IT cost analysis following private equity carve-out
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key fact
Effective IT cost analysis during a private equity carve-out can identify potential cost savings by eliminating redundancies, optimising vendor contracts, and streamlining IT operations, thereby enhancing the overall financial performance and attractiveness of the newly formed entity.
Our client stands as a premier global provider of professional assurance solutions, dedicated to assisting businesses in managing risks, enhancing sustainability, and realising their objectives. Serving a diverse array of sectors such as aerospace, automotive, food and beverage, healthcare, and beyond, they offer a comprehensive suite of services. These include certification, training, assessment, and verification, all tailored to optimise organisational efficiency and effectiveness.
Challenge
Following a large private equity carve out of a global professional services organisation, the IT leadership team of the newly formed company wanted to better understand the baseline IT budget they had inherited, whilst gaining fresh ideas and insight into how their IT cost base compared to industry standards, alongside understanding the interdependencies, synergies, and opportunities with the technology strategy, operating model, and sourcing strategy that were also being reviewed and refined in parallel.
To navigate through these challenges, we helped the client to develop a structured understanding of their cost base and, from this, a view of the potential opportunities for cost optimisation – including opportunities for cost reduction, as well opportunities for investment where this would support value creation.
Solution
Our approach involved assessing the current IT budget, and available contract data, to rapidly form a baseline cost for the IT function.
From this baseline set of costs, we identified a structured set of observations and findings, which were accompanied by clear, pragmatic recommendations to either reduce costs, progress investment, or optimise IT cost management processes.
As part of our benchmark analysis, we appraised the factors influencing potential variances in technology spend across the various competitor groups – enabling the client to understand the benchmarking context through a more sophisticated lens.
Outcome
Our intelligent analysis helped provide our client with a well-articulated and concise understanding of their IT costs and helped to align the client IT and business leadership teams around the cost base, drivers, and opportunities. Crucial to this was our iterative and collaborative approach to developing a final report that key stakeholders were bought into.
Through our recommendations, the client was left with a clear set of next steps that could be immediately actioned to build on the momentum established through our work – enabling cost savings whilst also kick-starting investment IT programmes.
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