Karol Górnowicz,Director of
Sales Department
How to go global -expanding our business.
Warsaw, 06.06.2012
What are the aims and logic of this presentation ?
Goals
Find solutions to meet Copernicus’ fundamental aims:
Maintain the double-digit annual growth Retain the highest-quality workforce
Go and grow international
Diversify revenue sources
Road Analysis of company’s financial data, market analysis and presentation of the current trends that deeply affect the demand for Business Transformation services.
Result The idea of the new long-term selling strategy to overcome the challenges, avoid future market failure and meet all the Goals in the most efficient way.
SUCCESS!
Warsaw, 06.06.2012
Agenda
Executive Summary
Closing remarks
Company overview
Most important challenge to overcome
Proposed solutions to the problem
Expected results
“Success for a company often comes from the ability to drive the proper transformation at critical points.
‘Business as usual’ is an expression that can mean certain death over the long run.
Being able to grow and reinvent offerings is critical to addressing economic volatility, staying on top of the market, and remaining competitive.” Source:(Journal of Management Excellence: Business Transformation. March 2011)
Warsaw, 06.06.2012
Executive summary
We achieved satisfying financial results,: € 5,3 M of profit and over € 14,1 M of revenue in 2011. and managed to accumulate considerable cash reserves in the amount of € 7,6 M.Our profit margin, however, lies below the market benchmark.
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6 For large corporations we provide well corporate-suited range of services thus expanding our potential client base. So far they were our marginal clientele.
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2
3
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So as to maintain the double-digit growth and expand our activity, we need to get more big contracts, which means establishing long-term relationships with customers and providing them with a wide range of services.
We depend on the revenues from F&A services to too great extent. On average 60 % of revenues in 2009-2011 came from F&A services. That poses risk to maintaining sustainable growth.
Both small&medium and large companies inceasingly depend on more sophisticated business transformation operations such as Customer or Knowledge Services.
To diversify the sources of revenue we need to grow organically and form periodical joint ventures to aggressively expand sales of non-F&A services.
7 For our currently fundamental customer base, small and medium sized organizations , we implement cross-selling of our wide range of services thus retaining our current clients.
Warsaw, 06.06.2012
Karol Górnowicz,Director of
Sales Department
Company Overview
… where we WILL BE
Where we ARE …
Warsaw, 06.06.2012
We have best-qualified workforce satisfied with the job workforce. Our products portfolio is wide, but we focus on F&A services thus not exploiting the full capacity.
How does our finances present themselves ?
Can we actually do better in the coming years ?
F&A S&F
Our portfolio of servicesOur portfolio of services
F&A S&F S&P CS KSFinance &
AdministrationSales &
FulfillmentCustomerServices
Sourcing & Procurement
SMEIntern. corp.Other
Our clients (revenues as % of total sales)
Our people
5 managers
30 consultants
5 part-time consultants
10 back-office employees
High satsifaction rate
KnowledgeServices
Warsaw, 06.06.2012
Our satysfying financial results, on average 22 % annual growth of revenue and 25 % annual growth of profit, contributed to over € 5,3 M of profit and over € 14,1 M of revenue in 2011. We managed to accumulate considerable cash reserves - € 7,6 M Our profit margin, however, lies below the market benchmark.
What is the structure of our services ?
Is it optimal from the financial point of view ?
14134115909500
2009 2010 2011
531342503400
2009 2010 2011
TOTAL REVENUES (€ k)
TOTAL PROFITS (€ k)
CAGR= 22%
CAGR= 25%
AVERAGE COPERNICUS’ PROFIT MARGIN: 37%
AVERAGE MARKET MARGIN: 42 %
Cash (as of 2011): € 7,6 M
Warsaw, 06.06.2012
The non-F&A services constitute roughly for 10% of the total sales per annum. This number does not match with the profit structure since non-F&A services yield approx. 40 percentage points higher profit margin
How does the market for our services look like ?
2009 2010 2011
5700 69548484
4 x 9504 x 1159
4 x 1414
F&AS&FS&PCSKS
2009 2010 2011
1190 1488 1859680
8501063
340425
531
510
638
797
680
850
1063
2210
2763
3453
F&A services yield on average 21% profit
margin.
Non-F&A services yield on average 60%
profit margin.
TOTAL REVENUES (€ k)
PROFITS (€ k)
Warsaw, 06.06.2012
We are the third biggest player in Poland in the SM sector with 17% market share. As for the international companies, Copernicus has about 4 %. Our position in Europe is marginal. The market for non-F&A will continue to grow much more rapidly than demand for F&A services.
MARKET SHARE OF BUSINESS TRANSFORMATION SERVICES POLAND
18
12
13
17
40
22
SME sector (%)
AkcenturaIn-FosysBT Con.CopernicusOtherSIP
22
20
24
34
International corporations (%)
Copernicus – 4%
In European scale our position is marginal. Altogether we have approx. 2 % of the market share
in SME sector and 0,5 % in
F&A S&F S&P CS KS
5
10
5
10
15
Source: IDG Research (2010)
Forecasted annual growth of the European market (%)
Warsaw, 06.06.2012
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The dynamics of the revenue growth in the F&A services should support the thesis of the best achievable profitability. The true is – it does not. The non-F&A services yield more attracitve profit margines.
