bob sywolski an execution model for the ceo

EXPERIENCED • FOCUSED • ACTIVE

PRIVATE EQUITY FOR THE BUSINESS OF SOFTWARE AND SERVICES

An Execution Model for the CEO


EXPERIENCED • FOCUSED • ACTIVE 2

Possible titles for the CEO role

• Survivor

• The Dirtiest Jobs

• The Most Dangerous Jobs

• The Apprentice

• Are you smarter than a 5th Grader?

• King of the Hill

• The Biggest Loser

• Sex and the City (… I just couldn’t resist this one!)

EXPERIENCED • FOCUSED • ACTIVE


An Execution Model for the CEO



Key Areas of Focus for the CEO

1. Get the best people on the team

2. Set the priorities right

3. Expose reality

4. Provide inspiration and energy

5. Establish and keep the culture



Key Areas of Focus

• Get the best people on the team– A never ending, non compromising focus on hiring, developing and rewarding the best

possible people

• Get the priorities right – Decide what to work on. Start this! Stop that! This is important, this is not. Some call it

strategy

• Expose reality – Build passion around getting and understanding the data and the willingness and

courage to confront it as it truly is

• Provide inspiration and energy– A combination cheerleader, parish priest, psychologist, and circus clown to provide the

motivation, stimulation and encouragement

• Establish and keep the culture– Defining the values and beliefs and setting the boundaries



Key Areas of Focus


possible people


strategy





• Establish and keep the culture – Defining the values and beliefs and setting the boundaries



Key Areas of Focus

• Get the best people on the team– A never ending, non compromising focus on hiring, developing and rewarding the

best possible people

• Get the priorities right– Decide what to work on. Start this! Stop that! This is important, this is not. Some call it

strategy








People, People, PeopleIf you don’t think your people are your most important asset, consider the following:

• Think about the issues that keep you awake…would a great person help?

• What would happen if your top/key person left?

• Are you missing opportunities because you don’t have the talent to pursue them?

• How deep is your bench?

• How good do you feel when you find that perfect candidate?



Get the best people on the teamA never ending, non compromising focus on hiring, developing and rewarding the best possible people

• Staff with the best and all that goes into making that happen. Never knowingly compromise.

• Assure that current assignments are the right blend of comfort, learning and stretch

• Invest in professional development

• Keeping morale high… and all the initiatives and actions one can focus on when “people come first”



OK It’s Important…So How Do We Do a Better Job?Why managers make poor hiring decisions:

• Failure to recognize the importance of hiring world class people!

• Passing off responsibility – HR driving search for key resources– Human resources does the sourcing and manages the hiring process

• Job specs – lack of clarity and detail around the job’s functions and goals

• Candidate specs – failure to be thoughtful and explicit about the required characteristics and skills of the candidate that link to the job specs

• Shopping Hungry – the position needs to be filled so badly that we hire what we know is a less than perfect candidate and hope for the best

• Everybody’s winging it – no specs, no process, no coordination

• Poor management of search firm – the search firm drives the process. Another form of passing off

• Poor reference checking – effective reference checking can help

• No clear expectations – overselling the candidate

• Poor interviewing skills – one of the major reasons for poor hires



Key Areas of Focus


possible people


strategy








Get the Priorities RightDecide what to work on. Start this! Stop that! This is important, this is not.

• Some call it strategy – I think of it as a focus on the right

• Business

• Products

• Customers

• What are your major priorities in terms of–People, Product, Process?

• Execute like crazy!!



