Milestone Group Quarterly: October 2004
Articles
Face to Face:
Jeff Rodek, Executive Chairman, Hyperion
Milestone: Under your leadership as CEO, Hyperion engineered a very impressive and sustained turnaround over the past three years. Other software companies have obviously been struggling and Hyperion has been thriving, so tell us about it.
Rodek: It was a lot of fun, but it was also a lot of hard work. I think in any business first you have to have a good opportunity, which Business Performance Management was and continues to be, then you have to have the talent and then you have to have the business model. Looking back at it, when I came to Hyperion, I felt we had a good starting point of customer satisfaction and the right foundation of products. We brought in a lot more talent, got people motivated to serve the customers and we drove some strong financial results. Although the term “Business Performance Management” didn’t exist five years ago, it’s actually been around for a long, long time. It’s actually what I used to do back in my days of operations research at FedEx.
Milestone: So what is the state of business performance management? Tell us about companies using your solutions. In what areas are they performing better? What areas are companies not realizing the full benefit of BPM?
Rodek: The state of the market for Business Performance Management is very, very healthy and we anticipate it being healthy for a very long time. You look at what companies are trying to do -- they are trying to make smarter investments in IT, they are trying to make investments that can stand alone and generate a quick return but also that leverage prior IT investments and they want to buy from a company that has a suite of products that they can start anywhere and grow. If you look at the customers who are using our products, starting with planning, they are moving from annual budgeting, usually done in spreadsheets, to frequent plans, maybe quarterly or event-based when they make an acquisition. They are doing more modeling and making better decisions about acquisitions, putting more emphasis on financial consolidations and SEC reporting. We’re now seeing a big wave of emphasis in new areas; customer profitability and product profitability and dashboarding to tie in everyone in the company. These are areas providing very quick paybacks.
Milestone: You talk about a single version of the truth -- how do you define it? Beyond the obvious technology needs, what are the biggest barriers? Is it staff skills or interpretation of data, etc. to an organization actually achieving a single version of the truth?
Rodek: Well, the term “single version of the truth” goes back to my days at FedEx in financial planning – generally on the opposite side of an issue from marketing. I remember Fred Smith (FedEx Founder and CEO) saying “it’s great if you both have a different opinion about what we should do but you can not have your own set of facts.” So a single version of the truth means making sure that a company is relying on accurate data and that information is shared, even if it is customized in different parts of the company, whether it is operations, sales, finance, marketing or human resources. The barriers to having a single version of the truth has to do with software, from two standpoints. First, you need to be able to collect relevant information from anywhere in an organization, from any transactional system or anything that is locked into a silo in a division. Second, you want to make sure that software deployed to do this is easy to use on the user’s end. Those two things are where it really has come together to make Business Performance Management so healthy and strong of late, because of the technology advancements on both fronts. These ease-of-use advancements include the ease of pulling data from wherever it lies in an organization into that single version of truth, eliminating the errors in spreadsheets, and also the ease in creating and using dashboards, where thousands if not tens of thousands of people in an organization can be accessing that same data and viewing it in a customized way.
Milestone: There is a lot of hype out there about real time. How important and truly useful is real time in the business intelligence and data warehousing arenas?
Rodek: Let me switch you to the Business Performance Management arena, which includes business intelligence as a key part of it. I think for most companies, to be relevant, information needs to be timely. But timely generally means “snapshot” information, that may actually be from yesterday. If you are looking at an acquisition, customer profitability, product profitability, how an organization, a department, or an individual is performing against a goal -- you want to make sure you get accurate, timely information. But real time, in most cases, means recent, not necessarily instantaneous. Now, if you are in the world of manufacturing, handling transactions -- like back to my days at FedEx, when we were running an airline -- you want nearly instantaneous information. In other words, you want “now,” meaning the last five minutes, or you want to sweep the last 15 minutes. But for Business Performance Management, what most knowledge workers need is the right information, easily obtained, at the right time. So timely information is the right information, easily displayed and based on powerful analysis, which means it could be from earlier today, from a half hour ago, or even from yesterday..
Milestone: Is desktop access to dashboards and adhoc reporting changing culture in organizations with better information flow?
Rodek: It’s definitely changing cultures to be much more performance driven where people can be held accountable, which is a good thing. Everybody wants to do a good job. It gives you a chance to show off and do a good job. In any sport the first thing you want to know is, “what are the rules?” and “what are the goals?” Dashboarding helps provide everyone line of sight to company objectives. . You can cascade down objectives; you can report back how people are doing against them. This level of visibility is actually changing corporate cultures. Accountability is improving, which means, in a positive way, reward systems are changing. The strong performers want to get the best rewards. What better way to motivate people than to provide objectives-based dashboards that tie performance to reward systems? Cultures are definitely changing for the better and, at the same time, company performance is changing for the better with dashboards.
Milestone: Shifting gears a little bit, how does Hyperion partner with other technology companies and specifically how does it partner with early stage software companies?
