Sell, Sunset or Adapt – Your 2019 Choices

Remember the advent of client/server? Most Microsoft practice owners do, because it created the ecosystem we know today. Thousands of businesses emerged, based on that technology. And in time, thousands of mainframe-based businesses disappeared. That’s the way disruption works.

Now, it seems clear that the co-called 3rd platform (social, mobile, cloud, big data) is set to eliminate thousands of client/server-based businesses in their turn.

If you own such a business, I believe 2019 requires your making a fundamental choice.

Sell

For some, the best choice may be to monetize the customer base you have accumulated and leave another to migrate them to a Cloud-first world. The central challenge here will be to find a strategic buyer who at least comes close to meeting your valuation expectation as an owner. If your business is project services-heavy, unfortunately, your options may be limited unless you are able to demonstrate strong and credible differentiation. What exactly will your valuation rationale be?

Sunset

For others, particularly those who do not wish to undertake a multi-year business model transition, it may make sense to rationalize all possible costs and simply ride existing momentum out for as long as it lasts. The difficulty here will be how much longer the traditional model can be “milked”, given shifting demand. Absent relatively high levels of recurring revenue (ideally product-oriented), the sunset risks being quicker than you anticipate and the value extraction low. How much would this option be worth to you?

Adapt

For those with neither a strategic buyer in the wings nor material recurring revenue, your only remaining option is to adapt. This will require dealing with The Elephant. Are you adequately capitalized to complete your own digital transformation?

Whatever your choice as an owner, I strongly suggest that in 2019 you give serious thought to how you would answer the questions each option poses.

And then act accordingly …

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