Profile: Charles Phillips
We talk to Infor CEO Charles Phillips about leadership
Marine, Wall Street analyst, philanthropist, software magnate: Charles Phillips is a more sophisticated CEO than the US IT sector has been used to. Stuart Lauchlan and Chris Middleton explain how one man’s strategy is changing a sector from within.
In his career, Charles Phillips has been a US marine captain, one of the most powerful influencers on Wall Street, director of the American Museum of Natural History, co-president of Oracle, and is now CEO of one of the world’s biggest software companies, Infor.
With $2.8 billion in revenues, Infor has quietly climbed to number three in the enterprise software league* behind Oracle and SAP, whose adverts shout from the walls of every major airport in the world.
But its lower-key presence shouldn’t be mistaken for a lack of ambition. Infor has grown through aggressive acquisition – with 35 major purchases and counting since 2002 – extending its reach and customer base behind the scenes while the industry’s larger-than-life personalities have their day in the spotlight.
Perhaps the difference in approach is rooted in its New York, rather than San Francisco, base. In New York, the showmen are on Broadway, not the conference stage.
Phillips acknowledges that his company is lesser known than its peers in enterprise resource planning (ERP), customer relationship management (CRM), business intelligence (BI) and human resource (HR) management systems. But all that may be about to change.
“We like to call ourselves ‘the world’s largest start-up’,” he says. “The reason that name stuck is that we came here [New York City] with a new management team about three and a half years ago. We’ve pretty much changed everything since then and started over.”
The company was founded as Agilisys in Pennsylvania in 2002, and then moved to the outskirts of Atlanta in 2004 – the same year that it bought itself a new name with the acquisition of German software house, Infor Business Solutions.
Today, Infor is a very different organisation as it nears the end of a three-and-a-half-year transformational journey instigated by Phillips when he joined. That journey has involved rewriting the product line, bringing in new senior management, and instilling a different culture within the organisation.
“We’ve all been doing this a long time,” he says of his colleagues, “and we all know what the problems are with enterprise software. Before, we knew what we didn’t like about it, but we didn’t have the resources and time to fix it. This time we’re doing it right.”
Phillips’ philosophy is simple: “using enterprise software sucks”. He means it: he made those words the backdrop to his keynote speech at Infor’s annual user conference in 2013. His role at Infor: “to suck less”, he says, by taking inspiration from the user-friendliness of social media and consumer technologies.
In media terms, that’s a tough challenge in a world of similar high-concept assaults over the years, such as Salesforce.com’s ‘No Software’ campaign, which somehow persuaded customers that there was no software in the cloud. But Phillips believes that he’s seeing the results of slowly raising his company’s profile.
“The Infor brand is now much better recognised than it was three years ago,” he says. “For the first two years, we purposefully didn’t do any branding. The products just weren’t there. So we got the work done first.
“A lot of people said, ‘Why aren’t you making a noise?’ But it wasn’t the right time. Now we’ve made changes to the strategy, so we’re spending a lot more on branding.”
That includes joining Oracle and SAP on those all-important airport billboards. “We’re getting a lot of incoming calls that we didn’t get three years ago,” he says. “The reason that’s happening is that we’re doing something different and the market wants an alternative.”
It’s also because Infor is executing on a well-ordered strategic plan, led from the front by Phillips.
The man and his mission
If you’re a software company looking for leadership, then Charles E Phillips Jr is a good choice to have in the hotseat – a supremely intelligent, sharply-suited African-American from Little Rock, Arkansas, who served as an economic adviser to President Obama during the recession.
He’s personable and commanding in person, but also measured and contained. Not for him the shameless bravado – and equally shameless u-turns – of his former employer, Oracle’s Larry Ellison.
Following a stint as a captain in the United State Marine Corps, ‘Chuck’ Phillips became one of the most respected software market analysts on Wall Street, as a managing director at Morgan Stanley in the 1990s. At that time, Phillips’ views and ratings of software companies were coveted and feared in equal measure by the ‘ITerati’ of Silicon Valley.
Such was his status on Wall Street that it came as a shock when, in 2003, it was announced that Ellison, founder and CEO of Oracle, had persuaded Phillips to become his right-hand man, bringing a touch of gravitas to the industry’s longest-running soap opera.
