604: When It’s Time for a Fire Drill | Gordon Stuart, CFO, Unit4

Listen to the Episode Below (00:53:12)

In the late 1980s, when Gordon Stuart exited a 4-year stint as an auditor with Price Waterhouse, he bid accounting farewell—or at least he did until he stepped into a CFO role roughly a dozen years later.

Ever since, he has occupied multiple CFO roles, helping to remove any doubt about his finance and accounting orientation.

Still, Stuart’s appetite for broader business experiences during the early part of his career set him apart from many of his finance leader peers. During the 1990s, as a senior engagement manager for strategy consulting firm McKinsey & Company, he found job satisfaction across a variety of industries.

Asked what originally led him to join McKinsey rather than take on a more traditional corporate finance role, Stuart says that “the opportunity that I saw would allow somebody who’s naturally curious about business to build a better set of capabilities, frameworks, experiences, and connections to further their career.”

Looking back, Stuart says that his biggest take-away from his 6 years with McKinsey involved the approach that McKinsey uses while serving clients.

“It taught me an awful lot about how to work with teams and rapidly assimilate and understand businesses and business models, as well as how to communicate with others. In fact, I think that this was probably one of the key learnings,” says Stuart, who would leave the strategy house in 1998 to become director of strategy for Dell Europe, where he would ultimately set up and lead the technology company’s Web hosting business for Europe.

“Our timing was unfortunate because the dotcom collapse of 2000 kind of reset priorities within Dell, and that’s when my CFO career began,” explains Stuart, who left Dell after the CEO of a UK software company (and former McKinsey colleague) convinced him to accept the software firm’s finance leadership role. “I never set out with an ambition to be a CFO, but as time passed, I kind of realized that if you pick the right business and it lines up with your interests, CFOs influence a lot of what happens in a business. And having an impact is very satisfying,” he explains. –Jack Sweeney

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Guest: Gordon Stuart

Company: Unit4

Connect: www.unit4.com

Headquarters: Utrecht, Netherlands

CFOTL: Are there certain metrics that you want to bring more attention to across the organization?

Stuart: One of the by-products of our SaaS migration is that it’s enabling me to do something that I’ve been trying unsuccessfully to do for 20 years, which is to get the business to look past the end of the year. Nothing drives me to distraction more than the 31st of December. It’s the end of the world as far as most people are concerned. I keep making the point that when you switch your computer off on the 31st and then you come back on the 2nd of January, it’s the same stuff in your mailbox. It’s the same deals that you’re working on.

We’re trying to use the whole ARR model to get people to think further ahead in their planning. We had a chat earlier this morning about our budget process for 2021. I said, “We can start it now because we know from our 3-year plan what we want our cost run rate to look like and what we want our ARR for our recurring business to look like. So all that we’ve got to do is to plot the course from here to there and then we’re interlocking to the next year of our 3-year plan. We can work out now whether we think the trajectory is looking low or high and how we might intervene to drive that.”

The SaaS model is helpful in getting people to think long-term and not just be in the mode of, “What’s today’s sales number? What do I need to do to get to the end of the quarter?” Clearly, one of the big pieces of this is “What does the mix of our business look like?” Because although SaaS is where we’re going, we still have a big on-prem business, and some customers that are on-prem product users now want to keep being on-prem product users. When they buy more volume or they buy new businesses that they roll applications out to—or we upsell them a new product—then they’ll typically consume this on-prem. But this has implications for how we look at the mix of our business, both for in-year results and for how it positions us for going into 2021 as well. jb