COMAG

Designing an infrastructure to support a more diversified business with help from IBM Global Business Services

Published on 17-Jun-2013

"IBM has played a key role in helping us prepare to transform our business. With an experienced partner to guide us and help us mitigate the risks, we now have full confidence that the project will be a success." - Karen Roberts, Marketing Information Director, COMAG

Customer:
COMAG

Industry:
Wholesale Distribution & Services

Deployment country:
United Kingdom

Solution:
Microsoft Dynamics - AMS, Microsoft Dynamics - CRM, Microsoft Dynamics - ERP, Business Performance Transformation, Enabling Business Flexibility, Enterprise Resource Planning, Transforming Business

Overview

Originally founded by Hearst Magazines and Condé Nast in 1977, COMAG has grown to become one of the largest international third-party magazine distributors, providing route-to-market services in the UK and overseas for approximately 3,000 products from 500 publishers. The company employs nearly 300 people and generates annual gross margins of around £16 million (USD 24 million).

Business need:
To expand into new markets and diversify its business in the UK, COMAG needed a more flexible, agile IT infrastructure. However, implementing a modern ERP platform seemed like a complex and risky project.

Solution:
IBM® Global Business Services® helped COMAG assess the options for transforming its IT landscape, and assisted in designing an implementation plan for a new solution – Microsoft Dynamics AX.

Benefits:
Built confidence that Microsoft Dynamics could be implemented successfully with minimal risk. Created a full process map of the business, which will be useful in future initiatives. The new solution should ultimately reduce IT costs while increasing business agility.

Case Study

Originally founded by Hearst Magazines and Condé Nast in 1977, COMAG has grown to become one of the largest international third-party magazine distributors, providing route-to-market services in the UK and overseas for approximately 3,000 products from 500 publishers. The company employs nearly 300 people and generates annual gross margins of around £16 million (USD 24 million).

Unlike newspapers, magazines are still primarily read offline, in physical form, so COMAG’s business has not been as dramatically affected by the rise of digital publishing as many other sectors of the publishing industry. Nevertheless, the company’s core UK market – the 54,000 traditional retailers supplied by 40 distribution centres – is highly mature, and growth opportunities are limited.

Facing tough economic conditions and increasing competition for consumers’ leisure time from television, gaming and the internet, COMAG realised that it had to extend its operations into new markets and develop new products and services.

Exploit, expand and explore
Karen Roberts, Marketing Information Director at COMAG, comments: “Our strategy has three main focus areas: exploiting our core market by boosting efficiencies; expanding the business areas where we’re seeing the greatest growth; and exploring the marketplace to identify new opportunities.”

In addition to the distribution of mass-market and specialist magazines to traditional retailers, COMAG now also operates in many additional areas. For example, it provides subscription management services to send magazines directly to subscribers; post-production services to attach gifts and samples to printed media; and placement services that deliver magazines directly to specialist retailers such as museums and garden centres, or to businesses such as hotels, gyms, hairdressers and doctors’ surgeries.

Re-thinking the IT landscape
“Our diversification strategy has proven to be very successful, but we found that our IT systems were struggling to keep pace,” explains Roberts. “We were relying on custom-built software running on a mainframe, which was expensive to develop and just didn’t give us the agility we needed to support new services. So we ended up managing most of our newer services in spreadsheets instead –making it difficult to control or analyse our data, and creating a lot of manual work.”

COMAG realised that the time had come to replace its mainframe system with a modern enterprise resource planning (ERP) system. The company created an internal project team and spent several months capturing the requirements of all its different business units. It issued a request for proposals (RFP), and selected a shortlist of four possible vendors from the responses it received.

“We gave the shortlisted vendors an opportunity to identify our specific business needs and explain how their solution would be able to meet them,” says Roberts. “We were most impressed by the response from IBM Global Business Services, who recommended implementing Microsoft Dynamics AX.

“The IBM consultants were excellent – they were very knowledgeable both technically and in business terms, and much more responsive to our needs than we might have expected from such a large company. They made it clear that IBM can work just as successfully with mid-sized businesses as it can with large enterprises. Over the course of our engagement we built a real partnership, based on a good cultural fit and mutual respect.”

