Richard “Dick“ Galanis is executive vice president and chief financial officer of Serco Inc., the $1.3 billion professional, technology, and management services company headquartered in Reston, Virginia. He joined Serco in 2008 after 6 years as CFO of General Dynamics' Advanced Information Systems unit. During his less than two years at Serco, he supervised the $500 million acquisition and integration of SI International, one of the largest acquisitions in the Washington, DC, region in recent years. Galanis was recently honored by the Northern Virginia Technology Council as “CFO of the Year.“
ExecutiveBiz: Over the last year, we have seen unprecedented turmoil in virtually every part of the economy. How has the changing economic landscape altered the way you approach your job as CFO?
Galanis: I saw a news report the other day that hurricane season started June 1, and I thought to myself: “That's old news. We've been dealing with a hurricane of economic, regulatory and market flux the entire year.“ Sure, we're taking a look at our plans for the next several years, but that's something we do on a fairly regular basis. More important, in my mind, is that we've got to think more nimbly about the here and now. We're doing more frequent reviews with our business groups about the current year and 2010 and updating our assumptions accordingly. We're pulsing our customers so that we stay in sync with their plans and thinking. We're issuing forecasts more often so that management stays on top of rapidly changing economic conditions. Obviously, we're also looking for ways to improve margins and cash flow, but, again, that's something we're always doing.
ExecutiveBiz: There's a new political philosophy guiding the government's decisions. Do you see the results of the pendulum swinging in a new direction? Have you re-balanced or diversified your financial assets?
Galanis: What we have done is re-balanced our business development assets to meet the new administration's priorities. We derive a substantial portion of our revenues from the federal government, so it's axiomatic that we would position ourselves to try to respond to those new priorities. We make decisions everyday about what we believe the “next new thing“ will be, and we try to make sure our business development dollars are aligned with the evolving needs of our largest customer. That said, let's not forget that the government has very large responsibilities that change marginally over time, and one major responsibility is national security, which is the single largest component of Serco's customer portfolio. So, yes, the pendulum is swinging in a new direction, but if you take the stimulus initiative out of the picture, the “arc“ of the swing has been fairly modest, at least from our perspective.
ExecutiveBiz: You mentioned the CFO “job description.“ To do your job, do you need to do more than just understand the numbers? Do you need to have a seat at the management table?
Galanis: The era of the “green eye shade“ controller is over. The “numbers“ are actually the financial lifeblood of any company or organization, and the CFO has a very important role to play in keeping the company healthy over the long term. When you look at the mayhem that the current recession has caused in the marketplace, you can see that in many cases ““ or most cases — the difference between survival and extinction can be traced back to financial decisions made years earlier. Companies that deployed their assets wisely with an eye toward an eventual downturn have done fine and will in all likelihood come through this period in decent shape. On the other hand, companies that played fast and loose with their money on the assumption that the good times would roll on indefinitely have gone under. A CFO has a management responsibility as significant as any other executive in a company, except of course for the CEO. And the two talents a good CFO needs to be blessed with are, first, the ability to look far forward and forecast the future ““ and, second, the humility to hedge one's bets in case that forecast turns out to be wrong.
ExecutiveBiz: Last question, specifically about the SI International merger. Are you developing a “best practices“ approach to harvest savings from both organizations? Has anything surprised you as a result of the merger?
Galanis: Economies of scale and other administrative savings were a key driver behind the merger, and we are obviously pursuing those goals. We are searching for and implementing the “best of the best“ ways to accomplish our overall corporate agenda, improving and leveraging the internal systems and procedures drawn from both legacy organizations. We have a well defined vision of where we want to be in 2015, and we have a strategy called Journey to Excellence to help us realize that vision. One key pillar of Journey to Excellence is Operational Excellence, which means we will manage our programs in ways that realize internal savings and efficiencies while consistently delivering superior results to our customers. In the “surprise“ category, I would have to say that we are still getting used to the new reality that when we combined two mid-sized companies, we became, in fact, one fairly large company. We are a bigger force in the marketplace, and we have more competitive “heft“ than our two companies had separately just a few months ago. When you break that billion-dollar revenues barrier, you really need to ramp up your company “self-image“, and we're still in the process of doing that. Serco has a great business model and a great future ahead of it, and I think you're going to see this company really excel over the next several years.