KKR's acquisition of Ensono earlier this month marked the end of one phase of the hybrid IT service provider's evolution and the beginning of another. Ensono, based in Downers Grove, Ill., originated as the IT outsourcing arm of Acxiom Corp., a customer intelligence company. In 2015, Charlesbank Capital Partners, a midmarket private equity firm, and M/C Partners, a private equity firm focused on SMBs, purchased that business unit in a carve-out transition. The acquired company rebranded as Ensono the following year.
KKR's Ensono acquisition, one of several deals this year involving cloud consulting services, changed the company's ownership but not its focus: The company aims to continue its cloud and critical infrastructure push. Along the way, Ensono will pursue acquisitions to extend its capabilities. "Being private-equity owned, we're always looking to improve the company," said Marc Capri, president of Ensono.
M&A isn't the only approach on tap for Ensono's next phase of development. The company is also creating a vertical market strategy. "The business conditions that exist for a client go way beyond just technology," Capri said in an interview. "We need to speak their language."
Following are excerpts of that discussion, edited for clarity and length.
With the new ownership arrangement in place, what's next for your company? What do you plan to pursue? Are there things that you can do now that perhaps you couldn't do as easily before?
Marc Capri: Starting at the top, the vision and the strategy for the business has always been to align with clients who have transformational needs, focus on the most critical applications and enable their business. And we've built capabilities over the past five years that have aligned to that, up to and including our most recent acquisition of Amido, which is a cloud-native application-oriented consultancy. So, while the vision and strategy doesn't change, the real exciting part is that by evolving from a sponsor like Charlesbank, [which] was an outstanding partner to this stage, we now set off on this next phase of our journey with KKR. [KKR] is excited about the strategy and just wants to invest in what we have been doing.
To take that a step further, a lot of the things that were key focus areas, for us as a leadership team over the past five years, were maybe what you would call a general hygiene and building a culture. In a managed service and transformation business like ours, our people and culture are a significant differentiator. So, we spent a lot of time making sure that Ensono is a place that our associates love to come to work every day, whether that's physically, when it's safe, or virtually, through the pandemic. And we feel that by investing heavily in our associates and the culture, that bleeds through and creates client loyalty, which essentially is the core ingredient to growth in our view.
Marc CapriPresident, Ensono
You mentioned the Amido acquisition. What plans do you have going forward? Are there any particular skill sets or geographies you are interested in?
Capri: We're looking at more transformation capability, whether that's application development, application modernization or more cloud transformation. Potentially security. Those are the areas that we're spending the most time looking at.
One thing about COVID: It feels as if it brought all the bad guys out, [given] the number of hacking incidents. It's amazing how that ramped up. While [security] is a core part of our business, we see that as an opportunity to potentially expand and provide more service.
Ensono to target vertical markets
Regarding cloud consultancies, there seems to be a growing consensus around the key components of these businesses. One of those is the cultivation of intellectual property, especially around verticals. Is that something you have done, are doing or intend to do at some point?
Capri: That's one of the things that we have evolved over the past five years. To date we have been in-market horizontally, but we've had a focus on a certain type of client, and that tends to be a client that's been established, maybe around 30 to 40 years. Not born in the cloud. And over that time, companies that look like that tend to acquire tech debt -- think of multiple platforms that run their critical environments. With that horizonal market focus, we've tended to gravitate toward certain industries, which won't shock you: Insurance, state and local government, retail [and] manufacturing are [some] that jump out. And in 2021, we've taken our first step toward a vertical go-to-market [strategy], and we've chosen state and local and insurance as the two we are going to focus on.
So, that's underway for 2021?
Capri: That's right. We hired a top-notch, seasoned state-and-local leader from the market. Clint Dean is the vice president who is going to lead that function. We are not yet ready to announce the equivalent on the insurance side.
Are there particular areas within those verticals you will be focusing on?
Capri: In state and local, we're focused on critical infrastructure, where a client would have legacy systems with a desire to modernize and create more agility for the interface to engage with the citizens. Things like unemployment, tax collections, criminal justice or DMV. The types of systems we have expertise around on the legacy side -- mainframes, midrange, large distributed environments -- those are the types of systems that the current apps run on. Our vision and our strategy is to talk to the clients about not just running them in a fashion that is highly available and as cost-effective as possible, but enabling them to modernize those applications, over time, to make them more relevant for the citizens.
Clients' cloud strategies
There's been lots of discussion around harnessing the cloud as part of a move to digital business and really starting to harness some of the cloud-native services, whether it's machine learning and AI or IoT services. Where do your clients stand? Are they pushing beyond the basics of cloud at this point? Or are they just getting their heads around moving to the cloud and what that means for their organizations?
Capri: Almost every answer in IT is, 'It depends.' We have some clients that are early adopters that are way out there. They're pushing us. They sit on our client advisory board. We have about 15 clients that come together with us on a quarterly basis to help advise our strategy. But then we also have clients that are the opposite of that, just dipping their toe in the water with the use of cloud. For us, it's about helping the client where they are on their journey and helping make sure they execute on their business strategy.
Really, what we are seeing is clients, in some cases, are perfectly capable and perfectly satisfied with running their most critical applications on legacy platforms like mainframes. But others are in industries that are changing rapidly. If you use state and local as an example, when you go to the DMV, do you want to stand in a line and fill out paperwork? I don't. We are talking to those clients: 'OK, how do we write new applications that would make your DMV experience, or your pay-your-real-estate-taxes experience, engage on a mobile device?' Those applications that we help [clients] write and take advantage of machine learning or some of the advanced capabilities -- that all interconnects back to potentially a mainframe or potentially some dedicated infrastructure. We help them take advantage of the modern services in the right context for their business.