating their own software products and build high-margin recurring revenue streams
  • Major consultancies are seeing niche consulting players start to gain market share

Challenges

  • Consulting companies want software products, but typically are not good at building software
  • Consultancies would prefer to work on strategy, as board- and executive-level work is highly lucrative, but consultants often lack an ability to demonstrate how their advice led to a company achieving its strategic plan
  • Budgets for strategy work are declining as boards and executives have difficulty tying this work to ROI

How SP Helps Consultancies:

Shared Performance can help consulting firms to regain and increase their strategic work through multiple fronts:

  1. New Capabilities & Additional Revenue - SP can help consultants to position into their classic traditional advisory role on how to manage firms as outcome management is a discipline in and of itself
  2. Product Benefits & Additional Revenue - Consistent with the current trajectory of these firms, SP can license SP Attain so that these firms have a SaaS tool in place that continues their relationship with the client, and keeps them close to both identifying and using their in-house expertise to immediately help clients where there are fallouts in delivering outcomes
  3. Pipeline Generation & Value Creation - Outcome management software can help these firms identify concrete value propositions around discrete projects that they can deliver for clients in a clear manner that can easily be agreed to by the client with respect to prioritization and with understanding of ROI
  4. Clarity and tying advisory work to outcomes – SP helps to demystify and reduce the opacity in the strategy consulting model, which has been a benefit and curse to consultants. On one end, consultants aren’t company operators and aren’t responsible for the results directly. As such, they can claim to have provided the correct advice and not be responsible for the outcomes. On the other hand, clients are fatigued about receiving “great advice but not concrete outcomes and results.” SP Attain can allow consultants to work more closely hand in hand with company operators to deliver outcomes and validate the investment in the consulting work.

This is a journey from an opaque advisory model to concrete value delivery and a return to the consultant helping operators to manage businesses more effectively and realize significant results expeditiously.

Further Industry Context:

All of the above sounds good, but are consultants really struggling, and do they have anything to be worried about in the long term? As Clayton Christensen, author of The Innovator’s Dilemma, a seminal work on disruption, noted, the key elements that have protected consulting firms from disruption in the past are opacity and agility.25 However, those key elements were also a part of how law firms defended their market share, and the legal market has been significantly disrupted with wallet share going to specialized legal outsourcing outfits as supplemental providers to the large firms. While this report will not go extensively into that history and the recent developments, major consulting firms are seeing similar demand erosion as new players chip away at share of wallet, with clients “unbundling” specialized or lower value services from the services offered by major firms. For example, “The rise of alternative professional services firms, such as Eden McCallum and Business Talent Group (BTG), is another chapter in the modularization story. These firms assemble leaner project teams of freelance consultants (mostly midlevel and senior alumni of top consultancies) for clients at a small fraction of the cost of traditional competitors. Their project teams are generally staffed with more-experienced consultants who can bring a greater degree of pragmatism and candor to the engagement, and their model assumes much more client control over the approach and outcome."26

SP will not only help major consultancies grow and regain their share of strategic advisory, it will protect them from disruption.

Additionally, consultancies can optimize their own operations by utilizing SP and reap the same benefits that they help their clients to realize.

These major players have large businesses to defend, as seen by the revenues below:

Major Consulting Company Revenue

Firm 2022 Revenue in Billions
Tata $128.00
Accenture $68.59
Deloitte $59.30
PWC $50.30
EY $45.40
Cognizant $19.40
Infosys $13.56
Mckinsey $12.50
BCG $11.70
CGI $10.07
Booz Allen $8.36
Bain $6.00

5. Advisory Companies (Gartner, Forrester, Info-Tech and others)

Advisors are an important part of the ecosystem and must be kept abreast of progress in this new category. This report focuses somewhat less on this grouping, as they do take a long time to get onboard. For instance, much of the ERP market was under creation for the 1970s and 1980s and did not get covered broadly by Gartner until 1990. The key with advisors is to heavily engage in situations where they are involved with the other constituent groups highlighted in this report that are promoting EOM. The recommended approach is to take much more of a PR angle and keep advisors informed, especially in promoting high profile activities, client outcomes, and adoption along this axis.

