Rekor Systems used strategic divestitures this year to sharpen its business focus and generate cash to help it get through the pandemic, CFO Eyal Hen said this week in a CFO Thought Leader podcast.
The company devised a plan in late 2019 to sell its two businesses, government contracting consulting and aviation industry staffing, after acquiring a digital license plate photography company, OpenALPR Technology, earlier that year.
The company wanted to build its identity around the tech firm to sharpen its growth path and simplify its business.
"The company started a new era here," said Hen, who launched his finance career 20 years ago as an analyst with PricewaterhouseCoopers in Israel. "With the technology, we think we have the biggest advantage over our competitors and from a financing and reporting perspective, we now focus on how to create value in the technology pricing of software and hardware."
Sale of the two older businesses proceeded without interruption despite the pandemic, a process that was smoothed in part because, in both cases, it was to the existing management teams.
"I wouldn't say it was easy to make these transactions even though they were with management," he said. "To do such big transactions in the middle of a pandemic was a big challenge."
The sales had a timely payoff, though. "All finance leaders would agree cash is king these days," he said. "And we were able to do it."
With its new focus, the company is poised to grow as the private sector turns to a technology that is mostly associated with municipal governments' efforts to catch traffic violators. Although public safety is one focus of the technology, the company is hoping the technology will catch on as fast-food chains and stores mine the data to improve drive-through and retail experiences, and municipalities use it to create more efficient traffic patterns, improve parking and automate tolls.
"It's a different way to look at the technology," he said. "It can improve customer experience at fast-food drive-through lines. There are many uses of the technology."
Hen and his team worked on upgrading and integrating the company’s finance and accounting systems at the same time it was working on the divestitures.
"We started to build infrastructure here for scale," he said. "We fully digitalized our finance operation: a new ERP system, connected to the CRM, connected to our e-commerce platform, and connected to our marketing platform. Everything is now talking to each other."
His team also implemented a business intelligence function that enables him to provide a dashboard to each executive, customized to their needs. "We’re using Microsoft BI," he said. "It sits on top of all this software."
"The CEO doesn't need to know every journal entry," he said, "but if he wants to see something real-time — what is our backlog, etc. — we created this dashboard that pulls information from the finance system."
The dashboard for the chief marketing officer pulls together data on the company's campaigns. "What is the [return on investment] on each campaign? How many leads do we create from each campaign?"
The operations dashboard looks at how many customers the company has and the size of its pipeline, weighted by the potential of each customer.
Move to the U.S.
After working four years at PwC in Tel Aviv early in his career, Hen moved to Reno, Nevada, in 2004 to help reorganize operations for Ormat Technologies, a renewable energy company founded in Israel with a footprint in Africa, Central America and Eastern Asia in addition to the U.S. and Israel.
He implemented an enterprise resource planning system during that time, as well. "But it was different," he said. "Here our customers are sometimes law enforcement, fast-food chains, municipalities going to smart TVs."
At the energy company, it involved getting financial operations from the company's power plant operations from all over the world under one umbrella.
"As a finance leader, you have to adjust," he said. "You have to make sure you create to your executive team. You want to make sure you create a dashboard they will actually look at to bring value to the company."
That will help the executive team evolve its strategy at Rekor as it doubles down on its new tech focus.