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Interview Therese Tucker, BlackLine Systems

Story by Benjamin F. Kuo

 

It's somewhat unusual in this economy to find companies who are seeing strong growth, so we were intrigued recently in running into BlackLine Systems (www.blackline.com), a firm which develops software for helping in the financial reporting process. We spoke with Therese Tucker, CEO and founder of the Calabasas firm. Therese is the former CTO at SunGard Treasury Systems, and has a wealth of experience in the financial software market. We caught up with Therese to hear about her company and why it's growing.

First, for our readers who aren't familiar with your software, can you explain what it does?

Therese Tucker: Every company out there closes its books every month, or usually every quarter if it's public and does financial reporting. However, most of the general ledger systems and ERP systems out there have huge gaps in the functionality they offer to clients. For example, most companies out there--probably 99 percent of the companies out there, do their balance account reconciliation in Excel. So, if you want to validate the balance in a bank account, someone opens up a spreadsheet and does work on it. A company might have 10,000 accounts, 50,000 accounts, which means you might have thousands of spreadsheets. People don't have control over the Excel processes. For example, they don't know when new accounts come in, when balances change, and there's very little control and visibility.

The software that BlackLine builds and markets, helps people with the close process, instead of doing it in Excel. Because it's software, because it's centralized, and because the information is in a database, people can start doing reporting, and there's more automation on the simple things. Plus, they can start generating the statistics they need easily, rather than taking what normally would be hours and hours to pull that information together, at the click of a button. Plus, because it is actually centralizing and automating the process, it has a really high ROI for our clients. They see an almost immediate payback in a month or two on the investment they make in BlackLine. Plus, it makes their auditors and compliance people much happier.

What's the story behind Blackline, and how did it start?

Therese Tucker: My background is technology. It's unusual to have a CEO from the technology side, they're usually from sales. I started as a programmer 25-26 years ago, working on financial application, including treasury systems, trading systems, and tax planning systems. I've always worked on financial systems. I had actually retired from SunGard as CTO before starting BlackLine. Initially, our software focused on wealth management. Wealth managers had very little in terms of good tools, especially things like options analysis and the tax impacts of that. However, we found that it's a hard market to break into. At the same time we were working on the wealth management area, we discovered that one of our clients, the First National Bank of Nebraska, was doing 10,000 account reconciliations a month--and managing that in Excel--and it was not working. They asked us if we could build something, and we subsequently found that there was nothing else offered on the market for managing account reconciliations. We though--that's impossible, you can't have all these companies doing account reconciliation in Excel--but they are. Either that, or they have to build home grown systems. What happens, is some companies have found that this has caused material weaknesses, with the result of management teams getting thrown out, and after that scandal, companies are basically trying to go back and do two years worth of account reconciliation. You need a system like ours to do something like that within a short period, in order to get relisted. Virtually every company we go into, account reconciliation is a big mess, at company after company you find things through the visibility in our software that you had no idea were lurking out there. It's a very interesting process, and although we can't use lots of names, our customers will talk to other companies and tell them they have to have this, which is pretty neat.

How much competition is there in this space with people like Oracle, SAP, etc?

Therese Tucker: Here's the difference. Those companies offer transactional systems. It's all about transactions going back and forth. However, our is more operational, and is a management system. To date, none of them have anything that does what we do. You'd think that SAP would have a module, or surely Oracle has a module. Our clients in some cases, after getting a recommendation of BlackLine, have gone back and checked first to see if SAP or the others have something, and they've all come back, surprised that they don't have it. You would be blown away by the number of things that clients do in Excel. After account reconciliation, we're looking at other things, like handling the close calendar. One client has 4,000 close tasks that have to happen every quarter, 4000 things they need to check the box on. You'd think they'd have that in the various systems, but they're still doing it in Excel. So, we've build a task manager module which tracks thigns that need to be done, to make sure multiple people sign off on documents, validate when they're done, send an email alert, etc.--all part of the task manager module. We've gone through and created seven different modules. The common thread with all of them, is we're replacing things people are doing in Excel today, and which are gaps in their ERP systems.

Let's talk a little bit about your growth. Why have you been seeing so much growth in your business?

Therese Tucker: The reason for the growth, is we're focused a lot on great service. A lot of our new clients come to us, because they have changed to another company, and have decided they have to have this. Our wonderful reputation has definitely been an impetus for growth. Another thing is the ROI studies we've had done outside our firm by Nucleus Research. Those independent ROI studies show a very, immediate payback on getting this kind of software. So, it's our personal reputation, as well as our track record. The other thing, is this is a wide open market. This is something every single company could use, and could use well, and get value out of--but something virtually no companies have at this time. Less than 1 percent of the companies out there have any kind of software like this.

It looks like you have a lot of executives from SunGard -- were all of you in this area originally?

Therese Tucker: SunGard Treasury has been in Southern California for some time. I ended up at SunGard from ADS Associates, which developed trading systems. It was acquired by SunGard in 1997, where I continued to work at until I started BlackLine.

We imagine that there are lots of auditors who would love to see their clients implement your software, is that the case?

Therese Tucker: They love this software. The only thing, from our clients point of view, is that it gives auditors more time to ask questions. The nice thing is that we do have auditor roles in the software, where you can restrict the auditors to only certain things through the review, such as tasks, supporting documents, the entire workflow and approval trail.

It's surprising that companies are still using Excel for this. Is there anything that is driving the shift to software?

Therese Tucker: Sarbanes Oxley was the impetus. Everyone has been using Excel forever, and no one really thought about doing it another way. However, with Sarbanes Oxley, it costs companies so much money, they went through and started looking at different controls. Until you've got a law like Sarbanes Oxley, there was not reason to validate that your balances were correct, and companies really never looked at that. Once people started looking at the different areas, they started to build controls around the spreadsheet process. We had one new client, who had two full time people who did nothing but put reconciliations into a document repository and mark it off on a spreadsheet when they were complete. But, the amount of labor that goes into that--not to mention emails, spreadsheets, and disk space--is unbelievable.

How big is the company now?

Therese Tucker: We've got 40 employees. We just hired our 40th employee--at the beginning of 2008, we had thirteen, so in a year and a half, we've tripled our employees.

Finally, what is in your plans for this year?

Therese Tucker: One of the things we've started to do, is to migrate toward a software-as-a-service model, so that you can use us via subscription as well as through an in-house or enterprise version. What that allows, is it gets IT out of the picture, and allows companies to get using the software for a very low cost. Users can pay $50 per user per month, and be up and running very quickly. In these kind of economic times, that transition has been wonderful for us--in the last quarter, we had more new customers than any in the prior history of the company.

Thanks!


 

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