Jim Benson, a veteran technology finance executive, joined publicly traded Dynatrace two years ago when the company was nearing $1 billion in revenue and entering a new phase of growth. The company, which was separated from Compuware five years ago, has generated positive net income, healthy cash flow, and annual sales growth of nearly 30%.
“Philosophy of” [Dynatrace] “The leadership team was very aligned with my personal philosophy of we need to grow and we need to grow profitably,” Benson said of the appeal of the job. But as the former Akamai Technologies CFO and HPE alum says, “Just because you get to $1 billion doesn't mean you get to $3 billion. It doesn't mean you get to $5 billion.” Masu.
Dynatrace had been successful in acquiring large customers in the application and infrastructure monitoring space, but the operational and financial plumbing had not kept up. In an interview last month, Benson talked about how Dynatrace is refining its sales model and setting common goals for sales, marketing and product teams. He also touched on the impact of the accelerating pace of the technology market.
Besides the belief in increasing profitability, what attracted you to the company?
Dynatrace needed an operational CFO. That's my skill set, the evolution of go-to-market models, R&D lifecycles, and product portfolios for software and SaaS companies. what [also] What interested me was that this company was a rocket ship in a very early stage market and needed someone to lead it alongside the CEO.
Which areas of the company's operations need to be upgraded to align with Dynatrace's broader portfolio and growth strategy?
We are doing a lot on the market development side, including building specialized sales models to drive adoption in new product areas. It's also about driving collaboration across all parts of the company.
Dynatrace's old feature model was small and crude. That's not unusual. Our sales organization was very tactical and had a one-play model. The idea was to find an owner for the application, run a proof of concept, and make it a success. [the prospect]and expand from there. People were going about their business in the swim lane.
It works for a while. As companies evolve, they require more coordination between product, marketing, and sales teams, especially when entering adjacent markets such as security. Team integration has become much better. Sales leaders work with product and marketing organizations. No disruption was observed due to the change.
What did you do at the ground level to maintain profitability while re-accelerating growth?
We made some changes towards market launch at the beginning of this fiscal year. [April 2024]. We re-segmented our customer base. We have recalculated the resource weights taking into account. [customer base] Ranked among the IT 500 companies with the highest propensity to spend.
Consider the weighting of investments to increase profit margins. Where can we scale further? How can we make our G&A expenses more efficient? How can we make our sales and marketing reach even more efficient? One of the things we're doing is is about leveraging our partners to help you get better scale for every dollar you spend on sales and marketing.
How did an orientation toward profitability become part of the organization's DNA?
Financially, we are a product of private equity-owned assets that have always focused on profitability. The CEO also believes in the model. We want to continue to drive margin improvement and efficiency, but when weighed, growth takes precedence over profitability as a driver of company valuation. But you need both. We are a “Rule of 40” company when measured by sales growth and free cash flow or operating margin. [they should be equal to or greater than 40 percent].
What has changed in the technology industry from 20 years ago?
The pace of change, the pace of innovation, and the pace of disruption. Twenty years ago, changes occurred in one- and two-year cycles. The pace of change is accelerating. Winners and losers remained in place for long periods of time. The period from when a company reaches the top position to when it is suddenly usurped is a little shorter.
Does that mean we need to do R&D faster?
We need a future-focused chief technology officer. Previously, you could adjust your product roadmap over a three-year period. Companies had long monetization cycles from roadmap items. In today's technology environment, you need to think about production implementation over the next 1-2 years and make sure your company is in a good position and won't be disinterred in 5 years. We need to build today while thinking about tomorrow.
