By Ashton Ward. Published on 28 August 2016
Unify Software and Solutions GmbH & Co. KG (Unify) is a $1.2bn corporate telephony and communications specialist. It employs around 5,200 people and operates in the Americas and Europe.
Private equity firm The Gores Group bought a 51% stake in Unify (formerly Siemens Enterprise Communications) in 2008 after being approached by Siemens AG. Gores set about transforming the business through restructuring and acquisitions, including the integration of Enterasys and SER.
In late 2013/14, a new CEO and CFO were appointed to help accelerate the pace of change in anticipation of a sale. A Big 4 consultancy had already prepared a strong business case and plan for the establishment of an owned and managed service centre in Bulgaria as a key step in stripping costs out of the finance section.
This was part of a company-wide transformation. Unify now needed transformation experts to help implement the plan.
The new CFO had previously worked with independent interims on a similar project, and asked them to partner with the consultancy firm on the implementation phase.
Recognising that, while the business plan and proposed methodology were excellent, using the consultancy to advise on implementation would be expensive, the project leaders proposed an alternative approach.
They suggested exiting the consultancy and bringing in a team of highly experienced interims instead, to realise an immediate €3m saving on the original €11.5m budget.
“It quickly became clear that [using the consultancy] was going to cost us quite a lot of money and also that we could do it quicker and cheaper ourselves because of the people we know, including the Eton Bridge team who were able to respond at very short notice and get some really good people in to work with us.”
The client agreed to give a team of independent interims, led by the Senior VP Transformation & CIO alongside the Transformation Director, the opportunity to make the change happen. The composition of the team flexed during the programme as different competencies were needed at different stages. Eton Bridge Partners’ ability to mobilise the right talent quickly and dependably was critical to the programme’s success.
The project leaders were also keen to emphasise the critical role played by the project sponsor, Unify’s Chief Finance Officer.
“Our sponsor was very experienced. She knew exactly what she was doing and knew that this would work, but she had to convince some of her colleagues that it would work as well. So we kept it simple and adopted a ‘lift and shift’ approach to minimise risk and rapidly deploy the solution.”
The pressure was on to make a measurable difference rapidly and cost effectively.
“It’s clear that as a team of independents you can start a major transformation programme like this and make it happen. There’s a lot of exceptional senior talent out there and Eton Bridge Partners was brilliant at rapidly identifying and sourcing the people we needed.”
What we did
The initial challenge was to build and staff a 200-person service centre in Sofia, Bulgaria to provide finance, planning and analysis functions. In the existing business model these functions were provided by 220 people across four countries.
On paper, this had to be achieved within 15 months, but given private equity’s requirement for a 12-month return on investment, the timescale was even tighter.
The business case and methodology, developed by the Big 4 consultancy, were sound and did not need revisiting. The property the firm had selected in Sofia to house the service centre, however, did cause some immediate problems.
“It was nowhere near big enough. So our first job was to search for a new property. We became experts in Bulgarian real estate. When we found a property we sent a Photoshopped image of the building with the Unify logo on it. It was a useful way of demonstrating progress.”
Focusing on the immediate core brief, the project leaders partnered with Eton Bridge Partners to build a team of experienced specialists, which they then divided into three sub-teams: a Bulgarian team; country leads; and subject matter experts.
Team membership changed in size and composition over time as different expertise was needed at different stages of the project. Membership ranged from 15 to 20 people, peaking at 30 during the most intense period.
“There was a greater challenge in finding more junior people to support us in areas such as process mapping, which I think reflects the interim market. But not only did we find these people, we were able to promote them into more senior roles as they built trust and rapport.”
A project management office was formed to oversee progress. Whilst a new, larger facility was being secured for the Sofia shared service centre, the team was able to make a start on appointing the people needed to staff the centre. The clients at Gores and Unify were immediately impressed by how quickly the project started moving.
“A month in corporate is a week in PE. This was a project that had been talked about for 15 months and we were able to go in and within two months we’d assembled a team and we could start to do things. And you could see the client thinking, ‘Well, this is a bit different’.”
Very quickly the project grew in its scope and the in-year savings it offered, while similar change projects in other areas were not making the same kind of progress. The project leaders reinvested the €3m saved by not using the Big 4 consultancy to look at other functions and geographies that could be addressed in the new service centre.
“The financing to do [additional phases] initially came from the savings we made by losing the big consultancy. And that meant we could go back to the board every couple of months and say ‘This is how we’re spending your money and these are the extra benefits’. They found that pretty compelling. After that, getting permission to do something different becomes easier.”
As the project was implemented, greater savings on the original budget of €11.5m were made and these savings were reinvested in expanding the scope of the project still further.
“Phase 1 was planned for 203 people – we actually ended up doing it with 170 by identifying basic inefficiencies. That’s been repeated in all the subsequent phases where, on average, we’ve done it for twenty per cent less than planned.”
The project expanded across three phases to ultimately address 10 different process areas, including procurement, IT and supply chain management, in 15 different countries.
When identifying the Sofia HQ, the project leaders had already future-proofed the project by allowing for expansion. This meant the service centre could accommodate all the 320 staff required to provide the increased range of shared services. As the original plans had estimated that 434 heads would be required, this was a considerable saving on the original budget, reinforced by the lower salaries in Bulgaria.
“On average a good Bulgarian worker costs €20 – €22,000 in total, compared with €70 – €110,000 being paid in other countries. Even if we had needed to hire in more people we’d have delivered over and above the business case.”
Traditionally a transformation programme considers an organisation’s systems, processes, people and culture. The project leaders focused specifically on the people and culture elements of the project because these areas offered the most immediate return on investment, but there were issues in other areas that might otherwise have been addressed.
“Different countries had different systems – including five different versions of SAP. But implementing or integrating SAP systems has a three to five year payback which was too long for this client, so we didn’t look at that.”
The results speak for themselves. Starting with a budget estimate of €11.5m to realise benefits of €12.4m, the team immediately identified €3m of savings by replacing the Big 4 consultancy with a team of independents put together with the help of Eton Bridge Partners.
During the project, an independent real estate interim brought in by Eton Bridge Partners secured €18m of savings by streamlining 250 properties, while IT specialists reduced spending in that area by 46 per cent.
By reinvesting savings and efficiencies across three phases and expanding the scope of the project to include savings in real estate, IT and finance, the team was able to make overall savings in excess of €50m over 18 months.
This radical turnaround in Unify’s cost base and profitability enabled The Gores Group to sell the organisation to Atos for an enterprise value of €590m (€340m in cash, €200m pension deficit and €50m net debt).
“Special thanks to the Eton Bridge team who have been with us throughout the whole journey and continue to be a support to us.”
Shared Service Centre of the Year Award goes to Unify
The Unify Service Centre established by a flexible team of interim subject matter experts provided by Eton Bridge Partners; led by the Unify project leaders has won the Shared Service Centre of the Year award at a prestigious industry event.
Organised by the Bulgarian Outsourcing Association, the annual Outsourcing Excellence Awards recognise success, business growth and leadership in the sector. This year’s event was attended by leading industry figures and government officials including the President of the Republic of Bulgaria and the Mayor of Sofia.
“Tremendous news! Congratulations to you both and to the fine group of people who have worked with you to achieve this award at Unify. What an achievement – up against AIG, Coke and Cargill, particularly bearing in mind this is a green field site where there was nothing in place 18 months ago.” Ashton Ward, Eton Bridge Partners