Tricentis just scored one of the biggest funding rounds for a B2B startup in a while — raising $165 million — for its software testing solution. According to Sandeep Johri, CEO of Tricentis, the investment reflects just how large the software testing industry is and how much enterprises are willing to spend on automated solutions.
“It’s a huge market, and if you look at all of the enterprises, they spend something like $30 billion in this market,” he recently told PYMNTS.
Testing software is a critical component of any organization’s progress and efforts to stay on top of innovation and technology. Traditionally, the process is quite manual and expensive — two characteristics Johri said aren’t compatible with the demands of the modern organization. His company is looking to step into a market where there is massive demand for an automated way to test new software.
“People were doing it manually,” he explained, “because there weren’t the tools out there to do it very easily. There are tools that allow you to automate it, but they’re very expensive and require technical developers.”
Traditionally, software testing is done by more software; an organization would have to have a team of developers to actually write software to automate the testing of the other software they’re trying to test. If that seems counterproductive, that’s because it is. Not to mention, added Johri, the software written to automate the testing of the other software is “fragile” and quite time-consuming.
For a while, businesses just dealt with these hurdles, looking to offset some costs by offshoring the entire software testing process. Today, however, businesses need to test their software and custom apps much more frequently.
“The speed of everything has gone up,” the executive explained. “People want to be able to make changes to their applications on a daily or on a monthly basis. Companies like Netflix and Amazon may make changes many times a day. This old model of upgrading software every three of six or nine months, it doesn’t work.”
Otherwise, he said, the effort spent to upgrade an app or software will go to waste without the ability to have those upgrades go live.
What It Means For FinServ
Demand for upgrading the way businesses test new software is seen, pretty much, across the board when it comes to industries. But Johri said that financial institutions are by far the number one sector that makes up Tricentis’ customer base. He offered one hypothetical scenario to explain why.
“If you are Flickr and your service involves allowing people to upload their photos from a party, if one of those photos gets messed up, it’s not a big deal,” he said. But turn photos into payments, and the software that enables the transfer of those payments cannot afford to mess up — not even once.
“If a bank messes up a transaction, that’s real money,” he continued. “Sometimes, it’s worth millions of dollars. The business impact on financial institutions is significant; therefore, testing is much more critical. Having said that, they also can’t be slow in this world. Everyone has pressure on time, but banks have that pressure, plus they can’t afford to mess up.”
Johri offered another scenario to demonstrate how critical agile software testing solutions have to be for the financial services space. If a bank’s software was developed to calculate exchange rates for a cross-border payment by accidentally multiplying a value by the exchange rate, not dividing it, that mistake in the underlying software can be crippling.
Even if the exchange rate between two currencies is small and may go unnoticed for a few weeks, those international transactions are incorrect. “The bank will be responsible for it,” Johri said. “You’re going to lose credibility. It creates a mess for you and for your customers.”
The high stakes of software accuracy have led the financial services industry to be one of the earliest adopters of innovation in the software testing space, the CEO noted. With the pace of FinTech innovation continuing to accelerate, industry players have seemingly endless opportunities to develop and integrate new software for all points of their service offerings — cross-border payments, real-time payments and beyond. But, Johri warned, the innovative software that’s developed is only as valuable as it is accurate.
The executive said Tricentis is working toward providing nearly 100 percent automation for its clients’ software testing needs, enabling companies to test software faster and ensure accuracy to keep up with demands to integrate the newest tools. Without this capability, businesses — especially banks — can trip over their own pursuits of progress.
“Testing becomes absolutely critical to a business’ pace of innovation,” Johri declared.