Changing room

18 August 2008

Neil Robertson is CEO of procurement software company Vectra IT and has been involved in running numerous start-ups and established companies. After setting up and running Great Plains Software (later purchased by Microsoft) in Europe in the boom years from 1995 to 2001, he founded his own CRM consultancy, which was sold to Philips. Subsequently Robertson became CEO of the Neverfail Group, building a 750-strong reseller channel in the US. He was brought in to Vectra IT by one of its investors, The Stockford Group. Paul Ashford, the founder and author of the inSight procurement software, moves to the role of CTO.

This is the classic story of an entrepreneur founding a company and taking it to a certain point before the investors appoint a new CEO. What sort of pressure does that put on you – and how did it come about?

It’s the sort of pressure I’m used to, coming into companies that are either mature and need turning round or are in more of a start-up phase. I started my own business in the 80s called Team Systems and sold it to Misys, and I was on the operating board of Misys through the recession of the 1990s. Then I kicked off Great Plains when it was just a tiny company from North Dakota and I subsequently came in to turn around Neverfail.

Vectra IT was formed about nine years ago by Paul Ashford, founder and CTO, who recognised a hole in the market for procurement solutions that deal with the whole purchase-to-pay cycle. He had a contract to work with Value Retail – and developed inSight Procurement, a sophisticated pan-European procurement system. Having sold it to a number of clients, he then rewrote the product about four years ago, so it’s now 100% browser-based, and we can deliver it either in the traditional way into people’s organisations or host it.

Paul did an extraordinary job. He’s very bright but also hard working – he was even taking support calls on his honeymoon. He was really doing well but was running into a capacity issue just to meet the current demands. He was working with customer businesses that were owned by Sir Peter Michael, who also has an investment arm that had taken a stake in Neverfail and they got in touch with me. The more I looked at the product, the more impressed I was in just how functionally rich it was, and how easy it was to implement. Because it’s tightly integrated into a number of financial applications, it’s perfect for the mid-market.

Your goal - and one of the reasons you’ve been brought in - is to build up a third party sales channel for inSight. How will you approach that?

My brief is to take a successful direct sales force and turn it into a channel machine. It’s something I’ve done throughout my career and I would say I’m as good at it as anyone else, particularly in this sector.

You always have to have a few direct sales on the basis that all these new partners you are looking to recruit want to see (and use) working references to support their early sales. But my first days here have been focused on putting in the infrastructure. We’re pretty far down the track of doing that, building the portal out, which will enable organisations to access information for sales, marketing, and the implementation and support processes. That will be rolling out about September time when we really go out and start to hunt channel.

Building channel will require more discipline in terms of the documentation and infrastructure than with a direct sales organisation. But then again, all the organisations I’ve worked with since the 1990s have been channel-based, so I know what we’re up against. The technology has moved on so much with things like Sharepoint 2007 that capturing and sharing information is much easier than in the past.

Do you think this will be an easy sell in these credit crunch times?

The proposition plays well at the moment. When times are good, most organisations are pretty good at spending money. What you’re buying, who you’re buying from, what you’re getting and what you’re paying for it, and the automation of the whole purchase-to-pay cycle, is not top of the agenda. Come a near recessionary market and the finance director’s focus has swivelled 180 degrees to look at cash. Cash really becomes king, particularly given the state of the banks at the moment, and their inability to lend.

A lot of businesses are starting to realise that as the downturn continues, they are really going to need to watch their cash incredibly closely. And while the finance director has ultimate responsibility for expenditure, in reality, the first thing they know about it is when they receive an invoice up to 30 days after the event. What we give them is complete control over what the company spends, who they spend it with and what prices they are paying, and the relevant terms and conditions – including debtor days. They can see the order as it progresses and when it’s been delivered. The productivity gains in terms of automating that process are huge.

What did surprise me was that the percentage of people who are actively involved in buying stuff is at least 35-40% of every company. Very few of them have any formal training. It isn’t well controlled, it isn’t transparent. And even if they do have budgetary control, the accounting process is still historical. It’s quite incredible when you look at all the time and effort that has been spent in collecting and counting money through the accounting system that they don’t have any control over how they spend it.

And what’s the attraction for resellers?

In tough times, the amount that’s spent on replacement accounting systems drops significantly. Resellers might have pretty good pipelines, but the deferral rates go up as organisations that do have budget, and do have intention of buying, just put the expenditure off. Our belief is that in the next six months resellers are going to be looking for some proposition that’s relevant to the current market conditions.

I would say the penetration of procurement systems in the market is less than 1% so I don’t think we’ll have a problem attracting partners. But when you’re looking at building a relationship with a partner, the goal is to make everybody in their organisation as good as the best that you have. It’s about sharing knowledge and working alongside them in true partnership to make them most productive.

You’ve built channels several times before. What will you look to do differently?

It’s about looking at the critical things you need to make the partners productive and make their relationships with their customers successful. Then just getting good at it. We need to have the mentality that information is power, but only as long as you share it. If it stays in one of our support guy’s head, then it’s useless.

We’re also making the best use of technology. I think at Great Plains one of the reasons we were successful was because of the way we used new technologies to take the products to market. Email was just coming of age, but few resellers used it, so we started to only ship leads by e-mail, for example, and we had a PC in the corner that was purely dedicated to sharing leads. As a result, every partner adopted email and we could then communicate instantly with our channel. Then obviously the web started to develop and we built a knowledge base and so on.

How fast do you think you can grow – how many partners will you look to recruit?

Initially only a handful, then improve our infrastructure and build the momentum. It’s a bit like an extrapolation of a curve, it’s a question of how many you can absorb. There’s a natural segregation of the channel according to accounting product, and therefore little channel conflict. So we should be able to build a reasonably solid community of partners initially in the UK and Europe but long term our goal is to take this product into the US.

Neil Robertson was talking to David Longworth of Webster Buchanan Research