Paulo Rosado, CEO and Founder of OutSystems, says Low Code is at the intersection of flexibility and control. OutSystems, which turns 20 this year, believes this intersection is both the opportunity of a lifetime for the business but also places OutSystems at the heart of some of the largest problems CIOs and CTOs face in the 2020s. Rosado is therefore piloting a business and a software sector that still faces branding and understanding issues amongst CIOs and CTOs, and has received a major investment injection, which will need to deliver a return.
“To give flexibility to the business, you have to build at the time when you don’t have the capacity,” Rosado says of the challenge CIOs and CTOs face of being a department that enables and leads change, but is also being constrained by resource shortages. Rosado believes this situation will be exacerbated in the coming months and years as organisations continue to accelerate digital transformation plans following the pandemic. The need for new digital services and operating models will increase the demand on CIOs and CTOs to create applications, but regulations and a high degree of uncertainty about the level of economic recovery mean that governance will not be allowed to make way for innovation.
“Innovation is really close to the edge of the business, so as a platform vendor, we cannot allow a loss of control,” the CEO says. “What we are seeing now is that in every piece of software, you are never done; everything has to be a product,” he says of the iterative nature of digital services and their development process.
Application development platforms and Low Code are sometimes viewed by sceptical business technology leaders as the harbinger of shadow IT and application sprawl, with the tech debt and hidden costs that this leads to. As a result, OutSystems is tackling this perception head on.
CIOs have shared with this scribe their concerns about maintenance and visibility, new front ends sprawling across the enterprise, systems becoming distractions and whether the outcomes fit the technical architecture of the business.
“One thing we do, is look at the lifecycle of software, because as technology grows, it accumulates debt. We take a lot of time to understand how you build for the future,” Rosado says. Technical debt is a topic OutSystems want to address and be a voice in, and, of course, see their application development platform as a solution to the problem. “We have customers that have multiple structures to the business, and there are shadow teams that report to departmental leaders. But, if you have a platform where you can govern what is being built, then that platform can detect code or technical redundancy. So you can control, but without stifling innovation.” The rise of APIs and microservices has led to an increase in complexity that is making maintenance harder for technology teams; therefore, the CEO believes application development platforms are the balance between flexibility and control.
A recent study OutSystems commissioned found that 28% of the IT budget is being consumed by technology debt and in large enterprises, $4 in every $10 goes into tech debt. Once operational spending has been taken out, the reserve available for new developments is depleted. “What we see is that there is a lot of whitespace and backlog that is not being addressed,” Rosado says, adding that with a shortage of development skills in many sectors, organisations need to view application development platforms as a way to deploy teams on the work that generates value to the business. “We are able to package grunt work so that you can deliver. These platforms have a duty to help you reduce the effort of change.
“Developers are a scarce resource in business today, and the complexities of traditional software development exacerbate the challenges most organisations face when tackling their digital transformation agenda,” Rosado says.
Challenged on whether part of the issue for Low Code is that CIOs and CTOs want out of the box solutions, Rosado agrees but also counters: “There is a demand for uniqueness. The backlogs that CIOs have is not for the off the shelf solution, there are times when an organisation needs to be a bit more sophisticated, and these are also the moments when the organisation realises just what technology can do for them, and that is where we play.
“Thirty percent of our customers are also Salesforce customers, and when they want that uniqueness, then Salesforce is not an option. These tools are limited on purpose. That has always been the case and will always be the case.”
Investment returns
In February 2021, OutSystems raised a further $150 million in funding as investors Abdiel Capital and Tiger Global joined Goldman Sachs, KKR, Guidepost Growth Equity, and Armilar Venture Partners in a funding round that values OutSystems at $9.5 billion. The funding will be used to expand investments in its research and development (R&D) and the go to market strategy. OutSystems has 350 partners, including systems integrators and professional services providers Accenture, Deloitte and Infosys, as well as a major technology partnership with AWS. This investment is likely to see that partner networks grow globally. Rosado says systems integrators are increasingly becoming consultancies, bringing ideas to their customers and this is beneficial to OutSystems.
Originally founded in Lisbon, Portugal, in 2001, OutSystems is now headquartered in Boston, USA, and as Rosado makes clear, it is a global business. Portugal has been quietly and successfully gaining a reputation for the technology organisations and skills it offers. Global fast-moving consumer goods (FMCG), retail and financial services CIOs have all discovered and tapped into the talent pool. “Portugal is a huge source of top engineering talent. In the post-pandemic era, Portugal will be a great place to live and work, and we are betting a lot on the country,” Rosado says. He adds that, like Eastern European nations, investment into STEM and language skills by the Portuguese is paying a dividend now. “As a country, it is an example of what we need to do for a society to peacefully transition to automation,” he says as we return once more to an intersection.
