WSO2 CEO plans to move up in business value

Mark Chillingworth Profile picture for user Mark Chillingworth November 28, 2023
Summary:
European expansion and abstracting platform management are driving growth as WSO2’s IPO is delayed to 2026

An image of WSO2 CEO Sanjiva Weerawarana
(Image sourced via WSO2)

WSO2 plans to move up the value stack. The business focuses on open-source API management, integration tools, identity access management (IAM) and internal software development products. These technologies have reached a point where they can be abstracted away from the technology department. CEO and founder Sanjiva Weerawarana is also charting the company towards European expansion, increased revenues and a much-talked-about IPO.

WSO2 is best known as a provider of integration technologies and Weerawarana doesn’t see this changing: 

Integration is development, as everything that you do in the enterprise involves connecting to other systems.

Those integrations are about delivering business outcomes and providing organizations with what is often termed a platform. Demand on CIOs and the technology platform is at an all-time high. The rapid rise in digitization that has taken place post-pandemic shows little sign of slowing down. This places a new pressure on CIOs, delivering enhancements to the platform in an era of skills shortages. 

It is for this reason that Weerawarana believes that integration needs to follow the same career path as servers and be abstracted away from the CIO’s team. Vendors love a new term, and WSO2 is coining the phrase “platformless” for what it believes is the next stage in integration development. It describes the situation as: 

Platforms have introduced their own challenges. They require large, highly-skilled platform engineering teams, and the skills are hard to find. Each platform requires many complex choices and links between multiple systems: DevOps pipelines, deployment management, monitoring and management systems, network substrates, and, of course, the actual cluster management.

The CEO says platform management needs to be removed from the process so that the CIO’s team can focus on deploying applications and integrations. This will remove the barrier between the platform provider and the user in the same way that serverless has done. These integrations should be akin to adding a new employee to the organization’s Microsoft 365 account, he says. 

The platform approach has, in turn, led to a more architectural view of enterprise technology - an architecture that is focused not on technology standards but on the needs of the business. Enterprise architects have evolved, and Weerawarana says platform operating technologies must also do so: 

The long-term focus is away from IT. Technology needs to be invisible and speak to the business needs.

As with every technology discussion in the last half of 2023, you cannot avoid generative AI. Weerawarana is openly advocating the technology: 

The broader question about AI is what will it do for development. I think AI-assisted development is incredibly powerful. Being able to write code in a much better and faster way, with assistance from AI, is going to be a productivity improvement.

All of our engineers have Copilot subscriptions, and we are strongly encouraging people to use Bard and ChatGPT. In terms of a creative assistant, there is no limit to how far it can go.

He does, however, think there will be some cost realities kicking in as CIOs and CFOs analyze and worry about cloud costs. He says: 

LLMs are very expensive to run, but we are seeing LLMs that have just five parameters. The technology for the models is getting better, and we will reach a point where a laptop can run a LLM.

He adds that as organizations learn about the possibilities of AI and the financial implications, there will be ramifications for enterprise data and data teams. Just as with cloud, pre-built LLMs from cloud operators will enable enough automation and resulting cost savings to make a difference to the business. Weerawarana likens it to hiring an already experienced employee who doesn’t require any training. 

Spanish ambition 

Weerawarana met with diginomica in London on a whistlestop tour of Europe, which included Spain, a country that is becoming increasingly important to WSO2 as well as an increasing number of CIOs. He says: 

We are expanding our footprint in Europe and setting up a European corporate headquarters in Madrid. Talent in Spain, along with the implications of Brexit, meant we needed a European footprint in addition to the UK footprint, the UK had been our European centre. We had to split that up.

With Spain’s technology economy continuing to flourish, WSO2 continues to see growth and opportunity in the Iberian peninsula. The CEO says: 

A local language presence is very important, and Spain is one of our growth countries, so the move was a combination of factors.

At present, Spain is the third largest market in Europe for WSO2, but the CEO sees technology growth taking place much faster in Spain than in other European economies.

An initial public offering (IPO) has been in the offing for WSO2 for some time, but Weerawarana says this will not take place until 2026, he says: 

The market conditions are not right. The plan now is to reach revenues of $200 million.

The company will reach $100 million in this financial year, something the CEO says is a real milestone to reach. They are not delaying the IPO because of a lack of confidence about the health of the technology sector, though, he says: 

We don’t see any contraction or market slow down yet. Sales this year grew by 20%, a little below what we wanted, but it is respectable. We are profitable and cash flow positive. We are like the people that won the gold rush; that was the people that sold shovels and jeans.

Asked where WSO2 will IPO, Weerawarana says the USA is most likely as WSO2 is technically a US firm, but despite being a tech firm, he hopes they will not list on the famed NASDAQ. The reason is that he feels the firm and its technology would perform better in a market that had a longer-term focus. 

For the second time, my meeting with Weerawarana took place with the backdrop of conflict as war rages in the Middle East and Ukraine. Our last meeting had to be virtual as his native Sri Lanka was plunged into civil unrest, which has impacted the business. WSO2 has shrunk its presence in Sri Lanka and is increasing its operations in Bangalore, India. He says:

When you are running a company, and you are looking to IPO, then you have to consider country risk and Sri Lanka is considered a country risk. In India, the cost structures are the same. So, we are moving our customer success team there, and our next 20 hires will be in Bangalore.

The percentage of people in Sri Lanka has gone down as we grow in other regions. I would personally prefer to keep the jobs in Sri Lanka, but I run a company, and my first job is to run the company.  

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