By Jennifer Toomey, Senior Director, Cloud Business Group, Oracle
When one of the world’s leading private equity firms buys a new company, the goal is to help the acquisition grow and generate value quickly. So when Bain Capital Private Equity purchased global chemical business Diversey from Sealed Air Corporation, David Feierstein, Diversey’s head of global transformation after the Bain acquisition, instituted zero-based budgeting to quickly accelerate profits.
The idea of zero-based budgeting, which has gained renewed traction in the financial world, is to free up non-value-creating capital for redeployment to areas that feed growth. To help accomplish this, Feierstein used Oracle EPM Cloud.
Speed was Feierstein’s primary objective: He needed to quickly grow equity value through improved efficiencies and cost savings. “The transformations I’m running are extremely quick. I don’t have three, four, or five years. I often only have between 12 and 24 months,” says Feierstein. With Diversey operating in over 100 countries with five separate target markets, Feierstein needed a management system that could deploy as quickly as possible, unify multiple business arms, and integrate with existing systems.
Speed has two components. The first is speed of implementation. To accomplish this, Feierstein introduced Oracle EPM Cloud. Migrating Diversey’s on-premises financial systems to the cloud not only provided opportunities to reduce costs and increase efficiencies; it was easier than trying to integrate multiple on-premises systems.
This leads to the second component of speed: acquisition and integration. “How do I buy companies and integrate them extremely quickly back into the core business?” Feierstein asks. “If I don’t have a good system backbone to do that, it’s going to take years. But I only have months.” Feierstein points out that six months of saved time could be worth tens of millions of dollars in a firm as large as Diversey.
In Feierstein’s experience leading transformations, he uses Oracle Enterprise Data Management Cloud to go into newly acquired businesses that may have highly disjointed master data and make sense of it and organize it. Enterprise Data Management Cloud “interacts with all these different applications,” Feierstein explains, helping his team to “implement new systems and new processes extremely quickly by centralizing, consolidating, and organizing the master data that’s critical to make all these applications function.
“Enterprise Data Management Cloud is really the only cloud application on the market for data relationship management,” Feierstein adds. “It’s the glue that allows me to implement multiple systems at the same time in a very organized way.” Also, zero-based budgeting just isn’t possible without a system for gathering, organizing, and analyzing massive quantities of data across thousands of people and multiple countries.
The results so far have been astounding. Feierstein says that when he implemented his technology coupled with zero-based budgeting at two leading consumer packaged goods companies, he saw a cost take-out of about 25 percent in 18 to 24 months at one organization and 30 percent in 12 months at another. With a fintech company, he realized a 20 percent savings in 14 months. Two of the companies even doubled revenue growth as a result of being able to redeploy those cost savings to build new markets. He expects a cost take-out of 20 to 30 percent at Diversey within 12 to 24 months.
When leading transformation efforts, Feierstein points out that it’s critical to evaluate long-term functionality. “If I put in an application that, five or 10 years from now, is not superior, then I’ll have to rip it out and put another one in,” he explains, noting that Oracle’s cloud applications include continuous updates and ongoing functionality upgrades.
Having instituted zero-based budgeting at four businesses in three different market sectors over the past five years, Feierstein has routinely turned to Oracle applications to address three critical factors—speed, functionality, and cost. Feierstein says that each time he moves to transform a business, he evaluates and re-evaluates EPM systems and has yet to find a product that offers the speed of implementation and long-term functionality of the Oracle Enterprise Performance Management suite. Feierstein emphasizes that his playbook of technology used to enable transformations does not just include planning, but now includes many other applications from Oracle; most recently, he has added EDM Cloud for master data management to that playbook.
Feierstein also notes another aspect to his playbook: using implementation partner, Huron Consulting Group. At every company he has been with for the last four years, Feierstein has chosen Huron Consulting, a partner he says knows he can rely on for its speed and its people.
The organizations that will grow and succeed in the future, says Feierstein, are “the ones that think effectively in a more cohesive way across their portfolio using technology.”