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Teamwork is Key to Success

As Seen in CFO Studio Magazine Q4 2016 Issue

FOR T&M ASSOCIATES’ CFO, WORKING TOGETHER KEEPS HIS COMPANY AT THE TOP

-BY MARTIN DAKS-

With clients ranging from small, local municipalities to large, multinational corporations, T&M Associates’ CFO Michael Dentici has spent the last decade helping the national consulting, environmental, engineering, and construction management services firm stay on target and be poised for growth in the ever-changing architecture/ engineering/consulting (A/E/C) market.

As CFO and a Board member, Dentici, 62, finds himself involved in a wide range of activities spanning numerous functions of the Middletown, NJ–based company, which posted $64.7 million in revenue in 2015. From expanding the firm’s geographic footprint to helping with financial software decisions, Dentici credits T&M’s collaborative culture for being able to actively engage and offer his expertise.

“T&M is more collaborative than other companies of its size or type,” says Dentici. “I am able to work with interdepartmental teams on a regular basis, reevaluating our company programs to ensure we have the right processes in place.”

As an example, Dentici cites routine review of T&M’s benefit programs that he conducts with the human resources department. “The frequency, combined with the perspectives of inside experts and outside consultants, ensures our employees are provided the best programs at a competitive price,” he says. “I also collaborate regularly with other departments to find faster, more economical solutions to a wide array of issues, from developing internal operational reports to contract reviews.”

Currently with about 400 employees, the company operates in a non-hierarchical, flat business model and is led by a four-member operating committee of top executives, including Dentici, which meets weekly to discuss strategy and current issues. The committee and three other officers from across the company compose the Board of Directors, ensuring that those who are setting company policy have an intimate understanding of the business. Dentici also routinely huddles with operational executives to review billing, collections, operational reporting, and other enterprise processes. This operating structure gives Dentici tremendous insights and the opportunity to impact a wide range of strategic decisions and programs.

“I work with a hard-working team to serve our company’s strategic financial and growth needs,” Dentici says. “The success of our collective efforts depends on teamwork, and cross-functional communication is enhanced with monthly meetings that include regional leaders from throughout our operations.” By encouraging teams from different departments to develop cross-functional skills and by promoting a deeper understanding of the company’s capabilities across geographies, collaboration enables T&M to better anticipate situations and respond in a timely manner.

“The validity of this kind of sharing has been vetted in studies, including one by the IBM Center for Applied Insights and the IBM Institute for Business Value,” he says, noting that “collaboration in the C-suite is linked to higher enterprise performance.”

Share and Share Alike

A flexible, team-based approach has enabled T&M to handle an array of challenging projects, including one that’s currently in progress for Holtec International, an Evesham-based power plant supplier. It involves building a 600,000-square-foot nuclear reactor manufacturing complex, test loop facility, and corporate engineering facility near the Walt Whitman Bridge on Camden’s Delaware waterfront. The project broke ground in July 2015 and is expected to be complete by the middle of 2018.

“On the finance side, we have to be accountable to our client while staying on budget,” Dentici reports. “In the case of this project, this meant working with operations leaders, project managers, and others to develop budget and cost controls. With the flexibility to provide customized management reports, we were able to deliver what the client wanted, and helped our front-line teams do their jobs in a timely manner.”

A Sense of Passion

As Dentici talks about his responsibilities, it’s easy to see the passion and enjoyment of accomplishment that he brings to the table. “To be successful, a CFO has to be flexible,” Dentici says, adding that he and his team also get involved in acquisitions, like the company’s 2015 purchase of a smaller engineering and planning firm. In that project, Dentici was tasked with due diligence, financial, and other responsibilities.

Dentici says his ability to stay calm while jumping from one issue to the next comes from experience. In 1976, after graduating from Thiel College, a small, liberal arts institution in Greenville, PA, with a bachelor’s degree in accounting and business administration, he joined international CPA firm Touche Ross & Company (now Deloitte). “I eventually left Touche and commenced my extensive career in the engineering and construction industry.”

