Consulting » THE FINANCIAL DIRECTOR INTERVIEW – The outsider who got the inside

Any FD who joins a computer services company created by a management buy-in and which calls itself Cyberdesk could be forgiven for expecting to find a dream job with the latest whiz-bang financial technology – on his desk, so to speak. Martin Hunt didn’t. He found an accounting system – in fact, he found several, unintegrated accounting systems – that hadn’t been upgraded for five or six years. The finance department was “Temp City”: only one member of the original team was still with the group in its new MBI incarnation, and hardly anyone seemed to know how to make the systems work. Controls and reporting times had gone out the window. Oh, and Hunt had just spent several years in manufacturing; he had no previous experience in Cyberdesk’s industry: computer maintenance and help desk services, networking and PC and printer sales. But then, Hunt knew what he was letting himself in for. In July last year, he went for an interview at Cyberdesk as a financial controller on a three-month contract. The company – which was then barely six months old and had been built out of three businesses owned by the large and fast-growing software group Misys – needed an FC to sort out the mess in the finance department while the managers set about looking for a new FD. At his interview, the first question Hunt asked was whether he could be considered for the FD job. By 1 September, he had it. Barely two months into the job, he spoke to Financial Director about the experience. Hunt had wanted to find a job that was in a different industry to the one in which he’d spent the last ten years – manufacturing for the building trade – and which was a “pure” finance role, rather than general management. He found that trying to change industries as well as jobs was harder than he expected. “I found great barriers,” he says, “which I feel is very wrong. I think an accountant and his skills are quite transferable between industries, but that isn’t the perception in the recruitment industry.” The resistance, he says, was present on both sides: recruitment consultants and their advisers were often reluctant to consider applicants from outside the client’s industry. “The client feels comfortable having somebody that has previously worked within their industry, and sometimes the recruitment companies tend to go along with what the customers say. They don’t want to make the client feel uncomfortable, which I think is a great mistake.” Hunt successfully sold the idea to Cyberdesk that an industry outsider could have certain advantages over a home-grown expert. “Because I’m learning all the time, I’m asking questions that somebody who’s been in the industry maybe wouldn’t. I question because I want to learn, but it actually makes people sit up and think, ‘Oh, why do we do it like that?'” Hunt says. By acting the part of the “stupid accountant who doesn’t understand this industry” he gets to ask stupid questions that really can add value: “It gets far too incestuous otherwise. I don’t think it takes very long to pick a new industry up. You actually bring over different ideas.” The first part of the Cyberdesk group is a VAR – a value-add reseller – an independent supplier of PCs and printers. Hunt admits that it’s a low-margin business – up against the likes of, it’s no wonder – but the company has a historical niche in printer sales. It’s sold several hundred to DIY chain B&Q, for example. Another part of the business specialises in computer networking. This is higher margin work and Cyberdesk has had considerable success, winning contracts from the likes of Barclays. The third part is the maintenance and help desk business. A remote help desk can solve many routine problems, while a team of engineers scattered around the country can be sent to more difficult call-outs. Large businesses with mission-critical systems – major City investment banks, for example – can have a Cyberdesk maintenance crew permanently on site. Before the buy-in, these three business units worked separately. Now, however, Hunt says the aim is “to wrap the whole package into one and go to larger users and say, ‘We can offer this range of service to solve all of your problems.’ Instead of getting the smaller contracts, we’re going after the larger contracts that will enable the business to grow at a faster rate. Looking after the “total cost of ownership” is the key aim, “to take control of the whole lifetime cycle of the computer within the company and control that, to make things smoother.” Hunt may have lacked experience in the IT world, but this certified accountant had plenty of other experience: general management, manufacturing for the building trade, retailing, general practice – and the insolvency of his family business. The company, Jandor, manufactured steel fire doors and had turnover of around £4m. Hunt joined the business as finance director after a stint with Jewellers Guild, the retail chain that sat uncomfortably within BAT Industries. The aim was that Hunt would eventually become the managing director of the company, taking over from his late father’s partner. “But unfortunately, being related to the building industry, there were various problems in the early 1990s – and being a very small, private, family-owned company, we had tremendous difficulties going into the recession.” Things didn’t get easier as the recession progressed, and so they tried to sell the company as a going concern – “in the interest of all the employees” – to one of its competitors, a Manchester-based group called Access. But the deal didn’t come off – at least, not until a couple of days after the receivers were called in. So, on top of the emotional turmoil of the collapse of his father’s business, Hunt was also busy “juggling: dealing with the bank on one side, the receivers on another, and the prospective purchaser. Plus, all the suppliers and trying to keep the company going while all this was happening. It was very difficult.” But the business carried on under new ownership, and Hunt was made general manager. “From a personal point of view I suppose you could say that sort of threw me into the front line of the company, out of the accounts department – which I’m grateful for. I came away from a pure accounting role to a more general management.” Access in turn was acquired by the Danish Hanson Group in 1996, and Hunt was named finance/commercial director of the UK business, with responsibility for the businesses in the south. But before long, more recession-inflicted trauma ensued. The business had two sites doing virtually the same thing – one in Newcastle and one in Perivale, London. A tough decision, but one of them had to go: it was Perivale. This left Hunt with less responsibility – “I wasn’t prepared to just run a small office in London; I didn’t feel it was right for my career” – so he finally left the Hanson Group last March, some ten years after joining the family business that the Danish company had ultimately acquired. Hunt thinks he’s gained a lot from the general management experience. “I think it gives me great benefits in being able to understand other parts of the business. I think – I hope – it’s one of the key reasons beyond the financial side of things that I was brought into this