Imagine if you had more than doubled your company’s revenue and employee count over the last five years. Imagine if you had increased your customer base by 80 percent and increased your annual profitability by 800 percent in that same period. And if you’re a public company, imagine if your stock had appreciated 300 percent, as well.
These numbers are Sohaib Abbasi’s reality.
When he took over Informatica Corp. (NASDAQ: INFA) as chairman and CEO in July 2004, the data integration company was on its way to finishing the year with $219.7 million in total revenue and a net loss of $104.4 million.
“At the time, Informatica was pursuing two distinctly different market options data warehousing and, the second one, analytic applications and business intelligence,” Abbasi says.
Abbasi had plenty of experience growing an organization, as he had previously worked at Oracle for 20 years, which he joined when it was a 30-person startup and where he was instrumental in growing the business from $4 million to more than $9 billion in annual revenue.
Using his previous experience, Abbasi created a clear vision for Informatica, and from there, he created a focused growth strategy that has resulted in revenue growth and profitability. Employee count increased from 800 in 2004 to more than 2,000 today.
All of this during a period when most businesses have struggled to stay above water and laid off employees. Here are the keys to how Abbasi did it.
Have a vision
Before you can grow your company, you have to first know what your company is trying to ultimately do.
“The first step that we took was to refocus the company with a very clear mission to establish Informatica as the dominant leader in data integration,” Abbasi says.
Based on his experience at Oracle, he knew you have to be a leader to succeed.
“[You have to be] focused on a single category where you are the leader; you are in a strong position to redefine that market,” he says.
Look at what your company does best.
“It starts by asking what is core to the company and what is beyond the core,” he says.
He applied that filter to every strategy the company was doing and considering.
Based on his previous experience, he saw that Oracle had been a leader in the early stage market for databases and, as a result of that, had enjoyed healthy growth. As it tried to expand beyond that, Oracle learned the complexities of going into other market categories.
“Applying that lesson meant that if Informatica refocused on its core market, it would be productive to focus on how we could expand the core market, so our decision was to refocus on the core market and try to challenge ourselves on how do we grow that market,” Abbasi says. “Specifically what we asked was, ‘In what ways are customers gaining value from Informatica, and how can we deliver more value?’”
By looking at research, he saw that Informatica’s technology was traditionally used to aggregate data from a variety of databases to get better information and analyze trends.
“It turns out that our customers need to integrate data for operational purposes, as well, and by moving beyond analytical warehousing to operational data integration, we were able to expand our market fivefold,” he says. “ … By refocusing on our core market, we were able to take advantage of our pioneering leadership, and we’ve been able to redefine Informatica’s market every year.”
Create a growth strategy
Once you know what you’re trying to achieve, then you can move forward.
“The second step that we took was to develop a focused growth strategy,” Abbasi says.
The strategy was a three-prong approach: The first part was to expand Informatica across all major geographic regions, the second was to grow beyond the data-warehousing market, and the third element was to advance the company’s technology leadership.
“The first element of a growth strategy needs to be around customers,” he says. “What is your growth strategy in terms of attracting and acquiring more customers? Are you focused on particular geographic regions or specific verticals?”
For example, he saw that Informatica’s customer base outside of North America accounted for only 30 percent of revenue it was too dependent on North America. He compared his revenue mix to that of more mature companies and realized that he could grow the revenue much faster outside of the continent, so he worked to try to gain more customers in those places. As a result, in the second quarter of this year, the company was now up to 36 percent of revenue coming from outside North America.
“The second element of any growth strategy is, ‘What value do you deliver to your existing customers and how will you expand that to deliver more value and more business purposes for your customers?’” he says.
At the time, just 20 percent of his customers used the company for more than data warehousing. By focusing on ways to expand this area as part of the growth strategy, today more than 50 percent of Informatica’s customers do so.
“The third element of a growth strategy is, ‘What are the technologies and services and how broad based of a product offering will you deliver?’” he says.
Informatica started by focusing on one product offering, but by expanding the core to embrace other technologies, it now has eight.
He says, “If you are executing well, your core will continue to grow.”
Abbasi also advises that you be prepared to modify your growth strategy.
“It’s essential to not only have a road map but to continually update the road map based on your progress and the changing IT landscape,” he says.
That’s been especially true during the downturn, so as part of the annual planning process, Abbasi and his team look at the technology industry as a whole on top of the data integration market so they can adjust the strategy if need be.
“At times, the operational discipline needs to be adapted to the changing macroeconomic environment,” he says. “We went through some unprecedented times of uncertainty as part of the great recession, and in our experience, if you go through those times of uncertainty, it is critically important to, very closely, monitor the changing circumstances and adapt the processes accordingly. In other words, the operational discipline needs to adapt, and in some cases, you need to change the planning horizon accordingly.”
Once you have a strategy in place, then you have to set up the organization to stay focused on it and fully understand it.
“With that focused growth strategy, we aligned the organization around those three growth strategy elements by coming up with corporate objectives and by coming up with metrics that we could measure how well we were doing against that,” Abbasi says.
One key was making sure employees knew what the company was trying to do.
“Have a framework where everyone understands what are the key corporate metrics and how does everyone’s contribution influence that,” he says.
He has defined several corporate objectives such as financial, market, technology, customer services, employee satisfaction, etc. that make up the mission and strategy, and he communicates those to employees. Every quarter in an all-hands meeting, he provides metrics to show employees how the company is meeting those objectives.
“Lay out a very clear vision and make sure that everyone understands what that vision is and make sure you actually take the time to verify that,” he says.
Abbasi verifies by surveying employees to make sure that they understand what’s happening. Ninety-four percent of employees responded and said they believed in the company’s vision and mission.
“You have to get that kind of awareness for what the vision is and a belief in that mission,” he says.
But you can’t just tell them what’s going on.
“The second [objective] is to articulate a very focused growth strategy and to make sure that the corporate objectives are stated in a way that not only do people understand what the focused growth strategy is, but they understand what their role is and how to contribute to that,” he says.
For example, customer service is one objective, and the goal is to rank No. 1 in customer loyalty. They measure this both for their customers and their competitors.
“It’s important to rely on an objective party, and it is equally important to benchmark against others,” he says.
So if that’s the objective, each department also has its own objective that contributes toward that. Customer support strives to make sure it lives up to the standards that customers have for it in terms of responsiveness. Product development will work to make sure that every product it puts out is the highest quality it can be so customers are satisfied. The sales team will work to build strong relationships with customers to make sure they understand what they’re buying so there aren’t surprises later.
“Within each department, each employee knows what their role is, and they know exactly, in what way, do they influence their groups, which, in turn, would contribute to the department, which, in turn, would contribute to the company,” Abbasi says. “The framework we came up with is not just the corporate level objectives but also how does that relate to the individual department and then individuals within those departments.”
As a result, 96 percent of employees said in the survey that they understood how to contribute to the company’s success, and 92 percent said they had the skills and capabilities to deliver their goals.
“Having that kind of alignment is critically important,” he says.
By implementing these three elements into the company, Informatica has enjoyed growth and success while many others have struggled. The company has also delivered a product every quarter for 16 consecutive quarters, which has led to its compound annual growth rate of 18 percent over the last five years even during the recession. On top of the $500.7 million in fiscal 2009 revenue, operating margins have increased from 5 percent in 2004 to 25 percent last year.
“I would reiterate the importance of having a clear vision, a focused growth strategy and exceptional operational discipline,” Abbasi says.
“The clear vision, the focused growth strategy and the relentless face of innovation have worked extremely well for Informatica.”
How to reach: Informatica Corp., (800) 653-3871 or www.informatica.com