Pivotal Software Business Model: Analysis and Recommendations

This report offers a detailed analysis of Pivotal Software's business model, utilizing the Business Model Canvas framework to dissect its key components. It explores Pivotal's customer segments, key activities, value proposition, channels, customer relationships, key resources, cost structure, and revenue streams. The analysis highlights Pivotal's strengths, such as its cloud-based services and its focus on software development. The report also identifies weaknesses, including financial losses and reliance on cloud development products. Furthermore, the report examines the company's critical success factors, such as its ability to provide software as a service, and discusses potential downside risks. The report provides recommendations for improvement, emphasizing the importance of metrics such as speed, stability, scale, and security to enhance Pivotal's offerings. The conclusion summarizes the key findings, emphasizing the company's efforts to build customer trust and capitalize on opportunities in cloud computing.

THINK BIG

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Executive summary
The given report explores the Pivotal Software business canvas model along with describing nine
building block component approach to identify the constraints that have direct impact on
company`s operation.
Growth in security area and cloud computing have been achieved by complementing these
services to various sectors.
Pivotal software can restructure its business canvas model by providing valuable security
services to different industries such as finance, infrastructure, medical and pharmaceutical, and
hospitality.

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Table of Contents
Pivotal software...........................................................................................................................................3
Business Model...........................................................................................................................................3
Building blocks.............................................................................................................................................3
Customer segments.................................................................................................................................3
Key partners............................................................................................................................................4
Key activities............................................................................................................................................4
Customer relationship.............................................................................................................................5
Channels..................................................................................................................................................5
Cost structure..........................................................................................................................................5
Revenue Streams.....................................................................................................................................5
Key resources..........................................................................................................................................5
Value Proposition....................................................................................................................................6
Critical success factors.................................................................................................................................6
Downside risk..............................................................................................................................................6
Business model changes..............................................................................................................................7
Critical thinking of Strengths and weaknesses.............................................................................................8
Quality of communication...........................................................................................................................9
Recommendation........................................................................................................................................9
Conclusion...................................................................................................................................................9
Appendix-1................................................................................................................................................11
Business Canvas Model.............................................................................................................................11
Apppendix-2..............................................................................................................................................14
References.................................................................................................................................................15

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Pivotal software
Pivotal software is a software company headquartered in Palo Alto, California founded in 2012.
Pivotal provides application services to many established large brand companies. Companies
work and deploy pivotal application services to work on NET, Java and Node apps on Pivotal
Cloud Foundry (Lucovsky, Collison, Spivak, Chen, & Laddad, 2010). Pivotal delivers every
application to every big private and public cloud on a single platform. The world is growing
rapidly towards software-driven future. Pivotal assists company to develop software so that they
can differentiate product or service to stay competitive and grow the business.
Business Model
Business Model Canvas is a strategic tabular formed template used to describe consumer
segments, key activities, value proposition, channel, customer relationship, key partners, cost
structure, and revenue streams of an organization.
Building blocks
Nine building blocks approach describes Pivotal Software business model (refer to Appendix 1-
Pivotal Software Business Model Canvas).
Customer segments
Pivotal Software offers a wide range of products & services to various commercial institutions
across numerous sectors such as in a financial firm; Pivotal provides different software
assistance to banking institutions, real estate organization, and asset management firms. Pivotal
software has high-profile customers such as Mercedes-Benz, Lockheed Martin, the IRS,
Comcast, and BMW. Pivotal software offers its services at international level to various
countries including Europe, America, and Asia Pacific.

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Key partners
Pivotal Software works with various companies in order to develop, integrate, and distribute its
products. Channel and distribution partner comprises value-added resellers that help company to
make marketing strategies. Strategic partners named Google, Cisco and Microsoft share their
resources to work together on joint projects and investment.
Key vendors that help Pivotal Software
(Source: Tasevska, 2017)
Key activities
Pivotal software is renowned as Software Company. Majorly, it involves in solving software.
Pivotal software is renowned as Software Company. Majorly, it involves in solving software
problems by creating software application. The core products are Pivotal CF, platform services
designed to help development teams for updating applications on cloud. Pivotal software
provides a wide range of ancillary services such as analytics, security and telecommunication

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solutions. Pivotal software serves commercial customers across various sectors such as
technology, public sector, health, media, and other industries.
Customer relationship
Pivotal software increases its sales through in-built sales team that interact to customers directly
in order to provide the services to individual needs. One`s the sale is incurred, the company
provides self-service facility that enables the customers to access the company`s products and
services, resources and information from Pivotal software website.
Channels
The company operates cloud-hosted online platform that provides easy access to their homepage,
which offers customer to get register an account with Pivotal. The company has core network of
19 offices across Toronto, North America, Dublin, New York and Singapore.
Cost structure
Pivotal Software incur expenses which results in development of software solutions, manage its
partnership and retain efficient personnel.
Revenue Streams
Pivotal software receives revenue by generating sale of various software. The company derive
its revenue from collection of subscription fee from regular customers. Pivotal software
generates revenue from various professional services such as consulting, and training.
Key resources
The US patent & trademark agency identifies more than 30 patent application registered in the
name of Pivotal software. Pivotal owns many intellectual properties, which are key for a
successful business operation.

