The Challenge
A SaaS business technology company was struggling to achieve EBITDA performance targets set by its private equity owners. Prior cost reduction initiatives had not provided the savings necessary, mainly through execution, which was negatively impacting investor confidence and overall company performance.
The existing issues were compounded by high operational expenses across multiple fronts, including underutilised professional services teams, poor profitability in some products, and the inefficient use of physical and technological resources.
How did CEG help?
A detailed review of all operating costs was initiated through the lens of ‘what could be saved now, what could be saved later, and what could be saved but requires some investment.’
This review identified that a ‘reduction in force’ process was necessary to improve the professional services division’s utilisation rate from 50% to optimal levels. Three offices in the UK were reduced down to one, with HQ moving to a new, less costly location large enough to absorb the resources from the second office.
The third office was closed, and the transactional processes it supported were transferred to a lower-cost offshore partner. A detailed analysis of the company’s products and services highlighted concerningly low profitability in some of its legacy offerings.
As a result, several products were shut down, with savings realised through the decommissioning of two data centres and redundant high-speed network connections. Furthermore, the company identified immediate savings in telecom services and found that various software licences were no longer required.
Where are they now?
Through the implementation of these strategies, the company achieved significant cost reductions, with an estimated saving of ยฃ5.2 million between FY 23 and FY 24. These initiatives not only helped to reduce operational costs but also laid the foundation for more sustainable business practices in anticipation of anticipated business growth.
The company’s efforts to modernise and streamline operations were crucial in stabilising its financial position and achieving the performance targets set by the company’s private equity shareholders.
