Four years ago, U.K.-based business technology company Advanced Computer Software Group was a roll-up of companies held together with little more than a light overlay of corporate branding. The company's CFO has since helped integrate its operations, doubling its profitability to 110 million pounds in earnings before interest, tax, depreciation and amortization.
With the integration, the company has increased its efficiency by removing waste, expanding margin opportunities, eliminating duplication, and increasing cross-sell solutions, Andrew Hicks said last week in a CFO Thought Leader podcast.
"Four years later, we have a single business operating, a single functional operating model, and our customer base in a much more organized way, which is helping us grow," said Hicks, who came to the company from Vista, a U.S. private equity firm that bought the company.
Hicks is applying some of Vista's business philosophy to further increase operating efficiencies at Advanced as it grows through additional mergers and acquisitions.
Vista's approach was to give promising young finance professionals challenging roles even if they didn't bring the background or skill set to the job at first.
"We challenge the paradigm that you have to have years of experience," Hicks said. "We have an entry-level hiring initiative where we have a series of aptitude tests and personality profiling tests to hire people of aptitude regardless of their background, then we bring them into the business. We put the right training programs around them."
The result has been a cohort of hungry finance professionals giving their all to the business.
A new work force
"What we find is, people are tremendously motivated by opportunities they're perhaps not getting elsewhere," he said. "So that helps us as a business, because we get tremendous productivity from that. The acronym we have here is HPEL (high performance entry level). We've recruited over 1,000 HPELs the last four years."
Hicks has overseen the acquisition of seven companies in the past 18 months, and more are on the horizon. When new companies are brought on, the goal is to get them integrated quickly.
"We've got a good track record of bringing businesses on to the Advanced platform and very quickly making the business feel part of Advanced," he said.
The company recently brought in an additional investor, and it's looking to grow both organically and inorganically. "We’re stepping up the M&A cadence," he said. "So, I've got M&A opportunities, people I'm engaging with around that area, and then really having my team ready to bring those businesses on to our platform, so it's really about M&A and integration."
Hicks earned his chartered accountant designation (the U.K. equivalent of a CPA) in the early 2000s and, after three years as a public auditor, he moved to Austin, Texas, to be an internal auditor for the health care technology operations of U.K.-based Misys. After gaining more responsibilities in Misys operations around the U.S., he joined Vista Equity Partners to oversee the finance operation on a technology carve-out from Thomson Reuters.
Collaboration and communication are key skills for finance professionals today, he said. Additionally, he suggests looking at broad operational metrics like bookings and conversion rates because once you get a clear picture of those forward-looking performance metrics, the backward-looking finance numbers take care of themselves, he said.
"I've developed this passion for having finance information be driven from operating metrics," he said. "So, I'll be working with the chief sales officer on what pipeline coverage he's looking at and what the conversion metrics are between various stages in the funnel to try to get some lead indicators on where our new bookings are coming from. Knowing new bookings conversion rates to revenue, you can just focus your attention further up the value stream with operational colleagues to try to drive value."
Hicks works with the chief technology officer to reduce allocations toward fixing product bugs so more can be put toward new products.
"How many defects are we creating?" he said. "How many are we able to fix? What's that cost to fix? So, from a new product perspective, I'm thinking about what's the total addressable market within our customer base for those solutions? And, increasingly, how much of the customers are we penetrating with those solutions, so we're thinking about these things from an operational basis as opposed to the traditional backward-looking finance numbers."
Finance professionals, who tend to be more introverted than other executives, need to bring their discipline and attention to detail to operational leaders because that can help them achieve their own performance objectives, Hicks said.
"At its most basic, it's helping the teams make sure they've got things in the right buckets because once they've done that, some of those 10% conversion rates [of prospects] become more reliable, more usable," he said. "But it's that engaging and communicating and really challenging the sales organization around some of these things with a view to optimizing performance that's important."