COMPUTER BUSINESS REVIEW

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Issue Date: August 2007

QA

1 August 2007

Jason Stamper interviews Elizabeth Gooch, CEO eg Solutions and probably the most successful female entrepreneur in IT in the UK today. What does her company bring to the table and is sexism alive and well in UK industry?
Q What's the background to eg Solutions?
A We started as a management consultancy in 1988. We started with performance improvement, in financial services. I had seen the role of production lines in manufacturing and believed those principles could be translated into financial services. But I knew they would not take kindly to people in white coats with clip-boards: they would much prefer a piece of software and the ability to make the improvement themselves. We signed our first three [software] clients in 2001, then we made the leap and floated on AIM in 2005.
Q What did you consider was wrong with many processes in financial services?
A In financial services the process is typically something written in a book. Usually, work is driven by the customer. The process does not move very smoothly. But if you look at car manufacturing, the production line keeps moving all the time. You can determine a guaranteed timeline because the people and machines keep swinging into action as the production line moves. Applying that to financial services turns the concept of work management on its head. Our software basically keeps the process going. It knows where each item of work is in the process. The software makes sure the right people with the right skills get the work and play their part. Their performance can now be carefully managed.
Q It sounds a lot like what business process management software is intended to help with.
A BPM says it can do all of this but typically it does not. Only around 40% of any process tends to fall within a BPM tool. We handle the entire 100%, but we also provide all of the management information that companies need, not just when one person happens to be signed in or out of the process. There is a greater degree of variation than you can typically achieve with BPM, which might only offer a small number of pre-defined exceptions.
Q Can you offer any examples?
A One of the major banks had designed its processes so there would be no more than three human touches. But its workflow software did not say when those touches should occur, or how long each had taken. There was nothing that set how quickly the case should flow. So often we are adding a timeline, as well as the management information that clients need.
Q How do companies react when you say they need tighter controls?
A It can come as something of a culture shock, but once they hear that we will guarantee to reduce existing resources by up to 20% in 16 weeks, companies come round to the idea. There is an embedded backlog culture. Many companies have got used to always working behind. Suddenly we can help them get up to date.
Q What about the staff themselves, are they against the additional monitoring and control?
A We have actually found improved staff motivation for many clients. Staff know where everything is, and what needs to be done next.
Q What is your execution like?
A Most of the business we do is fixed cost, and with a fixed timescale. They pay a chunk of the fee only after we deliver what we promise. That may be a 20% to 50% improvement in financial services, and 15% to 50% in public sector. But clients find the idea of 15% as shocking. We do a free diagnostic review for every client, looking at where they are now. Sometimes it is not software they need, but process improvement. For example, HBOS Retail did not take the software. But we developed some additional reports that they needed to improve their processes. Our average implementation is 25 weeks. But the key thing is that improvement always starts to come through within 10 to 12 weeks. Our pricing is based on the fact that companies will definitely see ROI within 12 months, but the average is seven months. One client's fee was £2,4m, but they saw a return of £11,8m.
Q But are you a consultancy or a software vendor?
A Our current ratio is 72% consultancy and the rest software. My target is to get that to 50:50. It may take another couple of years.
Q How are you going to grow the software business?
A We see a big potential in software as a service. What we are looking for is our embedded value: how long we are likely to be engaged with the customer. Early on we were engaged in one-off projects, but the City gives you a P/E ratio of 8 to 10, compared to 15 to 20 if you are engaged longer-term. So our new model is based on a subscription fee rather than one-off licence fee.
As for the software, the key is that it does what it says on the tin. It has to work, and add value for our clients. The number of packages that we have seen that are rubbish is amazing. So we deliberately do not go for leading edge technology necessarily. We are .Net users.
We only needed one or two software developers to begin with. I did the original design and then I thrashed out the functional design with a select group of clients. So it has always been very user focused.
Q How does SaaS help in this area?
A With our Operational Intelligence module there is a thin client piece, so that companies can create a virtual team. Our new licence model is based on a subscription fee, not a one-off payment. But overall I think SaaS is more suited to smaller clients.
Q 95% of your business today is in the UK. What are your expansion plans?
A We started our geographic expansion last year. We are looking at the Nordics, Netherlands, South Africa, India and the US in that order. We are about to close our first deal in the Nordics, so we are excited about that.
Q Most companies in the UK seem to prioritise the US market after the UK.
A Well Robbie Williams did not crack the US, did he? We worked with the DTI and the advice was that although India and the US are bigger markets they are farther away. There are others that may be smaller but are in the same time zone and easier to penetrate. That drove our strategy.
Q How is the company financed?
A There is no VC. 57% is owned by myself and other directors.
Q And since the listing, how have you done meeting the expectations of analysts and shareholders?
A We missed our target for 2006. In fact one of my directors said I would make a terrible hooker because I was lying on my back sunbathing on holiday when our shares lost ć5m. We over-estimated the speed with which we would penetrate new markets. Because we are on AIM we are doing our learning in public. The share price is largely dictated by things that you cannot control. What it did do was raise some valid questions, and we had to go back and validate what we are doing.
Q What is the likely outcome longer term?
A We think a trade sale is likely within five years. We have had approaches already.
Q Since the float you could, presumably, retire if you chose to.
A I am as motivated now as when I started. That is why I do it. But I make sure I have the right team: this is their legacy, and I feel I have a duty of care to employees.
Q Do you think entrepreneurialism is still actively nurtured in this country?
A When I started entrepreneurialism I was encouraged massively, that was the Thatcher years. Now I believe government is stifling commercial thinking. There is definitely too much red tape. Legislation actively encourages companies to retain poor staff. We have inherited a lot of stupid practices from Europe and paid the price.
Q Do you think you have a different management style as a woman in an industry dominated by male CEOs?
A I want people to do this because they love the job, not for some sort of work-life balance. I am not changing my business culture just because you want to work from home. Management practices at some companies have become more like a charity. You cannot swing like a pendulum: this is capitalism.
Q You have been able to grow the company and get ahead in IT. Do I take it that sexism is history in UK business?
A Jason, you still meet a lot of cocks. That is such a great word, is it not? Short but to the point. But I do not think I would be where I am if [sexism] was a serious inhibitor. You just get on with it and let your actions speak for you.


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