This article was first published in the September 2013 China edition of Accounting and Business magazine.
For a 177-year-old publisher, Wolters Kluwer has a surprisingly youthful feel. Its Manhattan branch is located in New York’s trendy Meatpacking district and it shares a building with internet newcomers like Google and Spotify. Equally, the office on loan to globe-trotting CFO Kevin Entricken is a largely paperless affair with few signs of the company’s 19th-century roots as a textbook publisher.
This is symbolic of the company’s swift adjustment to the digital age, says Entricken, also a member of the company’s executive board. Over the past decade the share of revenues generated from print has shrunk from half to just a quarter. ‘The accounting, medical and legal professions are becoming increasingly digital and so we had to adjust quickly,’ he says. ‘Our customers wanted more than just information, but rather software solutions that would enable them to perform their tasks more accurately and efficiently.’
That also meant adjusting to the iPad generation. ‘Accountants aren’t always behind their desks,’ he says. ‘We’ve needed to design products that could be used on mobile devices that professionals can take out into the field. Many of our customers are always on the move and need to access our information and software on a host of devices. As a result, we always have to be innovating.’
The demands from the accounting profession are likely to be especially acute. Accounting is facing a demographic shortfall globally, with three-quarters of current professionals on track to retire over the coming decade. ‘That will make efficiency even more important since there will be fewer people around to do the work,’ Entricken
says. ‘It’s not just about giving our clients what they explicitly ask for. We also spend a lot of time watching how accountants work and find ways to make everything faster and easier.’ One example is technology that scans documents – like W2 tax forms in the US – and automatically populates software. ‘That means less time wasted on mundane data entry and more time left over for higher value-added activities,’ Entricken says.
The growing complexity of tax rules around the world and the globalisation of companies mean that tax professionals have a voracious appetite for technology that helps them cope, according to Entricken. Another instance is CCH Axcess, specially designed to help accountants set up their diary, track time spent on a project and bill clients as well as store common client data. ‘By automating more of » these functions we can lessen the administrative burden,’ says Entricken, himself a professional accountant.
As a complex multinational, Wolters Kluwer is a big consumer of its own accounting products. That, Entricken says, makes it acutely aware of its customers’ needs. Meanwhile, many of the company’s employees are also former accounting professionals, which helps to ensure that products are attuned to the way accountants work.
Demand for healthcare products is also flourishing. ‘Aside from ageing populations in many nations, medicine is facing a lot of change – including extra regulation,’ he says. ‘That makes it ever more necessary to get the best information on treatment and diagnosis.’ In addition, like accountants and lawyers, doctors and nurses are making greater use of digital devices. ‘Medicine has been a bit slower to adjust to new technology than accounting, but more doctors and nurses are carrying iPads on their rounds.’
Aside from focusing on growth sectors, Wolters Kluwer has also been chasing new markets. Currently the company is strongest in rich nations. Half of its revenue comes from North America and about 40% from Europe. But the company is expanding aggressively in developing nations. The share of business coming from Asia-Pacific has doubled since 2003 to 6%. This is just the start, Entricken says. ‘China is a particularly exciting opportunity,’ he believes. ‘There is a determination to live up to the best international standards and make sure that accounts are reliable.’ Malaysia and Singapore are also potential high-growth markets. Wolters Kluwer has been in these countries for about 20 years, but is focusing more on cloud-based applications for accounting firms to enable them to interact with smaller business clients. Expanding in Asia poses new challenges in terms of language and new business environments and, as a result, Wolters Kluwer has focused on partnering with local firms, forming joint ventures or simply hiring local talent.
‘That’s exactly where our products can help,’ says Entricken. ‘Even in markets were growth has been disappointing, such as Brazil, there can be lucrative possibilities.’ Wolters Kluwer recently purchased ProSoft, a tax and accounting software company. ‘The weakness of Brazil’s economic growth figures are well known. However, the ferocious complexity of the tax system still makes this a promising market for us.’
Of course, the company cannot afford to neglect its oldest market in Europe. The continent’s sluggish economic growth has been a drag on parts of its business, especially journals that still rely on advertising and training, which can be cut in hard times. Businesses that thrive on strong merger and acquisition activities have also been less lucrative on the continent, in contrast to the more robust activity in the US.
Still, Entricken says that Wolters Kluwer is far less vulnerable to the region’s weakness than most other businesses. ‘We are not concentrated in cyclical sectors. You have to fill out your taxes in good times and bad. Law and medicine are also not too badly affected by downturns.’ The fact that many of the company’s products are based on multi-year subscriptions also helps to insulate the company. ‘Once customers get the products and integrate them into the business they are very reluctant to let them go,’ he says.
It is in challenging times that an efficient finance function really shows its worth, Entricken believes. Wolters Kluwer has something of an obsession with financial discipline and oversight. Each of the company’s businesses has a CFO and internal control officer. ‘Finance is part of every decision we make,’ he says. ‘We need finance chiefs in all parts of the world to make sure we understand the local model and to provide good business insights. There is also a checks and balances aspect to our work. We need to avoid financial slip-ups and wasting money and make sure that our customers have a good experience when we bill them.’
As a member of the executive board, Entricken recently took on broader responsibility for helping shape strategy for the group. ‘It is very exciting to take a broader view of the company’s strategy, capital allocation, acquisitions and divestitures,’ he says.
Route to the top
Entricken took a circuitous route to the top finance job. After graduating from Montclair State University, New Jersey, and qualifying as a Certified Public Accountant, he worked for several years at KPMG. ‘It was a great launchpad,’ he says. Jobs followed at large media companies, including Reed Elsevier and EMI Music. After joining Wolters Kluwer a decade ago he worked in various roles, including investor relations. His ascent to the group CFO role followed three successful years as the CFO at the company’s healthcare division, which was struggling at the time. ‘It was an opportunity to take a lead in transforming a unit that was facing challenges. The division suffered from shrinking margins and was dilutive to the group. We took some tough decisions and divested some businesses that were not core, while speeding up the migration away from print products. By the time we had finished, we had helped to reverse the situation.’
This was a pivotal point in Entricken’s career. ‘It is important to be willing to take on a really tough assignment and believe that you can make a difference,’ he says. ‘Nobody should jump on a sinking ship, but it does often make sense to get on one that is in turbulent waters.’ He has also been willing to be flexible, taking roles in all parts of the company, as well as shifting locations.
Since his promotion in May 2013, Entricken has returned to Wolters Kluwer’s HQ just outside Amsterdam, taking his wife and two small children with him. With clients in 150 countries, his job involves plenty of international travel. ‘This is a truly global company and the role of the CFO reflects that,’ he says. As Wolters Kluwer continues to beef up its operations in Asia, it seems likely that Entricken will be racking up even more air miles.
The trend towards digital content is also expected to continue. ‘I don’t think print will die out altogether,’ he predicts. ‘But it will likely shrink even further. Professionals in accounting, law and medicine are increasingly demanding content that can be constantly updated, that is embedded in software and that can be portable.’
The transition from print to online content may have been decimating profits in the newspaper industry across the world, but Wolters Kluwer has made the shift seem relatively effortless. Entricken and his colleagues in finance have helped to make this successful metamorphosis possible.
Christopher Alkan, journalist