Monday 26 September 2016

Purdy and The New Avengers: How a Finglas lad became Ireland's ultimate IT guy

John Purdy hauled himself up from working-class Dublin to the pinnacle of the Irish IT industry and, he tells Donal Lynch, the key was not being afraid of failing

Donal Lynch

Published 21/06/2015 | 02:30

John Purdy
John Purdy

There was a Sunday afternoon, five years ago, that John Purdy says was "a bit like our equivalent of the night of the bank guarantee". Which is apt, since, like so much of the financial carnage of those years, it was the pretty much the banks' faults.

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Purdy sat around the table with his team at their office in East Point business park "and we looked at each other and knew something had to change, our business was evaporating by the day, it was really do-or-die".

Purdy's ambitious plan had been to turn Ergo - his shape-shifting IT company - into an €80m-a-year business, but that was now in tatters.

The entire Irish financial sector, which had seemed like the company's ticket to ride, had imploded, and the super-slick lending platform - which had clients like Nationwide, Bank of Scotland, AIB and EBS clamouring to use it - was looking increasingly about as useful as a drinks voucher on the Titanic.

The banks, quite simply, had no money to lend.

"It was a dark moment," Purdy recalls. "And it was big time keeping me awake at night."

Purdy's solution was to remember that what had made him successful in the first place was continual reinvention. A drastic manoeuvre was required to keep the company sinking beneath the waves of the financial crisis.

"We had a few very smart, very expensive guys working for us - but nothing was going to make a difference at that point, so we pulled the platform completely," he recalls. "We realised that governance was going to be a big thing and so we took the platform from a lending software to a compliance software.

"We help banks comply with with banking regulations and other types of red tape when taking on new clients. We started that journey in 2010. In 2012, we separated it out into a separate company called Fenergo and it has private equity money in it."

Marc Murphy, former sales director at Ergo, now runs Fenergo and Purdy represents Ergo on the board as a non-executive director. The company now has offices in Dublin, London, Boston and Sydney, employing 105 people. It has doubled its turnover in each of the past three years and its customers include Nama and State Street.

The dramatic plummet into recession also prompted Ergo to overhaul its strategy by growing outside its domestic market. Purdy looked outside the country and decided to look to Irish firms that were themselves aggressively expanding overseas - companies like Ardagh Group and Greencore.

These days, approximately a third of its business comes from the UK, mainland Europe and the US, where the company has kitted out the new Primark stores with IT infrastructure.

"The downturn forced us to look away from Ireland, because we knew we just couldn't do the amount of business we needed to do, or get the customers we needed, right here.

"We now provide services in about 30 different countries around the globe for Irish-headquartered companies."

Reinvention has been the name of the game for Purdy since the start of his career.

"We work on the principle that everything we sell today will be revalued in three years' time," he says. "A few years ago, when the company was 20 years old, we tracked that reinvention - all the different changes. When you do it every day, you don't really notice, but it's quite staggering seeing it all put together."

Of course, the most staggering reinvention of all was probably Purdy's own - from working-class Finglas boy of the 1970s to the IT mogul and EY Industry Entrepreneur Of The Year (he won the award last year).

His story is less saccharine than Bill Cullen's, but with the same rags-to-riches overtones. He was the fourth child and first son in the family, and his father - a shipwright with Guinness, - died while Purdy was still in his teens. "That was a tough blow all right", he recalls. "My youngest brother was only 11 years old when that happened. But these are the kinds of things that help create your resilience and from my mother, we also got a very no-nonsense approach to life."

His mother, he says, also provided him with an ethos which would underscore his approach to business.

"She basically told me that it's okay to fail, that you just pick yourself up, dust yourself off, and try again. That was important, I'd say, because failing is how you learn; it's a part of a path to eventual success. I've often thought it's an awful pity our banks don't have a similar approach to life."

Like most people of his background and generation, Purdy didn't go to college - "the economics just wouldn't have allowed that in those years" - but after his Leaving Cert, he went to work for a printing company called Sharptext and then for Rank Xerox, experiences that he says stood to him. However, he always hankered after running his own business - and in 1993, he set up Ergo with his friend Tim Sheehy.

