IRIS splits as Leuw steps down
The accountancy software wing of IRIS has separated from the rest of the software group to become an independent business unit in a shake-up that also saw the resignation of Martin Leuw as group chief executive.
In a public statement, Martin Leuw said, “After 10 years leading IRIS through a period of exceptional growth, I felt it was time for me to pursue other business interests and entrepreneurial opportunities.” He will continue to be involved with the business as a non-executive director.
Previously an executive in the health software industry, Leuw joined the accountancy software specialist 10 years ago and transformed it into a cross-industry combine. Through a series of acquisitions and eventual merger with Vin Murria’s Computer Software Group in 2009, he built the firm’s turnover up to £120m - making it one of the UK’s fastest growing companies.
But the transformation of the IRIS Group has not been without its growing pains, particularly for long-term accountant customers who may have felt the accountancy wing was being used as a cash cow to fund a diversification drive that put their interests on the back burner. Starting with a botched migration of the PAYEmaster (formerly Freeway) to Microsoft's .NET architecture in 2005-6, Drummohr, PTP and IRIS users over the years have complained regularly on AccountingWEB that product quality dropped as IRIS increased its prices.
While IRIS now leads Sage in terms of market share in the UK accountancy software market, Software Satisfaction Awards surveys since 2005 suggest it has lost its position as the supplier with the most satisfied customers.
The IRIS board took the opportunity of Leuw’s departure to reorganise the group, concluding that it can achieve better customer focus by formally separating the business into two, with IRIS Accountancy Solutions being run independently from IRIS Software Group.
Phill Robinson has been promoted from managing director of IRIS Accountancy Practice Solutions to become CEO of the new company, IRIS Accountancy Solutions. IRIS’s successes in recent years meant the company had to manage a more complex business model. The new structure, “allows us to have greater focus on customer needs”, he told AccountingWEB.
Customers won’t see a lot of difference immediately, but there are plans in hand to accelerate investment in next generation prods. “We are already exposing software as a service developments and we will continue to accelerate that,” said Robinson, who joined IRIS from Cloud computing pioneer Salesforce.com in January 2009.
With 14,000 accountant customers, IRIS has roughly half of the UK’s practitioners as customers. “Inevitably there’s a range of views,” Robinson said. “But we want everybody to be happy and encourage them to have a dialogue with us. We do listen and want to improve the quality of service and quality of the products.”
Already, Robinson said he had addressed product issues by putting in place software quality intitiatives for IRIS suite as well as the PTP and Drummohr programs. “There weren’t as many functional additions to the latest [IRIS] release, but there were a great many process improvements,” he said.
As well as the software as a server, Robinson also identified good prospects for growth in the corporate market, where companies were coming to IRIS for systems to deal with iXBRL-based corporation tax and statutory accounts efiling.
But Martin Leuw’s shadow continues to hang over IRIS. His financial adventures during 2005-09 were backed by private equity groups Hellman & Friedman and HgCapital. This kind of investor usually looks for an exit route after 3-5 years, so the question has to be asked whether the new structure makes it easier to sell one or both of the entities.
“The capital structure remains unchanged and provides a lot of support for our ability to grow the business,” Robinson answered. “If you are an investor who wants to realise a return and can see the continued growth opportunities ahead of us, you would probably maintain that investment.”
The other new company, IRIS Software Group, contains all the other IRIS units, including IRIS Exchequer (mid-range accounting software) and a collection of payroll and HR interests. IRIS Group chief financial officer Neal Roberts will head this firm while the search takes place for a full-time appointee.
In another change, IRIS will appoint a new chairman: Nick Discombe, an advisor to a collection of private equity-backed businesses who has been a non-executive director of the company since 2007.
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AccountingWEB’s Head of Insight has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.