Steven J. Pugh, FCA, Chief Executive Officer, UNIT4 CODA, Inc., a business unit of UNIT4, the world's leading provider of enterprise resource planning (ERP) and financial management software was kind enough to take the time out from his busy schedule to answer a few questions about his career, his industry, the economy, and the challenges facing business today.
Thanks to Steven J. Pugh for his time, and for his thoughtful and informative responses. Thanks as well to the team at Birnbach Communications for their generous assistance in facilitating this tremendous interview.
These days, it is the exception not the norm to stay at a company for a quarter of a century, let alone serve as its CEO for more than a decade. You’ve seen it all – the booms, the downturns, and everything in between. What is the secret to your staying power?
Steven J. Pugh: It really comes down to really enjoying what I do and there are three reasons for this:
• As CODA evolved over the years, so did my job. Since 2000 I have had same job but against different parent company backdrops.
• Our accounting product set has changed as we migrated to emerging platforms – from minicomputers to client/server to browser-based, etc.
• CODA’s people and culture are outstanding. CODA employees truly listen to customers to understand what they really need, and many of our employees came to CODA from the end-user environment where they had been in the accounting roles for which we provide solutions.
Why did you choose this path -- why UNIT4 CODA and why financial software?
Steven J. Pugh: I come from an accounting background. I was naturally drawn to CODA when I realized that the company was totally focused on solutions to remove all those manual processes that were time-intensive, monotonous and prone to human error.
We’re slowly emerging from The Great Recession – certainly the toughest economic time we have seen in our lifetime. By and large, businesses have clamped down and focused on cost-cutting and their day-to-day operations, but they’ve been at it for more than 18 months now…a long, tough road. In your meetings with customers these days, what do you see happening now that is innovative, smart, etc. that keeps these businesses moving forward?
In general, companies that made hard decisions early on in this downturn have seen margin improvements. They invested very little in the backend of their business over the past two years and focused on revenue-generating activities. But now businesses are ready to make investments in their infrastructure, armed with the knowledge that they can do more with less, and therefore can be selective in getting the best tools for the job.
What can they do now to emerge from this recession with a leg-up on the competition? What are the key lessons learned they should consider?
Steven J. Pugh: Businesses should determine if their backend solutions are really doing the job. If they have an accounting system that is difficult to administer, is causing them real difficulty on a cyclical basis (e.g., closing monthly books), or if they regularly port everything to spreadsheets, they should seriously think about modernizing. A modern efficient financial system is critical to every business.
The “cloud” is an area that businesses should look at carefully. The advantage of cloud computing is that businesses don’t have to invest in computer equipment and they can get applications up and running quickly, particularly if IT is overloaded. Since CODA has always been about “best-of-class,” we view cloud computing as a logical extension of that philosophy. Businesses can find cloud apps that suit their needs and pocketbook.
Steven J. Pugh, FCA (photo left)
What is the “new normal”? Are you seeing “What’s old is now new again?” In what ways?
Steven J. Pugh: Early in my career, CFOs would tell me they had “smuggled” in minicomputers because they had a problem that CODA could solve, and they couldn’t get the attention of IT because the department was overloaded. I see this again today – very often people can’t get things done because IT is overloaded with revenue generation and operational projects. For these companies, best-of-class can be their best route.
You talk about accounting for change and the way in which a company responds to change can spell success or failure. With the move over the last decade toward more transparency, with more and more regulatory and compliance issues emerging, c-level execs have had their hands full. What is the particular pain point for CFOs in 2011 that is critical for them to stay on top of – what keeps them up at night?
Steven J. Pugh: CFOs are always at the sharp end of ensuring the company is in compliance, from getting ready for the audit and making sure there are no accounting irregularities. CFOs keep coming back to “How do I know that we are in compliance? How do I know that approved processes are actually being implemented?” We have a software solution that automates repeatable business & financial processes that are subject to compliance rules and regulations, so someone can’t approve expenditures in an unauthorized way, for example. It gives CFOs peace of mind that every document that is entered into the system will comply with company and regulatory requirements and is documented for the auditors.
What industries in particular are you seeing the most need?
Steven J. Pugh: Certainly the financial services sector is under the microscope, particularly the hedge fund industry. Financial services is an area that needs to demonstrate it is compliant, its records are secure, etc. This is a sweet spot for CODA.
Another area where there is great need is in the transport and logistics area, not necessarily due to heightened compliance requirement. They have complex accounting needs that cross borders, multiple currencies, different reporting methods and so on.
A third area is retail in that retail businesses require daily reports on how they are doing. They need to be able to turn on a dime and as a result they demand best-of-class accounting functions.
What trends do you see on the horizon?
Steven J. Pugh: Companies are examining the cloud but many of them don’t see this platform being one they are prepared to commit their business systems to 100%. There is, however, an opportunity to utilize cloud apps and cloud facilities for part of their business, perhaps a new venture they are setting up or a recent acquisition that requires a different IT approach. Hybrid computing could be a good direction for them. There is a lot of marketing hype on cloud, but businesses are slowing gaining confidence that there are cloud applications that do make sense for their business. They can opt to have best-of-class on-premise as well as off.
Another major trend one that is now actively being embraced is the use of social media in the work setting as a tool for better collaboration and communication. In many ways it is table stakes for any viable business. Many applications have chat functions built into them so that teams can collaborate more effectively and this will be seen even in financial accounting products very soon. We have a younger, more tech savvy workforce that is driving adoption of social media in business.
A final trend to watch is “green factor reporting.” This is very much an emerging trend in Europe but it is a little farther out on the horizon in the U.S. People are going to want to know much more about a business’ footprint: how far it transports its products and raw materials, how much resource its plants consume and what its overall philosophy about energy consumption and conservation are. In Europe, many large companies and government agencies require answers to these sorts of questions before admitting a company to their list of approved vendors. It is also becoming a growing requirement in European company annual reports.
What’s next for Steve Pugh and for UNIT4 CODA?
Steven J. Pugh: In the short term, CODA is moving into new verticals such as retail, and expanding our existing business. We are staying attuned to our customer base and continuing to look at new techniques and tools like social media and evaluating other services we can build or work with partners both on-premise and in the cloud to help customers work faster, better, cheaper.
Any questions I haven’t asked that you’d like to address?
Steven J. Pugh: Why would a company choose CODA?
We’ve been in business since 1979, in the USA since 1988, and we know Financial Accounting. It is all we do. Big companies that offer financial software don’t have a lock on innovation, domain expertise or being the “safe” choice. Increasingly businesses are selectively choosing best-of-class versus the one-size-fits-all approach of big ERP. Best practice today is a solution that gives companies exactly what they need, not what they don’t need, and at a cost effective price.
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