Scope
Advisory - Cost Out Diagnostics
Industry
Private Equity
introduction
Over an 8-week period, 7SS undertook an opportunity assessment across £117m global addressable spend to identify opportunities for P&L value creation across all procurement levers
Business Challenge
This global software provider, with over £330 million in turnover, faced critical fragmentation after being acquired by private equity and executing a swift M&A strategy. Third-party spend became highly complex, and the small, tactical procurement team struggled to manage the scattered direct and indirect costs. 7 Step Solutions was engaged to diagnose this fragmented spend across critical areas like IT, HR, and Marketing to identify and unlock immediate optimisation opportunities.
7SS supported a global business software and services provider with a £330m turnover, 25,000+ customers and 2,700 employees.
The business was acquired by private equity and since then has undertaken a significant M&A strategy leading to 3rd party spend becoming fragmented with only a small tactical procurement team.
7SS was engaged by private equity owners to undertake a diagnostic of the direct and indirect IT HR, Marketing, Insurance, FM and Property spend to identify areas for optimisation.
Our solution
7 Step Solutions was engaged by the private equity owners to apply its full four-phase diagnostic process—from initial data collection and stakeholder interviews to developing the strategic baseline and validating the delivery roadmap—ensuring the business could unlock significant, measurable value across its fragmented spend profile.
Data Collection / Analysis
Key information to determine the as-is baseline was sought. This included spend data (for example, what was being spent, when, by whom and with which suppliers), contract data (pricing / terms), policies (to determine any demand management) and stakeholder maps in the business. The output was a clear baseline of the as-is and with spend segmented by category.
Interview
From the segmented spend the key business buyers were identified. Sessions were set up with these individuals to develop the baseline further. This also gauged the as-is buying processes plus explored the competence and capability of the current buying practices.
Baseline
To determine the opportunities, the as-is was reviewed against good practice in other organisations. The output was a sourcing strategy developed for each procurement category.
Validation & Proposal
The final phase of the assessment was to validate the opportunities with the business and develop an appropriate delivery roadmap based on ease of implementation versus size of benefit. 7SS was then engaged to deliver the opportunities.
Outcomes
This extensive two-year programme began with an 8-week supply chain diagnostic to identify key cost and cash-flow opportunities across the operation. Over the subsequent 18 months, 7 Step Solutions implemented a full cost-out programme, continuing the transformation across IT, HR, Marketing, Insurance, and Property, resulting in audited annualised savings equal to 4% of the addressable spend.
Phase 1: Diagnostic
(8 weeks)
Complete a supply chain diagnostic to identify opportunities for cost saving across the operation and to improve cash flow for the franchisees
Develop a delivery roadmap based upon addressability of spend and feasibility of implementation
Phase 2: Delivery (6 months)
(6 months)
Cost out programme focussed on Indirect and direct IT
Phase 3 Delivery
(12 months )
Cost out programme continuing the IT cost out activity, further expanded to support HR, Marketing, Insurance and Property
Development of future state operating model supplemented with interim procurement leadership to support the transition
Total annualised savings delivered were audited as 4% of the addressable spend