【正文】 somewhat clear, smooth and timely integration of the two panies was less assured Challenges ? Some manufacturing processes and technologies were inpatible between the two panies ? Combining two panies with both direct product overlap ? Acquiring pany was more of a ―intermediates producer‖ and the acquired pany was more of a ―formulator‖ ? Significant facilities consolidation opportunities ? Distribution consolidation and improvement required changing the business model and the mindset — Standard lead times — Standard service levels ? Significant customer overlap ? Significant EHS issues needed to be addressed, peting away scarce capital resources European Region Operations: 30% of sales 40 manufacturing facilities 60 distribution sites . Kearney 1/8510Color/7 After an accelerated integration program, the merger was deemed a success by the CEO as well as the analyst munity ? ―By the end of 3Q, the new pany had achieved cost reductions of $100MM on an annualized basis, three months ahead of schedule.‖ — Man Stanley Dean Witter ? ―Already, the pany has achieved a $100MM annual run rate in cost savings ahead of schedule…‖ — Janney Montgomery Scott ? ―The integration process is running smoothly and in fact better than expected achieving a $100 MM lower run rate…‖ — . Man Securities ? ―The integration efforts continue to track ahead of plan…‖ — Deutsche Banc Alex Brown ? ―Considering the steep increase in raw material costs, the new pany was able to meet expectations with its rapid integration of the acquired pany’s operations…‖ — Brown Brothers Harriman . Kearney 1/8510Color/8 Perspective External Focus Internal Focus Incremental Transforming Value Creation (P/E Ratio) New Business Model New Segments New Technologies Acquisitions Share Gain Technology Improvement Geographic Expansion Portfolio Management Work Redesign Supply Chain Operating Excellence 23% Sales Growth 45% Sales Growth 68% Sales Growth Following the integration, the CEO’s Agenda is to double the rate of growth while maintaining high levels of profitability Cost improvement, customer service and retention and ebusiness have been identified as key areas of focus . Kearney 1/8510Color/9 ? Rapid assimilation of acquisitions with limited additional financial staff ? Global shared services ? IT provides a strategic advantage in support of growth initiatives Target Capabilities ? Global processes and metrics ? Interim information on sales, profitability and cost of operation ? Automation of routine processes and transactions ? Financial staff is aligned with the business ? Continuous launch of service offerings that cannot be easily matched by petitors ? Quality built into an automated processes ? Humans manage the relationship not transactions ? Integrated supply chain work (SOP process) across multiple enterprises ? Inventory mitment using production, sales and balances ? Ability to reach customers globally without a local presence Growth / Agility Strategic Imperative Cost Improvement Customer Service Retention eBusiness NewCo’s business strategy will place additional demands on the entire anization . Kearney 1/8510Color/10 Company IT Overview . Kearney 1/8510Color/11 Finance/ Back Office Demand Planning Supply Chain Customer Service Human Resources Client/Server (Windows NT or Unix) Highlevel Processes Integrator SAPIS General Ledger Order History (Focus DB) Transportation Management Railmax Manufacturing Planning Transport Safety Ordering Teserac (HR) Infinium HR Financial Reporting Other HR/Payroll Systems Manufacturing Quality Systems Current transactional systems are plex, reside on multiple platforms and are integrated through a work of interfaces AS/400 Mainframe . Kearney 1/8510Color/12 Intrinsic manual processes result in a high cost effort that cannot support the speed of today’s ebusiness environment Growth / Agility Strategic Imperative ? Lack of automation prohibits additional workforce leverage ? Systems are running out of physical capacity ? Incremental improvement mindset limits strategic development Observed Key Theme Cost Improvement Customer Service and Retention eBusiness ? Focus is on reconciling balances and correcting errors and not root cause error prevention ? Processes (especially billing) are manually intensive ? Global processes are desirable but difficult to implement consistently ? Transaction systems are being increasingly difficult to maintain ? Special customer requirements and services () are implemented but at a relatively high cost ? Inspection of errors protects/ masks the customer from errors inherent in the system ? Manual intervention presents a barrier ? Business information is not easily assimilated ? Quality of global customer information is suspect . Kearney 1/8510Color/13 Roughly 72% of the IT budget is spent on maintaining current service levels and infrastructure To maximize business value, we need to shift the spending from maintenance to business development and long term IT support and infrastructure Percent of IT Spending by Category IT Support Infrastructure 2% Maintenance 72% Business Development 19% Nondiscretionary 7% . Kearney 1/8510Color/14 Functions Current Limited Point Source Solutions Point Source Best of Breed Suite or Legacy Systems Proposed A future vision of the enterprise architecture must seamlessly and efficiently integrate core business processes in an ebusiness environment Evolving Strategy: AIM, Microsoft IBM AS/400, NT, ??? Compaq Compaq Digital, IP, Exchange SAP JDE