Mitigating the risk of a complex project
COMAG recognised that replacing all its existing business systems with a single ERP solution would be a complex, large-scale project, and was determined to prepare as carefully as possible in order to mitigate the risk of a failed implementation. So the company asked IBM to perform a much more detailed assessment of its needs and confirm whether the Microsoft solution was the best possible option.

“We knew that some of our trading partners were using solutions from another leading tier-one ERP vendor,” comments Roberts. “So we wanted to be absolutely sure that Dynamics was the right choice. The IBM team did a very fair and thorough job of comparing the two solutions, taking a technology-agnostic approach, and ultimately gave us the confidence to invest in the Microsoft solution.”

IBM used its Microsoft Dynamics ERP Assessment Business Value Accelerator to evaluate the current and desired system and process landscape at COMAG, define a solution model, assess the impact of change, and propose an implementation plan including deployment models and success criteria.

“IBM provided clear, well defined engagement with good tools that helped us map out our solution and plan for business change,” says Roberts. “The IBM team really integrated themselves into our business to help them understand where we were and what we wanted to be. Most importantly, it was very business-focused: they weren’t just trying to sell and implement a system, they were trying to help us become a better business.”

Harnessing IBM tools and methodologies
Using the IBM Component Business Model™ methodology, IBM and COMAG worked together to create a deconstructed view of the entire business across all its different divisions, broken down into business functions such as warehousing, logistics, marketing and so on.

“The Component Business Model gave us a much clearer view of how our business actually operates,” says Roberts. “For example, one of our main divisions handles distribution for mass-market magazines, while another division handles specialist publications. We’re used to seeing them as separate business units – but from a functional point of view, they are actually very similar. This kind of insight is vital when you are deploying a new ERP solution, because it helps to understand the requirements and avoid developing more processes than you actually need.”

With the Component Business Model complete, the team moved on to process mapping, and then to a detailed step-by-step analysis of every individual process.

“We used a cloud-based tool, IBM Blueworks Live™, to create a complete process map, including not only all the steps and dependencies, but also all the roles and responsibilities of our employees in each process,” says Roberts. “This is not only a key asset for our ERP initiative – it will also be very valuable for all sorts of other IT and business change projects in the future.”

Planning the route to success
The positive outcome of the assessment gave COMAG’s project sponsors (the Managing Director and General Manager) confidence that the Microsoft solution was the right choice for their business, and they built a robust business case for going ahead with the implementation.

“We have a strict business case process, which we managed internally,” says Roberts. “The IBM team contributed by helping us understand the impact on our business activities and identify areas where the biggest savings and improvements could be achieved.”

When the implementation is complete, COMAG expects to see a reduction in its ongoing IT costs. Retiring the old mainframe platform will reduce hardware and software licensing costs, and the new solution promises to be less expensive to maintain and develop.

“The most important point about moving to Dynamics is that it will allow us to be a lot more agile,” concludes Roberts. “When we enter new markets or develop new services, we’ll be able to support them with well designed, easily managed, standardised and automated business processes. Instead of a mass of complicated, error-prone spreadsheets, we will have full control and traceability of our data, and a more granular, real-time view of business activity.

“IBM has played a key role in helping us prepare to transform our business. With an experienced partner to guide us and help us mitigate the risks, we now have full confidence that the project will be a success.”

Products and services used

IBM products and services that were used in this case study.

Software:
IBM Blueworks Live

Service:
GBS ISV Community: Microsoft Solutions, GBS Strategy and Change: Business Strategy, GBS S&T: Technology Strategy

Legal Information

© Copyright IBM Corporation 2013. IBM United Kingdom Limited, PO Box 41, North Harbour, Portsmouth, Hampshire, PO6 3AU. Produced in the United Kingdom. June 2013. IBM, the IBM logo, ibm.com, Component Business Model and Global Business Services are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. Microsoft, Windows, Windows NT, and the Windows logo are trademarks of Microsoft Corporation in the United States, other countries, or both. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. It is the user’s responsibility to evaluate and verify the operation of any other products or programs with IBM products and programs. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. Microsoft Dynamics AX is not an IBM product or offering. Microsoft Dynamics AX is sold or licensed, as the case may be, to users under Microsoft’s terms and conditions, which are provided with the product or offering. Availability, and any and all warranties, services and support for Microsoft Dynamics AX is the direct responsibility of, and is provided directly to users by, Microsoft. Statements regarding IBM’s future direction and intent are subject to change or withdrawal without notice, and represent goals and objectives only.