SPHERE – Growth through M&A – Due Diligence Case Study

SPHERE – M&A Due Diligence – An Intuitus Case Study

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Sector: IT Services, Healthcare
Region: UK
Date: September 2017

Summary

Organisations in the healthcare sector, including the NHS, are increasingly reliant on technology to ensure the smooth-running of day-to-day business. It’s important that costs are reduced wherever possible, including within technology and IT operations, to help alleviate the financial pressure faced by businesses in this sector.

West Middlesex University Hospital Trust was acquired by Chelsea and Westminster Hospital NHS Foundation Trust in 2015. IT service provider SPHERE, which is co-owned by Chelsea and Westminster, will be incorporating the IT infrastructure of West Middlesex into their existing IT service provision. Intuitus was approached to provide M&A IT due diligence on West Middlesex in order to identify potential synergies and key risks ahead of the integration by SPHERE.

The Client

SPHERE (Systems Powering Healthcare Ltd) is an IT service provider delivering IT service management and shared IT infrastructure services to the healthcare sector.

The company is jointly and wholly owned by Chelsea and Westminster Hospital and the Royal Marsden NHS Foundation Trusts – SPHERE represents a collaboration and pooling of resources between the Trusts to deliver improved IT services to its members.

Challenges

The management team at SPHERE required full visibility of the current status of the IT services currently in place at West Middlesex, including data centre management, network and communications, computing infrastructure and storage, end-user computing, IT service management, and IT security. This would allow management to plan for the integration of the IT infrastructure at West Middlesex into the existing service offering provided by SPHERE.

The recent transition and merger of the two Trusts, coupled with SPHERE’s planned acquisition of the IT infrastructure at West Middlesex, meant that the merger of the two IT teams had to be handled with sensitivity. This had to be taken into account by any third-party consultant brought in.

How we helped

Intuitus was approached to undertake M&A due diligence on the IT infrastructure and associated service contracts and service provisions at West Middlesex, and advise on how these services align with the service proposition provided by SPHERE. The Intuitus team included Alan Lorimer, who has 20 years’ experience in IT, including many years reviewing the processes and operations of managed service companies in order to provide investment advice.

“Intuitus brought a wealth of experience, wisdom and knowledge to the engagement,” says Renier Botha, Managing Director at SPHERE. “It was a sensitive situation and we needed to get an expert, unbiased, impartial opinion. The Intuitus team was respected by everyone involved because they had been in similar situations many times before and knew exactly where to look and which questions to ask.”

The result was a comprehensive report that clearly outlined what actions were required to ensure the successful integration of the West Middlesex IT infrastructure. This report was then converted into a project initiation document, which acted as a foundation for the entire project. SPHERE was also able to use the report findings to compile a full remediation project scope with costings, which was presented to the senior management team. This clearly outlined the key risks and remediation required to successfully onboard the new infrastructure environment.

Results, Return on Investment and Future Plans

In the short term, SPHERE is focusing on delivering the IT services as they are outlined in the SLAs, and meeting the service expectations of the West Middlesex staff.

The major strategic benefit of the incorporation of the West Middlesex infrastructure in the longer term is in the economies of scale, as Renier Botha points out: “With the onboarding of West Middlesex, the scale of the service delivered by SPHERE has increased by 27%. As a result, we’ve been able to reduce the cost per user by 12%. Furthermore, the cost of running the service is 24% lower than what it would have cost the trusts individually were they to run the IT service without SPHERE. If SPHERE can successfully identify additional trusts to work with then there will be an opportunity to further drive down the total cost of providing a shared service.”

About our M&A Due Diligence

Intuitus’ M&A due diligence is an independent, bespoke assessment on behalf of an acquiring company (or strategic buyer) of a target company’s technology and/or IT operations and, where required, either an assessment or production of the technology and/or IT integration strategy and plan, including potential synergies and key risks. The buyer gains commercially focused, pragmatic insight in the form of an actionable report. Our findings and recommendations form an important part of the (integration) plan going forward and overall value enhancement strategy.

http://www.intuitusadvisory.com

 

Testimonial

“Intuitus brought a wealth of experience, wisdom and knowledge to the engagement. As a result of the M&A due diligence we’ve been able to make significant cost-savings, without compromising the quality of the IT service offering.”; Renier Botha, Managing Director at SPHERE

Original Case Study – intuitusadvisory.com

Allegiant Air Loyalty

Consulting to Cloud Troopers as the Interim Head of Loyalty Products & Programmes – Renier directed the design, software development and implementation of the points based Allegiant Airlines Loyalty and Rewards Programme to fully leverage the Allegiant services and brand strength to provide new revenue streams and increase the effectiveness of others. The Allegiant Rewards programme is based on a co-branded credit card provided by an American Bank.

