Undercapacity fuels takeover plan and Quantum Growth
New infrastructure improves costs, sales and productivity
Business problems - high costs & undercapacity halts growth
The company had been very successful and grown rapidly. However the administration and support infrastructure and processes were overstretched and could hardly keep up with customer demand. Most of the support and all of the IT systems had been outsourced to keep pace with the growth but cracks were beginning to appear as overheads and costs rose sharply. There was no time to pause for breath while growth continued but costs had to be cut.
Our solution - switch back to inhouse systems
We concluded that the outsourced systems were too inflexible and costly - demanding considerable manual intervention. In particular, the accounting systems were more suited to companies with traditional sales, purchase and nominal ledgers. The outsourced systems could not consolidate accounts for large joint ventures and projects. We recommended the most cost effective and quickest strategy was to acquire in-house operational, accounting and office systems and to design efficient new processes. We prepared detailed computer specifications, managed the invitation to tender, evaluated supplier responses, designed new accounting processes, recruited IT staff and project managed the implementation.
Winning results - cut overhead costs 50% and double sales
The entire project took about 12 months and the payback was felt immediately. Overhead costs fell by about 50% mainly due to staff savings. The infrastructure is now robust and can cope with massive growth. The board is now preparing to make a takeover - confident that its systems and processes will support its ambitious expansion plans.