Creating Value Through Digital Enterprise Transformation Originally presented to XPX, CT Chapter. We look at what it takes to create value and reduce risk using digital enterprise transformation to improve your business processes, technology, and talent foundations. Topics covered include building a roadmap, process improvement, systems improvement including ERP, CRM, BI/Analytics, and eCommerce, how to build a global organization, and how to build a professional management team.

1. Operations
Improvement for
Exit Planning

2. Agenda
The approach
The roadmap
Our case study
Table stakes
7
3
15
17

3. Hi, I’m Steve
Led transformation, software
selection, and implementation
projects at every level of business
– Fortune 50s, 500s, mid-sized,
and small businesses
Advised Fortune 500 executives,
family-run business owners, and
founders on growth plans,
operational improvement
projects, and technology strategy
Delivered $10M+ in operating
and technology savings, with
$100M+ of projects delivered on-
time and within budget, to-date
Clients
Big-4 Consulting
Boston, Stamford, The World
[ ] Lives in
Stamford with
wife, Darcy,
and two sonsBoston College Alum
B.S. Management, Info Systems

4. About our case study company, HiTech
• Middle-market IT services and equipment company
• Wants to exit within 10 years, sooner if possible
• Previous round of PE and strategic buyer discussions did not expose
adequate value in the business
• No interest from 30+ strategic buyers
• Limited interest from 120+ PE firms and value wasn’t as high as expected
• Small but successful product portfolio
• Run out of one location, some limited global reach

5. What are “operations”?
Operations are the processes and resources that are used to
produce the goods or services a business offers
• Meta-process
• Business processes
• Outsourced processes
Business Processes
• Platforms
• Foundational systems
• Value-added systems
Systems
• Organization structure
• Talent development
• Governance and controls
Structure / Talent
5

6. Reduce RiskAdd Value
Reduce costs
Enable top-line growth /
improve margin
Enable and drive innovation
Predictable revenue cycle
Reduce key-man risk
Compliance and security
What is our goal?
Add value to over a specified period of time
and reduce risk for investors
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7. First, let’s talk approach

8. Our process
• Define org and
management
capabilities
• Process and system
mapping
• Document
conceptual
architecture
• Plan projects
• Onboard project
owners
• Choose vendors
• Perform detailed
designs
• Build solutions
• Train staff
• Deploy solutions
• Monitor and
stabilize
• Plan and roll-out
improvements
• Document current-
state
• Document goals
• Understand growth
expectations
• Identify target
metrics
• Define high-level
operating structure
• Document current
ecosystem
• Solicit employee
feedback
• Gather
improvement
opportunities
• Document risks and
challenges
• List and prioritize
benefits of each
opportunity
Define/
Understand
Strategy
Assess
Develop
Roadmap
Implement
8

9. Talent: Org Chart / Operating Model
Organizational Chart
• Shows all roles, reporting lines
• See number of direct reports, overlapping
responsibilities
• Visual of where personnel cost and complexity
sit, where complexity can be taken out
Operating Model
• Documents the mission and responsibilities
of every role in the organization
• Maps responsibilities and capabilities to a
role, not an individual
9

10. Processes and Systems: Driven by Process
Process Framework
• Gets everyone talking the same language
• Think about business process, not “tasks”
• Clearly divides processes used to deliver a product
or service and those that support that delivery
Process Assessment
• Level of maturity, # of people collaborating
on a single process
• The systems involved with each process
• Top 5 improvements for each process
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11. Why do you need defined processes?
Scaling
Predictable operations, data, and behaviors across locations. Make it easy
to add people and locations and to integrate acquisitions
Efficiency
Perform operations at lowest cost, pursue automation, increase margin
Effectiveness
Ensure business activities achieve reliable outcomes, meaningful data,
and can be easily adopted and understood by users
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12. What do you need to be careful about?
• Cannot be all about control  will make company slow-responding,
minimally reduce risk
• The tools drive the process. Do not skimp on system selection
• Once you implement a system, the process becomes more difficult to
change (by design). Stabilize processes before building too much
infrastructure around them
• Adoption is paramount. Moving too fast endangers adoption, carries
cost, and makes future improvements even more difficult
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13. Setting the stage for value, the role of “digital”
Digital is the most modern, efficient way to
unlock enterprise value and is key to leanly
creating massive growth
• Union of process, tech, people
• Focused on execution
• Constantly iterating, evolving
• Customer is at the center of most
decisions. How does this investment
benefit our customers and how well
we know them?
Mobile Big Data
AnalyticscX Tools Process Automation
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14. Pre-Roadmap: Operations investments compound
Value
Compounds over time
Risk
Controlled at strategic points
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
EBITDARiskProfile
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15. Building foundations for value
Some investments have little short term benefit, but are
required for significant downstream value drivers
Master Data
Modeling
Data
Maintenance
Processes
CRM + Sales
Operations
Example: Sales and Marketing
Marketing
Automation
Fragmented, outdated
customer data
Keep customer data current,
SST
User customer data for
targeting; sales operations
Automate and micro-target
potential customers
$ |  |  $ |  /  |  $$ | / |  $$-$$$ |  | 
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Cost | Difficulty | Value

16. Build the roadmap
FY2017 FY2018 FY2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Software
Organization
Infrastructure
Sales &
Marketing
ERP Selection
CRM UpgradeERP Re-implementation
ERP Infrastructure
Marketing Analytics
Payroll and Benefits
Mobile project management
Org design
Management training
Sales org and new hires
Pricing tools and approvals
Security Project
New Wireless
Supply Chain Analytics Sourcing & Purchasing
Performance management rollout
Full company
communication
Tech-stack upgrade
Holding Pen (projects yet to be scheduled): • Custom promotions upgrade
• Warehouse management
• Move Field Service to the cloud
• IT risk assessment
• Recruiting platform replacement
• Financial reconciliation tool implementation
Sample
New hiring process
Global rollout 1
Global rollout 2
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17. That all sounds nice,
but what about HiTech?

