Q&A with Raul Vega, Chairman and CEO of Auxis, Inc.
by Boardroom Brief on October 22, 2010
1. Founded in 1997, Auxis, Inc. is a management consulting firm specializing in improving business performance to help companies prosper. Over the past 13 years and in light of the ongoing economic slowdown, the game has changed with more and more smart businesses looking to Auxis to help adjust their operating models and strategic growth plans to keep up with the changes and uncertainties in today’s competitive business environment. What are some of the unique services Auxis offers to help companies align their business strategy to achieve strategic business goals?
Our whole premise as a company is to help middle market Florida organizations prosper by bridging the gap between growth strategy development and operational execution. Over the past few years we have seen companies really question their overall strategy and how or if they can get growth out of their business. There’s a rising demand for our unique services as boards and CEOs look to reengineer their business or take a fresh look at it from a holistic perspective, which they may not have done in a while. For example, we have been doing a lot of what we call ‘business rationalization’ analysis. During this type of project, we help senior executive teams get a much better understanding of what are the true drivers of profitability and competitive advantage for their business and what areas are really causing a drain on operational and financial performance. Our strong combination of skills in finance, supply chain and information technology allows us to perform a very comprehensive look at product, service line and brand profitability that typically provides a very interesting insight on a company’s performance. In one recent case, our client eliminated 80 % of their products while creating a more profitable company. So basically we really want to understand the trajectory of where a business is headed, help companies flush out their growth opportunities and make things happen on the execution level.
2. You were recently named Chairman and Chief Executive Officer of Auxis, leveraging your extensive experience in business operations, corporate growth strategy and business transformation to lead the company in several new initiatives. This includes expanding your Outsourcing Services practice to include the Finance and Accounting sector, opening a new Outsourcing Service Center in Costa Rica. Can you discuss how business process outsourcing can help Florida-based companies reduce their annual back office processing costs by implementing a near-shore outsourced operating model?
When we look at middle market organizations in the state of Florida, we’re looking to help find ways for them to become more efficient and get more value out of their back office. We initially got into the outsourcing business in IT about 8 years ago because we directed many of our middle market clients to implement pretty advanced technologies. They were having a hard time managing and operating those systems, so we came in, offered those services and we were very successful. That’s part of what got us into looking at Costa Rica and Latin America.
Today, finance and accounting represents the fastest growing segment in the outsourcing industry. In terms of operations (such as accounts payables and receivables, billing, closing the books), you’re not really delivering competitive advantages from those services. You need to deliver those services as cost effectively as possible and take that extra cash and invest it in areas of your business where you can really drive competitive advantage, such as marketing, sales, improved analytics, etc.
We recognized a huge opportunity for Florida based organizations to take some of that routine transaction processing, place it in our Costa Rica operations center and save that money for the greater good of their company. We don’t believe middle market companies can successfully migrate to a completely offshore back office model, but the reality is you’re going to get significantly more efficiencies and savings when you bring some of these functions into the service center through increased economies of scale and lower labor costs. Many businesses are not comfortable operating in Latin America and that’s why we’re a great conduit for people going into these countries. We have done the homework, set up the operation and we can run and manage it. Our clients don’t need to set up legal entities, hire workers; they really don’t need to do anything, and the savings are significant. We recently benchmarked 333 positions across 14 South Florida companies and the average savings came in at 40%.
3. Another new initiative launched in 2009 includes your Government Services practice which has grown dramatically with recent project wins from the Department of Homeland Security, Environmental Protection Agency, Patent & Trademark Office and the Agency for Workforce Innovation in the State of Florida. Can you discuss what innovative technology solutions you employ to help the business of government boost performance, improve quality, increase efficiency and enhance services to clients?
As we watched where the economy was headed, we hired people that had a lot of experience in the government sector at a federal level. We saw an opportunity to take a lot of what we were doing on the IT side of the house and apply that expertise to the government. Essentially, we help the government do a lot of strategic IT planning and help them look at where they can invest and maximize their assets. We have a pretty technical IT management and architecturing tool we use which allows companies to document and understand what their strategic assets are and the correlations between different assets. For example, one thing we are discussing with the EPA as a follow-up to the work we’re doing, is to answer the hypothetical question, “What are all the activities the EPA is doing related to climate change”? The EPA can answer this question using our unique capabilities which organizes all climate related systems and all the assets will be documented, correlated and then graphically presented online. This is basically what we’re doing across the board for these government agencies. It is a very different model but we’re bringing our commercial expertise and innovation to a very focused area of the government.
