A leading cloud services and data center provider struggled to understand the operations and financials of its various business units, which led to difficulties with tracking KPIs and making major decisions. Specifically, the company lacked an idea of each business’s profitability, especially around products.
To successfully return to growth under new management, the provider enlisted AlixPartners to design and execute an effective transformation strategy.
First, we broke down the company’s financial information to better glean where product profitability could improve. Through this profitability analysis, we evaluated potential scenarios to estimate the impact of various cost and revenue changes and reach conclusions around a target product portfolio.
After assessing all products and resources (namely staffing requirements, technology, and data center needs), we detailed current cost allocations and recommended operational improvements. A more robust product strategy also enables the company to develop more appropriate sales and marketing motions, along with a stronger tech stack and organizational set-up.
We then designed a product roadmap that laid out the ease of implementing certain changes against their urgency for the business to find quick wins.
The transparency gained across operations and product financials has allowed the management team to better factor pricing and underlying costs into decision-making. We have shown that only ~40% of the offerings contribute to profitability. As a result, we have also provided recommendations to invest or divest in specific products, helping the company focus on the most profitable parts of its business. This included reorganizing the data center strategy to align with and power new product priorities.
10-15% increase
in EBITDA margin through the strategic measures we identified
