545: Get in Gear with ARR | Ken Stillwell,CFO, Pegasystems

Listen to the Episode Below (00:30:57)

The way Ken Stillwell tells it, his career as a CFO can be divided into two distinct worlds: the world before ARR and the world after ARR.

ARR, of course, is the acronymic identifier for the widely used SaaS metric known as annual recurring revenue. Stillwell prefers to put his own twist on the acronym by declaring its actual meaning to be annual recurring relationships—as in client relationships.

Says Stillwell: “Whatever metric you use to measure recurring relationships is really misunderstood in the marketplace until you start to track it.” What happens next has led many a finance leader to shout, “Where have you been all my life!”

Or so Stillwell might have us believe in light of his evident passion for the metric and the singular emphasis that he places on it when asked about the career chapter that he has opened as CFO of Pegasystems, a firm specializing in customer engagement solutions.

“Once CFOs track it and begin reporting it, its value becomes so obvious—not just the value of the metric, but also that of the relationship with the customer and of the different mind-set and shift that occurs when you are an ‘as a service’ company and of making customer success a key part of keeping that relationship,” says Stillwell, who began his finance career in Price Waterhouse’s audit advisory services practice, which he soon exited to become part of an early PW mergers and acquisitions group where he would become involved in various deal-making activities outside the US. It was this experience that Stillwell says helped to propel him into a number of consecutive CFO roles, including his latest CFO tour of duty at Pegasystems.

“The one thing that’s different about Pega from my earlier experiences as a CFO is that Pega is one of those rare examples where a company is growing both at an accelerated pace—by this, I mean that it’s growing faster than the market growth rate—and also at significant scale,” explains Stillwell, who adds that Pegasystems is quickly approaching $1 billion in annual revenue. “In my previous experience, the companies were typically slower-growing and focused more on operational excellence and how to maximize shareholder value when growing in the single digits. Pega is an interesting mix of both growth and scale.” –Jack Sweeney

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Guest: Ken Stillwell

Company: Pegasystems

Headquarters: Cambridge, MA

Connect: www.pega.com

CFOTL: What would your team likely tell us about your leadership style?

Stillwell: I would say that if you walked around our finance team and also our operational groups here at Pega, the theme that would probably be a common one about my style would be that I try to be a business partner. Not a business partner in terms of creating spreadsheets so that we can tell you what your budget is for a quarter and how you’re tracking, but being a business partner by helping to identify opportunities, helping to provide advice, and giving, guidance around how things are progressing. We’re trying to be the eyes and ears for the leaders of the organization because they may not be able to see things that the finance partners may be able to see, and then also helping to provide solutions–not just giving the problem or challenge to a different executive or a different part of the organization, but really helping to formulate ideas about how we’re going to work through this.

Maybe it’s that we need to reposition marketing investment onto a new campaign that may be really important to get into a new market or a new vertical or a new offering. Or it could be something around a hiring plan and how to accelerate hiring in an opportunity area and not be bound by these traditional kinds of budget role positions–to really think about things in a bigger picture. How do we still land at the appropriate kind of financial stewardship for our shareholders while also really not missing opportunities to help accelerate the company? So, I think that partnering and really being a resource for the organization and a sounding board is really what gets me up in the morning. I try to push that to my teams as well.