Focused Business Intelligence For Mergers and Acquisitions
Posted on 15. Sep, 2009 by Jerome Prescott in Software
A merger of two aggressive manufacturers in the United States and Canada formed a company that brought unique value to the agricultural, construction, materials handling and transportation industries.
As a multinational firm which has undergone mergers and acquisitions, the new company had multiple and disparate IT systems. They were seeking a more simple and timely way to access business data and improve its decision-making process to successfully serve customers in North America, Latin America, Europe and Asia.
Further compounding the problem was a disparity in business models of the merged entities. Dealing with multiple systems was causing confusion and tremendous overhead on their employees. Not to mention the reduction in quality of service provided to their customers.
Bridge and Gasket Comes to the Rescue
To connect multiple international systems, datacubes were crafted to house data from different ERP systems and data sources, including Excel, to allow business users to overlay data across different systems and create an international view of sales and profits. This is the Bridge.
Not only did this approach accelerate their ability to analyze important information, it also reduced the current IT report backlog. Users were empowered to mine the information to meet their own reporting requirements (the ‘gasket’).
Poor Forecasting and the China Syndrome
A manager in the call center overheard an agent taking an order and discounting the price of a popular item. On a hunch, he ran a query against one of the datacubes and found that this happened quite frequently. Customers ordering online always paid the full price, so a decision was made to minimize the discounts on certain items. This simple change reduced the volume of incoming calls as more customers ordered online while improving margins in the call center.
China Sourcing and Business Model Reversal
In the past, sales were forecast based on key attributes including customer group, geographies, product classes, and related criteria. Over time the accuracy of the forecasts was steadily decreasing as more and more products were sourced overseas, particularly China.
The current practice for the company was to source the majority of products from Asia and perhaps one-third from the US and Canada. About half of the suppliers were Chinese and even more of their business would be going to China in the future. Customers had more options and were more sensitive to price.
Customers took advantage of the competitive price and quality combinations. As supplier substitutions increased, sales forecasts based on the old model became less and less accurate. The business model was changing from customer driven to product driven.
Once the root of the problem was identified, a solution was developed to help manage a product-driven business model. The key was to start from user perspectives and work backwards toward the data.
Targeted business analytics for mergers or acquisitions can go a long way toward helping your business edure the addition of a new business model. Visit our website and see how our zero-risk BI Road Map Accelerator can help get you there quickly.
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