Xata's Growth Vehicle

Xata also lacked the infrastructure to execute the software-as-a-service model in the marketplace. “Xata had not been successful in changing the company to mirror the new product that it was delivering,” notes Mark Ties, who joined Xata as CFO a year and a half before Coughlan’s arrival. “It failed to equate its concept to business processes, business strategy, sales strategy, and the development of field and engineering organizations.” What was in place was a flawed strategy, he adds, that was “dependent on selling the hardware in order to sell the software.”

Xata, Coughlan says, “didn’t have clear direction, and there wasn’t a lot of excitement. Many people were working hard, but I’d call them firefighters, because all their effort was put into fixing the product at the customer site.” What Xata needed was additional software developers, and a system for regularly developing and adding more and more functionality and quality to its software—software that could be used by any make of onboard computer. “We also didn’t have any sales pipeline process that allowed us to say with any confidence not only what the current quarter looked like, but what the next three or four quarters looked like,” he adds.

Coughlan saw that for all its strengths, Xata needed more changes than he’d first believed: “I said to the board members, ‘This smooth-running company you told me about is more of a turnaround than it is a smooth-running company.’”

Refueling Xata

Once Coughlan got up to speed, most of the executive management team was replaced; some hardware engineers also exited. (The number of employees has since grown from 103 to 181.) David Gagne, whom Coughlan brought over from Lawson to run Xata’s field operations, recruited other Lawson vets to help build the software side of the business.

Not everything at Xata needed to be reconfigured. “We had a good board of directors, and Mark Ties was a strong CFO,” Coughlan says. “We had some pretty good back-office processes because of Mark, but even that was done with multiple systems.” Under Coughlan, Xata simplified its back office under one enterprise resource planning system.

Focusing on the software-as-a-service model meant adding not only capabilities but also services. Coughlan’s initial discussions with Xata’s customers told him that services weren’t just a helpful adjunct—they were urgently needed. “One of the things I noticed when I was going out to see customers was that they weren’t using all the application functionality that we were offering,” he says. Even at Lawson, Coughlan says, “if you went back 10 years ago, customers weren’t using the software correctly. A whole business was built around that called ‘consulting.’”