There has been one story dominating the media in the UK over the past few months, Scotland’s attempt to seek independence from the United Kingdom. Despite losing the referendum to go their own way, Scotland will gain extra powers from the UK government to help offer a better standard of living for their population and improve growth prospects for the country.
The interesting thing here is what would have happened if Scotland had broken away from the UK. Everything from running the public services and utilities infrastructures, through to managing revenue generation initiatives such as setting tax levels through to the technology infrastructure to support the running of the country in an independent capacity. Not to mention the currency, border control and defence spending issues as well.
Even though the independence vote was lost, there are synergies here with companies that are going through a similar situation, namely going through some form of divestiture from their parent organisation. There have been countless divestitures in recent years as companies look to cut costs and at the same time raise valuable funds to grow their business or diversify into new markets. The chart below from Deloitte highlights some of the reasons why companies divest operations.
Whenever a company goes through a divestiture process, one of the most important things to ensure is that the business can continue operating with minimum disruption. This is not easy, especially when IT infrastructures have to be untangled between the two organisations. The divestiture process is incredibly complex and it will affect all areas of a business, including the external supply chain. Unravelling a B2B infrastructure from a parent company can appear at first to be a monumental task, not only having to establish the technical components of the new B2B infrastructure but also ensuring that external trading partners can be effectively managed during the transition process. For this reason many companies will establish transition teams to oversee all aspects of a divestiture process. At the end of the day the newly divested business must continue to make money from day one and so the role of the transition team, especially relating to managing the new B2B infrastructure is critical.
Now there are a number of options open to the transition team with respect to the B2B infrastructure. Taking the right course of action or direction for the divested operation’s B2B strategy is a critical decision, if you go in the wrong direction it could restrict future growth opportunities for the business. So which path do you take?
- Firstly, a divested operation could continue to use their existing B2B platform which for many companies would probably be the easiest option for them to follow. However there are complexities with extracting the B2B platform from the parent company and then continuing to manage trading partner relationships etc.
- Secondly they could decide to introduce a brand new platform themselves or adopt the B2B platform from the new owner. Either of these options will mean severe disruption to the divested operation’s business processes and trading partner relationships.
- Finally they could decide to outsource the management of their entire B2B platform to a trusted partner. Following a divestiture, especially if the company is acquired by a private equity firm, the company will need to be focused on their core competencies. This will be manufacturing goods and bringing revenue into the business, not having to worry about how they manage their B2B infrastructure on an ongoing basis. Therefore out of the three possible options, outsourcing is the best possible route for managing a B2B infrastructure and any accompanying trading partner relationships. After all what does a private equity firm know about running a B2B infrastructure? This is where OpenText™ Managed Services can help.
Whichever route the divested operation decides to take, they will have a relatively short period of time to transition to the new B2B platform. Typically, a parent company would give the divested operation anywhere between 6 to 18 months to become totally self-sufficient in how they manage their B2B infrastructure.
Establishing a B2B infrastructure in a divested operation is intrinsically linked to the overall IT infrastructure that will also need to be established in the divested business. Networks and routers have to be setup, internet connections have to established, PC’s and Laptops have to be configured, email systems have to be setup for each user. In addition, ERP systems have to be rolled out, CRM systems have to be setup within the sales and marketing departments and IT systems have to be deployed in new warehouses and logistics facilities. Now I haven’t even discussed what needs to be done from a B2B perspective yet, but already you can see that the IT infrastructure alone, which will help to support the B2B platform, is incredibly complex.
As for the B2B infrastructure, the divested operation will need to develop or possibly migrate document maps to the new platform, this could typically range from 100 to a 1000 maps. Not all of these maps would need to be created from scratch, in one example I have heard about recently, one third of the maps for a divested operation were brought across from the parent company, one third were transferred, but required a few customisations and the remainder needed to be created from scratch. Mapping is a complex and time consuming process, would your company be able to undertake this internally?, would your B2B team have the skills to do this or would those skills remain with the parent company?
Another common area of concern is how to integrate to an ERP platform. A manufacturing company, especially one with manufacturing plants all over the world will have to somehow re-integrate its B2B platform to the ERP platform. The longer this process is delayed, the more chance there is for duplicate data being entered into purchasing systems, which then leads to a lot of manual rework and rekeying of data to ensure the view of the information in the ERP platform is similar to the view in the B2B environment. Being able to integrate these two platforms as quickly as possible, to ensure one seamless, real time view of information is essential. Again, would your company be able to undertake this integration activity yourself or would you have to seek help from an outside provider?
The other area of importance from a B2B transition point of view is managing the external community of trading partners. During the transition phase, the company still needs to be able to order and take delivery of goods from suppliers, they will still need to get their manufactured goods distributed around the world and more importantly each trading partner will need to be kept up to date with what is happening during the transition to the new B2B environment at the divested operation.
OpenText™ Managed Services has helped over 800 companies outsource the management of their B2B infrastructure. With many years’ experience of supporting some of the biggest companies in the world, OpenText is well positioned to help divested operations maintain continuity with their B2B platform and their trading partner community. There are five key areas where Managed Services has been deployed to help divested operations manage their B2B infrastructures.
- Document Mapping – This is by far the most popular outsourcing request that we have seen, potentially hundreds of document maps will need to be transferred to the divested operation. Companies could decide to move the maps as is, move and modify or write completely new maps. Either way, the divested operation is unlikely to have in-house skills to create their own maps. In fact mapping skills are likely to remain within in the parent company. OpenText has a dedicated mapping centre of excellence to create document maps of any type and skills to map to ERP systems or to any specific industry standards.
- ERP Integration – As with document mapping, a divested operation may lose access to valuable ERP implementation personnel following a divestiture. OpenText has been working with many companies to help integrate their B2B platform to ERP related business processes. This ensures that externally sourced information can flow seamlessly into the ERP system. OpenText™ Managed Services has been integrated with a range of different ERP platforms, including SAP where we have experience of creating a range of IDOC document types to support key business processes.
- Trading Partner Management – Trading partners will need to be managed during and after a divestiture has taken place. The newly divested operation will have to maintain these relationships so that supply chains are not interrupted and the supply of goods can continue as normal. OpenText offers, a number of trading partner management offerings, in local language around the world. This includes training the trading partners in how to use all aspects of a new B2B service, testing connectivity and document exchange capabilities and finally offering a number of performance dashboards so that the trading partner community can be effectively monitored.
- Global B2B Support – Loss of support from a parent organisation means that global B2B support services will have to be provided to maintain global trading capabilities. OpenText offers a truly global 24/7 ‘follow the sun’ support service. End users are able to speak with multi-lingual support representatives who will be fully trained in the specific capabilities of the divested operation’s business processes
- Technology / Legacy Platform Upgrade – Divestitures provide the ideal opportunity to upgrade or introduce new B2B technologies. In the past, the parent company may not have allowed certain technologies or processes to be introduced simply because they did not have the skills to implement or support them. OpenText supports both legacy and the latest internet communication protocols, thus ensuring that trading partners can be connected irrespective of which communication protocol they may prefer to use. OpenText also offers a number of web based B2B solutions that allow any trading partner, no matter what their technical capability, to trade electronically with the divested operation.
For more information on how OpenText™ Managed Services can help your business please click here or alternatively take a look at the SlideShare presentation below. In a future blog I will discuss how companies are using periods of restructuring to undertake digital transformation projects.