Key Areas of Focus


possible people


strategy








• Create and shift piles of data

• Agree that the data is accurate and share it throughout the organization

• Construct dashboards that are lucid and focused on drivers of performance

• Build a culture of intellectual honesty and the willingness and courage to confront reality

– Measurement– Accountability

• Operations Meetings are a way to institutionalize this process

Expose RealityBuild passion around getting and understanding the data and the willingness and courage to confront it with candor



Operations Meetings

• What are they?– Regular meetings of a leadership group used to:

• Report on and review progress• Develop and agree on new objectives and priorities

• What is their value?– Benefits and outcomes:

• Communicate and build consensus within the team• Drives search for better data• Align the group on priorities and actions• Problem solve and team build• An opportunity for assistance, support and peer pressure• Improves efficiency through use of process



Operations MeetingsClosing thoughts

• Bad news should travel fast and first – even if you don’t have a solution, others might

• Tell it like it is – reward those who are candid

• Strive for more thought and less words - Headline the issues and propose solutions

• This is not your third grade book report – so no show-and-tell please!

• Keep them fast paced – have some fun

They only work if you have good data that everybody believes is accurate!

Income Statement ($000s) Gross Margin Variance Analysis (000's)Vs. B % Rev vs. LY % Rev Vs. B % Rev vs. LY % Rev

Act Bud LY A/B A/LY Act Bud LY A/B A/LY GM $ Variance 168 10% (153) -8% 1,048 4% 4,834 23%Revenue: % % % % Attributable to:

Consulting 1,192 1,011 1,249 118% 95% 18,127 16,764 12,686 108% 143% Revenue- NA incl. HtATechnical Consulting 625 454 368 138% 170% 7,790 7,121 5,099 109% 153% Impact of billing rate/hr variance 70 4.2% 9 0.5% 110 0.4% (375) -1.8%Project Management 220 200 287 110% 77% 1,999 3,038 1,192 66% 168% Impact of head/hours variance 113 6.8% 376 20.0% (609) -2.2% 7,902.0 37.9%

Total NA Consulting Revenue 1,346 1,151 1,450 117% 93% 19,527 18,891 13,521 103% 144% Impact of utilization variance 79 4.8% (156) -8.3% 1,840 6.8% (246) -1.2%Total NA Tech Consulting Revenue 691 514 454 135% 152% 8,390 8,032 5,457 104% 154% Impact of FPE timing and mix variance 110 6.6% (70) -3.7% (175) -0.6% 190 0.9% Total NA Revenue per P&L 2,037 1,665 1,904 122% 107% 27,916 26,923 18,977 104% 147% Total NA incl. HtA/US Barnardos revenue impact 372 22.3% 158 8.4% 1,166 4.3% 7,472 36.9%

BBE HtA/US Barnardos Consulting - - 30 0% 0% 245 187 1,072 131% 23% Cost of RevenueBBE HtA/US Barnardos Tech Consulting - - (55) 0% 0% 147 32 788 463% 19% Impact of salary incl. HtA variance 99 5.9% 236 12.6% (50) -0.2% 2,184 10.5%

Total Consulting Revenue 1,346 1,151 1,480 117% 91% 19,722 19,078 14,592 104% 135% Impact of benefits variance 30 1.8% 55 2.9% 33 0.1% 447 2.1%Total Tech Consulting Revenue 691 514 399 135% 173% 8,536 8,064 6,244 106% 137% Impact of bonus variance 76 4.6% 42 2.2% 153 0.6% 256 1.2%

Total Revenue for GM Variance Analysis 2,037 1,665 1,879 122% 108% 28,308 27,142 20,837 104% 136% Impact of outside services variance (1) 0.0% (21) -1.1% (17) -0.1% (250) -1.2%Other - 0.0% - 0.0% - 0.0% - 0.0%

Cost of Revenue Total NA incl. HtA cost of revenue impact 204 12.3% 312 16.6% 118 0.4% 2,638 12.7%Salary per NA P&L 766 674 504 114% 152% 7,673 7,826 5,042 98% 152% Total NA incl. HtA/US Barnardos revenue impact 168 10.0% (153) -8% 1,048 4% 4,834 23%HtA Harbor Allocation 7 - 32 0% 20% 159 56 606 284% 26%Benefits 140 110 84 127% 165% 1,495 1,462 1,048 102% 143% Utilization*Bonus 178 102 137 175% 131% 1,378 1,225 1,122 112% 123% Act Bud LY Act Bud LYOutside Services 2 3 24 82% 10% 130 147 379 88% 34% Consultants 46.1% 45.5% 50.2% 66.0% 65.3% 62.8%

