Information Services

Competitive Strategy

Financial Information Service

Our client was hearing reports from its sales organization that a historically weak competitor was suddenly gaining market share by offering hot new products at remarkably low prices. Our client asked us to determine exactly what this competitor’s new strategy was and how best to respond to it. Though a combination of secondary research, executive interviews with customers and competitive benchmarking we learned that the new product family was merely a repackaging of old wares and the competitor was achieving its new-found strength largely by competing on price and gaining wallet-share though more effective cross-selling. Further we found major weaknesses in the competitor’s sales and service approaches, including rampant over-selling, problematic service implementations, and generally poor customer support. Finally we discovered that the competitor’s repackaging had resulted in significantly lower service delivery costs; these lower costs in turn enabled the aggressive pricing. We then worked with our client on a portfolio of marketing and sales approaches to exploit the competitor’s sales and service problems. In addition we identified several simple changes to our client’s service architecture to enable him to match the competitor’s service cost advantage while also improving customers’ perception of service quality.

Capturing Missed Profits

Service Arm of an Information Technology Vendor

A multi-billion information technology vendor was concerned about how to achieve its full profit potential for services. The Sales organization said that services were priced too high, while the service delivery organization said that sales was ‘giving away the store’. Meanwhile the overall organization had only the roughest ideas about which accounts were profitable, and what values customers ascribed to various services. After a detailed analysis of account profitability, discounting patterns, service costs at the account level, and customer perceptions of value we learned that (1) discounting was indeed out of control, (2) the core services were of high value and somewhat under-priced relative to customers’ perception of value, leaving some $70-100 M in profits on the table, and (3) a second set of services needed to be significantly restructured to better meet customers requirements. As a result, the client improved the processes by which it managed discounting, established sales training programs to help the sales reps sell more on value and less on price, and redesigned the problematic offers in order to capture a several hundred million dollar revenue opportunity.

A $400 M financial information company was concerned that its revenue and profitability were very closely linked to the extremely cyclical market for initial public offerings. We were asked to identify new services that could be sold, primarily to existing customers that would help smooth the cycles and grow the business faster. We recommended offering a variety of outsourcing services that were tailored to the special needs of the financial institutions and law firms that comprised our client’s core customer base. The recommended services have since become a material part of the client’s business and deepened its relationships with its principal customers.

Internet Strategy

Financial Information Service

Our $4 B client was concerned that it might lose a significant fraction of its customers to new competitors offering Internet-based solutions. Using primary market research and micro economic modeling tools we determined which customers would be affected, what new products they would require, with what revenue impacts on our client, and over what time period. Based on our work, the client has accelerated development of an Internet-specific version of its core service, and has unbundled certain service elements to better meet its customers’ needs for “open” services. These new services are expected to grow to be as much as one-third of our client’s revenues within five years.

Internet Spinout

Industrial Company

A $1 B century-old commercial printer was concerned that the growth in its customers’ businesses was increasingly moving to on-line and away from print. We helped them define a needed set of complementary on-line offerings, identify acquisition candidates who could supply them, and acquire a successful Internet company. The acquired company has since quintupled its revenues through organic growth. In a second assignment, we helped our client accelerate growth still further by developing a process to cross-sell the Internet divisions’ services through other divisions’ sales forces by treating the other divisions as indirect sales channels for the Internet division.

Growth Renewal Strategy/ Internet

Print and Electronic Publisher

This newly public company had recently been spun out from a Fortune 500 parent under whose ownership the business had languished. Widespread perception that the company was a shrinking business in a declining industry segment had led to a dangerously low share price, falling staff morale, and poor financial results. We developed a three-part turn-around approach consisting of:

1. Making the company the most cost effective player in its core business,
2. Developing line extensions using on Internet technology to increase delivered value
3. Leading an industry consolidation based on superior operating effectiveness

Post-Merger Integration

Internet and Software Services Company

Our clients, the CEO’s of two Internet and software services companies had just signed a letter of intent to merge their companies. We were retained to work with a cross-company team to address all issues of post merger integration in parallel with the legal and financial due diligence phases of the discussions, so that they day that the merger received formal approval, the companies could begin joint operations. Our work addressed all elements of the two businesses including marketing and sales, operations, R&D, and administration. Within four weeks we developed a comprehensive plan to combine the companies, achieve a minimum 10% unit cost decrease, retain all major accounts and key staff, and complete the integration with ninety days of deal closure.

