Ted Pretty has just completed his first acquisition since becoming chief executive officer at ASX-listed secure collaboration specialist Covata. The company announced a week ago that it had entered a binding agreement to acquire California-based security firm CipherPoint.
It’s not the size of the acquisition that makes it interesting, but the direction. CipherPoint’s Microsoft integrations and API engine will form key parts of the Covata data security platform (DSP) which the company outlined as the core of its strategic plan for the future last April.
Ted Pretty has had a long and storied career in the tech and innovation sectors. He has been a group managing director at Telstra; executive director at Macquarie Capital; chairman at Fujitsu Australia; group CEO at Hills Industries – and other roles in between – Mr Pretty has had a lot of different vantage points from which to view the industry.
In this podcast interview, Mr Pretty talks about the challenges – and great opportunities – for Australian software companies. What is clear from this interview is that Ted Pretty is pretty chuffed to find himself at the helm of a small, listed, Aussie tech company.
It’s a good time to be in the cyber sector. To say the least, there is a lot going on. Security issues are now mapped to board level in the private sector, and are at the heart of everything governments do online. There are huge opportunities.
“Boards are becoming much more aware now, certainly as regulatory changes in the US, Europe and Australia impose disclosure requirements around breaches and penalties for failure to take adequate action,” Mr Pretty said.
“That’s going to make a big difference and has probably elevated the issue to the appropriate place where it should be today.”
Mr Pretty outlines the broad-stroke strategies for building Covata’s data security platform and runs a ruler over some of government’s industry development policies. There is a lot that’s working in Australia, but government procurement is one area where we can do better.
The $6.5 billion that the Australian Government spends on ICT annually is an enormous potential lever that government can use to support local innovators. But it will require a rethinking of the procurement processes that are too slow and too expensive – and driven by a risk averse culture.
“At the end of the day, what drives business value is revenue. And one of the best things that a government can give to a small organisation is purchase orders – and to be prepared to trial [their products],” Mr Pretty said.
He says the US and UK governments seem to be better at this, with programs that enable an easier entry-point for smaller local provider to get into government.
“In a small market like Australia, it is even more critical that government embraces SMBs as suppliers,” he said. “This is a really tight market. Rules should really be directed at making it easy for government agencies to purchase off small to medium sized enterprise.”
“No-one is expecting a free kick if the product is not up to scratch. But by the same token, I think it is reasonable to expect that the products are trialled, and that the tendering process through which the products are made available should be a lot simpler for a smaller organisation.”
As an industry development tool, this is no small thing. Referenceable government sales can lead to directly to other sales elsewhere.
As it happens, the Covata platform is used by 22 government departments and agencies. And with the CipherPoint acquisition it also gains US government customers, including the US Army, DARPA, and NASA. Singapore is also a Covata user.
Mr Pretty has also outlined its relationship with Microsoft as another key go-to-market partner.
“One reason we have acquired CypherPoint as a small US-based company is that they had gone a little bit further down the track than we had in a number of respects, including for example a deeper integration with the Microsoft environment,” he said.
“And as you know 98 per cent of the big government and enterprise users are in that Microsoft environment, whether at the desktop or in their IT standard operating environment. So it’s important that we provide that seamless integration into the product.”
The Covata data security platform is offered as a software as a service either on-premise, private cloud, or Microsoft Azure.
And now that Microsoft has announced it now has Australian Signals Directorate accreditation for its cloud service Azure, “we are going to piggy-back on that as well.”
Microsoft’s recently announced co-location of two data centres with Canberra Data Centres presents a big opportunity for smaller local companies who are in the Microsoft ecosystem.
“I think that shows their commitment to this market. As a small Australian player, you really do need to have strong relationships with relevant global enterprises, because they are the once that can really support you in the go-to-market,” Mr Pretty said.