Services case study

Well-known, LSE-quoted supplier of high speed packaging automation equipment for pharmaceutical, personal care, healthcare and food & beverage sectors.

Services industry, transformational change

Situation

Part of a >€1bn, privately-held group, this IT function was set the task to transform itself into a standalone provider of IT service to third party organisations.

The offering was to include systems integration, consultancy, hosting and value added services.

Approach

A four-stage approach commenced with a strategic review to provide clarity on key issues and agreement on objectives and an appropriate implementation approach:

  • Strategic Review: a 360˚  review found a complex matrix of services and tools offered, many of which were unprofitable or uncompetitive.  Systems and processes involved a high level of manual activity despite the organisation being a provider of IT service and workflow automation.  
    Lack of clarity on core competencies was often the root cause of uncompetitiveness and the unclear value add in client offerings.
    The strategic review enabled focus on the most attractive service offerings in terms of growth and profitability, as well as the areas in which core competencies needed to be strengthened.
  • Market Offering: following the strategic review, a team was established to develop competitive service offerings in the key areas identified.  In parallel, quick wins were identified to provide momentum to the transformation programme.
    Sales and Marketing functions were engaged in developing and delivering a revised go-to-market strategy.
  • Service Delivery: based on the revised client offerings, core processes were reengineered to ensure improved levels of service delivery at reduced levels of cost-to-serve.  
    Zero-basing new processes ensured appropriate headcount levels and enabled a re-structuring of a leaner, more customer-focused organisation.
    Best-practice management processes provided transparency and enabled improved management of key performance levers, whilst staff training supported process changes and promoted appropriate behaviours.
  • Business as Usual: close follow-up and mentoring as changes were implemented helped the embedding of new processes and behaviours into business-as-usual.  Performance monitoring and reviews enabled any gaps to be identified and appropriate actions taken.  Once target performance levels were being delivered consistently, training and coaching in continuous improvement ensured sustainability of performance gains.

Results

The business unit was taken from loss-making to being sold to a global IT services provider within 3 years.

  • Significant turnaround in EBITDA from loss-making to double digit profitability.
  • Reengineering delivered significant reductions in cost-to-serve of key offerings whilst improving customer impact and net promoter scores
  • Right-sizing the organisation following business process reengineering enabled deliver of higher EBITDA levels for a lower headcount
  • Staff development ensured that the offering was underpinned by behaviours from sales through to service delivery

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