21st May 2007
The IRIS Group is something of an oddity in the world of
financial systems. Its product portfolio is unconventional, its CEO
hails from the Healthcare industry and it is headquartered in a
rather quaint country house to the West of London, far removed from
the shiny glass buildings favoured by the rest of the IT industry
along the M4 corridor.
But
within this seemingly incongruous mix are a solid strategy and a
corporate culture that lets employees thrive and apparently leaves
customers highly satisfied.
Martin Leuw, CEO IRIS Group shares his unique perspective of the
mid-market with Gary Simon, FSN's managing editor.
Martin Leuw may not be the archetypal IT veteran but his
experience with the Healthcare sector has given him a deep
appreciation of the importance of customer care. “Mid-market
companies are looking for ease of use and reliability. They want to
be able to grow with their software provider and to be offered a
seamless upgrade path,” he says.
“IRIS has made a small number of acquisitions but in each case it
has been ‘business as usual' as far as the customer is concerned.
We have always chosen our acquisitions avoiding product overlap and
in 28 years we have never discontinued a product. In every case we
are focussed on the customer and seeking to invest in the product
range.”
Leuw believes that keeping the business balanced is key to meeting
customer's objectives. “30 percent of our overheads is in product
development, 30 percent in customer service, 30 percent in sales
and the remaining 10 percent in administration.”
The IRIS Group, at around £40 million turnover is itself a
mid-market company, which Leuw acknowledges gives the software
house a greater degree of empathy with the markets it serves -
IRIS' typical customer has from 10 to a few hundred
employees.
Its acquisition of Exchequer has given it a firm foothold in the UK
mid-market for business systems but unusually the Group also has
close ties with the thousands of small accounting practices that
daily serve the needs of small and medium sized enterprises. This
unique fusion of mid-market business systems and practice
management systems gives the IRIS group significant traction in a
market that is often difficult to reach.
IRIS has leveraged its relationships with both sectors by providing
for automated data exchange between accountants and their clients,
opening up the possibility of easier audits or the preparation of
monthly management accounts for those companies that do not have
professional accountants in-house.
“We've been listening to our accountancy practice customers. They
are constantly seeking ways to save time and money for themselves
and their clients and many are already providing payroll bureau and
bookkeeping services. It seemed a natural next step to enable the
transfer of data between firms and their clients,” says Leuw.
But Leuw does not see the relationship with accounting firms as an
automatic passport to recommendations for IRIS' mid-market
software. “Exchequer has had countless awards for being an
outstanding product and for customer service. Accountancy firms are
independent but we hope that they will recommend our
software.”
One interesting feature of the acquisitions that IRIS has made is
that the entrepreneurs behind the acquired companies stay with the
merged Group. “Our culture is different from the large faceless
software houses and it is an environment in which entrepreneurs can
continue to thrive and realise their ambitions,” adds Leuw.
More generally, the Group enjoys a good relationship with its
employees and unlike vast swathes of the industry appears to have
little difficult in attracting skilled resources. “When we acquire
a company we don't just re-locate staff and merge business units.
We allow them to operate very much as before,” adds Leuw.
“Furthermore, more than 90 percent of employees are also
shareholders.”
Although, the Group's sales model is primarily direct to customers
it works with a number of third party vendors that provide vertical
market or other specific expertise, for example, around larger
payroll implementations.
For the future, Leuw sees growing interest in HR applications which
sit alongside the Group's payroll applications. “There aren't a lot
of systems to choose from and we are concentrating on packaging up
our expertise – even to the extent of providing an HR hotline,” he
adds.
The strategy appears to be working. The Group claims an organic
growth rate more than double the industry average which Leuw puts
at 6 to 7 percent and a customer retention rate in the high 90's.
“We have overtaken Sage in the practice management market and moved
into the number two slot in the payroll market,” says Leuw.
With a foothold in mid-market business systems, payroll packages
and accountancy firms the IRIS group is an unusual organisation.
But in a market increasingly served by global software houses both
customers and employees seem to appreciate the benefits of a
distinct and friendly culture that fosters innovation,
entrepreneurialism and customer focus.
“When customers buy into a software house they make a very big
commitment,” says Leuw. “From a personal point of view I enjoy the
customer service element but I also like to grow a business. It's
great to see our people doing things that they thought they
couldn't do and the entrepreneurs we have brought into the business
thriving as well.”
