Having the right ERP in place is crucial for any business to scale quickly, and even more so for a biotech startup taking on a deadly virus.
That was put to the test for software provider SAP when its platform had to manage Moderna’s transition to a major player during the COVID-19 pandemic, a case study discussed during Tuesday’s virtual conference, “Maximizing the Value of M&A Through Technology,” presented by SAP North America and the Association for Corporate Growth.
“SAP’s preconfigured solutions can be implemented in weeks rather than months,” said Tom Reul, a senior account executive at Answerthink, which helps deploy SAP software in the life sciences space.
One of Answerthink’s biggest success stories has come out of the work it did in 2015 with Moderna, which was then a little-known startup. SAP’s platform was going to be used to help the company run its business and develop its product line, which at the time was small.
Fast-forward to last year when the federal government injected $18 billion into Moderna to deploy its mRNA vaccine for COVID-19. The company’s ERP system, which ran on SAP, needed to scale up. Fortunately, scale was SAP’s strong suit.
“Without knowledge of COVID-19 even coming down the line, Moderna was able to support the transition from a startup to a leader in the vaccine market,” said Reul, who credits SAP’s ERP system for that rapid transformation.
Building a Digital Ecosystem
SAP’s part in Moderna’s successful vaccine development is just one example of the essential role technology has come to play in corporate growth and M&A.
During the session “How PE-funded SEF Energy Has Harnessed AI and IIoT to Increase Stakeholder Value,” panelists discussed why developing new technology is critical. Companies can say that they have an innovation department, but it’s often not a reality, according to Alan White, vice president of information technology for SEF Energy, a private holding company of oilfield manufacturing assets.
“You can’t force innovation, but you can quash it with burdensome processes and rules. We look for employees who are highly adaptable and are willing to experiment,” said White.
VistaVu Solutions, a business software provider, was able to help with SEF Energy’s digital journey, according to VistaVu’s founder and CEO, Jory Lamb. “SEF saw the value in the digital core in their digital landscape and they brought us to the table as a partner,” he said. “Right from the onset, they invited us into their strategic vision.”
“WE HAVE SENSORS THAT TIE INTO [VISTAVU AND SEF ENERGY’S CLIENTS’] SYSTEMS AND WE USE DATA TO DRIVE DECISIONS AND ANALYSIS. WE USE THIS EVERY DAY BECAUSE THE BEST ASPECT IS FASTER SPEED TO MARKET.”
Vice President of Information Technology, SEF Energy
One solution was building a digital ecosystem of SEF Energy’s back end to its customers. “We have sensors that tie into [VistaVu and SEF Energy’s clients’] systems and we use data to drive decisions and analysis,” said White. “We use this every day because the best aspect is faster speed to market.”
Another session, “Accelerating Value on M&A Activity Through Analytics & Planning,” explored the technology needs of businesses both before and after a merger. Often, the newly acquired companies need guidance on back-office operations, setting standards and easily sharing data that can be used to make decisions. In the session, Jonathan Essig, managing partner of SimpleFi Solutions, discussed the challenges that can vex a deal.
One is a lack of flexibility, “which becomes apparent when integrating with another firm, and it has been apparent in the last year as business models changed,” he said. “There is a lack of flexibility, whether in reporting and how you view data or the scenario modeling if we acquire an additional company.”
Inconsistent data governance and ERPs are causing law firms to fall behind the technological curve, but SAP solutions are helping legal services reclaim value.
A big problem law firms fall into is contracting out with small and mid-sized tech companies that can provide personalized ERP software for law firms but without rigorous standards.
“Law firms think their operations are special and unique and they need help from small, specialized providers,” said Craig Courter, COO of Katten Muchin Rosenman.
Poor data management means they have to be replaced every few years, which can be an expensive task, Courter adds. “You don’t want to do it often.”
Money and Resource Management
During the “Intelligent Spend for Private Equity—Simplifying for Rapid Savings” panel, Chad Buchanan, COO and general counsel for midmarket consulting firm Premikati, discussed how technology can help businesses control their spending.
The portfolio company’s procurement methods while under PE ownership can typically be divided into three buckets: Spending analysis, sourcing and purchasing. Using SAP Ariba technology, Buchanan said some private equity firms have been able to manage these three functions. “Ariba has a spend analysis module from various portfolio companies that shows what you are spending across the PE firms and where they might be missing potential savings,” he said.
Professional service firms, or PSFs, in particular, can run into problems when the time comes for them to grow, but putting the right software in place can help them scale, retain their differentiating advantage, and generate substantial returns for investors.
Unlike product-based companies, PSFs—like business and engineering consultants, for example—can only grow when they hire more people. But gains can be eaten up by a growing back-office workload that requires more workers. New hires can also dilute quality for clients without proper management. Overall, these factors can deliver mediocre returns for investors, according to Larry Perlov, president and managing partner of Illumiti, which helps deploy SAP’s software.
But the right ERP software can help avoid those growing pains and maximize value. Perlov says ERP software provided by SAP does this by automating back-office tasks, using advanced analytics to forecast which areas of the business are expected to grow, and helping to identify new talent and track the progress of tasks and projects of individual consultants, ensuring that consistency is maintained throughout the organization.
“Those who are effectively embracing [the services that SAP software provides] are able to become smarter, faster and leaner,” Perlov said.
Benjamin Glick is an associate editor of Middle Market Growth.
Phil Albinus is Middle Market Growth’s managing editor.