Total Cost of revenue for GM Var Analysis 1,093 889 781 123% 140% 10,835 10,717 8,197 101% 132% Principal Consultants 39.5% 29.3% 32.5% 40.6% 50.0% 39.5%Managing Consultants 0.0% 15.7% N/A 38.7% 26.8% N/A

Gross Margin, NA incl. HtA/US Barnardos 944 776 1,098 122% 86% 17,473 16425 12,640 106% 138% Total Consulting 45.8% 42.0% 49.3% 63.7% 61.4% 61.5%Gross Margin % 46% 47% 58% 62% 61% 61% Analysts 47.6% 44.5% 58.2% 73.3% 64.7% 78.2%Gross Margin % per NA P&L 47% 47% 61% 62% 60% 60% Programmers 37.6% 43.3% 54.0% 62.0% 59.2% 64.7%

Architects 35.4% 21.5% N/A 28.2% 31.9% N/AOther contributable costs 539 310 227 174% 238% 4,277 4,101 3093 104% 138% Managing Consultants 0.0% 16.4% 3.0% 8.5% 26.8% 15.0%Total Costs 1,632 1,198 1,008 136% 162% 15,112 14,818 11,291 102% 134% Total Technical Consulting 42.2% 39.8% 46.4% 62.8% 56.8% 61.7%EBITDA, NA incl. HtA/US Barnardos 405 467 871 87% 47% 13,197 12,324 9546 107% 138% Engagement Managers 22.6% 14.7% 15.1% 31.1% 25.5% 30.4%EBITDA % 20% 28% 46% 47% 45% 46% Project Managers 29.1% 36.9% 39.6% 51.4% 53.7% 46.9%EBITDA, per NA P&L 412 467 928 88% 44% 12,964 12161 8293 107% 156% Total Project Management 27.2% 28.0% 30.7% 44.6% 43.6% 39.8%

Total Blended Utilization 42.8% 39.2% 46.4% 61.5% 57.5% 59.1%Annualized revenue/head ($K) 140 120 173 117% 81% 180 167 175 108% 103%Annualized revenue/billable head ($k) 170 149 213 114% 80% 221 207 217 107% 102% Booklogs**

Actual Budget LY A/B A/Y Actual Budget LY A/BBilling Summary All Services:

Act Bud LY A/B A/LY Act Bud LY A/B A/LY Enterprise Sales 2,257,118 2,201,300 1,846,919 103% 122% 15,481,457 14,943,800 9,393,942 104%Total Blended Consulting All Other 2,487,663 1,957,966 2,553,561 127% 97% 17,925,073 18,926,815 15,795,908 95%

Billing rate/hr $204.0 $200.0 $206.0 102% 99% $199.6 $200.0 $205.6 100% 97.1% Salaries, benefits & bonus/hr $45.4 $39.9 $44.8 114% 101% $42.0 $40.9 $41.9 103% 100.1% By Product for: Pricing Multiple 4.49 5.02 4.59 90% 98% $4.76 $4.89 $4.90 97% 97.0% Consulting:

RE 1,624,277 1,792,025 2,124,387 91% 76% 13,567,758 14,185,165 10,499,402 96%Total Blended Tech Consulting FE 659,721 910,508 584,429 72% 113% 5,834,017 7,002,818 5,334,067 83%

Billing rate/hr $180.4 $159.7 $161.5 113% 112% $166.9 $158.7 $168.4 105% 99.1% EE 305,268 175,000 173,859 174% 176% 2,065,757 1,472,770 1,077,677 140% Salaries, benefits & bonus/hr $39.1 $36.7 $36.2 107% 108% $35.9 $36.4 $36.1 99% 99.5% PE 180,927 84,600 69,942 214% 259% 816,799 1,019,600 396,312 80% Pricing Multiple 4.62 4.36 4.46 106% 104% $4.64 $4.35 $4.66 107% 99.6% TIE 58,900 30,175 33,970 195% 173% 449,153 223,948 164,533 201%

