Jean-Michel Aulas: king of the middle market

Tireless: entrepreneur and football fan Aulas.

The man seems tireless. With a two-year professional degree, Aulas started his first company in 1969 when at the tender age of 20, selling it after three years and joining a computer services company. Here he gained insights into the specialised software needs of companies in different sectors.

Aulas was also quick to understand the significance that the introduction of the personal computer would have for medium-size companies. He soon left his job to found a company. He thought the first beneficiaries of the PC revolution would be accountants. They were (and still are) among his best customers.

Aulas’ company Cegid floated on the stock exchange after only three years, moving up to the main market in 1989. Aulas spent most of the money raised in the IPO on consolidating his market by acquiring small companies: Silicone, Orli, Amaris, Alphabla, Servantsoft – all of them bought to enter new SME markets and offer vertical applications for specific sectors.

This strategy allowed Cegid to build a dominant position in fashion, construction, restaurants and various industrial sectors. As one-size-fits-all Enterprise Resource Planning applications were introduced by larger competitors such as SAP and Oracle, Cegid was able to hang on to its market share with its specialist and sector-specific applications.

Aulas was also one of the early movers into the application services market, in which small companies are able to rent applications, rather than being obliged to buy them outright. This makes it easier for customers to upgrade their systems and buys their loyalty. In 2005, Aulas explained that among Cegid’s 80,000 clients, 60 per cent have upgrades and assistance contracts, pulling in €70 million of recurring revenues annually.

At a time when the large software companies are trying to muscle in on the middle market, Aulas’ little kingdom (40 per cent of the French SME market) is looked on with envy by competitors. In 2006, Microsoft CEO, Steve Ballmer visited Lyon, France’s second city and Cegid’s headquarters, to sign a partnership with Aulas to develop sector specific applications in security and on-demand business.

Leader of the pack

Whatever his standing in the international software market, in France Aulas is better known for his sporting connections than his entrepreneurial success. As president of French football premiere league side Olympique Lyonnais since 1987, Aulas is in the newspapers almost daily, sparking, or commenting on, the controversies that seem to dominate the game these days.

But his attitude as the head of the football club provides a good insight into his entrepreneurial style. Tagged as ultra-liberal, Aulas regularly uses the platform offered by Olympique Lyonnais’ ups and downs to argue about tax breaks, labour deregulation and IPO possibilities for football clubs – he took Olympique Lyonnais public last year.

His management of France’s the football club, as well as of Cegid, demonstrates how the very Cartesian son of a maths teacher hates randomness and tries to reduce the impact of unexpected events through highly detailed planning.

Still, this taste for detail has not stopped him from taking risks – unlike many French engineers and managers, whose intellectual grounding makes them risk averse. Maybe is it because like other prominent French entrepreneurs, such as commercial search engine Kelkoo founder Pierre Chappaz, Aulas is a true survivor. At 17 he broke his spine and was forced to spend six months immobilised in bed. And Aulas has sacrificed a lot to his ventures. He is divorced, and when asked recently about his next grand plans, he said he was going on vacation with his son, something he has rarely been able to do for a long time.

Contrary to recurrent rumours of a sale of his company, Aulas’ football activities – he is now president of the G14, the club of the super-rich European football clubs – have not yet restricted his computer venture. He is from Lyon, a city where the business culture has little tolerance for overspending and flamboyance. In 2006, Cegid had revenues of €228.2 million and profits of €16.2 million. In the first half of 2007 revenues grew by 22 per cent.

In football, Aulas is famous for his fighting spirit – he is always ready to complain about referees or to file complaints to football federations. It seems his approach also fosters teamwork in his company. Many of 2,000 Cegid employees have been there since the beginning. Now that R&D partnerships are growing and Aulas is looking to expand Cegid’s operations outside France, the type of loyalty he commands will be invaluable.