 

Guest Blog by Brian Sumers – 1 Sep 2016

Allegiant Air knows less about its most loyal customers than it would like. Its new co-branded credit card could help change that. But will anyone apply for it?

Despite being among the world’s most consistently profitable airlines, Allegiant Air knows relatively little about its customers, though it has learned, through surveys and from Mastercard that they have an average household income slightly above $100,000 and prefer to eat at Olive Garden and shop at TJ Maxx.

The problem is that Allegiant’s customers fly the airline infrequently, with about 80 percent booking one or two tickets per year. And since Allegiant has not had a frequent flyer program, it has fewer opportunities than other airlines to learn about its customers.

But Allegiant, which has reported 53 consecutive profitable quarters, believes it has finally solved its problem. Almost two decades after its first flight, the airline on Thursday launched a co-branded credit card — a Bank of America Mastercard — the first for Allegiant, a niche carrier that prefers routes other airlines avoid, such as St. Cloud, Minnesota to Phoenix, Minot, North Dakota to Las Vegas and Belleville, Illinois to Jacksonville. Allegiant will enter a market saturated with travel-themed cards from nearly every airline and hotel company, but it is hopeful the new card will give it more insights into its passengers.

“I am surprised it has taken them this long,” said Jay Sorensen, president of IdeaWorks Company and an authority on airline ancillary revenue schemes. “But what is unique about Allegiant is their base of business is probably very distinct from the traditional airlines. It is an interesting position.”

Credit card deals can be lucrative, and when American re-upped deals with Barclays and Citi in July, it said they could produce $1.5 billion in pre-tax revenue over two and a half years. Allegiant is tiny compared to American — the discounter had 85 aircraft at the end of June — but its deal should be lucrative, too.

“We think it is going to be valuable piece of business,” said Brian Davis, Allegiant’s vice president for marketing and sales, declining to give exact numbers. “We see our peers and the revenue generated from programs like this.”

The card comes as Allegiant, long an iconoclast in the U.S. airline industry, starts to look more like its competitors, all of whom have long had co-branded credit cards and loyalty programs. Allegiant, which had bought only used planes, recently placed its first order for new aircraft from Airbus. And, despite mostly flying between small and medium sized markets for most of its history, Allegiant is expanding at larger ones, including Newark, New Jersey. It is even starting to compete with larger airlines on some routes after having long avoided direct competition.

Still, with its co-branded credit card, Allegiant is trying something different. Unlike every other U.S. airline, Allegiant will not award points for travel. Instead, only card-holders, who will pay a $59 annual fee, will earn them. They’ll receive three points for each dollar they spend on Allegiant, two for spending on dining, and one for all other purchases. They can use points for discounts on travel, and the 15,000 points that come as a sign-up bonus can be redeemed for $150 off the price of any ticket. As sweeteners, cardholders receive a free drink when flying Allegiant, as well as discounts on hotel packages. (Allegiant hopes this will help it sell more packages.)

There’s no chance for travelers to redeem for business class airfare to Asia, but Davis said Allegiant’s customers have little interest in complicated redemption schemes.

“Those are built around travelers who travel a ton, and it is worth their time to learn about the rules,” he said. “If you only travel once a year, you’re not going to tolerate a lot of rules and conditions.”

Monitoring customer habits

When card members start spending, Allegiant will have access to more data about its core customers. Bank of America will not share information about individuals, but it will give the airline macro-level insights it does not have today.

“To the extent that people use it as their primary card, you have opened up the window to a lot more data,” Sorensen said. “That data can include, ‘Are they buying products from your competitors? And where are they using the card?”

This is a big deal for Davis. If a customer books a ticket using any credit card on Allegiant, he can learn some details about where else those customers shop, but a branded credit card will give Allegiant access to more aggregate data about what key customers want.

“If through this card, we learn our customers have a really strong affinity for a particular chain of restaurant, then I hope in the next year or two I would hope we would reach out to that restaurant chain about a [tie-in,]” Davis said.

