M&A: Fast Track Vendor Optimization

APRIL 2021

M&A: Fast Track Vendor Optimization

Fellow InCighters,

According to McKinsey, an organization’s Vendor Spend represents on average 25 to 40 percent of a merger's total cost-saving potential. The core to achieving this is building the right foundation; a combined spend baseline and taxonomy.

Mapping spend between two legacy organizations to a common taxonomy is difficult due to multiple ERP and Procurement Systems, but a must-have to ensure an apples-to-apples spend comparison. The AI & ML powered CIO InCight^®, an agnostic overlay that works with all in-place Financial Systems, provided this month’s featured client a detailed analysis of the legacy and merged entity’s IT Vendor Spend in fewer than 3 weeks.

Our automation categorizes spend to a standard taxonomy, making this baseline a reality, with no FTEs or consultants required. Companies often disregard this basic need, then painfully realize after Day 1 that their definitions of spend in each category are different.

CIO InCight brought vendor optimization to fruition. Over $45M of cost takeout has been realized in fewer than 9 months, bringing what their CIO calls a “hard synergy” to which IT has delivered the company. We feature two of the optimization plays in this month’s Insider:

#1 Consolidation of Firewall Vendors Delivers $2.4M of savings

The categorization of spend makes it easy to identify overlapping providers. The visibility into the combined entity’s Information Security spend showed six Firewall vendors in place that provided Network Security functionality. IT Finance revealed that CIO InCight “opened their field of vision” with intuitive, automated views of spend. Being able to clearly show how purchasing occurs (direct or via reseller) has been a “game-changer”.

#2 Leveraging Vendor TruSpend® with Dell Technologies saved $3.9M

Core functionality delivered in CIO InCight is Vendor TruSpend, defined as OEM Parentage + Reseller Purchasing. Historically knowing the “all in” spend with Dell Technologies (and the likes of HPE, Cisco, IBM, etc.) posed a significant challenge due to their complex product portfolio and more than 60% of the purchasing being done through resellers. Vendor TruSpend has “changed the playing field” resulting in better discounts and the use of fewer resellers. See the below on Dell Technologies' spend before and after the merger.

Creating consistent cost and category spend baselines has enabled our client to fast-track their vendor optimization post-merger. When the CIO, CFO, and CPO and their teams work off a single source of trusted spend, organizations stand a better chance of achieving their M&A goal.

Use Case:

In this clip, NASDAQ discusses how the "Integration of multiple financial systems" enabled by CIO InCight accelerates the process of optimizing merged companies vendor spend.

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Have questions?

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Best,
Leif

Leif Easterson
Global Head Customer Success

LEasterson@cxonexus.com

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APRIL 2021