Getting up to date with ISG
Advisor Relations
This month I want to share an update from ISG regarding a change in our ISG Americas leadership: David Lewis will be leading a new practice called Cost Optimization and is transitioning leadership of the Manufacturing vertical to Bob Krohn and Jenn Stein.
Our forthcoming 2022 Advisor Relations research found that 7 out of 10 providers see challenges with staying up to date with organizational changes at ISG, so I want to use this note to highlight the reason for these changes, and describe how your firm can engage with ISG going forward.
We created this new offering because we believe enterprise clients are facing notable headwinds. With cost optimization, ISG can help enterprises save an average of 30 percent in a variety of areas.
What are these headwinds? In the future, clients:
- Expect recession to hit their region – 83%
- Believe inflation will be a major driver of economic stress – 97%
- Agree an increase in workforce costs and labor shortages will lead to distressed situations – 87%
- Believe a recession will drive not just company restructurings, but will lead to a new round of industry consolidation – 76%
- Believe global supply chain disruption is most influenced by geopolitical events – 69%
Source: Alix Partners ‘Preparing for the Storm’ research study
I spoke with David about why ISG is creating this new offering and what it means for enterprises and providers:
A renewed focus on cost optimization
David has been named to the newly created position of Partner, Cost Optimization. This role will focus on helping clients optimize their cost base using all the solutions ISG offers—from software and automation to network and sourcing and more.
David’s background at ISG
David has been with ISG for 21 years and has been involved in the Manufacturing and Automotive industry for most of his career, most recently as head of the Manufacturing practice in the Americas.
What factors in the market have caused ISG to create a specific business initiative around cost optimization?
There is considerable volatility in the market these days. A significant number of clients have listed risks in their earnings releases related to inflation, recession, FX, interest rates, supply chain challenges, cost of capital, geopolitical risks, attrition, and availability of talent. We have seen many enterprises restating their full year 2022 guidance with some announcing significant layoffs. We also believe this distress will potentially lead to increased M&A and market consolidation.
As a result, these companies are aggressively looking to bring their cost structure in line with their revenue and margin compression. The ISG Cost Optimization solution will identify cost optimization opportunities across time horizons—quick hits, and short-, medium-, and long-term savings.
While most Cost Optimization initiatives tend for focus on pure cost reduction, renegotiating rates, and very tactical approaches, ISG is taking a more strategic approach to optimizing cost. We’re looking at consumption, environment rationalization, and simplification to drive more sustainable approaches that will have short- and long-term impact without materially impacting service delivery capability.
Shorter term/quick hit initiatives may include invoice forensics/audits, software renegotiations, network negotiations, automation opportunities, and more.
Longer term, more strategic initiatives, may include cloud migrations, technology modernization, application rationalization, sourcing optimization, shared service monetization, automate to source programs, and asset monetization.
What will ISG deliver to a client to deliver impactful short terms savings?
ISG will initially conduct an assessment of the current IT and business operations and develop a heatmap of savings opportunities across time horizons. Opportunity areas include Network, Software, Services, Automation, Cloud, Finance, Accounting, Procurement, HR, Contract Governance, etc.
The roadmap will be accompanied by a business case, investment, resources, timing, and risk to execute against the savings opportunities.
Finally, ISG will deliver a set of high-level recommendations for operating model changes so that the client can continuously optimize costs, as opposed to making Cost Optimization an episodic event. Recommendations will include capabilities around: cloud management (FinOps), contract governance, benchmarking tools, Technology Business Management processes and tools, Automation COEs, Training, Strategy (Transformation) Realization Office, Software Asset Management, and more.
Transition of leadership of the Manufacturing vertical in the Americas
Bob Krohn and Jenn Stein will assume co-leadership of our Manufacturing, Healthcare and Life Sciences industries vertical. We see natural synergies in supporting these client industries together, particularly as it relates to manufacturing in the pharmaceutical and medical device sectors. Bob will be responsible for our Manufacturing industry practice and will continue to lead our Healthcare practice, while Jenn will continue to lead our Life Sciences practice. In the near-term, David will work closely with Bob and Jenn and continue to support his current manufacturing clients to ensure a smooth transition.
Why is this important for the provider community?
Working with David: Most Cost Optimization roadmaps include workstreams where the service provider is the preferred execution partner. If you have clients who are seeing revenue and margin challenges due to market headwinds or are simply looking to free up investment for business and technology transformation initiatives, please contact Dave Lewis, [email protected], 727-858-4509.
Working with Bob and Jenn: The Momentum team is currently scheduling education sessions for Bob and Jenn to come up to speed on your Manufacturing capabilities. If you’re interested in scheduling periodic cadence calls in the Manufacturing vertical, the Momentum team can help you get those on their calendars as well.
Please do let me know if updates regarding organizational change at ISG are valuable to your firm. I want to ensure the information I share each month adds value.
If you want to catch up on past notes, please use this link: https://isg-one.com/research/research-newsletter-archive.
Regards,
Paul