Sorensen said an airline can use data to tailor offers to customers. Allegiant makes considerable revenue on vacation packages, but presumably many of its customers buy hotels independently on Orbitz or another site. If Allegiant can learn more about where its card-holders are staying, it will know more about which hotels to show in prominent positions on its website.

Allegiant also expects to use the card to maintain a year-round relationship with its most loyal customers. Today, it emails customers with deals, but it wants to have other reasons to contact them.

“For the first time, many customers will have a reason to stay connected with us for the other 51 weeks of the year,” Davis said. The goal is to “expand the company’s relationship” with customers, he said.

A challenge to attract card members

Many airlines first start a frequent flyer program and then add a credit card. They create the programs in this order because a carrier with millions of customers in a database has a natural market for its cards.

“It will be a handicap,” Sorensen said. “A general rule of thumb is that once you have a million or more people in a frequent flyer program, then you can start talking to a bank.”

But Allegiant expects to have something other airlines do not — motivated flight attendants. On every flight, they will make announcements and give out paper applications. They will ask passengers to fill them out and will collect them before landing. The on-plane collection is important, Davis said, because the airline fears customers will forget to mail them in.

With the card, Allegiant expects to the same people who buy the bulk of the airline’s tickers — the female head-of-householders. The airline says its core customer is Christie, 48, a married former school teacher with two kids living in Sioux Falls, South Dakota. Her husband is co-owner of the local insurance company. “Christie has always been in charge of booking vacations for the family and hates wasting time and money,” Allegiant says in internal documents.

Ultimately, though, the card’s success may on how aggressively flight attendants sell it. Other airlines also ask flight attendants to promote cards with limited success, but Allegiant is optimistic its employees, who already earn commissions for other on-plane sales, will be motivated. The flight attendant responsible for each credit card approval will receive a $30 commission.

“At legacy airlines, there is almost always pushback,” Sorensen said. “Flight attendants say, ‘We’re not sales people.’ Hopefully, Allegiant is an airline where the flight attendants understand they are sales people.”

Original Article from Skift click here

GHA Discovery – Loyalty Programme

GHA ICLP GMS Case Study

“GHA Discovery is an innovative program created to recognise and reward guests who embrace our dynamic collection of hotel brands across the globe. We require communications that reflect our unique position, cater to member preferences, and deliver an engaging experience. ICLP has been a great support in launching and running a communication platform across both email and print mediums, proving to be a dedicated partner to our company. ”, KRISTI GOLE, LOYALTY MARKETING MANAGER, GLOBAL HOTEL ALLIANCE

iRedeem Product Development

iRedeem Product Overview

iRedeem is an online redemption programme enabling members of a loyalty or membership programme to spend their loyalty currency on a range of exciting travel, lifestyle and leisure rewards.

Built on leading e-commerce technology and with a network of global partners iRedeem currently serves blue chip companies across the globe, offering them a personalised customer experience. You can incorporate your own inventory to provide greater redemption choice and reduce distressed inventory.

Also read the case study… iRedeem – A Global Airline Case Study

Loyalty in Technology

Global Technology Provider – Case Study

As a world-leading silicon component manufacturer, our client is entirely dependent on 3rd  party multi-national Original Equipment Manufacturers (OEMs), systems integrators and channel resellers to manufacture, market and sell finished products to end customers. Their Channel Partner Programme creates a relationship between the Company and its independent global channel partner community…

Harrods Rewards

“Launching Harrods Rewards is an integral part of our CRM strategy. It gives us the opportunity to understand our customers and their spending behaviour. We are pleased with our performance and the ongoing support from the ICLP team has been outstanding. It is a hugely exciting time for us.”; JOSE MAJLUF, CRM CONTROLLER, HARRODS

Read the full case study here… Harrods ICLP GMS Case Study

Tracka in the NHS

Tracka – NHS DrFoster Case Study

Challenge: It was recognised that NHS Stoke on Trent Community Health Services needed to ensure that the organisation has timely, auditable, and accurate information about patient experience. In order to get an understanding of patient satisfaction, a more systematic and reliable approach was required.

Solution: NHS Stoke on Trent Community Health Services started using PET in 2008 with ten devices to monitor how patients perceived the range of health services provided.

Outcome: Within the first two months of using PET, it became apparent that tangible improvements were required where hygiene and hospital meals were concerned. PET is providing the organisation with a tool to benchmark core patient experience along with key organisational objectives as set out in its strategic direction. As a result, a further 20 PET units have since been installed across all services.

Also read this case study… Erewash Case-Study