18. Value judgements
Cost reduction cases can be challenging for reasonably well-run middle-
market companies. Focus on growth benefits + low-hanging fruit.
Days Sales Outstanding
Often lacks scale
Total Sales Reduction Total Savings
$34,795,000 2 days $17,349.84
$34,795,000 3 days $26,024.75
$34,795,000 5 days $43,374.59
FTE Savings
Can’t cut partial FTE
B/O Cost Automation Total Savings
$275,000 1.5% $4,125.00
$275,000 3.5% $9,625.00
$275,000 7.5% $20,625.00
Value primarily comes from growth + improved margin
Sales Transformation Sales and Marketing Automation Operational Scalability Structure and Talent Pricing
Cost of Quality
Worth the effort, can be met through other means
COGS Reduction Total Savings
$25.23M 5% $1.26M
$25.23M 10% $2.52M
$25.23M 20% $5.05M
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19. Why was there little interest from strategic buyers?
My hypothesis: risk
• Few international
resources
• Limited ability to
support across time
zones
• Need to be closer to
growing markets
Geographic risk
• How will business run
without partners?
• Are all sales
relationship based?
• How will they price,
buy, sell, collect
without owners?
Key-man risk
• Concentration in a
single vendor
• Means expertise in
sales, purchasing,
consulting limited
• 1 tech stack = little
complexity. Can they
handle more?
Vendor risk
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20. Use operational improvement to decrease risk
Vendor risk
Management
structure
Cloud- based
infrastructure
Sourcing
processes,
approvals
Geographic riskKey-man risk Vendor risk
Metrics
and goals Operational
systems (ERP,
CRM,
Knowledge
Management)
Tracking
tools / BI
Approval
workflows and
thresholds
Management
frameworks
and tools
SLAs, SOPs,
FAQs, KX,
centralized
support
Demand
management
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21. What we heard that we can act on now…
“Streamline our
management
structure to be a
bit more
professional”
Yes! But also need to consider management disciplines
and tools
• What metrics will they be responsible for? How will
they be generated?
• Where will process handoffs occur?
• What staff will be they responsible for and do they
have the right skills?
“Improve
our…operations
to be more
scalable”
Scalability will come from:
• Defined roles
• Defined processes (balance discipline and flexibility)
• Systems – well selected, designed for the business,
owned by someone in the business. CapEx required
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22. What we heard that we need to set the stage for…
“Need more people…
particularly skilled
technicians”
Maybe, but be careful:
• Many smaller companies overspecialize specialties and
industry experience. Be strategic
• You definitely need good managers and great
salespeople – often the best are generalists
• Add strong managers before adding great technicians
Prepare for
M&A
First time buyers need to minimize risk, maximize potential for value
creation in the acquisition process:
• Platform for integration – create scale you can use to become more
efficient, don’t just add revenue
• Established, empowered executive team
• Systems, data structures, metrics that existing managers know how to
understand and use
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23. What else it sounds like…
New Product
Introductions
• Create a structured NPI process for folding new products and
vendors into the portfolio.
• Assign a manager responsibility for each step of the process
• Meet monthly to actively manage the process
• More new products
• Fewer issues at launch
• Better prepared for support
Vendor
Rationalization
• Evaluate current vendors, especially on outsourced services
and IT
• Contract re-negotiation and consolidation
• Market survey and re-bidding for major services
• Easy cost reduction
• Re-cast vendors as strategic
partners
• Tighter selection process
Pricing and
Approval Tools
• Develop process on paper including approval thresholds
(distributed authority), digital workflow tools
• Make pricing more consistent, eliminate unneeded discounts,
collect for all service delivered
• Easy cost reduction
• Re-cast vendors as strategic
partners
• Tighter selection process
HR Processes
• Hiring process: job descriptions, recruitment strategy,
interview strategy, compensation, and benefits evaluation
• Retention and staff development – manager training,
mobility, soft benefit policies, and performance management
• Attract better candidates
• Vet candidates consistently
• People as core competency
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24. Some other important projects for exiting companies
ERP
Customer Service Customer Satisfaction
Sub-ledger Automation
SOX
Business Intelligence
CybersecurityKnowledge Management
Backoffice outsourcing
eCommerce
Fulfillment Automation
Procurement Tools
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25. Our Credentials
Led process transformation,
software selection, and
implementation projects at every
level of business – Fortune 500s,
mid-sized, and small businesses
Advised Fortune 500 executives,
family-run business owners, and
founders on growth plans,
operational improvement
projects, and technology strategy
& implementation
Delivered millions of dollars in
operating savings and technology
savings, with over $100M of
projects delivered on-time and
within budget
Construction Life Sciences Broadcast Manufacturing Franchising HospitalityReal Estate Publishing
ClientsIndustries
High-tech

26. Discover
More
(203) 539-1724
steve@ronanconsultinggroup.com
www.ronanconsultinggroup.com