The Nordic Capital Operations Team drives the digitalisation effort and are exploring a number of different alternatives on how to best support the portfolio companies
Not every company will aim to be the next Google but digitalisation is relevant for all businesses as they use technology advancements and “big data” to increase revenue, enhance customer relationships, drive cost improvement and transform business processes. It is businesses that are looking to the future and evolving accordingly that are best placed to succeed in the long term. As such, digitalisation is prioritised by Nordic Capital during the investment process and throughout the ownership period.
Commitment to digital advancement
From the investment outset, a digital element is integrated into Nordic Capital’s due diligence process, looking at customer/consumer online purchasing behaviour; website performance; social media presence; analysis of new or potential entrants and digital developments in related industries; and the future business model and value chain sustainability (e.g. risk of disruption).
This focus and continued commitment to digital advancement as a means to improve profitability and enhance growth continues into the ownership period and is considered a key element of the board agenda. This is facilitated by using a range of management tools that include regular digital audits, disruption assessments and innovation pilots; as well as providing portfolio companies with training and access to other CIOs and an extensive network of digital advisers.
Then at the point of exit, digital due diligence is again applied to pre-empt prospective buyers and form a clear view on digital opportunities. A digital vision for the company’s future is an important element of the equity story.
Digitalisation in action
Nordic Capital’s portfolio companies have a wide range of digital initiatives underway. While some such as CINT and ERT are already digital transformers, others are demonstrating how digitalisation can support the development of more traditional businesses.
An example is Quant, which recruited its first Chief Digitalisation Officer in April 2017, is also using digitalisation to drive a step change its business. For over 25 years, the company has been a market leader in maintaining and improving the safety, production and equipment performance for over 300 facilities around the world.
For Quant, the primary benefit of digitalisation is to improve the way it interacts with, and provides service, to its customers. In recent years, it has developed a portfolio of digital tools that enables the business to connect efficiently with customers and staff, gathering maintenance data in the most efficient way possible. The company is now using digitalisation to enable it to move away from calendar based maintenance to a condition based approach, which is a very significant step for the business, reducing the risk that customers’ equipment is over or under maintained and subject to downtime. With the use of smart sensors and enabling technology that captures and manages data, Quant is able to understand much more about machine behaviour, enabling it to offer customers predictive maintenance capability, better reporting and planning, increased operational efficiency, reduced manpower and lower cost. In this way, digitalisation is helping Quant to solidify its position as a global leader in the growing market for industrialised maintenance.
One of the next waves of technological advancement comes in the form of Artificial Intelligence. For Quant, augmented reality is becoming increasingly relevant for its customers and OEMs and so the business is working to develop its own capability so that it can interface with them as seamlessly as possible. It is using advanced analytics today and has also started to look at using AI to understand and predict machine behaviour.