2009-2011
60%
F&A S&F S&P CS KS
4 x 10 %
SOURCES OF REVENUE
Considerable dependance on the F&A services poses risk to sustainable growth.
Diversification of the sources of income has not really been implemented
The growth of revenue of the F&A services is considerable and reached about 37% per annum and can be considered as impressive.
But the growth of the non-F&A services , considering their profitability, is not satysfying.
CONCLUSIONS
To sum up our financial situation: we are too strongly dependent on the Finance&Accounting services. 25% annual growth in profit was mostly contributed to the non-F&A services which yet are not in our focus.
Warsaw, 06.06.2012
Karol Górnowicz,Director of
Sales Department
Most important challenge to overcome
What are we missing ?
Warsaw, 06.06.2012
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Welcome to the End of „Business as usual” !
Percentage of non-technology literate at work and as consumers
Percentage of technology-literateat work and as consumers
Business as usual
New business models
The demographics change in consumers and the workforce alone mean businesses have to change. Therefore there will be a rapidly growing market for a wide range of innovative business transformation services.
The changing business environment will imply more focus on business transformation services for the companies. They always follow their clients.
Warsaw, 06.06.2012
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want lower tariffs, more range of products, efficient and reliable service
want job enablement, efficient tools and processes to perform their job
want increased revenue and controlled costs, for higher ROI
Consumers
Employees
Shareholders
necessity
„Business as usual” leads to . . .
influence marketing/cross-selling and rollout of new products/servicesCompetitors
What do we have to be particularly aware of ?
Arguments for new business focus
What do these changes mean to our business ?
New market conditions are challenging our company portfolio of services.
Warsaw, 06.06.2012
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Understanding end users’ needs becomes crucial.This is achievable by expanding knowledge services, customer services.
Business needs support in implementing new business solutions. This is why they will look for complicated business transformation solutions.
To sum up…
What do the experts say about it ?
Source: Strategic Review report by Nasscom (2010)
Small or medium sized organizations have the challenge to come out with products that give the look and feel of that of big brands. This is a big challenge. That's when alternate, outsouricng models like customer services and knowledge management are needed.
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”Large corporate giants have the resources and power to maintain their hold in uncertain situations. They will aim at maintaing their dominant position and try to keep customers attached to them. They must optimize their core operations to drive best-in-class efficiency and help fund the transformation and innovation.
What about our long-term targets ? Are we likely to meet them with certainty ?
There are increased incentives for our clients to increase demand for more sophisticated services, such as CS or KS. Companies must at the same time increase their efficiency – our Fulfillment and Sourcing Services are well suited here.
Warsaw, 06.06.2012
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What will help us meet customers’ demand and our long-term targets at the same time ?
Copernicus’
Targets
• Maintain double-digit growthCompanies increasingly use number of outsourcing providers , often based on targeting providers with specific capabilities and/or reputations to specific processes and activities.
• Go and grow international
If we want to scale-up the market our services cannot be based on headcount. It would have to go beyond head-count, on solutions that use domain expertise. We have to aim at creating business impact.
• Retain the highest-quality workforceAt the end of the day, the concept of continuous improvement and business-challenging projects puts the employee first as well. She or he has the chance to implement her or his own ideas every day.
• Diversify sources of incomeAs companies differentiate their outsorcing providers, it is more complicated to maintain dynamic sales growth without going international and keeping the best-quality employees who constitute our competetive advantage.
F&A focus does not support this target F&A focus does not support this
target
F&A focus does not support this target
F&A focus does not support this target
The realization of our long-term targets is threatened with continuation of current sales strategy. We need to act quickly and move towards services other than F&A.
Warsaw, 06.06.2012
Karol Górnowicz,Director of
Sales Department
Proposed solutions to the problem
What shall we do to break a potential growth barrier ?
Warsaw, 06.06.2012
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Organic growth + We have relevant knowledge, top-notch employees and enough cash + We have total control over the company. Managing is not complicated We do not need extra cash for risky ventures and change management
Joint venture + We have sufficient resources to meet necessary requirements + We brace ourselves for further market expansions - We risk culture clash, pressure from external partners
Merger+ Possible synergy effects
- No experience with mergers
- Costly, long-lasting process
- Our employees do not like this idea and may leave us
Acquisition+ New portfolio of valuable clients
- We do not have enough cash resources
- High investment costs with no certain success
Summary from the internal research of the possible ways of change.The advantages (+) and disadvantages (-) of the four analyzed scenarios.
What shall we do to expand revenues from each non-F&A service?
Recommended scenario:
Organic growth with joint ventures
Increasing revenues from the non-F&A services is our solution. It can be achieved in 4 scenarios. The organic growth is defnitely most adequate one.
