As part of its strategy, the client decided to transfer a subset of its activities from one subsidiary to another, resulting in a major carve-out / carve-in program for the two IT departments involved.
A few months after the start of the transfers, the receiving subsidiary identified a significant increase of its recurring costs and decided to freeze the project and to perform a diagnosis to get back on track. With the support of PMP Strategy & Lucernys, the client was able to clarify the financial impact to the date of the receiving entity, identify the causes of the additional costs, and define the corrective actions to be implemented.
In the early 2020s, the public institution decided to merge two activities previously operated in different subsidiaries. The objective was to facilitate the implementation of its strategic plan and optimize the use of its major assets (mainly its distribution network). Without major stakes from a business point of view, this decision meant a major carve out program to transfer the IS activities operated in the original subsidiary (representing a budget of about €70M/year for various services used by both a network of group agencies and consumed by the end customer), to the target subsidiary.
In 2022, after one year of implementation of the carve-out project, the target subsidiary identified a significant increase in the projected cost of the transferred activities - up to 35 M€/year (+50% against expectations).
They immediately decided to stop the transfer, pending answers of several key questions:
Thanks to PMP Strategy’s knowledge of the client and support by our partner firm specializing in CIOs, PMP Strategy & Lucernys worked together with the financial and operational teams of the two subsidiaries concerned with the carve-out.
We structured our approach into four stages:
Following our intervention, the client was able to confirm the interest of transferring the IS activities between its subsidiaries. It was also possible to launch a second and more operational analysis, allowing it to restart the carve-out project in the best conditions, because of :