When staying competitive demands speed and structural change
A global software company was facing aggressive competition from cloud-based rivals—with multiple challenges to its core products. Revenues had flattened and then declined, with operating margins following. Executives knew that the company would have to launch margin-growth efforts across all operating units—efforts that could deliver a significant and sustainable bottom-line impact.
The leadership team set a target of several hundreds of millions of dollars in total margin improvement, with a blistering pace: reach the target in just two years, capturing more than a third of the target in the first year alone. In its entire history—even amid strict austerity programs—the company had never achieved such massive cost savings and had never succeeded in sustaining its gains. Executives knew that success would depend on speed and structural change, and they turned to AlixPartners for help.
Swift execution makes the difference
Our team got to work and broke the complex problem into 10 distinct projects helmed by separate teams. Each cross-functional team had business, finance, HR, and IT expertise, and the teams worked closely together to identify, validate, and recommend a portfolio of margin-improvement actions. The actions spanned measures from a total overhaul of R&D and a shift to a cloud-first product model to a comprehensive strategic-sourcing, procurement compliance, and facilities utilization program. All told, we developed more than 500 detailed initiatives with an expected impact of 150% of the original target.
We also set up a decision board that would regularly review the consolidated pipeline of initiatives, approve actions, and monitor implementation progress toward goals. To make sure these critical initiatives would get implemented successfully, several AlixPartners senior consultants stepped into interim leadership roles for key functions.
To foster internal transparency and accountability for the results, we developed a visualization tool so managers could track the initiatives from concept through execution. The visualization displayed (1) performance targets defined for each initiative, (2) actual results achieved during implementation, and (3) trends in outcomes. Critically, the visualization made it possible for managers to spot issues and make course corrections as needed. As a result, we set up a new business-intelligence center of excellence, eliminating duplication across many functions and taking charge of analytics and reporting for the transformation program and other company needs. Plus, the center served as a single source of truth.
When it really matters
The transformation program delivered $250 million in savings in just the first 10 months—surpassing even the company’s stretch target—and exceeded the first-year goal by more than $100 million. The remainder of the pipeline continues to be implemented at an accelerated place, and the structural changes have laid the groundwork for the company to be able to sustain its success long into the future.