His current position fulfills Dentici’s natural curiosity, letting him get involved daily in a wide range of issues like project analysis, team management, financial systems and reporting, and other operational matters. Dentici is also called on to help in evaluating software to process management-level information.

He is quick to point out that the job is about more than just producing financial statements and analyzing cash-flow needs. “You have to be able to work closely with other departments, clients, and strategic partners,” he says.

Long-term Relationships

Even when the subject is debt financing, terms like “teamwork” and “collaboration” keep popping up in a conversation with Dentici. For example, while some companies shop around for financial partners, moving from one institution to another, T&M Associates has worked with one bank, TD (formerly Commerce Bank) for more than 15 years.

“Financing is important for our short-term working capital needs and long-term growth,” he explains. “So [we wanted] to establish a long-term, close relationship with an institution that understands our company and our needs.” This attitude of collaboration also extends to T&M’s other key business partners, including Aon, UBS, Conner Strong & Buckelew.

Dentici negotiates with TD on such issues as T&M’s line of credit, noting that although he’s not happy with any debt at all, “having access to credit and capital is just part of our business and the challenges of collections that can accompany work for local, municipal, and county agencies, a big component of T&M’s client base.”

The beat and the teamwork go on. Dentici recently participated on an eight-member team who prepared a strategic growth plan that will guide T&M through 2020, a task that involved input from just about every component of the company and took nearly nine months to complete. “Making a company successful is a long-term endeavor, and I’m pleased to be surrounded by other leaders who can link arms and create a vision that inspires employees and motivates them to follow.”

“I love working with people, especially my team,” he says. “But communication is vital, and a CFO has to be able to wear multiple hats. You have to enjoy being a generalist if you want to do this job.”

Racing Forward

As Seen in CFO Studio Magazine Q4 2016 Issue

A COMPANY IN HYPER-GROWTH PRESENTS ITS CFO WITH CHALLENGES – AND EXHILARATION

-BY JULIE BARKER-

Anthony Conte, Chief Financial Officer of EPAM Systems, Inc., a company of over 18,000 employees in 25 countries, believes that the CFO needs to bring a resource management perspective to the overall business, no matter what that business might be.

Conte came to this realization through “a lot of blocking and tackling” in a period of high growth. At EPAM, a provider of product development and software engineering solutions, he was performing the 21st-century CFO role in hyperdrive, integrating acquisitions and developing planning tools. “What this requires,” he says, “is a high degree of flexibility and innovation to continue to create a financial organization that supports the business.”

What EPAM engineers do, Conte explains, is to envision a more productive, cost-efficient way for companies to deliver services and products, then align multiple technologies to make it happen. For example, the engineering team created the ability for viewers of a leading cable and satellite television channel to watch episodes of their favorite shows across various devices — laptops, tablets, smartphones, and TVs — by streaming the shows from the website. EPAM’s redesign for the site loads fast, even when fans click through to multiple pages; and it is always real-time, featuring whatever show is currently on the air.

Conte knows that to deliver on his role as CFO, he has to understand the technology that is driving both the financial and operating metrics of EPAM. He believes his success is “directly tied to my ability to interact with the head of our IT operation and the head of our delivery organization.”

Loving Numbers

Back when Conte was in high school, he had a teacher who spoke of accounting as “the backbone of the business world. He viewed it as the language of business,” says Conte, “and that resonated with me.” Conte remembers talking to his dad about this notion that accounting provided stability for companies, and not only that, a career path leading to continued employment and success.

Certainly that part of the vision his teacher created has been true for him. He received his degree in accounting from Northeastern University in Boston, started his career at Coopers & Lybrand, obtained his CPA, worked at John Hancock Financial, then at McGraw-Hill, and in that company worked his way up to divisional controller. He took a corporate controller job at EPAM in 2006.

