Australian software development firm Readify completed an AU$7 million capital-raising effort, backed by Blue Sky Private Equity, earlier this year. Now, the Melbourne-headquartered company is working to use some of the funds to acquire long-time user experience design partner Folk.
The rest of the multimillion-dollar cash boost will be going towards a mergers and acquisitions strategy.
Folk and Readify have been working together since 2008, with Readify providing solution design and development resources for a number of projects, and Folk providing specialist design and user experience capabilities and visual design.
The companies have joined forces on a number of high-profile sites, including Grays Online, Australian Rugby Union, and the Cancer Institute of NSW.
"We've learned over the past six years of working with Folk that together, we can deliver both highly robust and compellingly usable software for clients — this new partnership will mean we have both world-class design and powerhouse software development, and we believe that is unique in the Australian market," said Readify managing director Graeme Strange.
Following the capital-raising effort — the company's first of this size — it is likely that Folk will be folded into Readify's portfolio offering within the next 12 months, or sooner.
"I think we'll rapidly move to acquire Folk," Strange told ZDNet. "We've had a lot to do with Folk over the last five years, so it won't be long. We've got 12 months to do it, but, in reality, I'd expect to see it happen much sooner.
"Very quickly, we'll move to 100 percent ownership of Folk, and it will be slowly but surely folded in," he said.
Strange said that although Folk comes with a strong existing brand, it is likely that it will be brought under the Readify brand eventually, once the acquisition has been completed.
Folk managing director Michael Broadhead comes as part of the deal, and, according to Strange, he is pleased to see his company become a part of Readify.
The move to take on the UX agency was made by Readify in a bid to address the changing nature of the IT market, with budgets and responsibilities shifting between the jurisdictions of the CIO and the CMO departments within enterprises.
"What we're seeing is that a lot of the budget is moving from CIO to the CMO departments," said Strange. "The world has changed, consumers expect all technology to be easy to use, and our clients expect smaller, faster delivery of software that delivers immediate and continuous benefits. The days of fixed-price mega projects are gone.
"To get that quick return on investment, employees and customers have to want to use the software we create. That's what makes this deal compelling. The acquisition will extend our capability so we can deliver outstanding software in a seamless collaborative environment," he said.
Broadhead said that for large service organisations like banks, insurance providers, travel companies, and government agencies, customers' most frequent and important brand experiences are now online.
"For many customers, the digital experience is the brand," said Broadhead. "For traditional brand consultancies and some clients, digital is an afterthought — just part of the marketing mix — while for most UX designers, the brand has been defined prior to their engagement, so they don't have a deep understanding of what's driving it.
"As the world moves towards mobile and cloud, this design/development integration is a logical step; we're just making it earlier than most," he said.