Appirio CEO won't follow Bluewolf into sale

As IBM buys Bluewolf, the CEO of hot cloud consulting firm Appirio says he doesn’t plan to follow suit

IBM said yesterday it had agreed to buy Bluewolf for an undisclosed sum. Bluewolf is a company that helps in the deploying and setting best practices on and other cloud platforms. The company appeared on the IDG Connect 20 Red-Hot-Pre-IPO Companies 2016 list and I interviewed CEO Eric Berridge a couple of months ago.

To get another perspective on the deal and the wider market I swapped emails with Chris Barbin, the CEO of what is arguably Bluewolf’s nearest peer, Indianapolis-headquartered Appirio. The following is a lightly edited version of our exchange.

 Are you surprised by the Bluewolf deal or the identity of the buyer? 

This isn’t surprising to anyone who follows the industry. We’ve seen a trend of global systems integrators (GSIs) snapping up independent consultancies in an effort to gain greater access to the marketplace and become more appealing to customers who are demanding nimble and agile actionable strategies, and shunning old school, bloated consultancy methods.

Eric Berridge (Bluewolf CEO) recently said the IPO market for services firms is tough. Do you concur?

The market rewards consistency, predictability and growth. Companies that show robust revenue growth and real market share fare well. High growth without real profitability is a challenge in a services IPO, but pure-play cloud services companies have an opportunity to ride this still early wave of the next generation of cloud technologies and take meaningful share from traditional players. It is an opportunity that's in the hundreds of billions of dollars - and rushing an acquisition or an IPO is short sighted in our opinion.  

What are Bluewolf's chances of keeping its culture under the new owner?

Culture isn’t something that can be dictated; it takes the efforts of every single person in a company aligning on core values the group as a whole, and each individual, truly believes in. Culture is also incredibly specific to the DNA of a company; it’s a challenge for that not to be diluted or disrupted during an acquisition, particularly as a smaller shop is absorbed by a GSI. The sheer size, processes, politics, and literally hundreds of priorities that can often be in conflict will all be real obstacles in a deal like this - and in the end will impact customers.

Can IBM integrate Bluewolf successfully?

M&A integration is always challenging and, as noted above, a critical criterion is cultural alignment, which will be the single biggest obstacle to integrating successfully. We have seen and benefited from major customer and talent attrition from the other acquisitions in the space in the past 12 months, and we anticipate the same pattern here.

Will Appirio follow suit in pursuing a sale? 

Appirio is one of the last cloud consultancies that can implement a portfolio of the leading cloud technologies such as Salesforce, Workday, Google and Amazon in the enterprise, without all the baggage of the GSIs. We are purely focused on next generation public cloud technologies and solutions, are not saddled with legacy relationships such as Oracle and SAP, and have no intention of stopping, slowing down, or following the path of recently acquired independent shops. Our “indie” status allows us to be customer-centric, nimble, and provide incredible time to value with actionable strategies that show results in days and weeks and months, not years or decades.

In that case, what are your medium-term plans?

In the last two years, we’ve shifted from a technology-centric horizontal set of service offerings to one of truly transforming businesses through meaningful Worker Experience, Customer Experience and industry solutions that integrate our best-of-breed public cloud partnerships.  We believe the virtuous cycle of a superior Customer Experience, backed by a superior Worker Experience, is the only way for a company to succeed in the age of the customer. Another major priority for us this year is focusing on our methodology and tooling, including our managed services offerings and IP. These have been and will continue to be huge differentiators for us. In terms of our Salesforce relationship, we’re delivering Fullforce vertical solutions for media, non-profit, and retail. Finally, we’ll also be unveiling a more material and global partnership with Amazon Web Services later this year, which we’re incredibly excited about.

Do you expect more of the giants chasing the services indies and will it work?

The giants clearly see a need to on-board talent, culture and the agility of the indies and I imagine we’ll see more GSIs moving to take on this persona through acquisitions. But meeting the demands of the customer age isn’t as easy as buying an indie shop. Customers demand value in days, weeks and months - not years or decades via dated methodologies and frameworks. Customers won’t tolerate the bloat that compromise budget, time, and innovation. Expensive, long-running initiatives with dozens or hundreds of onsite consultants is the old-school way of doing things -- and it’s neither effective nor transformational. An acquisition may seem like an easy way to meet this demand, but it doesn’t solve the core problem.

Will Appirio instead seek to IPO?

An IPO is something we’ll evaluate if and when the time is right, but we’re not building a culture or business to flip or to go public. Rather, we’re building a lasting business and culture to partner with our customers to transform their businesses with leading public cloud technologies while also transforming the $400 billion services industry at the same time.

What are revenues and headcount and profits today?

We don't share revenue and profits publicly. Our headcount is over 1,250 worldwide supported by over 1,000,000 designers, developers and data scientists in our Topcoder community. Appirio has over 1,000 customers globally, offices in San Francisco, Indianapolis, Dublin, London, Jaipur, and Tokyo and we continue to grow at a double digit clip with increasing operating profits now five years running.  


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IDG Connect Red-Hot Pre-IPO Companies 2016

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