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Value Proposition
Pivotal software creates value to customers. The company provides service to extensive network
of international clients and operates offices in US, Germany, UK, and Ireland.
Critical success factors
Proving software as a service, the company has chosen cloud foundry as a base platform to
encourage and empower customers to extend customized application. Extending and integrating
enterprise application with software brings challenges. Cloud foundry plays important role in
prioritizing it as success factor. The company said that 2019 would head with fiscal year in its
first quarter to achieve sales growth. The CEO of organization achieved revenue growth of 69%
& 28% of total revenue is driven to expand the usage of software and to get the subscription
amount from existing customers (Pivotal investors, 2018).
(Source: EMA Pivotal, 2018)
Downside risk
Money raised from IPO creates risk, which associates with dell related investments. Although,
money raised in the name of Pivotal will remain with the company. However, IPO gives a way
for cash shortage with dell and Silver Lake Partner. Analysts are predicting that silver lake is
expecting higher returns on investments related to dell (Backaitis, 2018). The company is
focusing on improving security postures complied with PCF (Pivotal Cloud Foundry) built-in

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capabilities. PCF help the data to convert to code language with IPsec Add-on. Use coding
method to secure data. The company uses PCF to protect the data against advance threat (Pivotal
Software, 2018). The company generates revenue double from $280.8 million in 2016 to $509
million in 2018. The company relies on cloud development product (PCF) Pivotal cloud foundry
for revenue. This shows that the company is interested in creating and developing applications to
run in data centers.
Business model changes
It has been seen that pivotal incurred net losses every year from the time it came into
existence. However, these losses have reduced.
Fiscal Year Net losses
2016 $282.7 million
2017 $232.9 million
2018 $163.5 million
These losses have created accumulated deficit in its reserves $1.1 billion. Pivotal described in its
prospectus that this year operating expenses increase to hire and incur additional sales, opening
of new offices, costs additional legal, research and development and other expense to register it
as a public company (Fortune, 2018). The company should move to understand its customer
behavior. The company should strive to precisely understand the security of its cloud, which will
attract more subscription from the existing customers and attracts new customer to buy their
application. From consumer app to enterprise technology, the company should help its customers
to build software. The San Francisco branch office teaches the client`s engineer to make same
exact application as Pivotal lab`s product (Rodriguez, 2016).

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Critical thinking of Strengths and weaknesses
Existing strength of core values in the company gives the opportunity to shape the
potential of cloud computing. The sustainable business model identify the opportunity factors
which improves future of cloud computing. The strengths are-
Cost factor in cost-intensive IT sector plays an important role in decision-making.
Flexibility opens up new circumstances while considering price reduction ability. Flexibility
affects the reduction of fixed costs that can be converted to variable costs, which reduces the
asset of company indicating that software has developed with less capital. Retention of
consumers, one`s the customer is satisfied with security issues after using Pivotal`s application
(Penzel, Kryvinska, & Strauss, 2015). They stick to company as they start trusting on security
needs. Cloud computing provides extensive services such as monitoring, security control, and
maintenance to the business to protect their data.
Trust issues are critical in cloud computing. Major risk and weakness is related to trust
and security. Control, security, and performance issues enforce the company to create business
model and this type of business model is given greater priority in sustainable growth. Every
category that discomforts customer can affect the company`s operation positively. The loss of
control is another weakness. When company keep outsourcing the service, they lose their ability
to make and implement decision on operability, functionality, and design. The customers do not
much idea where the data is stored and it is not even guaranteed. The business model focuses on
transparency to win and create trust among the customers.

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Quality of communication
Until now, all traffic among applications had to pass through cloud foundry router. After
the addition of CF-networking stack, user create policies that communicate directly to one
another by enhancing performance and security (Pivotal documentation, 2018).
Container to container networking offers app a way to communicate with each other
(Pivotal, 2017). It includes some core components such as Cloud Foundry Command Line
interface, garden external networker, policy server, and application security groups can affect
traffic from app usage at the same time.
Recommendation
The company should try to improve five important metrics to get better software.
Speed- Company should strive to provide more apps and go faster to fulfil customer needs as
early as possible.
Stability- Company should appoint internal team, which has reliable dial tone for all software
platform services.
Scale- Company has to keep a check whether apps stay online when consumers need them.
Pivotal should access its apps comfortably even when traffic surges.
Security- How quickly company strengthen its system such as apps and its personal website. If
the company is not able to cover its security and monitoring issues. It becomes risky for
business.