Regardless, advisors face many of the same challenges as consultancies. For example, keeping a Gartner subscription in the marketing budget without the validation of its impact on strategic goals is a challenge they hope to overcome.

Current State

  • Advisors like Gartner are facing budget pressure from their clients
  • Advisors are selling general market insights, which are hard to correlate to value for many organizations

Challenges

  • Executive and board-level attention is hard to capture
  • Budget pressure, as tying insights to revenue and outcomes is difficult (or even impossible under current conditions)

How SP Helps Advisors:

  • SP Attain can tie the context of market insights from providers like Gartner to outcomes achieved by teams, showing a demonstrable link between market intelligence and organizational performance

Closing Thoughts

In summary, Shared Performance is an innovative company (with strong IP defensibility) that is creating a new category which empowers organizations to realize strategic plans with a confidence and clarity that was not previously possible.

Shared Performance has the luxury of proven success in direct sales and is currently cultivating a robust partner network. A further dive into category creation with these partners will add critical ecosystem support to aid SP in the realization of its ambitious vision.

Suggested Next Steps

While there is tremendous opportunity, there continues to be considerable outcomes to achieve on top of what SP has already accomplished.   Risks will increase with growth, and continued diligence is required to progress.  Here are some additional recommendations to prioritize and pursue:

  • A deeper dive into EOM category creation
    • I have previously run multi-day category creation team exercises and that will be useful here. This will provide the necessary details that underline my comments above.
  • Specific GTM plans and resource strategies
    • Determine who and how each strategy will advance, in conjunction with the other strategies. Consider roadmap to outline path, SP’s progress and providing ongoing leadership.
  • Risk mitigation strategies
    • Evaluate existing and new execution risks to continue the protections and diligence to date.
  • Another Analogous Transformative Management Tool: Customer Relationship Management (CRM)
    • CRM is another triangulation that is relevant to EOM.
  • Market sizing refinement
    • Create more detailed projections including alternatives to US Census data.
  • Patent summation
    • Create an executive overview of the existing two patents, the third pending approval and remaining options.

1 https://www.netsuite.com/portal/resource/articles/erp...
2 https://www.strategicmarketresearch.com/market-rep...
3 https://www.trissaconsulting.com/articles/strategy-exe...
4 https://www.celonis.com/?utm_source=google&utm_m...
5 https://www.crunchbase.com/funding_round/celonis-ser...
6 https://www.planview.com/products-solutions/solutions...
7 https://www.globenewswire.com/news-release/2023/04/17...
8 https://finance.yahoo.com/news/erp-software-market-size...
9 https://www.statista.com/forecasts/966889/erp-software...
10 https://www.alliedmarketresearch.com/asia-pacific-erp-so...
11 https://www.bls.gov/bdm/nonprofits/nonprofits.htm
12 https://oboloo.com/blog/unveiling-the-top-players-in...
13 https://www.sap.com/about/company.html
14 https://www.sap.com/about/company.html?pdf-asset=...
15 https://www.trissaconsulting.com/articles/strategy-execu...
16 https://www.privateequitywire.co.uk/2021/04/22/299092...
17 https://www.spglobal.com/en/research-insights/featured/sp...
18 https://www.bain.com/insights/private-equity-outlook-glob...
19 https://www.bain.com/insights/private-equity-outlook-glob...
20 https://www.bain.com/insights/private-equity-outlook-glob...
21 https://explodingtopics.com/blog/saas-statistics
22 https://www.servicenow.com/content/dam/servicenow-assets...
23 “Consulting on the Cusp of Disruption” Clayton M. Christensen, Dina Wang, and Derek van Bever, October 2013, Harvard Business Review
24 “Consulting on the Cusp of Disruption” Clayton M. Christensen, Dina Wang, and Derek van Bever, October 2013, Harvard Business Review
25 “Consulting on the Cusp of Disruption” Clayton M. Christensen, Dina Wang, and Derek van Bever, October 2013, Harvard Business Review
26 “Consulting on the Cusp of Disruption” Clayton M. Christensen, Dina Wang, and Derek van Bever, October 2013, Harvard Business Review

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