As its magazine-publisher clients are hit by a perfect storm of rising costs and falling sales, how could distribution business COMAG help them trim expenses and boost efficiency?
COMAG joined forces with IBM® Global Business Services® to unite its diverse business units on Microsoft Dynamics AX, centralizing core functions such as finance and order processing.
70% reductionin number of processes handled by central functions
Cutscosts and boosts efficiency
Strengthensdecision-making by improving visibility of orders, products, costs and more
Business challenge story
Harsh industry climate
Turmoil has beset the UK magazine industry, as dwindling sales of physical copies, rising printing costs and increased delivery costs have impacted publishers’ margins. To battle the storm, publishers are searching for innovative ways to engage audiences, boost circulation, and raise profitability.
COMAG distributes around 30 percent of magazines sold in the UK, including high-profile publications such as Vogue and Good Housekeeping. To help its publisher clients grow circulation, COMAG decided to diversify its business, relying heavily on acquisitions to enable rapid entry into new markets.
For example, through the acquisition of GoldKey Media, COMAG became the largest provider of magazines to the UK travel sector, placing clients’ titles in venues such as hotels and airport lounges. COMAG also purchased a company that supplies magazines to specialist retailers, such as garden centers and craft stores.
Extending its reach even further, through GoldKey Media, COMAG branched out into digital distribution, for example, serving delegates with online magazine content during the G7 summits and the World Economic Forum.
Diversification of routes to market helped publishers capture new audiences, but the move came at a price, as Steve Pounder, IT Director at COMAG, explains: “The wave of acquisitions brought with it a host of legacy IT systems, many of which were outdated, inflexible, and expensive to manage.”
Needless to say, reporting on such a disparate landscape was tricky, as data from the various systems often had to be manually merged.
“Because each acquired company handled functions such as order-processing, supplier management and finance independently of the other business units, we ended up with significant duplication of effort,” continues Steve Pounder. “We recognized that to reduce costs, we needed to harmonize core processes and consolidate to a single system.”
Finding the right fitIdentifying a suitable solution raised complex challenges. In magazine distribution, retailers usually place orders as ‘sale-or-return’—meaning that when that week’s or month’s issue becomes out of date, unsold copies are returned and deducted from the publishers’ income. Most of the vendors that COMAG approached were unable to support the complexity of the sale-or-return business model, which includes multiple discount levels and other adjustments.
“Finding the right integration partner was critical, because whichever path we chose, we would need to work closely with the implementer to assess our unique requirements and tailor the solution to our business,” recalls Steve Pounder.
“We decided to work with IBM Global Business Services because we felt that the consultants offered a good cultural fit with our own team. IBM demonstrated the ability to understand our requirements, and approached the project as a partnership. It was clear that IBM was invested in our success.
“At the time, we had not yet reached a final decision regarding our choice of ERP platform. IBM offered us six months of system-agnostic consulting services, during which we assessed requirements in more detail and drew up a blueprint before making our final selection. In the end, we decided to deploy Microsoft Dynamics AX, because it provided excellent value for money, and could be customized relatively easily to meet our needs. Furthermore, Microsoft Dynamics AX came with an intuitive user interface, and offered close integration with our other enterprise systems.”
Working closely together, COMAG and IBM Global Business Services gathered requirements for the new system in fine detail, then tailored and implemented the Microsoft solution. To assist in the solution design, the IBM team mapped business processes using IBM Blueworks Live™, helping to identify dependencies and develop efficient ways of working. Once the design was complete, the IBM team migrated data from COMAG’s myriad of legacy systems to Microsoft Dynamics AX.
The new solution runs at an IBM data center, and IBM supplies application management services. The offshore IBM team travelled to the UK and worked face-to-face alongside the COMAG team for several months, helping to build strong relationships before the two parties began working together remotely. If problems arise or changes are necessary, COMAG can communicate them to a single contact, who coordinates activities with other teams.
Steve Pounder adds: “We are very happy with the service from IBM Global Business Services. The implementation team took our complex business needs and mapped them as far as possible to a ‘vanilla’ solution with the least possible customization, saving considerable costs. The technical implementation itself went very smoothly; we got on well with the consultants, and the same people supported us throughout the requirements-gathering stage and the actual implementation, so they already knew our business very well.”
Turning heads and pagesTo remove duplication of effort, COMAG restructured its organization to form centralized teams for core tasks such as order-processing, procurement and finance. Through this harmonization, COMAG has established common processes across most of its organization, supported by Microsoft Dynamics AX.
“Working with IBM, we identified over 1,000 tasks being carried out across different business units, including managing suppliers, titles and master data,” continues Steve Pounder. “We were able to consolidate those into just 300 tasks performed by a central function—a reduction of 70 percent.”
The Microsoft solution deployed by IBM has given COMAG clearer visibility of where stock is located, enabling optimized product routing between warehouses, with the ultimate goal of reducing transport costs and boosting efficiency. The solution also presents COMAG with a clear, single view of all orders by route to market, so that it can develop a deeper understanding of profitability and demand.
In the finance division, employees enjoy rapid access to detailed information—for example, they can drill down to examine individual transactions. Furthermore, the Microsoft solution helps the team rapidly match supplier invoices to the product or service provided by the relevant business unit, supporting accurate attribution of logistics costs to each offering.
Steve Pounder concludes: “By transforming our business to form core central functions, we can reduce costs and help our clients ride out the industry storm. Working with IBM Global Business Services to deploy Microsoft Dynamics AX has enabled us to refine our business processes, cut costs, and support magazine publishers.”
Founded in 1977, COMAG distributes around 30 percent of magazines sold in the UK, as well as exporting UK magazines for sale overseas. The company is jointly owned by Hearst Magazines UK and Condé Nast Publications, and also serves numerous independent third-party publisher clients, which together account for more than 60 percent of its annual revenues.
- AMS: Application Out-Tasking - Custom
- AMS: Design-Build-Manage
- Blueworks Live
- GBS AD&I - EA - Microsoft
- GBS AD&I - EA - Microsoft - AMS Dynamics AX
- GBS BCS EA - Microsoft
- IBM Global Business Services