“Business grows and finance improves through a focus on systems – that is my thesis,” says Wayne Koonin, group finance director at Omnia. With 15 years of turnaround experience in the mining industry and a small team of trusted advisors in tow, he recently joined the South African chemicals group and identified digital transformation as the lever to “take the business to the next level”.
CFO South Africa spoke to Wayne and chatted about raising capital in a highly pressured mining sector, his concept of 'reversing' a business 'into a system' and an invitation to go to the United States to exchange views with the leadership of software giant Microsoft.
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Wayne Koonin's description of the term 'sabbatical' says a lot about his personality. When he left mining firm Coal of Africa (CoAL) - after what he describes as a very challenging but rewarding time in his career - Wayne decided that he was ready for a break. "In addition to my financial background, I also have a strong legal background, so in that period I did some interesting work in the field of financial and commercial litigation. It was fascinating stuff. I was probably as busy as I was in my CFO role at CoAL, but I could do everything in my own time. For me, a sabbatical doesn't mean playing golf all day. It was more about how I kept myself busy until I decided on my next career move."
Take that attitude and an impressive CV and it is not hard to see why Wayne was headhunted by Omnia, a 4,400 people strong South African firm active in mining explosives, fertiliser and other specialised chemicals, with a R16,8 billion turnover. "I studied on a part-time basis both at the University of Toronto and Wits and qualified as a South African CA in 1997," Wayne explains. "I have spent the bulk of my career in international mining, using South Africa as a base."
"I have specialised in corporate turnaround by re-engineering businesses through raising debt and equity and at the same time driving changes to systems, business processes and structures."
After his stint as CFO of multiple-listed CoAL, Wayne decided he had "done everything" there was to be done in the mining industry and started looking for a new experience. "After the disposal of a 25% interest in CoAL to a Chinese consortium, I was bought out of the remainder of my contract. After two-and-a-half years I had achieved what I had set out to do in a five-year period. It was an incredible way to round off my career in the mining industry, where I have been active for close on 15 years. Most CFOs only have the opportunity to do one turnaround in their career. I had the privilege to be involved in many along with a range of very complex issues to add to the challenge."
Although Wayne implemented Microsoft's solutions at CoAL, he feels that raising capital was one of his biggest contributions during his time with the company. "When I joined, the company was in a lot of financial and legal difficulty and we needed to undertake an extremely complicated capital raise within a relatively short period of time. After preparing a 600-page prospectus, we successfully raised $106 million that provided a lifeline to the company. We did several other capital and debt raising exercises thereafter, culminating in the $100 million we raised by selling 25% of the business to a Chinese consortium. It was basically about giving oxygen to an enterprise that was running out of air and creating flexibility to ensure a future for the business and shareholders."
"The real core of my strategy is building a unified technology platform and there is no software company that can cover all the requirements from network software to databases to ERP systems, except Microsoft."
"At the same time we also had to deal with a range of complex environmental issues and legal issues, which made it really complicated. The process to complete the prospectus and raise the capital involved 46 people spread between Johannesburg and London and we worked on this for six months. The raise was almost scuppered on the last day when Greece unexpectedly called a referendum and sent the global markets deep into the red. To add to the difficulty, the deal with the Chinese involved lots of complications and was negotiated during the time of Marikana. The successful outcome of this transaction has been the highlight of my career so far."
Wayne says his objectives for Omnia are very different and he is able to call on his vast experience in the turnaround space to create effective change in a short period of time. This will be the sixth time he'll be reengineering a business during his career and due to the size and complexity of the business, the most challenging. "When I joined as group FD last year, the business was already doing very well, yet there were opportunities to further improve the performance." The company had previously embarked on a project to implement an ERP system that was challenging and was reaching a point where it could potentially limit future growth. "You have to avoid the technology trap. That is very dangerous. Omnia had an ERP system that we could not scale or take advantage of the changes in the technology landscape to improve the business further."
Although this was not a core part of his initial brief when hired, Wayne quickly identified the opportunity to put his skills to good use in the company. "I understand the IT environment and how to use it to change a business. I had to build a business case to convince the executive and board that the IT strategy and vision needed to be revisited and that Omnia needed to align with the right vendors as part of this process. We took nine months to put the business case together in support of upgrading and updating the entire network architecture and platform to Microsoft Dynamics AX, which will become the recommended ERP platform for the entire business."
