New Apps, Management Software Seeping In as Old Industries Digitize

Xconomy Boston — 

John Van Siclen recalls driving around last year in the middle of nowhere, Wisconsin, to visit a large retailer. The meeting was off the beaten path for the Dynatrace CEO, but not just in the physical sense.

His Waltham, MA-based company makes software that helps businesses run their digital operations. Over the years, Dynatrace has sold its products to tech and media powerhouses like Akamai, Microsoft, Yahoo, and ESPN, among other customers. Now, Van Siclen (pictured) is seeing more companies in traditional industries like retail, insurance, and finance looking to buy software and expertise for the digital age.

“Eighteen months ago, they couldn’t spell ‘NoSQL,’” he jokes, referring to a type of database system. “Now they’re saying, ‘I don’t need more tools. I need a platform, a way to manage it all.’”

The Wisconsin retailer, for example, is best known for its physical department stores, but it is expanding its technology team and trying to boost its online profile and sales.

Conversations with customers tend to revolve around the same topic, Van Siclen says: “How do we become more effective around digital strategy?” That means improving things like operational efficiency, reliability, and speed to market, he adds.

Dynatrace’s software does what’s called application performance management—it tries to make business apps and websites run more smoothly and efficiently on desktop and mobile devices. When problems pop up in the network, the software identifies them and helps companies’ IT and customer experience teams fix them.

It’s all part of a bigger trend around new software seeping into old industries. Talk to tech CEOs around town, and you’ll hear how more of them are spending time with customers in unlikely locales—insurance companies and farms in the rural Midwest, banks in small-town Canada, gyms around New England.

In terms of managing apps, data, and workforces, the adage that software is eating the world seems to be playing out, one traditional business at a time. (The spread of other kinds of software, such as cybersecurity and payment systems, is a topic for another day.) And it’s happening in places that are a far cry from the shiny Silicon Valley offices that entrepreneurs visit to get their startups funded.

Kronos is another software maker that has seen its business pick up in traditional sectors. The Chelmsford, MA-based company sells software that helps businesses manage their workforces—tasks like tracking employee hours and attendance, ensuring compliance with labor laws, and running payroll.

A recent Kronos customer is the YMCA of Greater Boston. Redesigns and new facilities notwithstanding, the local Y’s sweaty gyms and after-school programs don’t exactly scream high-tech. Yet the organization’s branch directors and managers are using Kronos software behind the scenes to manage employees and hiring. “One of our Y customers, before, they had 20 pages of paperwork for every new hire at the branch level,” says Stephanie Walsh, industry marketing manager at Kronos.

The idea is that digitizing the management process—calculating pay rates, tracking certifications, and so forth—frees up administrators to spend more time on the Y’s customers and community.

Kronos also gets plenty of business in sectors like retail, hospitality, healthcare, government, and manufacturing. Its other Boston-area customers include City Sports, Staples, and Athenahealth.

The challenges in getting customers to adopt this kind of software, Walsh says, include improving “ease of use and getting people to change processes.”

Indeed, no one is saying it’s easy to sell new software to older, traditional businesses. Kronos and Dynatrace, for their parts, are established companies with track records that help them land customers. Kronos was founded in 1977, has some 4,000 employees, and spends about $100 million a year on technology and innovation, says Malysa O’Connor, a marketing director at the company. Dynatrace, meanwhile, was acquired and spun back out by Detroit-based Compuware, and now has about 1,700 employees and $450 million in projected annual revenue.

But smaller startups might have a tougher time gaining traction in older markets. Boston-based Objective Logistics, for example, had some similarities to Kronos in terms of offering workforce-related software—though more on the performance-tracking and gamification side. The startup raised venture capital to go after customers in the restaurant and retail markets, but it didn’t take off and was sold to cybersecurity firm Bit9 earlier this year.

Swipely, based in Providence, RI, has also been going after restaurants and small retailers with its marketing and analytics software for credit-card transactions. The company went through some layoffs in May, although it said it continues to grow.

Customer size ultimately may be the key to success for software companies. Small, local businesses typically don’t have the time or money to spend on software products. But going after bigger customers typically requires an experienced sales team, as well as clear and demonstrated metrics around the benefits of any new software.

Dynatrace CEO John Van Siclen (right) and CMO Nicolas Robbe (left).

Dynatrace CEO John Van Siclen (right) and CMO Nicolas Robbe (left).

So, companies like Dynatrace need to continually evolve their offerings to stay relevant. Van Siclen says his team is creating a “digital experience center”—similar to a network operations center (a room for monitoring networks), but less technical and more business oriented. “The next step is from data presentation to problem presentation,” he says, referring to what the product should display to customers. “Once they trust the data, they want the top three resolutions.”

No matter how traditional the industry, Van Siclen and others are finding that managers and business leaders need answers from their software—and they need them fast. “Five years ago, it was OK to drill down for half an hour to find a problem,” he says. “Now, they don’t want to even look.”