But numbers alone don’t provide a financial executive with enough information. Business decisions are increasingly complex; numbers need context. Conte says that as his company seeks to grow from $1 billion to $2 billion in revenue, the organization has built various internal tools for such things as research planning and production systems. “Now we’re incorporating these things into our financial systems, creating data warehousing and business intelligence (BI) applications,” he says. “It creates a holistic picture that we use to plan for the future.”

If, for example, the company needs Java programmers who are not working on other time-sensitive projects, finding them is easy through a global employee system, created by EPAM, that provides a real-time, detailed profile of every employee and project in the company. Also, by analyzing the data, the company might find an ideal location for opening a new development center or recruiting local talent. The system, which incorporates elements of social media, “allows us to get some good metrics and analytics on where the people with the right skill set and background are currently sitting,” Conte says.

These challenges are not at all what he thought he’d be concerned with back when he took all those accounting classes; but now “those types of metrics help me drive forward resourcing, which is our No. 1 metric,” Conte says.

Conte’s company is on the front lines of digital integration, facing the enormous opportunities (and challenges) brought on by the current digital disruption facing every industry in the world. He has made it his mission to get out of his financial silo so that the decisions in which he participates are truly able to drive the business forward. “I can talk at a high level and give [potential clients] an elevator pitch,” he says. “But at the end of the day, the customer doesn’t want to see the CFO in a sales role. The customer needs to talk to the technical people.”

Acquisitions and Growth

In the past three years, even as Newtown, PA– based EPAM has completed eight acquisitions, organic growth has been over 20 percent per year, landing the company in the eighth spot on the 2016 Forbes list of the 25 Fastest Growing Public Tech Companies. As Conte says, the company is in hyper-growth mode. “What this requires,” he says, “is a high degree of flexibility and innovation to continue to create a financial organization that supports the business.”

“Your forecasting is going to be impacted most. By the time you finish the forecast, odds are, something is going to have happened that changes that forecast.” He adds: “When I go back three years and look at the eight acquisitions, each one of them has turned us in a slightly different direction than what we would have previously thought.”

Conte must keep close ties with his senior-level peers. By staying tight with business leaders throughout the organization, including IT, he keeps himself aware of decisions and potential changes, and keeps all those contacts in the loop too, “making sure that everything we do is structured in a way to be flexible and move as the business moves.”

Conte continues to plan and forecast, since decisions based on those plans will absolutely affect the future of the company and its employees. But after a decade here he knows no plan is set in stone. He might need to change it tomorrow.

Strategizing Growth

As Seen in CFO Studio Magazine Q4 2016 Issue

THE CFO OF ONE OF THE COUNTRY’S LARGEST PRIVATE FAMILY-OWNED COMPANIES BELIEVES IT’S TIME TO FOCUS ON INVESTING IN ACQUISITIONS

-BY JULIE BARKER-

Acquisitions are tightly woven into Joe Ritzel’s professional bio. They are career high points, he feels, representing both the biggest challenges and the greatest successes. The Senior VP Finance and CFO of Day & Zimmermann (D&Z), a Philadelphia-based, century-old, family-owned company that provides construction & engineering, staffing, and defense solutions for leading corporations and governments around the world, made his mark navigating a series of acquisitions. Ritzel now oversees a finance team that files “over 50,000 W2s a year,” though many of those are for contract employees. Ranked #179 on the 2015 “Forbes” America’s Largest Private Companies list, better measures of D&Z’s size are the number of worldwide locations —more than 150—and revenues, which were $2.7 billion in 2015. In 2001 when the previous CFO retired and Ritzel took over the job, revenues were $1.2 billion. “So it’s been a good period of rapid growth,” says Ritzel. Two acquisitions in that period were game changers in terms of size and complexity: a 2006 purchase of Atlantic Services, Inc., which consolidated D&Z’s position in the power services market (D&Z has a footprint at 70 percent of the U.S. nuclear fleet); and the 2015 acquisition of SOC, which D&Z co-owned since 2008, in the government services area which added about $350 million in revenue.

