Interview with Martin Leuw - CEO Iris Group

20th 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 - CEO Iris Group 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."