Cloud PSA and ERP vendor FinancialForce has a new CEO. Scott Brown took up the reins yesterday, replacing Tod Nielsen who is retiring after a 4-year stint leading the company. Brown joins from Teradata, where he served as Chief Revenue Officer for eighteen months, following a 22-year career in sales and customer success roles at Cisco Systems. Our first question therefore when diginomica spoke to Brown yesterday was, why make this move to a much smaller company? Here's what he told us:
For me, it's kind of coming full circle. I did two start-up ERP companies early in my career [Effective Management Systems and SSA] ... Coming back to a smaller company, after having experience doing things at scale is, you know — the most fun you have in your career is with the small companies, right? They're faster, entrepreneurial, and you have an opportunity to really make a difference in these kind of roles.
So what is the difference he plans to make at FinancialForce? Brown praises Nielsen's work on the product during his leadership and says the focus will now be on building up sales:
Generally where technology companies have a problem, it's on product, it's often not in go-to-market. We don't have a product problem, we have a go-to-market issue ...
This isn't a turnaround situation. My job is to see if we can ignite more growth and get it profitable, and ultimately get it to an exit. And it's in that order.
He outlines three main opportunities — the most glaring of which, given that FinancialForce runs natively on the Salesforce platform, is to sell its ERP solution into the Salesforce customer base:
The lead flow that we should get out of Salesforce should be dramatically higher, because Salesforce has grown like crazy. People that have that platform have a natural affinity to want to see everything from, 'I'm a prospect' to 'I'm an order' to 'I see the financial results of it' — to ultimately seamlessly know what my cost of customer acquisition is. So that I think is ... a huge opportunity for us that I think we've just underplayed, frankly.
Having been a FinancialForce customer at both Teradata and Cisco, he also sees opportunity to continue growing sales for its professional services automation (PSA) offering, both in the midmarket and among much larger firms. He explains:
The mid size just aren't well automated in terms of their services practices and their overall business. Plus, they're moving into subscription and they don't have subscription capabilities in their ERP system.
At the [larger] size they've got these monolithic, big custom systems — from years ago when people built their own ERP — that they would love to replace, but they just don't know even where to start.
FinancialForce at Teradata
The final opportunity is to expand spend within existing customers who may not be using FinancialForce to its fullest extent. This is based on his own experience at Teradata, where Brown started out implementing the product in the services organization, but then introduced it in other areas of the business to help track spend in areas such as development, pre-sales and post-sales. He states:
When I left, out of the 8,000 people at Teradata, 7,300 of them were FinancialForce users. So part of my conversation with customers is going to be, 'I actually think there's a lot more to this product than just your services business. If you really want to manage the whole business, manage it on FinancialForce. Use it the way that I used it.'
I thought what I was doing was just normal. When I got in conversations with FinancialForce, and the board, and even a few customers, everybody's eyes lit up when they heard [I was] doing this because they were like, 'We should do that. That's a great idea.'
You don't even need to buy more. Just use the platform that you have today more expansively. Think about it in the context of seeing your customer in full color, or seeing the full nature of the resources that you have in your business and figure out how you can optimize and use them. That's what I did as a customer.
Subscription business model
Brown will also be able to offer customers the benefit of his experience of helping first Cisco and then Teradata on the journey to a subscription business model. He comments:
I know a lot of businesses out there that are trying to reinvent themselves in a subscription form factor. I think that's a huge opportunity. Because there's all kinds of things that you put into the subscription. And then you have to understand the P&L of what you're delivering and how you're delivering it. For a lot of these folks, they don't even know how to package it, set aside measure and manage it once they sell it. This is where our accounting system's actually very helpful, because you can literally follow that all the way through the P&L of every customer.
He also promises to listen to customers and says that FinancialForce's customer focus is one of the traits that attracted him to the company. As someone brought up in Wisconsin, that sits well with his down-to-earth, midwestern roots, he says:
I was so taken by the culture of how deeply they care for their people, how deeply they care for their customers ...
I'm a very low-ego guy. There's a lot of people in this Bay area that aren't that way. They've a very high opinion of themselves, and it just doesn't work for me. I just can't work at companies like that.
Although Brown finished at Teradata on Friday and was just hours into his new job yesterday when we spoke, he's still hitting the ground running due to his familiarity not only with FinancialForce (and Salesforce) as a previous customer, but also an impressive understanding of the subscription business model. The strategy he outlines makes a lot of sense.
He emphasizes that he's not there to bring sweeping change, which customers will welcome. While we would agree with his assessment that Nielsen's tenure has seen significant and welcome evolution of the product, it has also seen a fair bit of change in the management suite. As Brown acknowledged when speaking to us, that includes four different chief revenue officers in the past few years. Therefore Brown is not planning further changes in the management team, he told us. Instead, the strategy is to develop sales along the lines he set out, especially by investing in the Salesforce relationship. That is an opportunity that we'd agree FinancialForce has not exploited as strongly as it perhaps should have done.
Overall, this looks like a good move for FinancialForce. Perhaps the most surprising aspect is Brown's decision to throw in his lot with such a relatively small player after his roles at much larger businesses. The ERP landscape has changed hugely since he last worked at an up-and-coming challenger — let's see what impact he can make this time around.