Fix a Broken Back-Office

On-Line financial Information Service

Our client, a large on-line services company serving the financial markets had grown through more than forty acquisitions and was faced with the problem of integrating forty versions of the back office functions of order capture, fulfillment, billing and collections. It its current fragmented state, the company was having a difficult time meeting customer demands for unified billing. Further, previous cost cutting efforts and staff turnover had resulted processes with frequent billing errors which gave customers ample excuses to not pay or late pay their bills, producing a rapidly escalating backlog of uncollected receivables. We worked with a client team to prioritize which process elements to tackle with what priority and to determine what staffing levels were needed in each department to clear the receivables backlog. We then assisted them with the design of an efficient approach for the most broken elements of the order-to-cash process.

Improve Service Implementation Process

On-line Services Company

A major on-line services organization asked us to help it improve its service implementation process. While the process often worked well, there were many instances in which implementation projects took too long, cost too much and frustrated customers, sales reps (whose commissions depended on successful implementations) and the implementation staff itself. Through combinations of internal and external benchmarking and propagating internal best practices we redesigned this process to make it run faster and with much better quality. This new process which is about to go into a pilot demonstration phase in 3-5 regional offices is expected to product more than $10 M in incremental profits from earlier revenue starts, better customer retention, greater sales of incremental services and reduced lost business from customers who abandon the service during frustrated implementation processes.

Business Consolidation

Financial Information Services

A $100 M information services company led a market consolidation among a set of related players to build a $1.5 B service company serving the financial services industry. The company had developed a very compelling technology strategy to deliver the services of all the acquired entities through one suite of hardware platforms, software tools, and networks, thereby eliminating the costs of maintaining multiple incompatible systems and processes. To help the company realize these savings, we developed an orderly consolidation process to sell its customers on the benefits of the new technical environment, install the new technology, and rationalize the multiple sales forces and billing systems that put the entire plan at risk.

Improving Marketing and Product Management

On-Line Services

In this assignment, we consolidated highly fragmented marketing and product management activities in the largest division of this $6B print and on-line services company. These changes enabled the company to bring a higher degree of professionalism and expertise to marketing and product management as well as save money by removing one layer of management. In a second division, in which these functions were grossly overstaffed and where there was excessive spending for outside services, we identified a series of specific organizational and budgetary cuts to save nearly $10 M annually. With a third division, we devised a new organization structure for product management, marketing, and sales to enable renewed business growth after many years of stagnation caused by cost cutting to the point of starvation.

Sales and Service Efficiency

Financial Information Services

We developed a multi-channel sales strategy to help financial information service close the more than 50% sales efficiency gap it had versus its principal competitor. We also developed a customer service improvement strategy that addressed both the root causes of high levels of customer churn and the company’s disadvantaged service cost position. As this latter strategy is implemented, our client expects to lower its customer churn due to dissatisfaction by ten percentage points, and lower unit cost for customer service by 20-25%.

New Product Process

Electronic Information Services

A $500 M print and electronic information service was concerned that, as its organization was transitioning from purely print based products to a family that mixed both print and electronically delivered output, the new product development process was near breakdown. In short, the technology, editorial, marketing, and sales functions were constantly at loggerheads. We worked with staff in these four functions to develop a revised process, shortened cycle time by a third, and smoothed a process that had operated with so much rancor. In a later assignment, we developed an information technology plan for this client to enable them to focus their limited resources on applications of greatest value. In this plan we identified which functions could be safely out-sourced, and which needed to be kept in house because of their criticality to our client’s core functions.

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