Doing What Needs Doing: A CFO as Sales Boss

A software firm's finance and operations chief puts himself on the front lines of customer interaction. His other passion: carefully nurturing the ...
David McCannOctober 27, 2009

Amid the constant switching of hats that is a big part of life for most small-company executives, formal titles mean little next to doing whatever has to be done. At TeamQuest Corp., a $25 million vendor of information-technology-optimization software, Terry Wisner is not only CFO but chief operating officer as well. But his biggest priority isn’t the books, the capital markets, or operations. It’s maximizing the revenue stream.

At a time when many customers are short on cash, there is an especially keen need to keep them happy by negotiating flexible contract terms, and Wisner helps with that. Engaging leaders of his customers in discussions about TeamQuest’s product and positioning strategies also helps keep them connected to the company. And, for this CFO, no time is better spent than attending trade shows and talking with customers, and prospective ones, about their IT management needs. The company’s Americas sales team, in fact, reports to him.

The revenue focus supports TeamQuest’s finance “strategy,” such as it is. The company is in pay-as-you-go mode. It has never taken on any debt, not even to buy back shares from investors in the privately held company in order to build an employee stock ownership plan.

Wisner counts the ESOP as one of his top achievements since joining TeamQuest as finance chief in 2000. He came over from RSM McGladrey, where he had worked on the TeamQuest account from the time the company was spun off from Unisys Corp. in 1991. He added the COO role four years ago.

An edited version of’s interview with Wisner follows.

What is TeamQuest’s business about?

Customers license software from us. We primarily have two kinds of tools: performance management and capacity planning. By performance management I don’t mean the kind of software that’s focused on financial metrics that most companies use. Our software manages the performance of the IT structure and data center, the operating systems and the devices that are connected to the network. It gathers metrics on their performance and monitors them to make sure they’re working at the optimized level.

Wisner“We’ve never gone out and brought on a bunch of capital or people just to see what happens.” — TeamQuest CFO Terry Wisner

For capacity management, we have a unique modeling technology. Let’s say you’re a CFO and the IT guys come to you and say they want to buy more servers. Our tool tracks the capacity of the existing servers and plays what-if scenarios so you don’t buy new ones until you actually need them. It lets you avoid server sprawl, where you’ve got all these boxes running one application. Where would it make the most sense to put the apps based on the infrastructure you have? If you bring more apps on board, what’s the impact going to be?

What is your finance strategy?
The strategy is pay as you go. That’s been our core competency for years. The company was profitable from day one, and we have no debt. We finance our acquisitions, if we do any, with excess cash from operations. We’ve always been a growing company, but it’s controlled growth. We’ve financed our growth of employees through our own operations, too. I frequently get calls [from lenders who say], “I’ll give you all the money you want. Just tell me how much you need.” But we’ve never gone out and brought on a bunch of capital or people just to see what happens.

Rather than being in acquisition mode, we more typically seek business partners that have IT or services that are complementary to ours. We discuss what makes sense for both parties but make sure to get enough skin in the game where we’re not just looking for economies of scale, but for better market penetration.

So, what is a typical day for you? How do you determine how to juggle your CFO and COO responsibilities?
Well, I’ve realigned some management in order to take care of operations, and I have a really strong controller to help out on day-to-day financial matters. I’m focused mostly on revenue generation now. The Americas sales team reports up to me.

How do you help generate revenue? Do you have any role in the actual sales process?
I’m involved at the tail end of contract negotiations lots of times. But I’m also involved from the standpoint of either telling the story of TeamQuest or having a management-to-management dialogue with the customer about our product strategy.

Technology is changing constantly — we not only have to keep up with the platforms that we support, we also have to keep up with the new functionality requirements that the marketplace demands. So I get involved in reviews with our product managers as to where our road map is going, and I do briefings for analysts in the IT space like [those at] Gartner and Forrester that influence what businesses are buying.

I also get heavily involved in conventions and trade shows, hearing what people are saying and keeping up with the pulse of the marketplace. I pinpoint and set up meetings with analysts and any customers and prospects that are there. I also get involved in user-group meetings, including our own technology summits that we put on in both the U.S. and Europe. These are opportunities to get face-to-face time with customers and partners to give them the perspective of what the company is doing and add assurance that we’re not going anywhere — we’ve been around since 1991 and are continuing to do well.

Since you don’t borrow money, does that mean the credit crisis has had no effect on you?
I wouldn’t say that. We’ve had to recognize that our customers and prospects have a significant battle with budgets, so we’ve been building in a lot of flexibility. We will license our software for a one-time charge, or we’ll put together a right-to-use model that is subscription-based or lease-based. It all depends on whether the customer wants to account for the purchase as an operating expenditure or still has some capex budget so they can capitalize it and write it off over time.

We have to be flexible on other contract terms as well. If they’re committing to a three- to five-year deal, how can we finance it for them? When does maintenance start? How fast are they going to deploy — can they delay some of the licensing costs?

Other than keeping up with the technology, what risks do you have to guard against?
Over time we have been very fortunate that our customers don’t leave us. You don’t have to count up tons and tons of customers to get to a significant portion of our revenue. So we are conscious of that in developing programs to form relationships between the upper management of TeamQuest and that of our main customers. It establishes a beachhead in case someone comes along or a political cloud starts raining [that would] take us out as an incumbent software vendor. So instead of just having a relationship between our account manager and the customer’s users or influencers, we try to establish one with the business owner/decision maker.

If we sustain our revenue, then we know that our 135 domestic employees are sharing in the wealth, because of our ESOP.

Why did you decide to create an ESOP?
One of the drivers was that every company needs an exit strategy, and ours was to sell the company to the employees. Also, when I came on board in 2000 I restructured the company from a C corporation to an S corporation. With an S, federal income taxes get pushed down to the shareholder level, but there is an exemption for any percentage of the company that is owned by an ESOP.

Today, as it stands, the company is 61% owned by the ESOP. So for the 61% of our taxable income that’s pushed down to the shareholder level, there are no taxes paid on that. We started in 2001 with 22% employee ownership and a goal to get over 50% in 10 years, so we’ve surpassed that.

Where is the other 39% ownership?
With two of the three original founders of the company. We typically need to declare a dividend distribution for them in order to pay their share of the taxes. As we generate cash income we buy back more [of their shares]. Probably in the next five to eight years we’ll take care of the remaining 39%.

The beauty of this, and the unusual thing about it, is that we’ve done it all with internal leverage. There is no outside financial institution or venture capital that we’ve infused into the ESOP trust to buy the stock. All the money comes from loans from the company to the trust, made from cash reserves. Each year we make a retirement plan contribution to the trust based on payroll, and the trust turns around and makes a debt payment back to the company for previous loans.