An excellent example of how a PE is using Data to power Industrial OEM business

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John Seral, Operating Advisor at Clayton, Dubilier, and Rice, with vast experience as the Chief Information Officer at GE,  talks about how monetizing data is driving customer success. He also shares how Hussman, with the help of Entytle Insyghts achieved predictive analysis and alternatively gained more than a hundred percent in revenue.

The bottom line here is that data is powering our business in the future, it really is. Data is the digital currency. When we acquire a business now, we do a hard look at what type of data do they have on the customer, on the operations, on the financials, driving sales, and cost out as well. We’ve got to look at using today that data does everything to grow the business, to make it more efficient, and to look at what pockets we need to fill with other tuck-in acquisitions, data analytics teams, and chief data officers. 

I mean, this is the type of stuff that we would go in on day one and start looking at. The growth of e-commerce, mobile apps and digital, and IoT is looked at in every business going forward, and I think it’s critical. Moving towards monetizing data and making disparate structures into digital tools that drive customer service. We don’t have a single business where we’re not driving mobile and e-commerce faster than any other traditional type of interacting with the customer.

Next, let me go to this example with Hussman. This is one where we used Entytle. Hussman is in the business of building long refrigerated racks. Sometimes they’re open with the food just displayed and kept cool and sometimes in closed doors. We actually even have some hot service type of places where you can buy prepared foods, but they make all this equipment. They put these huge refrigeration units on the roof of the building. They’ve got evaporative condensers, heat exchangers coils, everything, all these mechanical type apparatus throughout the store. But this equipment needs maintenance. This equipment can’t fail during business hours, has to be brought offline off-hours and maintained. So there is no failure where the food would get spoiled or anything would be disrupted even during a power disruption.

 What we do is have IoT sensors all over on this equipment. We do predictive maintenance. We anticipate any type of outage or upgrade and can plan it accordingly. We use Entytle here to bring in the data so we could better know our customers and better understand who is spending the money and who is not spending the right amount of money and who is kind of waiting for a disaster. Using all this data and comparing one customer to another, we have all these insights into what customers are efficient and well run, which ones are stretching the products a little bit too far and they have a failure. Which ones are missing some upgrade capabilities and Vivek & his team came in right in the middle of the process of getting all this done. We sold it to Panasonic and we increased revenue even by more than one hundred percent. I think we got around five times the money on this deal. So incredible product, incredible engagement. 

These guys are doing some fascinating stuff with the products. If we work on our customers like Kroger, Walmart, and they have their own apps and we worked with these applications and mobile apps so that we can light up with LED lights on these cabinets, light up the product you have on your shopping list. As you walk by it in the store and you flash it, you could use different colors, like on a Bud Light display. You can flash a blue and white. So as you’re walking down the aisle, your to-do list in your shopping list lights up by you. And also some promotions can light up as well. 

Such a fascinating use of data, fascinating integration with our customers on that product. So granted, this industry is going through a lot of change to people shopping at home mobile and not walking in the store. But I don’t think this is going away any day soon. 

Things we learned:  

When acquiring a company, the first hundred days we get in there and do an evaluation on a three-year strategy, like I said, only look three years out and plan to run and hit it hard in those three years. We try to implement a federated model where we can and let the divisions do their own thing but under a framework of what type of data, data cleansing, and data centralization we need here. Invest in data and insight tools, clean up the data, bring in tools like Entytle so we can that we can actually utilize it quickly, and process upgrades where it makes sense. 

Like I said earlier, you really want to do a Pareto where the business processes and point solutions like supply chain planning systems or anything around that can be paid back within months, not years. Automate the paper, a lot of RPA – Robotic Process Automation, going in, take the paper out, take all the clicks out inside the business and make it more efficient and Paint your Exit; really understand where you’re going and when and what it’s going to look like and move toward that. People – define the team by the business strategy of the three-year strategy, figure out what people what skills you need, get them in there quick, rationalize the team within 90 days. Get a plan in there so you get the right people in on your technical teams. You don’t have the data type of skills you need. Go get them. You don’t have the security talent, go get them. You’ve got to get them in quick and fix it and make the make that happens rapidly. 

Build the insights team or figure out what kind of data you need and whether there’s financial data, marketing data, customer product data. Go get the team in place and get them started. EBITDA really is linked to the people you bring in. Are these people going to touch the earnings of the business or are they going to impact it? or else look at outsourced opportunities, take the cost out, just get the job done? But the critical people are the ones who are going to move the needle on the earnings of the business and design and plan everything and link pays to the exit goals and motivate people to make big change quickly and technology – legacy optimization. I told you earlier that I started COBOL in RPG and I didn’t ask and Also, we’re seeing all that today. It’s still around. It’s not evil. We were at these companies that supported those that are still capable. We bring in a lot of offshore talent. It’s willing to maintain it and even grow it. We try to not grow rapidly, but we have to keep it around and build around it, build where you get your payback, build where you get the data insights. And that’s the key to everything. 

ERPs just don’t payback. Don’t; we’ll never start a new project. It’s going to take three to five years and the next guy is going to see some benefits from it. Security is the mandate goes without saying SaaS and Co-Lo is our mantra. Any new applications got to be software as a service and everything we’ve got, we try to Co-Lo to a professional facility that’s well managed and secure and invest our time and money into insights and data.

About John Seral

John is a seasoned Chief Information Officer who spent the bulk of his career in General Electric, in multiple different roles at multiple different divisions. He ended his career at General Electric as Chief Information Officer of the GE infrastructure division, which was a collection of some of GE’s largest businesses such as power, aircraft, and transportation. During his time in GE, John had an unbelievable front seat to the digital changes underway along with some of the investments GE had made. After that stint and tenure at GE, which was indeed a long and very successful tenure, he then moved into a private equity role at Clayton Dubilier & Rice, advising companies as an information technology leader. 

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