After a flurry of acquisitions around 2006 and 2007, Day & Zimmermann concentrated on weathering the recession and then organic growth. And now, says Ritzel, “we’re in a solid position in all four of our businesses (engineering construction & maintenance; workforce solutions; government services & security; and manufacturing ammunition for the U.S. government and its allies). “So it’s the right time to invest.”

Getting Ready to Acquire

It appears that Ritzel isn’t the only CFO with those thoughts. According to a report by EY last October, the acquisition appetite is at a six-year high, driven by the need to expand at a faster rate than organic growth can provide. Markets are changing, whole industries are being disrupted, and sector boundaries are blurring, said the report. The long-term prospects for growth look positive, another factor spurring the interest of senior executives in 19 industry sectors, 59 percent of whom expected to pursue acquisitions in the 12 months following that survey, which took place in August and September of last year.

Ritzel says seeking out “the right strategic fit and the right cultural fit” makes the process of acquisition more of a puzzle than it would seem on the surface. You can buy a business that complements your main business, which is how D&Z got into power maintenance in the 1980s.

Or you can buy a competitor, which D&Z did in 1999. The company acquired, Mason & Hanger, was actually in three of the four businesses that D&Z was in; everything but staffing. For that reason alone, says Ritzel, “it was a great deal and the largest in company history.” Ritzel was on the front lines of the purchase and integration as VP and Controller for the then Government Services group.

In this 18-month period, he oversaw that integration, while at the same time the company experienced a changeover in the CEO’s office as Hal Yoh replaced his father and the third generation took over the reins of the family business. At the same time, with the installation of its first ERP system, SAP, the company hit some bumps in the road. “We were having trouble processing invoices. It was a nail-biter of a time, and we had just done the biggest acquisition we had ever done,” says Ritzel.

He adds the capper: “Put those three things together and that’s when I became CFO,” stepping into the top finance job at D&Z on January 1, 2001.

Handling the Challenges

The integration of the Mason & Hanger acquisition went pretty smoothly. Having been involved from the start, Ritzel says, he worked to “get all of the synergies out of it.” The startup of SAP was more challenging. Some of D&Z’s billing is complex, Ritzel admits. Government invoices, for example, have to be precise, “down into what they call CLIN (contract line item number) level billing.” He convened teams together to focus on “what had to happen,” not just to straighten out the invoicing problem, but to deliver the reports that were needed by the Business Unit management.

He says the hard work was worthwhile. “This truly enabled us to change processes and get people more focused. It was more than just putting in an ERP. By 2003 we got everything streamlined and operating more efficiently, and that really jumped us to the next level.”

Dividing His Time

Ritzel has a document that he hands out to all the folks in Finance. The document outlines in clear color blocks the scope and potential value of the six critical areas that financial work is involved with, from transaction processing to regulatory reporting to management reporting, to decision support and analysis to planning and forecasting to performance/value/risk management. “The key is that in order to accomplish the priorities in all of those buckets, financial leaders need to work in four different roles. And you need to know what percent of your time should be put toward each role: Operator, Steward, Strategist, Catalyst.”

Back in 1983 when Ritzel joined the company as Controller for a newly acquired subsidiary, he reported up through operations and not through the CFO. But that changed. Financial team members now report directly through the Finance chain and have a dotted line to operations. Being a good business partner requires finance executives to perform all four of the above roles regularly, even Operator, which involves problem-solving, customer focus, and building effective teams. “Getting the percentages proper in terms of how much of those roles are devoted to those six critical areas is what it’s all about.”

Says Ritzel, “I try to make sure I am spending more time each year as a strategist and catalyst as the finance team continues to get better. Generally, the higher up in the organization a finance leader goes, the percent of time in these two categories should increase.”

With his interest in seeking out acquisition targets, it’s a given that Ritzel will be spending more and more time as strategist and catalyst.