Convergint, a company operating in the security integration space, enjoyed rapid organic and acquisitive growth and was ready to build out a financial planning and analysis (FP&A) team and supporting processes. Joe Nagel, who joined the organization as the head of FP&A and CFO of the North American division, was tasked with addressing these challenges and driving transformation within the company. This case study explores the steps taken by Nagel and his team to improve FP&A processes, the challenges faced, and the outcomes achieved.

The AFP FP&A Case Study series is designed to help you build up key FP&A capabilities and skills by sharing examples of how leading practitioners have tackled challenges in their work and the lessons learned.

Insight: Bringing in the right talent and managing the existing team requires alignment with the FP&A vision and attention to team needs.

Background

Convergint operates primarily in the security integration space, with a market size of $60-$70 billion. The company's largest business is security and safety system integration and service and industrial facilities — building alarms, door access and internet-of-things monitoring. Convergint does not manufacture products; rather, it is customer relationship-based, building solutions based on customers' long-term needs. Founded in 2001 by former Siemens employees, the company has grown to a nearly $3 billion organization with 12,000 employees globally and is privately owned by three private equity partners.

Joe Nagel is a Vice President at Convergint with two overlapping titles. As the Vice President and CFO of North America, he provides operational support to the North American region, which comprises about $2 billion of the company's revenue. His second title is Head of Global FP&A, where he oversees global FP&A consolidation, planning, forecasting and strategic alignment. Nagel's background includes experience in public company manufacturing, working with companies like Siemens, Navistar, CF Industries and Littlefuse. He has a strong focus on systems optimization, process improvements and better data governance to support decision-making.

Challenge

The need for change at Convergint was driven by the company's rapid expansion and the complexities involved in scaling a global organization. With the introduction of two new private equity sponsors, there was heightened focus on the organization's ability to sustain growth and scale effectively.

"Rapid organic growth combined with strategic acquisitions can obscure various inefficiencies,” said Nagel, because everyone wants to keep that success going. However, the inconsistencies in information, customer-facing approaches and performance measurement presented significant challenges for effective scaling.

“There may be instances of overspending that still yield reasonably profitable returns,” he said. “Over time, we observed higher than anticipated costs, declining returns per employee, and an inability to scale as quickly as our business was expanding. It became imperative for the company to thoroughly analyze utilization, direct labor burden rates, work in progress (WIP), job performance and unabsorbed costs adversely affecting profitability. We decided to pause momentarily and determine how to restore our high-performing teams to generating above historical returns."

Convergint faced numerous obstacles, including:

• Insufficient staffing: There were two full-time FP&A staff, and a handful of people who performed FP&A functions in their spare time, such as a controller who supported a couple of the regions when not busy, but “there was no direct lifeline to the finance organization to support these businesses in real-time,” said Nagel.
• Inadequate systems: “We used an antiquated, 15-year-old on-premises planning tool that did not have the capacity, and was not structured in a way to manage the business. A lot of work had to be done offline,” said Nagel.
• Poor data quality: "We had discrepancies in information across different businesses, even to the extent of recording information and evaluating customer performance,” he said.
• Inconsistent processes: Work and corresponding data capture was done differently across different regions, which made the evaluation of work incomparable.

“We had folks that spent all their time wrangling data and getting it into a system so that we could report on it out to the field,” said Nagel. “They lived in rows and columns of numbers, just throwing reports out to the organization with no 'whys,' no understanding of what drove the business results. They spent all their time keeping the engine moving but not having the time to step back and ask how to do things better.”

Approach

Nagel entered the business with a mandate for change from the equity sponsors and the C-suite. He described it as “a key part of the interview process.” With prior experience leading FP&A and supporting operations, he was well prepared to set his vision and framework.

“I think the number one objective is just being a valued finance business partner that provides real-time actionable data to influence decision-making,” he said. “Without good data, you struggle to put things together in a meaningful way. And without good systems and processes, you struggle with how much time it takes to get there.”

Acting on this vision meant building capacity by adding staff who could improve information efficiency and create space to focus on operational improvement. The first hire was a person who had the skills to manage data, with an eye toward using Power BI for reporting. This person would eventually become the systems administrator for an envisioned enterprise performance management (EPM) tool, preparing the groundwork for AI.

The second hire was a director of FP&A. “The acting FP&A manager was very detailed and very good at what he did, but I needed an experienced hire who had the vision and prior experience of scaling a team,” said Nagel. This person needed to be able to focus internally to scale up the team, communicate effectively across the business as a partner and advisor, and thrive in the fast-paced, demanding environment of a private equity-owned firm.

Convergint was investing in several business transformations, and Nagel linked the transformation in finance to the broader company effort. This included implementing new enterprise resource planning (ERP) and EPM systems, along with tools for customer relationship management (CRM), CPQ (Configure, Price, Quote), field service management, job management and automated payments and collections. The goal was to resolve data inconsistencies and improve overall business processes. The new executive leadership team, which joined by the end of the previous year, supported the initiative and focused on fixing core issues at their root.

