M&A Carve Out

Scope

Exiom acted as a key implementation partner in the divestiture of a division from a major HealthCare organization to a leading private equity firm.

The objective was to establish an independent ERP system to ensure continued support for the divested division’s core business processes—planning, manufacturing, sourcing, delivery, and finance. A primary requirement specified that the ERP be hosted externally from the divesting organisation and be fully operational on the divestiture date (Day 1). As the private equity acquirer did not possess its own data centres, it was necessary for the ERP to be deployed with a Cloud service provider.

There were several challenges to overcome:

  • The division was running an older version of JDE (B7334) which was hosted in the divesting entities data centres.
  • There were several other companies utilizing the B7334 version and therefore the business data of the division being divested was comingled with other companies.  
  • No purging and archiving activities had recently been performed and as a result the database was too large to upgrade/migrate in its current state.
  • JDE was integrated with numerous critical systems supporting manufacturing, quality, distribution, and finance. As these systems were not being transferred to the private equity firm, it was necessary to develop interfaces from the new independent ERP system back to the divesting organisation under TSA’s (Transition Service Agreements). A subsequent project in which Exiom participated, focused on eliminating reliance on TSAs by standing up the capability within the divested entity e.g. 3PL for Distribution.
  • Healthcare is a regulated environment e.g. FDA and therefore all system changes are subject to formal validation which typically increases complexity and timelines.
  • Since the divestiture date was fixed, it was essential to complete the project on schedule; any delay would postpone the division’s sale and result in adverse publicity, cost overruns, lack of trust and confidence.
  • No CNC/Infrastructure resources were being conveyed to the private equity divested entity and therefore the requirement was to partner with a Cloud provider that could also provide a managed services contract to manage the JDE technology stack in addition to hosting the ERP.

Project implementation

Oracle was chosen as the Cloud provider to provision and manage an instance of JDE 9.2 for the divested entity.

Exiom partnered with the client’s business, compliance and IT teams to deliver the key prerequisites before a move to Oracle Cloud was even viable:

  • Reduced the size of the on-premise JDE B7334 database by performing a purging and archiving exercise.
  • Upgraded B7334 to an on-premise instance of JDE 9.2, including:
    • Remapping/streamlining of the business processes to identify and eliminate any redundant processes:
      • Reconfiguration of business processes resulted in a 35% reduction in interactive and batch versions.
      • Through custom code analysis of the remapped processes, there was a 40% decrease in the amount of custom code that needed to be retrofitted for JDE 9.2, either because some code was unnecessary or could be substituted with other tools like Orchestrations.
    • Carved out the data so that only the divesting divisions business data was migrated to 9.2 (and not the other operating companies using B7334).

Exiom partnered with Oracle and the client to lift and shift the on-premise version of JDE 9.2 to Oracle Cloud Infrastructure (OCI):

  • Install and configure JDE 9.2 on OCI using One Click Provisioning
  • Configure the standard JDE DV, PY and PD environments on OCI
  • Migrate the objects and data from JDE 9.2 on-premise to OCI
  • Install and configure third party applications e.g. Cloud Inventory, Transform, Hubble on OCI
  • Build new functionality required for the divested entity to operate on ‘Day 1’ (Divestiture date) e.g.:
    • Functionality provided by the divesting entity which would not be available after divestiture e.g. procure to pay which was provided by Shared Services in the divesting entity. 
    • Flash sales between divesting and divested entity during the interim period when TSAs operational.
  • ‘Rewire’ interfaces from JDE 9.2 on-premise to JDE 9.2 in OCI back to systems residing inside the divesting entity e.g. Distribution.
  • PD weekend cut over of business data

Project approach

Result

The ERP was ready for the divestiture date. On Day 1 the divested entity was manufacturing, receiving, shipping, collecting cash etc. with no business disruption (i.e. close the business on Friday, weekend data migration, JDE 9.2 up and running on the Monday).

Some statistics:

  • All JDE modules + 9 third party applications and tools lifted to the Cloud
  • 105 virtual servers shifted to Oracle Cloud Infrastructure
  • 170 inbound & outbound interfaces redesigned & integrated in the cloud
  • 20% Performance improvements on OCI vs on-premise
  •  System stable on Day 1 of Go Live

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