To call it a humble beginning might be understating things. "We were running it out of my spare bedroom at home and from Tim's garage in Cabra."

But after Purdy's wife, Audrey, became pregnant, the bedroom was needed for the new baby - so Purdy's fledging company had to find a new home.

"We moved to a shed which had a galvanised roof, tarmac on the floor and no running water. I used to have to take a basin of mugs home every night, clean them and bring them back in. Rent was almost zero though, and it gave us the start we needed. It also taught me some lessons: I take very seriously the responsibility of making payroll every month - and those times really made me sharp in terms of understanding the importance of cash-flow and margin."

Purdy and Sheehy slowly transformed Ergo from a two-man operation selling toner cartridges for printers into one of Ireland's largest indigenous IT companies. These days, his office in East Point business park is rather more salubrious than that first shed, with a signed Man United jersey on one wall and a limited edition £5 sterling note with George Best on it on another.

Purdy has a holiday home in Galway now, but he says with a laugh that he's "not at the jet- affording stage" yet (although he does have a sizeable collection of model cars), because most of his money gets ploughed back into the business.

The shape-shifting nature of Ergo's business exacts its own financial toll. Turnover rose somewhat last year, but operating profit fell by some 47pc to €347,000, according to the company's latest accounts. Purdy said earnings were impacted by Ergo's €1.75m investment into developing FlowForma, a management software tool used in the UK by the NHS and other health administrators for submitting expense claims, holiday requests and performance reviews.

The investment in FlowForma has been written off against operating profit over three years.

The technology attracted sizeable Enterprise Ireland investment last year, and Purdy expects FlowForma to "go into a dramatic growth phase" in coming months - potentially adding about €1m to operating profit in the current financial year.

The company recently bought customer relationship management (CRM) specialist and IT resource provider, iSite, and the acquisition will see Ergo grow its revenue by 30pc in the next year - from just under €30m to March 2015 to just under €40m in March of next year - and increase employee numbers from 200 to 330. On top of this, Ergo plans to create 120 extra jobs within two years through additional growth. That growth is important in and of itself, he says, "because we need scale to compete for bigger contracts. We need to start heading for €100 mil in turnover. We're going to do that through organic and acquisition-lead growth.

"It's about providing a range of managed service and cloud services. What's important to remember for us - and I tell this to our new hires - is that we sell outcomes. It doesn't matter if something is in the cloud or if it's big or small, fat or thin, it's about the outcome: are we winning more customers and helping our customers win more customers. Are our margins improving?

"It's those outcomes that are the critical element. The technology is only the conduit, a piece of plumbing."

Purdy's story resonates because it's mirrored the country's recent history - from poverty to prosperity, and then rebounding after, it looked like the bottom had fallen out of everything.

In recent years, Ergo has been garlanded with industry awards (it's a three-time Microsoft country partner and cloud partner of the year) and Purdy himself has won the EY Industry Entrepreneur of the Year - in the process, beating off the likes of Pat McCann of hotel group Dalata and Greg and Marian O'Gorman of the Kilkenny retail chain.

But, as much as you can tell he's quietly thrilled at all of this, he says the key to staying ahead of the game is to keep growing.

"There's never a time where you say 'oh, we're done' or 'we've made it'. When we get to thinking that the game will be up. However big we get, we still think ourselves as the underdog."

'I had to borrow money from my sister to buy flowers for my wife'

If I could give advice to my younger self it would be…

"Believe in yourself more. A little self-doubt is no harm - but too much can really hold you back."

The most broke I've ever been was...

"This is easy. The business started in 1993 and my son was born in 1994 - and I had so little cash that I had to borrow money from my sister to buy flowers for my wife. I don't know if I've ever paid her back either!"

My favourite holiday has been...

"In Cape Cod. I used to get up every morning and cycle through these beautiful suburbs - and I would go past David Drumm's house! There was unbelievable wealth. I could settle somewhere like that."

The next big thing in my industry is going to be...

"The internet of things. By 2020 we're told that 20 billion things around the world will be interconnected. We've put together a team to see how we can tap into that."

My favourite investment has been…

"I haven't really invested outside of companies I run. Of course, I dabbled in property - like every other gobshite in the country..."

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