Rodek: We have hundreds and hundreds of partners, some large and many early stage companies. Our partnerships can take different forms. Sometimes, we will OEM our products, such as the case with IBM, which OEMs Hyperion Essbase for its DB2 OLAP product. But more often with early stage companies, they either utilize our products in their solutions in a joint selling arrangement, or they resell our products. Our latest product, Hyperion Essbase 7X, provides a good example of how smaller companies are taking technology innovations to diverse audiences. Partners are taking products like this, doing some refinement, and taking the solution into a specific part of an organization -- it could be human resources, it could be manufacturing or another division within a company. Also, partners may have experience specific to vertical markets, --such as retail or health care. They can provide custom work where they really know specific domains and take the power of our technology to these markets. In addition to these types of partnerships, we may partner with early stage software companies that have technology we want to bring to our customers. We may sometimes resell, or we may partner for joint selling so we can both be better off. There are many ways that an early stage technology company can partner with Hyperion for mutual success, whether that means leveraging our technology or leveraging their technology. The key is to put together a partnership where both parties win.
Milestone: Hyperion acquired Brio in 2003. This acquisition was strategic in part because Brio had a strong reach and operation beyond Hyperion’s traditional base in the financial area. Has this been successful and how specifically has Hyperion staying in the operations, supply chain and CRM?
Rodek: The integration has been extremely successful from a customer standpoint, from an employee standpoint and from a financial standpoint. It has been a win in all three areas. Starting with the customer side, it allowed us to fill out our suite much more broadly by having a strong business intelligence product that is very easy to use, that can go on tens of thousands of seats in an organization -- all accessing that same single version of the truth. From a financial standpoint, it has dramatically improved our profitability as well as our top line growth. And from an employee standpoint, we’ve done extremely well in integrating the teams. The attention has been very, very good and talent has grown enormously. We look at that acquisition as a huge success. One of the advantages was not just the technology but also the domain knowledge of the Brio organization; in sales, human resources and manufacturing. Having easy-to-use dashboards, easy-to-use query and reporting technology, combined with our financial applications and Hyperion Essbase and providing solutions for customer profitability and product profitability – these are some of the things that have allowed us to extend the reach of business performance management all the way from the boardroom to the front lines, in every corner of the enterprise.
Milestone: The favorable court ruling for Oracle’s attempted hostile takeover of PeopleSoft has raised many interesting scenarios including one that suggests that Hyperion could now be a target. Hyperion has a very large maintenance stream and lots and lots of customers, enviable if you are SAP, IBM or Microsoft and looking for a large acquisition. What is your take on things?
Rodek: I think we are in an enviable position and that’s why we love being at Hyperion and we love business performance management. We think we have a very, very strong future as an independent company. When you look at the broad offerings we have, we have the financial strength, we have the product suite that the customers want, we have a great record in customer satisfaction, we have great partners, so we have a great future on our own. There is a lot of consolidation going on out there; I would expect that consolidation to continue. Whether anybody would be interested in us, that’s their decision not ours. We think our position is very, very strong and we intend to grow as an independent company.
Milestone: In your role as Executive Chairman, can you talk about Godfrey Sullivan’s recent succession to CEO and also the distinction you are making with an Executive Chairman title?
Rodek: Godfrey and I have worked together for three years. Some of the reasons for the change are, first, the company has never been in better shape; we just finished a record fiscal year and as you noted, quite a few years of very solid improvement in an environment where many companies are struggling. Second, the management team has never been stronger, has never had the breadth or the strength it currently has. So the company was in very good shape. Also, as an advocate of strong corporate governance, I feel that most companies are very well served by having a role separation between the Chairman and the CEO. If you look at the world today, a CEO’s job is far more than a full time position and the Chairman’s position has become, over the last two years, a very full job in and of itself. So trying to do both is pretty intense. It is always better to have succession occur when things are going well; far too many times it happens when it is not. My job as Executive Chairman, in which I remain an employee of the company, is to lead the board, stay involved in corporate strategy, customer relationships, public relations and thought leadership on Business Performance Management.
Milestone: How do you spend your time now that you are not CEO? Will we see you again as a CEO of another software company?
Rodek: Quite a bit of my time remains with Hyperion, doing those things that I just mentioned. I love the company, I love the industry that we are in and I like our prospects. Nothing would make me happier than the next five years to be even better than the previous five years. I had a great run and now we have a great CEO. We have worked very well together over the last three years and I hope to work with him in his new role for as long or longer. In my free time now, which I have more of, I force a little balance on myself, which surprises a lot of people. I spend more time with my family. My plans are to stay as Executive Chairman of Hyperion. Will I ever be a CEO of another company? I don’t know -- I will cross that bridge down the road. Never say never, but right now I really love what I am doing.
Jeff Rodek is Executive Chairman of the Board at Hyperion Solutions (Nasdaq: HYSL), a global leader in Business Performance Management software. Jeff joined Hyperion as CEO in 1999. Prior he was President and COO of Ingram Micro. Earlier in his career he served for 16 years at Federal Express, most recently as Senior Vice President, the Americas. Jeff holds a bachelor's degree in mechanical engineering and a master's degree in business administration, with an emphasis in finance, from The Ohio State University.
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