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ByBox, specialists in smart locker technology and field service solutions, today announced a strategic investment from Francisco Partners, the firm who acquired ClickSoftware in 2015 and who currently values ByBox at £221 million.

The private equity firm backs ambitious technology-enabled businesses and will support ByBox’s expansion of its UK infrastructure and global deployment of its ‘Konnect’ app-locker solution.

“ByBox is a great company with a clear and increasingly critical proposition. Its success comes down to great leadership, outstanding customer service and relentless development of its solutions. Listening closely to customers and really understanding market trends have made ByBox an extremely investible business,” remarked Deep Shah, co-president, Francisco Partners.

Working with Francisco Partners will enable ByBox to accelerate the deployment of its ground-breaking app-locker technology both in the UK and across key global markets. ByBox’s app-lockers systematically address the core challenges of the field service supply chain. This should be welcome news to ByBox’s customers, who grapple constantly with how to permanently extinguish unnecessary costs.

[quote float="left"]We’re excited to help ByBox support its existing UK customer base with new offerings, accelerate its international expansion and penetrate new industries.[/quote]Petri Oksanen, partner, Francisco Partners commented, “We’re excited to help ByBox support its existing UK customer base with new offerings, accelerate its international expansion and penetrate new industries. Our growth experience will complement ByBox’s inventive nature and intelligent solution set in continuing to drive real customer value into the global field service market.”

The transaction marks an exit for LDC, a mid-market private equity investor. LDC originally provided £37.5 million of development capital in 2016. In the last two years, the business has grown significantly and doubled in value.

“LDC are insightful and supportive investors who have worked closely with the ByBox team to formulate and execute a successful strategy. The next phase of this strategy is characterised by ongoing investment in our UK business as well as driving our international expansion. FP has a tremendous track record and will be ideal partners to help us deliver this growth,” commented Stuart Miller, co-founder and CEO of ByBox.

“ByBox is a great example of a company with a winning combination of innovative problem-solving technology and fantastic customer service. Under the impeccable leadership of Stuart and his team, ByBox has grown to become a real market leader in its field, two years ahead of plan,” said Alastair Weinel, investment director at LDC in the South. “Together, we’ve generated significant value and have opened the door for even further expansion. We know this ambitious management team isn’t finished yet and wish the team every success in the next phase of their journey.”

“The world is increasingly dependent on technology. When the tech fails, the world stops working. So field service has never been more critical – which is why everybody at ByBox is so excited to be an increasingly critical part of the future solution set. The backing from FP allows us to go faster and to deliver the next phase of our ambition for our customers,” concluded Miller.

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DA Systems' David Upton looks at how we must try to change the perception of technology costs from an expense to be justified to a necessary investment when approaching the board...

Recent research undertaken to understand attitudes towards investing in technology highlighted a generic problem within the transport and logistics industry. Companies all appreciate the benefits mobile technology can bring, yet they are not succeeding in securing the necessary investment required from business leadership. Why? Because technological investment is seen as an expense to be justified rather than an investment in reducing costs and generating more profits.

It was a problem for 80% of survey respondents, 88% of whom said that they wanted to introduce new mobile technology, but faced budget restrictions.

This suggests a further underlying issue because it means that they are not developing a compelling enough business case to address the return on investments to be expected. If they were, the funds would be flowing more freely. Most business cases centre on increasing revenue.

Obviously there is a revenue element to consider, but the primary advantage of mobile technology is that it increases the likelihood of a parcel being delivered first time around – which minimises some of the largest costs associated with business operations. This article explains how to develop a business case for technological investment and prioritises the benefits.

In the case of investing in mobile technology to provide customers with an estimated time of delivery to reduce the cost of failed deliveries, building a compelling business case should be relatively straightforward. The overall impetus should be cost reduction, with a focal point of preventing the cost of a missed first time delivery. This is estimated in the region of £23 per drop and causes a very significant erosion to profit margins when it isn’t achieved.

On average, 15% of deliveries fail on the first attempt because the customer was not aware of the delivery time, which could be managed by adopting mobile technology. Even absorbing the inefficiencies of a slightly empty delivery van because orders that have been pre-loaded get cancelled, is better than the cost of a missed delivery.

 

Optimising a delivery round to take the most economical route means saving on fuel, mileage time and being able to do more drops per vehicle. In turn this means a reduction in the number of drivers and vehicles, which again saves money. So taking all these factors into consideration, the emphasis in a business case should be on technology, which is self-financing, with payback achieved within the first year of investment at the latest.

Taking DPD as a good example of how costs can be reduced and revenues increased as a result of technological improvements, they have grown sales by over £100 million as a result of implementing ETA messaging. Of course enhancing customer interaction is an important factor, but the real benefit is derived from getting deliveries right first time and reducing the cost base.

If 15% of operational costs can be saved by getting deliveries right first time, achieving better optimisation of delivery routes and requiring fewer journeys means fewer drivers are required. And courier productivity levels can be further increased by using route optimisation software, which in turn can reduce the number of miles to be driven by 10%.

For a large delivery company with a £16 million fuel bill, this creates the potential to save up to £1.6 million on fuel costs. Given their profit margin is roughly 10%, this creates a net increase to the total bottom line of 10%, a huge bonus.

To quote another delivery company example, after it implemented route optimisation, fleet mileage was cut by 17% and overall fleet size was reduced by 7%. This is the type of rationale that needs to be used in a business case for technological investment, going beyond customer and branding benefits to deliver hard cost savings and potential for greater profits.

So far we have outlined just a few of the solid cost saving justifications to be included in a business case for investing in new technology and there are many more, ranging from improved communication with call centre staff and traffic management options, to reduced fuel consumption.

When developing a business case, delivery companies need to be clear about the tangible benefits and turn the way they approach investing in technology around. Think of it as less of ‘an expenditure to be justified’ and more as a way to make greater profits with immediate payback.