How do you help a private equity firm to increase IT capacity while reducing costs?

Ensunet rises to a unique challenge

As you know, the world of private equity, or PE is high-stakes, fast-moving, and very confidential. So we’ll be cloaking this story in a veil of anonymity, but you’ll quickly appreciate the size, scope, and complexity of the challenge.

Here’s the short version: A prominent New York-based PE has in its portfolio a leading multi-brand franchisee group, operating more than 300 franchise locations in more than a dozen states, with over 7,000 employees. They’ve got a growth strategy. They’ve been acquiring franchisees by the score, and aim to keep going.

But there’s a problem: Two of their critical IT systems won’t scale with them.

That’s an enterprise-hobbling issue. It’s why Ensunet was brought in as part of the broader finance-and-accounting revitalization team.

A barrier to growth

The two systems in question were enterprise resource planning, or ERP, and human-resources information system, or HRIS. For each, the PE was dependent on an outside service provider who thought they had a cash-cow on their hands—and would be able to milk it for more and more, as it grew.

They were mistaken. Not only did Ensunet manage the tactical challenge of evaluating, and negotiating with, multiple candidate vendors for each system—but we also surmounted the larger strategic challenge of providing the PE with increased operating leverage. In other words, the goal was to enable them to grow, without adding costs to either system.

So how did we do it?

An enterprise-wide perspective

The scale and scope of these two systems can’t be overstated. And we’re talking about a fast-moving operation that’s already sprinting. You can’t afford a second of disruption.

What we did was to stand up two new internal organizations within the franchisee portfolio group: one for ERP, and the other for HRIS. Suffice to say, this was a massive architectural challenge. It impacted everything from general accounting to procure-to-pay to human resources and payroll.  

On the ERP side, the new architecture now encompasses general ledger, A/R and A/P, reporting, and fixed assets. On the HRIS side, it now includes onboarding, payroll, benefits, performance management, and lots more. HRIS now feeds into ERP. And the ERP, incidentally, feeds into Power BI reporting so that leadership gets a bird’s-eye view of franchise and operational status.

Here’s the best part about the new architecture: It will let the client add up to 500 more franchise locations, without adding any new headcount. That’s a massive advantage.

But it gets even better.

Scoring and negotiation

For both the ERP and HRIS systems, Ensunet developed the business case. Working with the client, we created weighted scoring parameters for each. For example, the ERP consolidated scorecard gave more weight to “use and scale” than “vendor management.” The HRIS scorecard—with eight different scoring factors—took into account everything from “benefits” to “communications,” and weighted them unevenly, based on the client’s needs.

We then analyzed different vendors: four for HRIS, and three for ERP.  We had them perform demos for us, which we used to score them, based on the weighted scorecard factors.

We then negotiated with them, and were able to provide the PE with the best-of-all-worlds result: The best possible solutions, and the best possible pricing.

In short, we saved this PE portfolio asset north of 15 percent on an annualized basis.

Combine that with the ability to scale without growing headcount and the power of taking all this in-house rather than relying on outsiders, and this PE was armed for growth like never before. Even more amazing, Ensunet turned this in a quick seven weeks!

Ensunet has supported IT for billions in pre- and post-merger activity. If you need help with this crucial challenge, download our free M&A IT Playbook & Integration Checklist. Or contact us today for a no-obligation consultation with one of our friendly subject—matter experts.