Roper Technologies, Inc. ranks as the seventh largest software company in the United States of America as of 2022. It was incorporated more than a century ago — but for a majority of this time, it was not a technology company. Roper was a classic industrial conglomerate, capital-hungry and diversified across unrelated verticals. Fast forward to today, the company describes itself as developing vertical software products for niche markets.
This is the story of how a sprawling manufacturing giant transformed into a software powerhouse.
Roper’s roots date back to a corporation that made gas stoves and gear pumps in the late 1800s. The two divisions operated under the same corporate structure until being separated in the 1950s. Over the next three decades, the kitchen appliance company flourished, its annual sales growing to roughly 25 times that of the industrial segment. However, it is Roper Industries — the gear pump business — that formed the groundwork of the software company we know today.
In June of 1982, Derrick Key, a seasoned management consultant from A.T. Kearny joined Roper Industries as Vice President. Key climbed the corporate ladder to become CEO of the company in December of 1991. The company, which had gone private as a result of a leveraged buyout, returned to the public market in 1992. With Key at the helm, Roper’s business portfolio underwent its first major transformation. Key acquired a series of companies over the next nine years — initially the targets were similar to Roper’s existing business, but over time, more capital was allocated to buy market leaders in niche oligopolies. This included acquisitions of testing, measurement, and digital imaging companies. Roper shifted away from selling commoditized industrial products at scale, and toward domains which rewarded product performance and customer relationships. Key also designed a new model of management where P&L ownership of each product line was assigned to a single manager. These strategies worked. When Key stepped down in 2001, the company’s revenue had increased from around $70 million to $587 million.
Even though Roper’s profile had changed a lot, it still bore the scars of its industrial heritage — 20% of the company’s revenue was tied up in working capital and its performance was at the mercy of cyclical market dynamics. A sharper pivot was needed. It was against this context that Brian Jellison, Executive Vice President of Ingersoll Rand, was offered the opportunity to be CEO of Roper.
As an executive, Jellison was smart, opinionated — and unconventional. His term at Ingersoll Rand had left him “just fed up with how little time was spent on actually focusing on creating shareholder value.” So much so that at age 55, Jellison jumped at the chance to head Roper.
Jellison is known as the architect of the Roper we know today because he accelerated the company’s pivot from industry to software — a move that proved to be highly lucrative. Between 2001 and 2023, Roper compounde ...
The rest of this article is for members only.