NC 471,232 102,400 226,960 460% 208% 1,585,141 980,800 452,901 162%Total Blended Project Management NS 77,279 56,275 55,467 137% 139% 548,129 526,568 470,001 104%

Billing rate/hr $205.9 $203.1 $207.0 101% 99% $195.1 $203.1 $199.1 96% 98.0% Total Consulting 3,377,605 3,150,983 3,269,014 107% 103% 24,866,755 25,411,668 18,394,894 98% Salaries, benefits & bonus/hr $47.5 $38.5 $39.2 123% 121% $44.9 $38.0 $42.1 118% 106.7% Technical Consulting: Pricing Multiple 4.33 5.27 $5.29 82% 82% $4.34 $5.34 $4.73 81% 91.8% RE 930,389 794,626 931,396 117% 100% 6,180,101 6,572,103 5,354,708 94%

FE 132,738 106,798 90,780 124% 146% 970,388 893,766 836,021 109%Contractors: EE 9,413 34,900 17,290 27% 54% 322,371 322,567 191,713 100%

Billing rate/hr - $200.0 $205.7 0% 0% $199.0 $200.0 $197.7 99% 100.7% PE 191,732 24,300 82,235 789% 233% 780,179 293,800 232,481 266% Salaries, benefits & bonus/hr $65.0 $75.0 $98.6 87% 66% $79.0 $75.0 $82.9 105% 95.3% TIE - 48,860 - 0% 0% 81,494 363,210 127,490 22% Pricing Multiple - 2.67 2.09 0% 0% $2.52 $2.67 $2.38 94% 105.6% NC 102,904 800 9,766 12863% 1054% 205,242 13,500 46,182 1520%

NS - ‐ - 136% 0% - - 6,360 0%Total Blended: Total Tech Consulting 1,367,175 1,008,284 1,131,467 121% 8,539,774 8,458,946 6,794,956 101%

Billing rate/hr $196.7 $187.8 $191.9 105% 103% $188.1 $187.1 $190.8 101% 98.6% Salaries, benefits & bonus/hr $43.8 $38.7 $41.8 113% 105% $40.6 $39.3 $41.0 103% 99.0% Total Consulting Services 4,744,780 4,159,266 4,400,480 114% 108% 33,406,529 33,870,615 25,189,850 99% Pricing Multiple 4.49 4.85 4.59 93% 98% $4.63 $4.77 $4.65 97% 99.5% *** Budget is Sales Manager

Hours Billed Backlog Summary***Act Bud LY A/B A/LY Act Bud LY A/B A/LY 5-Dec % Var. vs LM Var. vs LY 5-Nov % 4‐Dec %

Scheduled Backlog 9,914,500 67% 4.1% 48.3% 9,523,500 78% 6,684,300 61%Consulting 6,370 5,162 5,353 123.4% 119.0% 89,817 85,198 62,138 105.4% 144.5% Unscheduled BacklogTechnical Consulting 2,968 2,962 2,820 100.2% 105.3% 49,035 46,499 39,037 105.5% 125.6% New Contract 1,446,000 10% 262.5% -38.0% 398,900 3% 2,330,700 21%Project Management 849 985 760 86.2% 111.8% 13,830 14,956 10,618 92.5% 130.2% On Hold 3,047,400 21% 64.8% 87.2% 1,848,900 15% 1,628,000 15%Independent Contractors 0 38 151 0.0% 0.0% 1,429 1,516 3,642 94.2% 39.2% At Risk 290,700 2% -24.6% 9.4% 385,500 3% 265,800 2%Total Hours Billed 10,187 9,147 9,083 111.4% 112.2% 154,111 148,169 115,435 104.0% 133.5% Retained Work 74,800 1% 2.5% 40.9% 73,000 1% 53,100 0%

