In brief:
- In an era when technology is increasingly essential to industries of all kinds, digital transformation requires strategic thinking that provides building blocks for long-term goals
- 6point6 serves as a digital transformation consultant to companies and government departments navigating large scale, complex digital projects
- ICG and 6point6’s aligned vision on a user-centric approach to digital transformation enables partnership and collaboration in growth
- ICG’s partnership-led approach to financing and investing means deep understanding and real collaboration is at the heart of investments, serving to back company strategies and empower founders with clear visions for growth
- Please note: On 31 October 2023, ICG announced that together with the founders and management team of 6point6, an agreement had been signed to sell the digital transformation consultancy to Accenture
Digital transformation has been around for some time now. However, it remains a fluid concept. Businesses across industries, from accountancy to manufacturing, have invested in not just updating their technology, but revamping their business models for a digital economy.
Today, everything is a tech company, or at least every company’s approach to technology is in focus.
For investors, evaluating a company’s digital capabilities have gone beyond just understanding what technology it uses, but how the technology correlates against its commercial model. As a result, what digital transformation means is unique to each business, product, or service.
As technologies like artificial intelligence (AI) continue to drive new opportunities for automation and software continues munching its way through the world, “there’s a tsunami of potential coming if you can unlock it,” says Liam McGivern from ICG’s European Mid-Market team.
Capturing true value from digital transformation, however, requires much more than just forcing company-wide software installation, or automating customer interactions. “The key is in the building blocks,” explains McGivern. “Thinking many steps ahead to what you want to achieve in the long-term and making sure you’re linking pieces as you go along.”
Where the real opportunity lies is not with one-click processes, but people-centric approaches to digital transformation that set companies up for enduring success. It’s this long-term, user orientated approach that helped lead ICG to invest in 6point6. The UK-based business with offices in London and Manchester acts as a digital transformation consultant for companies and government departments navigating complex projects.
It means building a deep understanding of organisations’ digital needs to deliver real change beyond buzzwords.
People-centric digital transformation
Digital transformation, however you define it, was accelerated by COVID-19 and the sudden need for many businesses to adapt to remote and hybrid working. Across the European Union, 46% of firms reported taking action to become more digital, according to a European Investment Bank survey. Top-line statistics like this abound, but how often is digital transformation truly transformational to businesses?
“Software-driven, self-serve ideas are great but these don’t work unless a company is well organised and has a culture and processes which can unlock opportunities which flow from the roll-out of these solutions,” explains McGivern. “For us, as an investor, the key with all businesses operating in, or carrying out digital transformation, is understanding how it’s differentiated and how technology will reinforce and round-out that differentiation.”
It’s a vision that gels with 6point6’s approach to clients.
The company works closely with clients and project partners to understand the challenges and help scope, spec, design and build bespoke systems and programmes. This involves working deeply with each part of a business to define and refine use-cases into a set of actionable projects covering user experience, resilience, security and best use of data, with 6point6 overseeing the development of those projects. But digital transformation is also about communicating objectives across whole organisations to demonstrate how investment in the right technology can improve revenue, reduce operating costs, and reduce risks in legacy processes.
6point6 and ICG are aligned on their approaches to building a positive work culture. “We’re building a culture and investing in a people strategy to attract and retain those with the right mindset, attitude, as well the right skills,” says Janet Coulthurst, Chief of Staff, 6point6. ICG’s Chief People and External Affairs Officer Antje Hensel-Roth agrees: “Much like 6point6, as we welcome new colleagues to our firm, it is vital that we ensure they integrate quickly and are able to add to our effectiveness and culture. We support our portfolio companies taking a similar approach to a holistic and forward thinking people strategy.”
Digital transformation is also about communicating how investment in technology can improve revenue, reduce operating costs, and reduce risks in legacy processes.
Among 6point6’s success stories is a cloud overhaul of the UK Home Office’s systems. Made up of data spread across 1,400 servers, 27 data hosts and 36 external interfaces, the project saw the creation of a new secure, reliable and scalable digital service for a vital piece of national infrastructure.
Done right, 6point6’s service aims to offer future-proof solutions that clients can continue to integrate new technology into. As an investor, the task at hand for McGivern was to understand the core of 6point6’s business and how ICG can help drive its long-term vision.
Getting under the skin
“Any company with a high growth agenda needs partnership financing and the right investor supporting them,” says McGivern. “We spent a lot of time getting under the skin, understanding what they really do, why their customers like them, why do they engage with them?”
However, beyond just understanding the bricks and mortar of a business, successful investments are about coherent working relationships. ICG’s mid-market team works to a partnership mindset, not a command-and-control style approach as can be common among private capital.
Any company with a high growth agenda needs partnership financing and the right investor supporting them.
Liam McGivern, ICG’s European Mid-Market team
Rather than invest as quasi-operators, ICG looks for founders or management teams with long-term ambition and vision, who have and want to retain large stakes in their business. In ICG’s track record of backing such teams, this has proved the right balance for shared success, in both improving the quality and scale of businesses, as well as sharing economic gains.
“6point6 have a vision of what they want to do,” says McGivern. “They wanted an investor who’s going to help them realise that vision over time in partnership, working collaboratively.”
A focus on backing founders’ vision has become a hallmark of technology investing and, as the sector broadens and becomes more established across the economy, the definition of what it means to grow a technology company is changing.
Backing strategies for growth
Digital businesses were once the realm of venture capital. Success stories came predominantly from Silicon Valley where hundreds of millions of dollars were up for grab to fuel user growth and chase billion-dollar ‘unicorn’ valuations.
As the industry has evolved and the role of technology companies in the global economy has changed, different types of alternative capital is now also active in digital and digital-adjacent spaces.
“Technology entrepreneurs have become more savvy and more thoughtful about the kind of partner they choose,” says McGivern. This wider range of options allows founders and management teams to follow through on their strategies and visions, rather than have them handed down from investors’ playbooks.
“As an institution, we want to buy into your strategy,” says McGivern. This partnership approach means acknowledging that not every board room decision will go ICG’s way for the duration of a three-to-five year working relationship. This makes identifying the true strength of a business’s proposition and its strategy crucial, ensuring investor and management team focus is on aligning on what really matters.
“The danger in digital transformation is there’s a lot of people talking about it, but the substance isn’t always as strong business-to-business,” says McGivern. At a time when more organisations look for deep digital transformation that bring significant improvements over complex legacy systems, 6point6’s user-centric collaborative approach offers more than just software but can help transform whole economies. This was a key aspect of the investment thesis, which ICG bought into when making the deal.
Go deeper:
- The European Mid-Market team provides flexible, tailored solutions supporting family owners, founders and management teams in realising their objectives for long-term, sustainable value creation
- Our flagship European Corporate team targets locally sourced, directly originated and privately negotiated investments in corporate, sponsored leveraged buyout and opportunistic transactions
- Our investment DNA has a track record of creating sustainable value by partnering with ambitious businesses
- Press release: ICG Mid-Market sells 6point6 to Accenture
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