The FP&A team eventually grew to nearly 20 people globally, with about 20% being recruited, and the remainder sourced internally. With this type of recognition, Nagel recognized the challenges and anxieties his team faced. “We were adding layers, adding roles that did not exist, and taking away what people had been paid to do for years,” he said. Some employees previously had direct access to the CFO or CEO, but the new org chart introduced additional layers, created new roles and deprioritized others that had been in place for years. “People wanted to know: What does this mean for me? Where are things going? Is this a good fit now, and in the future? When you start to shake the cart a bit, people get nervous.”

Nagel implemented several strategies to ensure that his team remained engaged, informed and motivated throughout the transformation process.

• Set a clear vision and expectations. Nagel emphasized the significance of delivering real-time actionable data to guide decision-making and establish expectations for the team's contributions. By defining the objectives and desired outcomes, Nagel enabled his team to comprehend their roles (direction) and how they could contribute effectively to the organization (purpose).
• Prioritize open communication and transparency. Nagel recognized that change could be unsettling, so he prioritized keeping his team informed about the progress and upcoming steps of the transformation. He conducted weekly meetings to touch base, and quarterly updates to provide regular status reports and address any concerns or questions. “I tried to give people the ‘why’ behind what we are doing,” he said.
• Maintain support and connection. “You have to think about your operating rhythm and how you stay engaged with your team,” said Nagel, recognizing that significant changes bring excitement, fear and trepidation. He maintained connection through informal meetings and lunches, addressing concerns and offering reassurance. “You have to watch people’s behaviors, not just what they say,” he added.
• Provide opportunity for involvement in the transformation process. Nagel ensured that team members had both the opportunity to participate and the empowerment to influence the to-be state in meetings and sessions related to the transformation. This enabled his team to gain a comprehensive understanding of the broader business challenges and the solutions being implemented, empowering the team to contribute their insights and ideas, and fostering a sense of ownership and collaboration.
• Cultivate a culture of continuous improvement and feedback. Nagel cultivated a culture of continuous enhancement and feedback within his team. He actively encouraged team members to provide input on new processes and tools being implemented, underscoring the importance of iterative transformation and the value of their contributions.

In addition, Nagel carefully considered how he built his team.

• Hire for demonstrated ability to trace actions to financial impact. He sought to recruit individuals with experience and a proven track record in supporting business operations for similar organizations. These individuals needed to have a deep understanding of how the operational and sales teams’ decisions impact the P&L, the transactional flows and key levers they can pull to affect the business and how unit actions stack up to achieve company objectives. 
• Blend internal experience with external expertise. Internally, some colleagues demonstrated their desire and capability to support operations, so they were moved from accounting to FP&A. They were appreciated for taking on this role full-time and bringing detailed company knowledge. From the outside, the goal was to recruit new staff with the right cultural fit who would blend seamlessly into a well-established organization and had demonstrated operational finance partnership in similar industries. One new employee ended up becoming a key contributor to the company’s transformation efforts.
• Accept that some people would leave. People may depart for various reasons; they might seek personal change during organizational transitions or feel uncomfortable with the changes. “People want to feel valued and appreciated. If they see a future with you, great. If not, that's fine too,” said Nagel. “We can coach them towards their next goals. They've gained valuable experience and can contribute significantly elsewhere.”
• Coach for growth. Nagel’s role involved ensuring that regional finance leaders were aligned and that they collaborated toward common goals, learning from each other effectively. “I focus on challenging the status quo and encouraging the team to critically engage with their operational counterparts,” said Nagel. “These are great roles for future CFO’s and critical to the business’s ability to scale.”

Outcome

The efforts in transforming the FP&A team at Convergint led to significant improvements in various aspects of the organization's financial processes and overall performance.

• Operationally, the quality, content and timeliness of board reporting and monthly financial packages improved significantly. The new reporting formats and dashboards for regional monthly business reviews provided consistent and actionable insights, making it easier for the leadership team to drill down into specific areas and ask relevant questions.
• Forecasting went from a twice-per-year budgeting exercise to a quarterly forecast that incorporated drivers and backlog analysis. This process was well received by teams in the field, reducing the time required for forecasting from a month to 10 days. The improved forecasting provided better visibility into future performance and allowed for more accurate and timely decision-making.
• One of the most notable outcomes was the improvement in margins. There were several improvements across the North American business which, when taken together, led to an approximately 20% improvement in EBITDA (earnings before interest, taxes, depreciation and amortization) margins from the previous year.

The new processes and tools were positively received by teams in the field, with team members appreciating the improved information and ease of forecasting. This feedback demonstrated that the transformation was not only working as intended but was actively driving improvements across the business.

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