Situation:

• Hosting, a managed services provider, was nearing the end of the owner’s investment period and seeking to drive sustainable earnings growth. Inside Consulting was engaged to reduce outside spend and assist with revenue growth initiatives.
• As the competitive landscape shifted and large IaaS competitors emerged, Hosting engaged Inside Consulting to assist with a restructuring plan to enhance competitiveness.

Insights and actions:

• Sourcing diagnostic analysis revealed a set of spend categories with compressible costs, where Hosting had more leverage than previously understood. Inside Consulting conducted multi-round tenders and live reverse auctions where appropriate, focusing on network and data center software.
• Revenue growth analysis revealed opportunities to increase lead flow and penetration within an underserved market segment. Inside Consulting helped design actionable pilots to confirm and capture these opportunities.
• To address the organizational restructuring challenge, Inside Consulting conducted a zero-based budgeting exercise across overhead functions as well as Sales and Marketing. Analysis revealed that customer ticket resolution teams had actually grown more productive in recent years and required additional investment rather than cuts. Analysis of the sales organization revealed a high concentration of bookings within a subset of the team, as well as the need to clarify account support models.

Impact:

• In the initial engagement, working alongside the client’s management team, we delivered $7M of improved EBITDA run-rate (+25%) and added 2 points of annual revenue growth over a 16-month period.
• The subsequent restructuring effort identified $8M of cash flow improvement potential from a combination of organizational productivity improvements and outside spend compression.