Case Study:
Public Technology Company
Background
Public company with four business units: a leading provider of software to hotels around the world; process manufacturing ERP software; gaming systems solutions to casinos; and a hardware maintenance operation.
Business challenges on arrival
- $40 million out of the total gross revenues of $64 million came from hardware sales, systems and network integration, and legacy hardware maintenance. These were 20% gross margin businesses experiencing rapid declines as "Y2K" approached
- Monthly cash losses of $1 million per month; the Company had lost $13.5 million and $10.2 million in the two prior years
- Weak management and operations environment
- Lack of internal and financial controls
Actions taken
- Introduced strong internal controls
- Established detailed budgets and fast track reporting of results to monitor compliance with the plan
- Installed incentive compensation structure to drive performance
- Identified the high growth, high margin products and service lines. Rapidly eliminated business lines, and associated costs, that were not making an adequate contribution
- Removed, or upgraded, unprofitable customers
- Resized and restructured to eliminate costs
Results
- In two and a half years, approximately $55 million out of the $70 million revenue was generated from the sale of solutions with gross margins of 80%
- Profitability achieved