Morneau Shepell: delivering long-term value to OTIP
Morneau Shepell is a leading provider of technology-enabled HR services that provide an integrated approach to employee wellbeing through a cloud-based platform. Its core focus is to provide everything their clients need to support the mental, physical, social and financial wellbeing of their people.
Paul Sywulych is the Vice President of Digital Innovation at Morneau Shepell. He has been with the company for over 26 years in a variety of different roles. In his current position, he leads a number of key enterprise initiatives to leverage AI, machine learning and advanced technologies to improve the lives of employees and to help organisations maximise the value of their human capital.
Since 2014, Morneau Shepell has partnered with Ontario Teachers Insurance Plan (OTIP) and overseen OTIP’s growth from 20,000 members to more than 230,000. “We provide an array of solutions around health and pension administration,” explains Sywulych. “This ranges from outsource solutions for large organisations across North America to system only solutions that we provide to OTIP. As we make incremental improvements to the technology platform that supports OTIP, they automatically get the benefits of our investment because it helps us and them too.”
Sywulych points to the importance of delivering long-term and sustainable value to partnerships such as OTIP, and recognises the benefits this has. “OTIP has been a great partner for us and is one of our largest health administration clients in Canada. They knew they needed a strong administrative platform to accelerate their growth because of the speed of adoption of a standardised benefits plan across Ontario for teachers,” he explains. “One of the most interesting things from working with OTIP is that they really opened their doors to us. They welcomed us to spend time with them and we had our people hands-on during an 18 month implementation.” Sywulych believes offering that continued support is the key to success. “I believe that if you don’t help people run the software correctly and offer that ongoing support then it all falls apart so it’s vital you’re there,” he says. “We don’t just take a ‘set it and forget it’ approach. We continue to evolve the software platform because we do so for not just one client but for many. We’re doing incremental enhancements to the software to support technology trends and how things are changing.”
Looking to the future of the partnership, Sywulych believes observing the latest trends in the industry and operating with an agile and lean approach is essential to success over the next few years. “Our goal from a UX perspective is to make our customers’ interactions with software straightforward and try and reduce some of the things that they need to do so they can focus more on the areas of value add,” he explains. “In the near future, we’re looking at what’s the next thing that will drive the most value for our clients and we’re focused primarily around three key pillars: consumer grade experiences, the way in which we leverage AI, and augmenting additional things that matter to people. At Morneau Shepell, we’re also investing in initiatives such as voluntary benefits that extend the value proposition that employers can offer to their people.”
M&A activity key lever for future tech sector growth
Despite the continuing uncertainty of the pandemic, the tech sector has witnessed soaring dealmaking activity over the past year, rocketing in the second half of 2020, with the last quarter of 2020 a record one for M&A activity, and momentum continuing into 2021.
Dealmaking in tech sector soars in past year
And the latest figures bear this out with the number of technology M&A deals totalling US$208.44bn globally in Q1 2021, according to GlobalData. While the US holds top spot both in volume of deals (1034) and total value (US$140.61bn), Europe ranked next with 649 deals (US$44.49bn) with the UK continuing its reign as Europe’s biggest M&A market with 204 deals.
In particular, megadeals – those valued at US$5bn or more – soared in 2020 representing 59% of all global technology sector deal value in 2020, up from 47% in 2019, according to the latest edition of the EY Technology Global Capital Confidence Barometer.
This tech sector trend towards megadeals is backed up by EY’s CCB data, with 16% of tech sector respondents planning to pursue transformative deals valued at US$5bn or more in the near-term.
While technology deal activity “all but stopped at the beginning of 2020 after fluctuating between historic highs and lows, companies pivoted quickly and tech M&A exploded in the second half of the year”, says Barak Ravid, EY Global TMT Leader for Strategy and Transactions.
M&A activity level for tech sector growth
Looking ahead to the future, technology executives are optimistic, with nearly half (47%) expecting profitability to fully rebound this year, according to CCB data, compared to 23% across all sectors, and with more than half (51%) planning to pursue M&A in the next year in order to sustain growth.
According to Ravid, M&A activity is increasingly becoming a key lever for growth as businesses look to recover.
“To position themselves for future revenue growth, tech companies are now adjusting their M&A strategy to focus more on a target’s business resilience, digital technology alignment and to gain market share through consolidation,” says Ravid.
However, with an increasingly competitive deal market and ongoing geopolitical tensions, the majority of tech execs expect to see more competition in the bidding process for assets over the next year, primarily from private capital.