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Jayson Traxler, Stax CEO and Mihaela Dumea, Stax Director, FP&A share valuable insights on how Stax’s digital transformation and automation has accelerated the value-add plan. They highlighted the significance of trustworthy data and a phased approach in establishing an FP&A function. In addition, when a firm like Stax establishes key performance indicators and embraces data liberation, it empowers real-time decision-making and drives optimization of enterprise value.
Video Transcript:
Jayson Traxler: When a private equity firm like Blue Point Capital Partners invests in a private company like Stax, they set forth a series of objectives - people, process, technology, in order to drive what's called the value-add plan. The value-add plan in the case of Stax helped take the firm from an entrepreneur-led business to a professionalized business with a series of steps over a period of time that helps make the business durable and drive value creation.
FP&A was central to our value-add plan upon the acquisition of Stax by Blue Point. In fact, FP&A was the first hire we made, as part of the value add plan. Stax in an entrepreneurial sense had no focus on KPIs and metrics. We went from zero to 43 pretty quickly, which may be too many, but we're trying to optimize the business; and what that has done for us, this liberation of data, has really enabled the business to run effectively, allows us to have real-time decision making which allows us to get to a better GAAP reporting over a longer period of time, which drives enterprise value and optimizes the business.
Mihaela Dumea: When I started, Stax had just been acquired by Blue Point and there was a need to look at data in a more strategic, structured way. The company was founder owned, with long-tenured employees who held all the institutional knowledge. So the data was somewhat siloed and hard to access.
I think, this is very much a normal part of growth for, any company. When they get to a certain size, they move through this maturation process and start looking at their data. They become strategic about their expansion, and at that point they have to hire an FP&A function, whether it's internal like myself, or they go outside to contract that function like some of our clients do.
For Stax, I think it made the most sense to start with what we had available and do a phased approach to build in-house. Sometimes that has negative connotations, but I think it has a lot of value. You can move at a comfortable pace without uprooting systems and applications you already have running, and the main concern is just getting data that is accurate and consistent and easy-to-update. Leadership provided us with some of the key performance indicators they wanted to look at, and we took those and ran with them, began organizing the data and solving for the metrics.
At the same time as our process was happening internally, I learned about our Data Analytics team and a product they were developing, which was very similar to an FP&A offering. Began to talk with the team and realized that it was the perfect compliment to what we were doing internally but enhanced with the technology piece.
We began to work and relied on this concept of master data management which pulled all the data together and then turned it around in reporting that was released in real time and to audiences of various levels.
Working with the Stax Intel team was the absolute perfect fit. They are much more of an advisor than just an executor. The conversations go back and forth. They are problem solving with you. They really understand context. They've been in this market for a really long time. They understand PE firms and how they like to look at data. So they're very much a partner. And this allowed us to build a platform that is very robust and flexible, and replace the need for an immediate ERP implementation.
We have just entered the final phase of the project; this is all about building the architecture to connect our warehouse to all the systems we use, our payroll - ADP, our CRM - HubSpot. This will allow for real-time updates, very seamless, as opposed to using the manpower, one of us to send updates to the team.
I think we've been able to do a lot in a very short period of time. The most significant for me was the ability to get data that is dependable, accurate, consistent, and available at all times. The internal phased approach also had a surprise benefit. Last year, we acquired a company and had to quickly onboard, and it was so easy to pivot and make changes to all of our systems, but also to all of our reporting, which I don't think would've been possible or as easily possible were we in the middle of an ERP implementation, especially without the added cost or more burden on resources. The last piece for me was the ability to write all the reporting and then pass them on to get automated, which really allowed me to pull up and do more high-value work.
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