Ross Wilkers
Joe Donohue oversees the management and oversight of financial operations at Agilex Technologies as chief financial officer.
Donohue’s financial leadership career includes stints at both Marriott and Legent, followed by a role at Integec.
In this conversation with ExecutiveBiz, Donohue offers a five-year forecast of the GovCon sector and describes how many services contractors could reshape their portfolios. He also describes his work with Agilex’s management team to implement the firm’s growth strategy.
ExecutiveBiz: When did you first join Agilex and how has your role evolved over time?
Joe Donohue: I started at Agilex on October 14, 2007 so this will be my seven year anniversary this month. The year I joined, we had approximately 2 million dollars of revenue and 50 employees. This was the early investment phase of the company, where we built out the corporate infrastructure that would subsequently support our long-term, high growth strategy. One of my primary focuses at the time was to be brutally tight on spending our start-up capital, to make sure we prioritized investing in the items that would yield the highest return.
We also started the process of building out a world-class finance and accounting team that’s grown from single digits to approximately twenty-five folks today. In 2012, we were actually recognized by Deltek with their project excellence award for business impact, a testament to the strength of our accounting team.
Over the last seven years, we’ve consistently executed a strategy that has made us one of the fastest growing companies in the region and in the market. This entails detailed financial planning followed by proactive monitoring and performance management to adjust where needed.
During this time period, my role has evolved from an initial focus on managing the dollars tightly so that the company had a sound financial footing, to a greater emphasis today on positioning the company to make the necessary investments in our continued growth. This is critical as our growth strategy is one of the key factors driving enterprise value.
ExecutiveBiz: The Washington Business Journal recently named Agilex one of the region’s fastest growing companies for a fifth consecutive year. And CRN has named you one of North America’s fastest growing IT solution providers four years in a row. How do you achieve such a level of execution in growth?
Joe Donohue: It requires planning and paying attention to the details every step of the way. We set the goal of growing 30% year over year. We analyze and inspect business details on an ongoing basis, like for instance our funded backlog and our deal pipeline. If, for example, our funded backlog is x and our pipeline is y, that may be enough to grow only 20-25% year over year in our assessment; therefore, we then look for incremental investments and changes we could make that will deliver 5 to 10% of additional growth.
A lot of those changes require new resources – personnel, technology, capabilities and methodologies – investments that put us in prime position to distinguish ourselves from our competition and ensure that we grow at a much higher rate than our peers.
ExecutiveBiz: What led you to work in the GovCon industry after your time at Marriott and Legent?
Joe Donohue: After I got my MBA in finance, I joined Marriott and it was a great place to put to use the technical financial skills that I developed in my graduate program. Marriott sells hotel rooms that come in different shapes and sizes from low-end hotels to the high-end Ritz Carlton. You had to create very detailed financial models to assess whether you should build and manage a hotel, or not, in a particular city.
From there, I went to Legent and had my first exposure to the technology market. Like Marriott, it was a relatively large company with a mature and sophisticated culture of financial planning and analysis. In addition, Legent also provided me the chance to get involved in more operational matters, which I found interesting.
After six years at Marriott and Legent, the chance to broaden my professional focus presented itself in the government contracting community. I joined USI in the mid-90s, which ultimately became Integic. It was a professional services and systems integration firm augmented with robust technical capabilities – a “solutions providerâ€. Instead of a transactional sales environment, deals were more strategic and complex, taking more creativity and time to imagine and fulfill.
The challenge of delivering highly complex solutions to solve our government’s most pressing mission critical problems and the associated financial management and support required to do so was something I wanted to be a part of.
At Integic, I was able to expand my role, continuing to focus on financial analysis, planning and budgeting while also taking on more operational responsibilities. This has served me well at Agilex, as I’m able to combine a solid financial perspective with very hands on operational experience. This underpins my ability to bring together strategy and execution, which is critical in our line of work.
ExecutiveBiz: How do you work with your peers to implement an integrated strategy?
Joe Donohue: As a management team, we share a mandate of growing 30% or more year over year. This is a team effort and a team commitment with multiple integrated functional components. My team and I put in place a financial architecture that we drive to support our teammates in contracts, business development, operations and delivery. As an example, on the business development front we regularly review the breadth and depth of our deal pipeline in bi-weekly CRM sessions.
If that pipeline appears to be less than needed, I need to be in a position to reprioritize our investments to bring on more business development assets to beef up our pipeline. Those assets can be personnel, tools, partnerships, etc.
One of our congruent objectives is to grow the business at an extremely rapid and profitable rate. They depend on me to look out into the future, to provide a financial roadmap and a menu of decisions to enhance our probability to obtain that 30% growth. Every day we communicate and meet to make sure that we are on the path to achieve our goal with a very respectable profit level. Strong, organic, profitable growth are the hallmarks of enterprise value enhancement.
ExecutiveBiz: How do financial leadership approaches between companies of different sizes change and what aspects stay the same?
Joe Donohue: The company’s size has an impact, but it depends more on the company’s goals and strategic objectives. Some consistent attributes seen across companies regardless of their goals or size are: compliance with policies and rules, be they GAAP, the FAR, or any number of regulatory bodies out there; a need for budgeting and reporting so you can stay on plan and always know where you are at; and establishing controls that show you are operating with discipline and within your company’s policies, etc. These should be in place regardless of a company’s size.
Financial leadership ultimately comes down to the strategies that you implement to grow and enhance enterprise value. In our case, we are still firmly focused on our growth phase so I spend significant time prioritizing sales and business development investments. Investing in the right go-to-market and delivery leadership is critical to our business; investing in resources that help us find such personnel, rapidly, is another key corporate investment initiative.
Investing in our 1,000 person strong employee talent pool to insure they have fulfilling career opportunities and job security is another area of tremendous investment. This is all in support of our high growth strategy.
On the other hand, more mature and perhaps entrenched companies are often looking to boost their profits while having modest to flat growth objectives. There the higher focus might be on creating greater efficiencies or evaluating the benefits of outsourcing certain functions. If they’re caught in a declining market position, they’re obligated to focus there because growth may not be a reasonable option.
Each company has its own strategic objectives and capabilities; its incumbent upon financial leadership to create a framework whereby those goals are not only attainable, but enterprise value is increased as well.
ExecutiveBiz: How do you see the GovCon industry evolving over the next three to five years?
Joe Donohue: Despite ongoing challenges, this remains a very large and robust market, driven by the world’s largest buyer of products and services. Tremendous opportunity for continued growth and success remains for the well-diversified and well managed government IT contractor. With an aging population, social and medical infrastructure programs will continue to expand in the next 3 to 5 years as just one example.
For those overly weighted in their business portfolio on the DoD side, they may have to retrench and rebalance their portfolio to optimize their opportunities. The ideal company is going to have a multi-pronged strategy and never rely on just one particular agency, program or capability to achieve success.
At Agilex, as an example, we focus on four markets – government healthcare, the Justice and Homeland Security sector, the Intelligence Community, and large civilian agencies like the Postal Service, Amtrak and the Census Bureau. Across each market, we bring to bear our core solutions offerings like advanced analytics, data optimization and cloud computing, all integrated by an agile methodology that supports rapid delivery.
With a diversified portfolio, if two out of four sectors are going great, you can have a very vibrant and robust company. If three or four are going great, like at Agilex, you have a rock star company. Nirvana is clicking when you have an expanding pipeline and rapidly growing revenue, as this allows you to optimize profitability as well. I believe there will be ample opportunities in the GovCon industry to achieve fabulous results over the near term for the well managed enterprise.