After the challenges of the previous ERP implementation, there was a fair amount of resistance in the business to conquer, Wayne admits. "That is why we are first doing a series of pilot projects to prove the benefits to the business. We are using our own version of the 'agile approach' to run and implement the projects in short time frames. It is crucial that the business adapts to the systems and not the other way around. By reversing the business into the system, we automatically adopt best practices, improve controls, maintain a standardised footprint across the group and importantly, reduce the risk around upgrades in the future."
"We have saved the business between two and three years by finalising a plan within nine months which we started to action once we purchased the licences."
"The real core of my strategy is building a unified technology platform and there is no software company that can cover all the requirements from network software to databases to ERP systems, except Microsoft," Wayne explains. "The real benefit lies in setting up, implementing and using the software properly. Often a lot of money gets spent on technology, but it doesn't deliver value because of a poor implementation. A strong understanding of the business requirements and the software capabilities, are the key ingredients to design the core architecture and hardware requirements correctly."
Hunting in a pack
Wayne speaks a lot about 'we' when he talks about reengineering the business systems and that is not because he is being polite. "I have a team of people that have worked with me for a long time. I am very much the visionary with the ability to marry strategy, vision and technology, but my head of IT, Rajan Pillay, is the technical brains on the full range of Microsoft technologies and also has a strong understanding of accounting and business. I have worked with Rajan for 14 years and this will be our fourth implementation of Microsoft Dynamics AX together. The other person is Sanet van Schalkwyk, with whom I have worked for the last six years and who was also involved in three of the four implementations with Rajan. As a team we work with a number of consultants, but the three of us hunt in a pack. It has been very rewarding to build the core team and to work together for so many years."
"Once we have implemented this, we can look at more aggressive growth and acquisitions."
Together, Wayne, Rajan and Sanet talk to colleagues who may feel that the ERP is not going to be able to handle a specific slice of the business. "By understanding the software properly, we can do eight or nine out of the ten things with it. For the rest we can either find a suitable workaround in the system, use third-party software or develop something as a last resort. If people don't understand how they can use the technology properly, we go into conversation with them to find a solution. At Omnia we are yet to find something that cannot be done within the core Microsoft products and especially the Microsoft Dynamics AX 2012 R3 system."
Thanks to the team's intimate knowledge of IT - and Microsoft solutions in particular - Wayne expects there is "a substantial return on investment" awaiting Omnia. "We have saved the business between two and three years by finalising a plan within nine months which we started to action once we purchased the licences. We just went live with our first pilot site in 100 days with no major problems. The previous project for this site took more than two years to complete and get properly operational. I can't reveal a number, but I am expecting substantial ROI - and more importantly - the ability to create a platform for growth and take the business to the next level."
Wayne says that many executives at Omnia already knew what had to happen, but the real challenge was how to tackle the project. "We are a science business incorporating many elements like manufacturing, exporting, sales and hazardous chemicals - all adding complexity. The CEO was very supportive and we were able to deal with the risk profile quite well thanks to the learnings of the previous project."
With Microsoft moving away from a sales-focused machine towards a partnership approach, Omnia was a massive test case for the American firm. "It was a hard sell to Microsoft here, to get them behind me and to canvas the deal on a global basis. I met with many of the international executives and shared the vision with them and the opportunities for both organisations. Because of the size of the deal, approval had to come right from the CEO's second in command in the US. For us that means the level of exposure is phenomenal as we are forging relationships at the highest level and have built an excellent working relationship with Microsoft. For them it is also one of the better deals. I am sure that in time, Microsoft will use us as a showcase of a blue chip company with an end-to-end solution where the technology is used properly."
Wayne now regularly speaks about his experience with Microsoft and has even been invited to come to the company's Executive Briefing Conference (EBC) at the Microsoft headquarters in 2016. "I am very excited. The exposure is phenomenal. It took a lot of hard work to make the partnership happen, but we have had the licenses since May 2015 and have already delivered quicker than even Microsoft had expected. We also have a similar partnership with HP around hardware which has been equally successful. HP are way ahead of the competition and for me this combination of Microsoft software and HP hardware is a tried and tested format."
Wayne's career reads like that of a typical top achiever, who gets bored when a challenge has been met and its back to business as usual. However, he says he is with Omnia, which is active in 25 countries and has 12 plants at the 168 hectare factory site in Sasolburg, for the long haul. "I have built my career around not being a stereotypical FD. Omnia is a great opportunity to put my experience to good use, and also for me to learn and continue to grow at a senior level. Once we have implemented this, we can look at more aggressive growth and acquisitions."