In his role as co-president of Oracle, Phillips made his mark by overhauling the company’s operating model – no mean feat when playing sidekick to a driven, hyper-competitive man. Previously, Oracle’s model had been a mix of in-house development, hard marketing, and ruthless selling.
Ellison had always said of companies that grow by acquisition that it was easy to write cheques, but less easy to write software. But as is often the case, Oracle turned on a dime and embraced the opposite approach: Phillips’ strategy of buying rival companies and folding their technology (and customers) into the Oracle portfolio.
With Phillips’ reputation on Wall Street to bolster it, Oracle became one of the most aggressively acquisitive companies in Silicon Valley – an about-face it has repeated this decade with multiple cloud deals, after years of dismissing cloud services as vapourware.
But few of Ellison’s sidekicks last for long. No official explanation has ever been given for Phillips’ departure from Oracle. It came out of the blue and he was swiftly replaced as co-president by Ellison’s close friend, Mark Hurd, who had recently been sacked from Hewlett-Packard.
With his Oracle days behind him, Phillips left the Bay Area and headed back to New York. Today, leadership of Infor allows him to do what he does best: analyse, overhaul operations, and build a new philosophy into a company. Thus, like Tom Siebel and Marc Benioff before him, Phillips has become what so many ex-Oracle people have: a bitter rival to his former employer.
Designs on success
Perhaps the most public sign of Phillips’ personal touch is the creation of Hook and Loop, Infor’s in-house design agency, briefed to create “experiences people love”. That takes skill, so as well as hiring 1,500 software engineers over the past three years, Infor has been recruiting the cream of New York’s design talent.
“We had to hire ‘not the usual suspects’,” says Phillips. “We’ve got the Apple ID creator, the digital effects artist from The Avengers, a Kenneth Cole designer… all people with a design background who came to New York to do something creative. Our perfect candidate is someone who came to this city in pursuit of some creative aspect of their lives, and then got sidetracked into technology.”
All of this is because Infor wants to rethink business software in every respect, he says. “We need to entice people to use our software. We want people to have fun using business software. We need to be more driven by what it’s like in the consumer world. Why can’t enterprise business software be intuitive, like the apps you have on your phone or your iPad?”
In this key respect, Phillips’ thinking makes sense. It used to be the case that people travelled to work to use cutting-edge technology. Now they use cutting-edge technology while travelling to work, via their own smartphones and tablets. Social media, consumer app stores, and the like, have so rapidly become the norm that legacy, on-premise software can feel clumsy, antiquated and slow by comparison.
“Think about your phone and how much fun that is. You talk about your phone at cocktail parties. Twenty-five years ago you’d never have talked about your home phone. It was a utility. But once you make it fun and dynamic, then it becomes something you spend time on – probably too much time,” says Phillips.
Privately-held Infor is backed by investors, Golden Gate Capital, who seem content to fund Phillips’ wholesale strategic change. They recognise that Phillips’ own time on Wall Street revealed him to be a high-flier with real analytical talent, not to mention an ability to get the IT sector to dance to his tune.
And like some others in his industry, Phillips is a serial philanthropist. He donates millions of dollars to non-profits, schools, community and civic groups via the Phillips Charitable Organization (PCO), a not-for-profit foundation that focuses on aiding single parents, at-risk students, and veterans.
It is no surprise that the PCO also reflects Phillips’ obsessions with efficiency and trying to do things differently. It has only four board members, no administrative overheads, and boasts that it can make decisions swiftly and focus on ensuring that 100 per cent of its funds go to the right places.
Each PCO member has to have the interpersonal skills to interview potential grantees respectfully and gather the requisite documentation and facts to make an insightful case report and recommendation to the board.
At Infor, there’s a sense that Phillips has found his best role to date. He’s leading the pack, not riding alongside a richer, more powerful CEO. He’s making a visible difference to the company he’s leading. He’s even got the quiet satisfaction of competing directly against his former employer.
But there’s still a lot to be done to accomplish the mission he’s set himself. “We are further ahead of where we told our investors we’d be by now,” he says. “We knew it would take three or four years of investment. We’ve got more done in terms of the product line than I expected. Not as much as I wanted, but more than I anticipated.” TS
*: Not including cloud services giant Salesforce.com, which hit $4 billion in revenues in 2014.
The Strategist says
Changing the conversation.