Diligent CEO Brian Stafford is making a big bet that corporate responsibility is the next business software game, similar to [hotlink]from Oracle[/hotlink] technology in the 2000s or [hotlink]Sales forces[/hotlink] in the 2010s.
In fact, he just wagered over $ 1 billion on it, sources say.
On Wednesday, corporate governance software maker Diligent announced it had acquired Galvanize, a Canadian developer of risk management and compliance software. Although Stafford has not disclosed a price, sources put the figure at $ 1 billion. It comes after Diligent acquired another company in the space, Steele Compliance, for around $ 325 million earlier this month, according to these sources.
The deals create a private company valued at north of $ 7 billion, which is expected to reach $ 550 million in revenue this year.
In an interview, Stafford says he believes the combination of companies will create software that will give board members better insight into potential risks – whether in cybersecurity, human resources, its supply chain. or elsewhere – within a company.
“This will create more transparency within the organization,” Stafford notes. “Whenever there is a problem, someone already knows within the organization. So every time you read a story about hacking a financial services company, or every time you hear about fraternization issues or inappropriate behavior, it was there in an employee survey or a phone call to the service. assistance. This data exists in some systems… but it never got to the right people.
Backed by Insight Partners, Diligent creates software that allows executives and board members to share documents and analyze their business metrics on a single dashboard. By integrating Diligent with Galvanize and Steele, Stafford claims that its roster of approximately 19,000 customers will be able to use a combination of human reporting and automation to generate risk and compliance reports for the business rather than , for example, to rely only on the chief of security. manager, an internal audit or the risk manager to escalate the report to the top.
Of course, Stafford recognizes that it is not a perfect system. Much still relies on human relationships.
“Organizations with the best controls and the best transparency tend to miss fewer of these [risk and compliance] problems. If there is genuine corruption within an organization, it is a difficult thing to resolve immediately, ”he said. But the hope is that the needle is moving in the right direction overall.
Diligent’s deal comes as subscription-based businesses (its customers pay annually) attract investors with the allure of stable and predictable revenues. In August, investors, including Blackstone and existing investor Clearlake Capital, invested some $ 500 million in Diligent, valuing the company at more than $ 4 billion. Insight Partners, which remains Diligent’s largest shareholder, privatized the company for around $ 624 million in 2016.
Galvanize, meanwhile, has raised some $ 50 million in total from investors led by Norwest Venture Partners.
For his part, Stafford has even higher ambitions. He sees the last two decades of enterprise software in two slices: In the 2000s, it was the software that helped businesses run their day-to-day operations that spawned the Oracles and SAPs of the world. Meanwhile, the 2010s heralded marketing software makers as [hotlink]Adobe[/hotlink] and Salesforce.
“We believe the 2020s and beyond will be all about doing business ethics and stakeholder capital and making sure companies have the right systems to make sure they don’t make mistakes.” , Stafford said. “Organizations are moving more towards stakeholder capitalism with [hotlink]Black rock[/hotlink] CEO Larry Fink’s take on an organization’s purpose, or the Business Roundtable on how to care more about stakeholders.
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