Alvarez & Marsal
Case Study: Alvarez & Marshall
About The Company
When it comes to diagnosing and providing restorative treatment to the global business issues facing today’s private and public sector organizations, Alvarez & Marsal (A&M) has all the right credentials: rich experience, a breadth of practice strengths, and a trailing history of “patients” who have not only turned the corner, but blossomed. With more than 1,000 employees globally, and a corporate desire to be a billion-dollar practice in five years, A&M is the company to know in times of crisis, eras of opportunity, or simply when at an organizational crossroad. Some 23 years ago, when the firm was founded in New York City by joint CEO’s Tony Alvarez and Bryan Marsal, there was a healthy demand for a boutique restructuring firm. The firm grew at a slow but healthy pace in its first 17 years - from a partnership of two people to about 70 people in two offices. From late 2001, a combination of factors that included internet mobility, outsourcing, acquisitions, divestitures, corporate accounting scandals, and the resulting new government regulations, provided increasing stresses to even the most stable of organizations. Seeing the demand, A&M’s growth has exploded as they added staff and extra lines of business to take advantage of changing market conditions. This extended A&M’s practice to include Tax Advisory, Business Consultancy, Dispute Analysis, Forensics, Transaction Advisory, Due Diligence, Real Estate and Public Sector.
Situation
Alvarez & Marsal went live with Agresso’s enterprise resource planning (ERP) solution, Agresso Business World, in 2002 with 150 users, and that number is expected to grow to between 2,500 - 4,000 users over the next five years. With 35 offices, and four planned additions in 2007 alone, A&M is a prime example of a market category that Agresso calls “Businesses Living IN Change — BLINC™.” These businesses live in a cycle of rapid-change, demanding the ability to change their business data, processes and accompanying reporting and analysis capabilities on an ongoing basis without high cost or organizational stress.
The need for instant and up to date information “I knew that A&M was probably one of the best examples of a business living in a dynamic environment and managing change,” said Paul Williams, CIO of A&M. “Our managing partners, who for years have focused on changing our clients business, now focus on changing and growing our firm. “We were at a place in our evolution where we needed ‘turn on a dime’ execution, could demand instant and up to date ad hoc information for decision making, and could recruit and integrate hundreds of new employees each year.” Williams pointed to the ramifications of supporting staggering workforce change. A&M’s trailing 12 month recruitment rate on January 1, 2007 was 43% - high enough - but the net growth rate is closer to 60% over the past five years. Factoring in attrition rates, A&M’s recruitment rate is nearer to 70% per year over that period. A&M didn’t have time to consider redesign of systems to support processes the company evaluates individual P&L’s on over 1,000 employees at year end for bonuses and performs consolidated entity reporting as well.
Results And Benefits
A&M cites the following benefits from using Agresso:
1. Supports Rapid Growth/Expansion
Agresso supports the workforce and infrastructure demands of a highgrowth professional services firm, including A&M’s 43% recruitment rate, without the need for external IT costs/resources. Conversely, A&M believes it spends nearly $1 million dollars on Microsoft Office products to support new users each year. “I don’t think we spent anything on growth requirements for Agresso or such a small amount it doesn’t register as a separate line item,” said Williams.
2. Complexity
A&M’s business is a mix of cash and accruals, and like most professional services firms, its revenue comes directly from staff services. The referral of credits, and ownership of income, is a complex dynamic matrix; on an ongoing basis, A&M must dynamically calculate and allocate costs and revenues in its ‘management accounts’. Using Agresso, A&M can make these changes on an ongoing basis, as well as prospectively and retrospectively - without individually posting any journal entries (something typically needed by other ERP solutions.) “Let’s say the ‘owner’ of a project changes, backdated to the beginning of the year,” Williams said. “All the finance team needs to do is change the project tree, and all the reports move correctly, without dropping a dollar.”
3. Reporting
A&M can produce custom reports ‘on the fly’, including:
• Who has referred the most revenue to the firm,
• which office has the best or fastest collection rates,
• who billed without an engagement letter.
Says Williams: “All of this may not sound like a big deal, but I can tell you from experience that custom reporting is not generally something that companies can do easily...and without the use of external IT resources.
4. Concurrent Accounting
A&M can, at the same time, run its accounting/billing from December through November... and January through December. “This is important because the partners are taxed on any cash left in the business in December and like most people, they don’t like paying tax on money they can’t spend!” Williams said.
5. Consolidation
A&M is a matrix of legal entities, and employee pools and projects, yet runs single resource pools for execution (regardless of which business owns the project). “This means that because we allocate our people resources based on relevant skills, these projects ultimately must consolidate and correctly allocate costs and revenue from disparate business units and even countries,” Williams said. “This would take huge customization with another solution, but Agresso handles this easily.”
6. Long-Term Cost Efficiencies
Williams’ prior experience working with other ERP solutions provides him with a unique perspective on long-term TCO. “I can tell you definitively that upgrades and releases are a very big revenue source for Agresso’s competitors and partners. At A&M, however, we are migrating to Agresso Business World 5.5 by ourselves. Our Reporting suites have upgraded seamlessly without having to be rebuilt. That’s a direct result of Agresso’s unique architecture.”
