Seamus Keating is a man of carefully chosen words. Nearly a decade in the CFO role at FTSE-250 technology consulting business Logica has seen him at the forefront of its most tranformational times, but that does not appear to have given him the assured manner of a man whose business reported some of the most resilient financial results in its sector amid the recession.
In fact, he is so on-message that an uninformed observer might not get the impression of a man who has been rather busy driving performance. Instead of touring some of the tough times and how he overcame them, he sticks to PR-friendly nuggets about “finding positive solutions”, avoiding any specific examples. “Generic is probably best,” he says.
It’s a shame, because Keating’s role has brought the CFO gig out of its shell in a big way, which has contributed to Logica surviving the mid-1990s recession in IT services and today’s sea change in economic fortunes. Last interviewed by Financial Director in 2005 – three years into the role of CFO for the merged LogicaCMG business, Keating revealed that he, like all of its executive committee members, was directly responsible for managing a handful of key accounts – giving him unrivalled visibility among clients and the business, while the “commercial organisation” and Logica’s technical director reported to him as they still do.
“It does help your own thought processes in the business and the formulation and execution of strategy. The closer you are to your market, the more relevant your thinking is going to be,” he told us then. “I get to sign off every bid we put to a customer that is a significant amount of money. Together [with the commercial people and technical director] we review the major bids going out to customers, ensuring we have understood the scope correctly, have been able to cost it accurately and believe we have priced it correctly. That means I get closer to the front end of winning business rather than simply adding up the score after it’s all done. It makes things more challenging, but overall more satisfying and fulfilling.”
And he has some nice factoids to bandy about at the pub for kudos. It was LogicaCMG’s software that controlled the UK’s Beagle 2 probe on Mars, launched the year after he took on the CFO job; between 1984 and 1998 its innovations included the automated clearing system for UK banks, the customer service system for BT and the London Underground’s automated ticketing system.
The every-guy-a-salesman approach saw the business through tough times once before and is proving a valuable resource amid the current punishing economic environment. Logica reported resilient financial performance for the year to February 2010, with operating profit of £272m and revenues of £3.7bn, in line with expectations.
Keating points to Logica’s lastest results as the fruition of a pivotal change in company ambition some years back, moving from the aim of becoming the number one IT services provider in the world to instead focusing on being the number one player in Europe. And in early 2008, a review of Logica’s cost structure he led took out significant overheads – so it could “concentrate on selling more of what our customers would want to buy in the recession”.
In 2005, Keating came out all guns blazing on a plan to double the size of the business – on top of its sudden expansion after absorbing CMG – though he admitted to Financial Director it was “a tall order”. After an acquisitive spree and work to embed its various new companies throughout Europe, Keating’s ambition now is to “get more value from that group of businesses by making them work better together, getting better levels of growth, getting the economies of scale for the size of the business and concentrating on the European platform”. No mention of being the world’s number one. “The world has become a more difficult place,” he adds.
That is acutely true for governments across Europe, which could be a problem for Logica. Public sector clients make up some 63 percent of its revenues. In the UK, George Osborne’s first Budget unveiled 25 percent budget cuts for some public sector departments, which can only mean large-scale change, headcount reduction and the potential cancellation of expensive supplier contracts in the next five years.
But on this, Keating is just as circumspect. Press reports leading up to the General Election suggested the company would have preferred a Labour victory, given the Tory taste for cutting the state down to size. Keating, however, dismisses these fears. He believes the answers to the problem of public spending is how technology is used, and the feasibility of outsourcing to reduce the cost of delivering public services, rather than just how the cost of technology can be reduced.
“Technology and IT services are an enabler to reduce the cost of delivering services. We are comfortable that all political parties today see that,” he says.
That is not entirely lining up with what Logica’s CEO Andy Green told the Financial Times this February. He pointed to a possible “hiatus” in public sector work beyond the election – “though in the medium-term all European countries will need to invest in automation to get spending down.”
Outsourcing is another critical area for Logica. In 2009, for its UK business alone, outsourcing revenue continued to grow as a proportion of the business and accounted for just less than half its total UK revenue, which stood at £750m. Keating explains how the decision to focus on outsourcing was part of its plan to become a strong player in the IT services industry.
“Our company needed to have more scale to have a better mix of where our work was done between offshore and onshore. If we could do that, we would create a really strong player in the industry,” he says. It has capitalised on the globalisation of its industry, with much more of the work that Logica does being done offshore in lower-cost centres. “It has been about embracing that and making it work for our clients – and making it work for our own people as well”.
On the subject of clients, Keating also says that one of his proudest achievements has been building a strong finance function. This has involved helping the team to support a much bigger business, helping them to change from a setup where each business had a siloed and independent finance team to one where the work done by the team could be offshored into shared transaction processing centres. By doing this, Keating has had to educate the teams to help them realise that their resources and time could be better spent on supporting colleagues to win and deliver business profitably, while really understanding what the business issues are.
Heading for the top
While he seems to be enjoying the role of CFO today, Keating will not be drawn on his future, refusing to divulge if he would consider a CEO role elsewhere. But he admits to having had “a number of discussions with the board about the CEO position” before Green took it in 2007.
The board, he recalls, believed that “what we needed at the time was somebody who was able to address issues on the importance of better, more strategic sales and marketing – and that would not have been something I, coming from a finance background, would have brought to the table at the time”. He says that taking charge of Logica’s internal change programmes and retaining the reporting line of the commercial organisation “is for me the next piece of experience in broadening my role as CFO”.
If Keating is disappointed not to be Andy Green right now, he is not showing it. He seems content in his current role and developing it further. “I play a significant operating role in the business in addition to the straight finance part of the role,” he adds. But, as expected, he refuses to be drawn on whether he would angle for the top job next time the chair is up.
2002 Promoted to the main Logica board as group CFO. Then made group CFO of Logica CMG later that year
1999–2002 Director of group finance, Logica
1997–1999 Finance director, Olivetti Solutions Italy
1989–1997 Finance director, Olivetti Solutions UK