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Inside the new IRIS: 'Same as before - but bigger'

26th Jun 2007
Head of Insight AccountingWEB
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With the IRIS Group poised to complete its £500 million merger with the Computer Services Group in the next week, chief executive Martin Leuw promised it would be "the same as before - only bigger".

Discussing the new group's structure with AccountingWEB, Leuw said, "The expanded group will continue with an absolute focus on customers. There will no difference from our previous, smaller acquisitions. My priority is to ensure there's no disruption to how we provide our service."

The merger - said by the partners to be worth £500 million - was engineered by private equity house HgCapital, which was the majority shareholder in both organisations, having funded a management buyout at CS Group as recently as this April. As Leuw explained it, private equity group Hellman & Friedman, which has stakes in several niche software houses in the US and expressed an interest in combining IRIS with Hg's other software business holding. Once the deal is completed and the new company has bedded in, Leuw said more money was available to fund future acquisitions.

As well as retaining the IRIS name, the accountancy practice wing remains the dominant partner, with group finance and IT functions based at the existing IRIS headquarters in Datchet, near Windsor. The accounting wing will remain pretty much as it is now, but new divisions will be created to cater for the legal, HR & payroll and large business markets served by CSG.

The company's accounting software wing will remain in Bournemouth and be responsible for products extending from the online iCash cashbook application to IRIS Bookkeeping, Accounts Office and the Exchequer application.

Leuw emphasised that each division would continue to focus on developing, selling and supporting their individual product ranges, each branded as "part of the IRIS Group". "People are familiar with the product names and we will keep in line with that," Leuw said.

Robert SalvoniAccording to Leuw, the face of IRIS will be presented by divisional heads such as Robert Salvoni (pictured), the managing director of the accountancy practice solutions division. He commented: "We don't want another brand. Customers are buying stuff from IRIS and we want them to get the feeling they're dealing with people who are not part of a faceless, private equity-backed organisation, but who spend time with them to understand their needs."

Salvoni's top priority is to maintain customer satisfaction levels and ensure "customers are delighted with the service they get from IRIS". Next on his list is to sustain innovation: "That's absolutely critical and so many companies lose sight of that and forget it's what makes the business successful."

Having joined a such a fast-growing company, the third priority on Salvoni's to-do list is to communicate effectively to his team, which is on track to generate a third of the expanded group's turnover (and more of the profits) with only around 20% of the headcount.

Salvoni quickly refuted the suggestion that his successful accountancy practice wing was the cash cow being milked to the fund the group's ambitious expansion.

"There's no question of my division funding the growth of IRIS or the other divisions. What we take out of the business we plough back. The growth of the business is more than matched by the investment in the business," he said

Salvoni emphasised that the division's development budget ran into "the high millions" and was set for the next three-to-five years. In addition to adding new functionality and supporting an increasing variety of technical architectures, part of that spending is aimed at reducing the "cost of failure", he added.

"Why pour money into people dealing with issues when I could pour money into dealing with these issues in the first place?"

Customers who do experience any problems with products from his division can "expect a visit", Salvoni said.

Having lived through some major customer service problems in his previous role with BT Openworld, Salvoni commented, "Technical things can occur. When you shoot yourself in the foot, I've learned that openness is the only way to go. The first rule is don't make mistakes in the first place. But if you do, the best thing for the customer is for that problem to be fixed.

"I would far rather customers brought them to us directly rather than air them in a public forum as a result of frustration."

One of the obvious opportunities for an acquisitive software conglomerate is to cross-sell applications between different customer groups. Leuw mentioned this as one of the areas the expanding group would look into, but it remained a secondary priority for Salvoni: "I'm not focused on the accountancy market from a product perspective, but on customer benefits. Penetration of our market is only interesting if it is of interest to our customers.

"I can draw in other products from the IRIS portfolio, or from third parties, but I will not badger customers and use the valued relationship I have with them other than to offer value-adding processes and services."

Within the new IRIS Group, there will be product overlaps as well as cross-fertilisation opportunities, but for the time being the message is that everything will proceed as normal.

AccountingWEB member David Cox recently asked about the future of PTP following the merger. Salvoni took the time to answer this query directly: "PTP is a fantastic business with its own brand values and product strengths in the shape of form-driven applications that are very intuitive to use. I want to reinforce this with more investment to help it continue to flourish.

"PTP hasn't got the depth and breadth of the integrated IRIS suite. But for organisations that want an intuitive, 'does what it says on the tin' system, PTP is far and away the best product in the market. We are not trying to turn it into IRIS 'lite'. PTP is very successful among 5,000 smaller firms and start-ups. We're not going to risk that."

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By carnmores
27th Jun 2007 15:02

the last words indeed ......'were not going to risk that'

thats a bit of an understatement after the PAYE debacle... oh well

as long as everybody is aware that i still intend to proceed with an application to present a class action, doubtless it has been mentioned in the M&A paper

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