4. As business technology continues to shift from the image of IT being a simple process of servers, a website, email and network connectivity to complex globalized solutions, how does Auxis help companies productively utilize this shift to drive toward common goals and help businesses succeed?
We are very good at helping companies adopt emerging technologies in a manner that will maximize the value to their particular situation and operating environment. It is very important to deploy technology in the proper sequence so that you build something that’s scalable and operational. That’s a big challenge in IT. What happens very often is people fall in love with an idea, or something new that comes up and everyone wants to get it, like the I-Pad. They then rush to deploy it within their organization without adequately thinking how to best make it fit with existing processes and technologies. Ask yourself “how does it work together?” before deploying new technologies so your IT environment doesn’t become what we call ‘spaghetti ware”, where everything’s all over the place and it’s a mess that is much more expensive for you to clean up later. Successful technology deployments are about much more than just the technology. It’s about business processes, it’s about the data and it’s really about the people. In our experience, the reason most large systems projects fail is because organizations haven’t adequately addressed the people component. You haven’t dealt with management issues or properly trained them or brought in the right skill sets and then you get a system that’s not properly implemented and it’s considered a failure. That’s notorious in the IT world.
5. The global economy has arrived. How is Auxis uniquely qualified to help companies take advantage of opportunities in North, South and Central Americas, Europe, China and beyond?
Our definite strength is Latin America based. Our whole team is very bicultural and at least 60 or 70% of them have worked extensively in Latin America, understand the business customs and the legal and tax compliance issues. Latin America is one of the most complicated regions in the world to do business. There are very complex statutory, regulatory and trade requirements that can cause big problems if an organization does not properly address. We’re able to bridge that for our clients and are a great conduit for people coming into the U.S. or trying to expand into Latin America. The other area where we have good expertise, though it’s not as broad but very focused, is helping companies set up distribution operations from China to the U.S. and then to Latin America. For example, we had a client that buys a lot of product from China and was bringing it to the U.S. to distribution centers here, consolidating it in the U.S. and then shipping it to Latin America. We were able to design a new supply chain for them to consolidate the shipment in China, eliminate the U.S transport and send directly to Latin America. It saved them tremendous transportation costs and created a much more agile supply chain. So we’re able to help people bridge the Asia, U.S. and Latin America business model because of our supply chain and international expertise.
6. As one of Florida’s Hispanic business leaders, you were invited in 2009 by Governor Crist to join in a roundtable discussion on how to enhance Florida’s economy. In honor of Hispanic Heritage Month and the rich heritage which has influenced many aspects of our communities, how can we better meet the needs of Florida’s Hispanic business community?
I don’t think there are unique needs for the Hispanic business community, but I do believe there are opportunities to help a lot of smaller, mid market companies in general, many of which are Hispanic owned and led. I believe we can learn from programs that other countries have successfully implemented to improve the competitiveness of small and mid market Florida companies. Take for example, Costa Rica, where they have created free trade zones for service companies. There you can set up a services company and you do not pay local income taxes for 8 years. Similarly, in Uruguay, you pay zero income taxes forever. This allow companies to invest more capital in growing their business while also helping the overall local economy by attracting an increased growth in higher paying jobs which fuels growth in other sectors. I believe we should be looking at setting up similar economic development zones for service companies in rural areas and other economically depressed areas of Florida. The government really needs to be looking at these types of programs to create better incentives for people to take risks, invest and create well paying jobs.
About Raul Vega
Raul Vega is CEO and co-founder of Auxis, Inc., a management consulting firm focused on helping clients create value and enable growth. He has been instrumental in the firm’s growth since its inception in 1997.
Vega began his professional career with Price Waterhouse and is now an accomplished executive consultant with over 20 years of experience in Fortune 20 international organizations and professional services. He has a proven ability to work with top executives to analyze complex business issues, develop business strategy and implement change initiatives. He is a professional project manager who is able to lead multinational business infrastructure implementation teams and has strong experience in business strategy, operational processes, systems implementation and financial management.
Vega has significant field experience throughout the Americas having worked directly on projects in 15 countries throughout the region. He has successfully led numerous complex international projects from initial planning and analysis to full-scale implementation.
Most recently, Vega led the operational, financial and technology due diligence and post merger integration for a $19 billion private equity fund developing a global consumer goods operating platform through the merger of two under-performing global small appliance companies. During this effort, he was instrumental in developing the merger integration methodology and strategy that resulted in the identification and realization of over $50 million EBITDA synergies.
Raul is a graduate of the University of Florida where he earned both a Bachelor and Master of Science degree in Accounting.