business, to ensure that the accounts department interacts with other areas. I feel I’ve got a lot to contribute on that side of things: looking at areas of the business with a financial slant.” But he was also quite certain that he wanted to get out of general management and back to finance. “I think if I’d stayed in there for too much longer I would have closed the door on my financial career – I’m at the very old age of 35 now – but it’s true: it’s very ageist.” Still, it’s an unusual move to make, and one that Granville, the venture capitalists backing Cyberdesk, asked him about. “I said I see that it can only give me greater strength in the role of the finance director,” Hunt says. “The finance director isn’t just sitting worrying about beancounting, it’s about producing information and being fully interactive in the business.” When Hunt first arrived as Cyberdesk’s interim financial controller last July, his first job was to find the beans, then count them. The company had been formed out of a management buy-in led by Paul Beardsmore and Charlie Gibson, who had been at Groupe Bull together. In fact, Cyberdesk grew out of three businesses which had been part Misys, but which were managed separately. Although the new team wanted to run them as a cohesive business, some basic systems had to be sorted out. Most of the finance department either hadn’t joined or didn’t stay with the new business. For some managers, their personal priorities changed as a result of being able to exercise lucrative share options once Misys on-sold the businesses it had acquired in earlier years. Others preferred to remain under the Misys umbrella. The previous FD left within weeks of the buy-in last February. “Not having a financial director obviously left the company with a hole.” The company’s auditors, Rutherford Manson Dowds, helped fill the gap. “One of their chaps came in as an FD on a temporary basis from May,” Hunt explains. But aside from the fact that the company decided that it was better to hire a full-time FD before hiring the team that he would work with (“So the accounts department was made up of temps.”), the man from RMD was busy doing things other than getting the accounts sorted out. “He was very busy preparing business plans and budgets for the new year, so he didn’t really have time to pick up on where the systems were, how they operated, what had to be done,” Hunt explains. Through agency Robert Walters, Hunt found himself at Cyberdesk trying to get contract work as a temporary FC to sort out the accounts. Hunt’s instructions pretty much amounted to “There’s a chair, there’s a PC. Get me some accounts out!” “So that was quite a challenge!” he says. The system comprised three different ledgers in three different locations, plus a separate system for logging maintenance contracts and the assets covered by them. That’s the system used to generate invoices for the maintenance part of the business, which is now so large that more than 1,500 invoices have to be raised on it, then raised again on the unintegrated accounts package. “Farcical,” Hunt says. “No one knew how it worked, and because the old team had been progressively leaving over the last couple of months, things probably weren’t done as well as they should have been,” Hunt recalls. There were short-comings in reconciliations, for example. There were “bits of paper that showed a form of reconciliation but there wasn’t really a reconciliation behind it.” There were also problems with data capture. “I think you should be reporting within nine working days of the month. When I first came down it was slipping into the 20s – the late 20s.” But it was a great experience, Hunt insists. And now that he’s hired a fresh team, “the good thing is that I know how their jobs actually function. Any questions they have, no one can pull any wool over my eyes! I would say that there are a number of situations where an FD goes into a company and never has the time or the opportunity to see how the accounting system operates. I think that’s quite a big failure. I’ve been very fortunate to come in at that stage and see the nuts and bolts of the finance system. I know its weaknesses and its strengths. “Obviously one of my tasks is to identify a new system which can integrate the whole of the business into one, and then spend more time ensuring the data is produced speedily, accurately, and used to manage the business.” It wasn’t just the accounts department that had been going through turmoil. The three Misys businesses – which were “a backwater” of the FTSE-100 software group – suddenly found that they were being owned and managed by two first-time entrepreneurs that they’d never seen before. Perhaps surprisingly, morale is very high, Hunt insists. For one thing, the new management is visibly working very hard. Old hierarchies have been stripped away and a new flat management structure is in place. Hunt himself thinks that the business is all the more exciting for being an MBI: “Having venture capitalists involved, the company will go places. That’s what they’re looking for, isn’t it? They’re not looking to buy something that’s just going to tick over.”

 CURRICULUM VITAE NAME:                  MARTIN HUNT, ACCA AGE:                   35 CAREER: 1982-86                Small, now defunct, accountancy practice in Pinner,                        Middlesex 1986-88                Financial accountant, Jewellers Guild (part of BAT                        Industries) 1988-93                Finance director, Jandor (family-owned steel fire                        door manufacturing business) 1993-96                Jandor went into receivership in 1993 and was                        acquired by Manchester group Accent 1996-98                Accent was acquired by Danish Hanson Group; Hunt                        became finance/commercial director of Hanson UK                        company 1998                   Temporary & consultancy work 1998-                  Finance director, Cyberdesk On choosing to         "I felt it would give me the flexibility to do the ACCA            move on into other areas when I wanted to, qualification:         instead of getting articled. It would allow me to                        move into other areas if I wanted to - which I                        did." On applying for        "Sometimes that's an advantage and the FD job while       sometimes it isn't. You get a chance to working as the FC:     show what you can do. An interview is a totally                        different situation to a day-to-day working basis." On being an IT industry novice:       "I've come into this business never having                        had any sort of experience of working with the IT                        industry. I worked in a far more aggressive                        industry - the building trade on the financial side                        of things - and so I think I've got a lot to add." On working             "They've obviously been very supportive of me, with venture           coming into the accounts role. Supportive but not capital group          too involved. Granville:                        I think there's a danger that they come in and they                        actually run the business, which isn't at all the                        case with Granville."