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Conclusion
The above report reveals and analysis business model of Pivotal software. The company
is able to identify threat and opportunities available in the environment. The company is trying to
win trust of customer clients by providing them security services. It has been identified that the
company could not successfully raise fund through IPO. The expectation of silver lake partner
started heightening after knowing of dell association. Cloud computing provides the ability to
enhance web application. The application container demands the web application package, which
helps in developing applications. Company uses communication channels through cloud foundry
networking which gives direct communication chance for micro services. Pivotal provides cloud-
computing services to various sectors such as healthcare, financial services, infrastructural
services & many more.

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Appendix-1
Business Canvas Model
Name of the company: Pivotal Software
Key Partners
 Consultation and
integration
partner is named
as Accenture,
dell services
 Strategic partner
includes Google,
Amazon web
services and
Microsoft.
Key Activities
 Serves wide range
of commercial and
institutional
customers
 Provision of
software solution
that creates
software
applications.
 Cloud-based
services by Pivotal
online channel.
Value
Proposition
 Industrial
standing and
reputation
 International
reach
 Proprietary
technologies
and innovative
products
 Technical
expertise and
specialist
personnel.
Customer
Relationships
 Direct
contact to
the
customers
through e-
mails.
 Customer
friendly
staff
 Establishi
ng loyalty
and trust
among
customers
 After
sales
Customer
Segments
 Financial
services
 Healthcare
and
Pharmaceutic
al
 Government
 Service
provider of
Telecommuni
cation and
Media
 Automotive
Team or Company Name:
COMPANY NAME

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feedback
Key Resources
 Intellectual and
technological
property
 Owns and leases
physical
properties.
 Office network
and satellite across
Asia Pacific,
North America,
and Europe.
Channels
 Accessible
through
company`s
homepage
 Regional direct
sales team
 Email and
online contact
form
 Independent
software vendor
 Personal
website
www.pivotal.io
Cost Structure
 Salaries to staff
 Maintaining communication infrastructure
 Maintenance of online system platforms
Revenue Streams
 Collection through subscription fees.
 Small portion of revenue by provisional services through
training and technical support services.

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Apppendix-2
Pivotal Software's IPO
(Source: Alexander, 2018)

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References
Alexander, (2018). First Look at Pivotal Software's IPO. Retrieved from:
https://seekingalpha.com/article/4158851-first-look-pivotal-softwares-ipo
Backaitis, V. (2018). The hidden risk in Pivotal`s IPO. Retrieved from:
https://seekingalpha.com/article/4163782-hidden-risk-pivotals-ipo
EMA Pivotal, (2018). Perception of cloud vs. On-Premises Use. Retrieved from:
https://image.slidesharecdn.com/ema-pivotalcloudanalyticswebinarapr2016-
160519183517/95/analytics-in-the-cloud-getting-the-most-out-of-analytics-deployments-
7-638.jpg?cb=1463682962
Fortune, (2018). 3 Takeaways from the New Pivotal Software Upcoming IPO. Retrieved from:
http://fortune.com/2018/03/23/pivotal-software-ipo-dell-emc-vmware/
Lucovsky, M., Collison, D., Spivak, V. Chen, G. C. & Laddad, R. (2010). Cloud platform
architecture. Retrieved from: https://patents.google.com/patent/US8627426B2/en
Penzel, D., Kryvinska, N., & Strauss, C. (2015). The Future of Cloud Computing A SWOT
Analysis and Predictions of Development. International Conference on Future Internet
of Things and Cloud, 102(1).
Pivotal documentation, (2018). Understanding Container-to-Container Networking. Retrieved
from: https://docs.pivotal.io/pivotalcf/1-12/concepts/understand-cf-networking.html
Pivotal investors, (2018). Pivotal Reports First Quarter Fiscal Year 2019 Financial Results.
Retrieved from: https://investors.pivotal.io/news/financial-news/press-release-details/
2018/Pivotal-Reports-First-Quarter-Fiscal-Year-2019-Financial-Results/default.as

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Pivotal Software, (2018). Pivotal cloud foundry. Retrieved from: https://pivotal.io/platform
Pivotal, (2017). Cloud Foundry Networking: Enabling Direct Communication for Microservices
- Chin, McClure. Retrieved from: https://content.pivotal.io/youtube-all-videos/cloud-
foundry-networking-enabling-direct-communication-for-microservices-chin-mcclure-2
Rodriguez, S. (2016). Why this $3 Billion Company Wants to Put Itself Out of Business.
Retrieved from: https://www.inc.com/sal-rodriguez/pivotal-labs-2016-company-of-the-
year-nominee.html
Sedano, T., Ralph, P., & Péraire, C. (2017). Software development waste. In Proceedings of the
39th International Conference on Software Engineering. USA: IEEE Press.
Tasevska, M. (2017). Top 10 Procurement Software Vendors and Market Forecast 2016-2021.
Retrieved from: https://www.appsruntheworld.com/top-10-procurement-software-
vendors-and-market-forecast/