10 questions for Micro Focus CFO Mike Phillips

The inside story on the CFO of a company generating more than $US430 million revenue
  • Nancy Weil (IDG News Service)
  • 21 June, 2011 02:27

Name: Mike Phillips

Age: 48.

Time with company: 8 months

Education: University of Southampton, U.K., Bachelor of Science in economics and accounting; ACA qualification from the ICAEW (The Institute of Chartered Accountants in England and Wales)

Company headquarters: Newbury, Berkshire, U.K.

Revenue: $432 million to $442 million is current guidance.

Number of countries: 27

Number of employees total: A little under 1,500

Number CFO oversees: About 140

About the company: Micro Focus International's software allows companies to develop, test, deploy, assess and modernize business-critical enterprise applications. more than 18,000 customers and over 2 million licensed users, including 91 of the Fortune Global 100 companies. The company website is http://www.microfocus.com.

1. Where did you start in finance and what experiences led you to the job you have today?

I went into Peat, Markwick, Mitchell, qualified [for an ACA], stayed a couple of years after the qualifications and then moved into corporate finance. I went to Smtih & Williamson, who are U.K.-based, but have an international presence. I spent eight and a half years there and moved on to PricewaterhouseCoopers, in Windsor, which is just outside London. I was with their tech corporate finance team, so I ended up heading up the team. After I was there, I was introduced to someone coming out of Dell -- he was actually leaving Dell and looking for a vehicle to grow an IT services company in the U.K., and so he and I got to talking about how I could help him. He was a very interesting guy and had done a lot of research in the tech sector, but he'd also done a lot of turnarounds. I helped talk him into investing in a company called Microgen. It was kind of a dreadful experience -- you'd be looking at corporate accounts and put them into a fiche reader and the paper never printed out. ... If you were storing information you never wanted to look at again, it was a great place to be. This was before the Internet. CD was coming along, but they didn't want to invest in that sort of company; they then got involved in outsourced printing services, specifically invoice.

The company ran into a little bit of trouble. I'd been doing some work for them on the corporate finance side and Martyn Ratcliffe, who was the guy at Dell, was interested in investing in them, then became executive chairman and he told me how it was the worst company where he'd ever been. It was a turnaround that needed some help and he asked me if I would help him, so I went and got what my mother-in-law called my first proper job and went to work at Microgen as the head of corporate finance.

We sold off the overseas businesses, that generated cash. We then looked at doing a series of acquisitions. It was a great experience.

I was there until early 2007 and decided after that great experience that it was it was time to do something else. I went and worked at a private equity company. It was an interesting change. It was a company called Data Explorers. A new CEO came on board and actually recruited a whole management team around him and the CFO role which I was interested in became sort of narrow. The role I was going to be filling wasn't suddenly attractive and at that point I got a call from a headhunter about a company that was in need of restructuring.

So I went and met with Kevin Loosemoore, who was the executive chair [of Morse plc]. I asked, "Is there a wider role that could be available here, so I joined in September 2008. My predecessor had predicted that at the end of September, we'd have two and a half million [dollars] of cash in the bank. When I arrived on my first day to find that we had net debt of $8.9 million .... it was clear that this could be a very short appointment.

We turned around our position with the banks in terms of getting them comfortable with the actions we were taking. Calendar Q4 of 2008 wasn't the best time to renegotiate your banking agreements, but we managed to do it, so that we started in 2009 with a stronger position in terms of financing the business and in terms of what we needed to do to turn things around. [Then] Kevin asked if I wanted to be CEO. I became CEO in September 2009. By mid-2009 ... we turned the cash position around.

Kevin was also chairman of a company called Micro Focus and [in June 2010] he was bringing together a new team. I was approached to be CEO here. I joined in October last year.

2. Who was an influential boss for you and what lessons did they teach you about management and leadership?

You can tell from how I ended up here that Martyn Ratcliffe was pretty important. Martyn very quickly taught me that running a business is all about running the numbers. It's important to make sure to have numbers quickly and that they are as fully accurate as they can be. ... It may be that you are deliberately investing in an area and it's OK to run it at a loss, but you've got the details and the numbers that show you what it costs to run that business. He also taught me a great deal in terms of how to go about integrating businesses, actually being involved with and living with how you integrated those companies.

He was always able to show great leadership by being prepared to put in the hours to make something happen and wanting to be there and getting involved in the details of the business. [He taught me to] always make sure you've got people around you who are going to make things happen.

3. What are the biggest challenges facing CFOs today?

I think a key challenge is making sure that the business has access to the right amount of capital to develop on the plans of the business. We're very fortunate here at Micro Focus that we're in a very strong business and a very cash generative business. For other CFOs in other businesses, it may be a bit tougher to get access to the capital.

4. What is a good day at work like for you?

Looking at the business and determining what the issues are to make the company better. If we're addressing those types of issues on a particular day, then that's great. Having fun is also something I'm quite keen on, so making sure people are enjoying their work.

5. How would you characterize your management style?

I would say I'm pretty detail-oriented and make sure that anyone who is working for me is also on top of detail -- not that I want to do their job for them, but just to make sure they're into their job with a level of detail so that I know they can get the job done. Once I know they are into the detail, then I'm all for letting them get the job done.

6. What strengths and qualities do you look for in job candidates?

I think it goes along with a sense of being into the detail -- I think a can-do attitude is also important and someone who is not afraid of change. I think if a particular business is not changing in some way, shape or form, it can become a little bit stale. But people can also be uncomfortable with change, so I want to be sure they will be comfortable with change and not see it as a threat in any way, shape or form, to their role.

7. What are some of your favorite interview questions or techniques to elicit information to determine whether a candidate will be successful at your company? What sort of answers send up red flags for you and make you think a job candidate wouldn't be a good fit?

I think in terms of [interviewing] tips, it's always correct form to let the person you're interviewing talk. It's actually very important to listen and let them talk and answer questions. There is an old saw -- you've got two ears and one mouth and you should use them in that proportion and I think that's important in interviews. In terms of determining whether they're the right sort of person for Micro Focus, it's very much around are they prepared to embrace change and will they thrive in a change environment. As I said, [Micro Focus] is about a great deal of changes and we want people to come on board and be able to embrace them.

8. What is it about your current job, at this particular company, that sets it apart from other chief finance positions?

The company is part of the FTSE 250 [top companies by market capitalization on the London Stock Exchange]. I've had a little bit of experience with international companies, but we're in 27 countries. We have a world leadership position -- it's a great place to be. Those three things -- being in the FTSE 250, the international experience and being in a leadership position -- aren't exactly what a lot of other companies have.

9. What do you do to unwind from a hectic day?

Spending time with the family is often too brief and too infrequent. I have two children, 11 and 14 [years old], so spending time with them is good. I like to play golf, so getting out on the golf course. I like to go running too. So those would be three things I like to do, not all at once obviously.

10. If you weren't doing this job, what would you be doing?

Chief financial officer of a slightly smaller company or chief operating officer of a slightly smaller company. It would be something in IT or technology related.