Warsaw, 06.06.2012
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Hire top manager in the Sales&Fulfillment field, implement efficiency wagesHire top manager in the Sales&Fulfillment field, implement efficiency wages
Marketing & Promotion actions Marketing & Promotion actions
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
Hire top manager
Joint venture
Competetive rates
Cross-selling
Form periodical joint ventures to get big contractsForm periodical joint ventures to get big contracts
Offer our clients competetive service rates, even below bottom lineOffer our clients competetive service rates, even below bottom line
Implement cross-selling within current and new F&A projectsImplement cross-selling within current and new F&A projects
Sales & Fulfillment
Warsaw, 06.06.2012
GANTT
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Marketing & Promotion actions Marketing & Promotion actions
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
Hire top manager
Long-term projects
Competetive rates
Cross-selling
GANTT
Compete for the long-term government projects Compete for the long-term government projects
Offer our clients competetive service rates, even below bottom lineOffer our clients competetive service rates, even below bottom line
Implement cross-sellingImplement cross-selling
Hire top manager in the Sourcing&Procurement field, implement efficiency wagesHire top manager in the Sourcing&Procurement field, implement efficiency wages
Sourcing & Procurement
Warsaw, 06.06.2012
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Customer ServicesThemeGallery is a Design Digital Content & Contents mall developed by Guild Design Inc.
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
Hire top manager
Fresh workforce
Joint ventures
Free services
GANTT
Advertise job positions to fresh graduates and hire the bestAdvertise job positions to fresh graduates and hire the best
Form periodical joint ventures with small businesses and start-ups Form periodical joint ventures with small businesses and start-ups
Advertise our services by off-charge cross-sold serviceAdvertise our services by off-charge cross-sold service
Hire top manager in the Customer Services field, implement efficiency wagesHire top manager in the Customer Services field, implement efficiency wages
Sourcing & Procurement
Warsaw, 06.06.2012
Marketing & Promotion actions Marketing & Promotion actions
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H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
Hire top manager
Business events
Target students
Cross-selling
What are the benefits and costs of those actions ?
GANTT
Organize or take part in cyclical business events (conferences, meetings)Organize or take part in cyclical business events (conferences, meetings)
Organize topic-related workshops and competitions for studentsOrganize topic-related workshops and competitions for students
Cross-sell the services to our current and new clientsCross-sell the services to our current and new clients
Hire top manager in the Knowledge Services field, implement efficiency wagesHire top manager in the Knowledge Services field, implement efficiency wages
Knowledge Services
Warsaw, 06.06.2012
Marketing & Promotion actions Marketing & Promotion actions
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Marketing & Promotion actions Marketing & Promotion actions
BenefitsBenefits
+ Focus on high-margin projects+ More big, long-term contracts+ Increased brand recognition+ Promotion in the European market+ Increased information flow and exchange of experience+ New contracts and clients coming with hired managers + Increased dependence of our clients on wider range of services + Increased operational efficiency (wages)+ New experience in business cooperation – helpful in future global expansion
- Extra hiring costs for the top-managers - Extra operational risk in joint venture projects- Short-term lossess due to discount rates
CostsCosts
We have enough resources (workforce, cash and knowledge) to implement all actions. The benefits of the recommended actions outweight the costs incurred.
Warsaw, 06.06.2012
Karol Górnowicz,Director of
Sales Department
Expected results
d
What can we expect to happen in consequence ?
Warsaw, 06.06.2012
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Revenues
Costs
Revenues from F&A Revenues
from F&A
Preperation of new contracts
Efficiency wages
Cross-selling
Big, long-term contracts
Stable costs
New RevenueSources
Current Business Model
New Business Model
Economics of scale
Fixed HR expenses
PR actions
More contracts
More clients
Stable source of income
Efficiency
Advertising
Diversification & Sustainability of growth
New selling strategy will provide more sources of revenue, attract big prestigeous contracts and create incentives to increase operating efficiency.
Warsaw, 06.06.2012
2012 2015
Number of full-time
consultants
+200%+200%More projects in real terms
Going global & Retention of employees
More long-term services
More demanding clients
More high-margin projects
More ambitious tasks
More information flow
At the same time, the organic financial growth must be supported by the substantial growth in the workforce.
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Warsaw, 06.06.2012
Karol Górnowicz,Director of
Sales Department
Closing remarks
d
Our new strategy realizes all company’s targets
Warsaw, 06.06.2012
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All four goals have received total attentionand were provided with appropriate solutions
Maintain the double-digit
growth
Retain the highest-quality workforce
Diversify revenues
sourcesGo and grow international
Focus on high-margin
projects More big projects Cross-selling strategy
Increased distribution
of revenue sources
Clients’ dependence
on new services
More orders from large
corporations Increased brand recognition
Aggressive growth of the
workforce and portfolio of projects
New trade experts More experience from
joint ventures Extra ideas from young employees
There were four goals of this presentation concerning the performance of the Copernicus Consulting Inc.
Warsaw, 06.06.2012
Karol Górnowicz,Director of
Sales Department
We are competing for the moment
We are competing for the future
We are competing for the relevance
Warsaw, 06.06.2012
Thank You!