Total Unscheduled 4,858,900 33% 79.5% 13.6% 2,706,300 22% 4,277,600 39%Headcount Analysis

Actual Budget LY A v B A v LY A v LM Actual Budget A v B LY Total Backlog 14,773,400 100% 20.8% 34.8% 12,229,800 100% 10,961,900 100%Billable Resources 140.0 133.0 103.0 7.0 37.0 0.0 140.0 135.0 5.0 103.0 *** HtA & US portion of Barnardos backlog is included in N.A. backlog, not BBEOperating Resources 30.0 32.0 24.0 (2.0) 6.0 0.0 30.0 32.0 (2.0) 26.0Hired in Training 4.0 1.0 3.0 3.0 1.0 4.0 0.0 1.0 (1.0) 5.0Total Headcount 174.0 166.0 130.0 8.0 44.0 4.0 170.0 168.0 2.0 134.0

Current Month Year to Date

Year to Date

Current Month

Current Month Year to Date Month

YTD

Current Month YTD

Last Month

Current Month Month EndedYear to Date

Current Month

North America Consulting Services Flash

Gross Margin Variance Analysis (000's)vs. Budget % Revenue vs. Last Year % Revenue

Gross Margin $ Variance (150) -8% (50) -3%

Attributable to: Revenue Impact of billing rate/hour variance 10 1% 60 4% Impact of head/hours variance (25) -1% 75 5% Impact of utilization variance (10) -1% 30 2% Impact of timing and mix variance 25 1% (10) -1%Total revenue impact - 0% 155 10%

Attributable to: Cost of Revenue Impact of salaries (220) -11% (240) -16% Impact of benefits variance 30 2% (10) -1% Impact of bonus variance 25 1% 5 0% Impact of outside services variance 15 1% 40 3% Other - 0% - 0%Total cost of revenue impact (150) -8% (205) -14%

Total gross margin impact (150) -8% (50) -3%

Month Actual



Key Areas of Focus


possible people


strategy



• Provide inspiration, energy and a shared vision– A combination cheerleader, parish priest, psychologist, and circus clown




A Shared Vision, Inspiration and Energy

• A broadly communicated vision, and the inspiration and energy from the CEO are essential for an organization to be successful

• The CEO as a management theorist, strategic thinker, business teacher, and corporate icon

• Being a cheerleader, parish priest, psychologist, and circus clown

• Use your “style” … it’s the only one that will be compelling

• Exhausting and hardest emotionally



The Best Leaders Share Ten Basic Qualities:*

1. Passion – A sense of mission that comes from the heart

2. Intelligence and clarity of thinking – Raw intellectual horsepower and the ability to make the complex seem simple

3. Great communication skills – Getting people to believe in the cause

4. High energy level – Wearing out rather than rusting out

5. Egos in check – The team vs. the person

6. Inner peace – Less frenetic, more self-aware and in harmony

7. Capitalize on early life experiences – The impact of toilet training

8. Strong family lives – In the past and now

9. Positive attitude – An astonishing sense of the possible

10. Focus on “Doing the right things right”* From: Lessons From the Top by Thomas J. Neff, Doubleday & Company, Inc.



Key Areas of Focus


possible people


strategy








Establish and Keep the CultureDefining the values and set the boundaries

• Defining and driving the basic value sets and principles of behavior

• Cultural values will develop! Every tribe and organization have them.

• You need to oversee their evolution.

• Honesty – ethical and intellectual, candor, openness, respect for the individual, non-political environment, hard work, tolerance … just some examples.



“What do you do as the CEO?”

• Getting exceptional people on the team

• Working the priorities

• Exposing reality – creating a data driven/high performance environment

• Providing inspiration and energy

• Establishing and keeping the culture and basic beliefs