Digital Value Creation for Growth Acquisition
Challenge
A private equity firm’s portfolio asset is a major multi-brand franchisee operation with more than 7,000 employees and spanning over 300 locations around the country.
Kratos Partners was brought in to scrutinize two critical business systems, enterprise resource planning (ERP) and human resources information system (HRIS), as part of an enterprise-wide overhaul of their finance-and-accounting operation. Both of these systems were being run by outside service providers, which robbed the client of desired control. As the company grew and maintained its aggressive posture of acquiring new franchisees by the score, the ERP and HRIS vendors would only charge more money year after year to accommodate the growth.
Solution
Kratos Partners developed the business architecture for two new organizations, one for enterprise resource planning (ERP) and the other for human resources information system (HRIS), which the private equity firm would be able to run internally.
The new architecture not only supported new efficiencies and functionality such as Power BI reporting for leadership on franchise and operational status, but it also was designed to let the company add up to 500 more franchise locations without adding any new headcount. This was not exactly the way the previous vendors had wanted things to go!
In addition, Kratos Partners developed the business case and weighted scorecards for auditioning all-new vendors for each system. These multi-factor scorecards were used to evaluate three ERP vendors and four HRIS vendors who were all invited to demonstrate their offerings. Kratos Partners along with the portfolio then scored each system based on the weighted criteria and negotiated the best price from each vendor.
In short, we were able to save the client north of 15 percent on an annualized basis.
Team
Over a period about seven weeks the strategy and selection of the vendor was finalized, the team developed the architecture and testing regimen, and then reviewed system demos and ranked and scored them, and also conducted the pricing negotiation.
After the strategy engagement, the portfolio engaged Kratos Partners to manage the engagement in Interim Leadership role driving the implementation of ERP, HRIS and Analytics solutions over period of 24 weeks.
During this engagement we worked hand-in-hand with the PE’s chosen firm for the broader finance-and-accounting reinvention, of which the ERP and HRIS were two vital components.
