In Texas everything is big: the superhighways, the houses, the ranches, the oil derricks, the friendliness of the people, and the rugged terrain that stretches out as far as the eye can see before vanishing into the huge blue horizon. The second largest U.S. state in both area and population, Texas is home to the most Fortune 500 companies in the United States as well as to a number of corporate giants.
But as a company you don’t necessarily have to be big to be successful in Texas. However, it does often help if you are nimble and fast, as recent years in the history of the midsize telecommunications company GVTC strikingly illustrate. Founded in 1951 as a telephone cooperative in the hill country of Texas, Guadalupe Valley Telephone Cooperative, as it was then known, provided phone service to the sparsely populated area.
Being a cooperative in a highly regulated environment, the company was a non-profit entity, taking orders and establishing a solid local reputation for being reliable and service-oriented. For many years it enjoyed the good life of a monopoly in this quiet, sparsely populated, and remote countryside.
Then a few years ago, that changed. People discovered the beauty and desirability of the Texas Hill Country and began flooding in, bringing with them not only spending power but also an increasingly insatiable and sophisticated need for telecommunication services. The corporate giants – Time Warner Cable, AT&T, and Verizon – soon recognized the new market potential of the area and were quick to move in.
From order taker to competitive player
Ritchie Sorrells, president and CEO of GVTC, was there when it happened. “We went from being order takers to competing for customers. So we had to shift the company from a monopolistic, noncompetitive environment to a competitive one,” he says. One of the first steps Sorrells took was to bring in a fresh executive management team in 2004.
The new CFO, Mark Gitter, rapidly ascertained that the information technology structure of the company was inadequate to meet the complex demands of the booming market – and to stand up against the competition darkening the horizon. It lacked the ability to produce timely financial reports, nor could it generate budgeting and financial analyses or manage its performance. In fact, the company had not even had a budget prior to that year.
“We realized that we needed to upgrade our IT system to capture the kind of information we required and get it in a timely manner,” states Gitter. “It was necessary that we become a nimble company regarding information needs.”
Moreover, the new management team, who came from competitive business cultures and were used to getting a lot of information fast, were growing impatient.
The sales and marketing force was clamoring for more information about the customers: what they were buying, what they would like to buy – and if they were leaving, why they were leaving. The financial executives needed to track and report profitability by business segment, something that was becoming essential as the business environment of GVTC had expanded to include cable TV, security, broadband services, and fiber optic transport service in addition to telephones. “
We really had to be ahead of the curve in terms of that information. Otherwise we would have found ourselves losing customers before we even knew it,” acknowledges Sorrells. “Only with accurate and timely information could we – and can we – be proactive in response to the competition.”
The writing was on the wall, in big, bold, capital letters. So Gitter scoured the marketplace for a software tool that would enable the company to meet its complex financial information needs – and found it in the SAP Business Planning and Consolidation application, one of the SAP solutions for enterprise performance management. With the help of the SAP partner firm Akili, Inc. (www.akili.com), headquartered near Dallas, Sorrells and Gitter were able to create their annual budget very quickly, get their monthly results into the system from their enterprise resource planning system, and then perform variance analysis and a resulting forecast.
SAP Business Planning and Consolidation has enabled them to forecast profit and loss, cash flow, and balance sheet. It also enables GVTC to create scenarios and see immediately the resulting impact on all financial reports. The company can now, for example, forecast a higher penetration rate of a particular product and see its impact.
Changes and challenges
“It was a lot of change and a lot of challenges,” remembers Gitter. “We are particularly indebted to our management consultants at Akili, who are very dedicated and fast. What makes them unique in implementing SAP Business Planning and Consolidation is their ability to really understand the complex business of telecommunications.”
Shiek Shah, a cofounder of Akili, explains, “Our decade of experience with the telecom industry helped us quickly identify key performance indicators that were pertinent to GVTC. Once those were identified, our team then quickly discovered the source data that helped measure the performance against their plan.”
In fact, the good teamwork with Akili made it possible for GVTC to manage the implementation in conjunction with the budget process in only six months, thereby adhering to the strict time frame that they had imposed upon themselves. “We had critical work to get on with and did not have the luxury of time,” states Gitter. “You could say that the software implementation was the equivalent of changing a flat tire on a rolling vehicle.”
What particularly appealed to Gitter about the new software is that it has a Microsoft Excel frontend, thereby enabling seamless integration into the frontend user group of accounting staff. It provides a driver-based, variable event-driven model that makes it possible to harness the power of Microsoft Excel and run multiple financial scenarios very quickly.
This enables the company, for example, to immediately see the financial impact of changes in sales forecasts – not only in the current budget but also looking out on a five-year time horizon. With the SAP solution, GVTC has a tool that automatically calculates revenue results as sales volumes change.
New agility and speed
With the implementation of SAP Business Planning and Consolidation, GVTC has been able to meet its information requirements, acquiring an agility and speed that the company could not even have dreamed of a year or two earlier. It can now, for example, provide the sales and marketing force with the ability to capture daily sales information.
Previously, this was an arduous task. “Every month we used to spend 15 or 16 hours gathering the information and putting it into Microsoft Excel before giving the data to sales and marketing,” says Gitter. “Now they can see the results as service orders are processed in the system, rather than waiting until the end of the month.”
GVTC also used the software to create a product management team to assess and ensure the company was truly serving the needs of its customers. The company examines product sets in terms of average revenue per user, penetration percentage in the marketplace, product quantities, daily sales information, right down to the universal service order code in the billing system. “We literally have the most granular level of building block in our product that leaps out of the billing system,” explains Gitter. “We are able to give product and sales managers a window into the activity surrounding their products.”
Sorrells particularly appreciates how SAP Business Planning and Consolidation has supported GVTC in its strategy of becoming a customer-focused, market-driven, performance-based enterprise. “The software drives our corporate scorecard,” he says. “It gives us the tools to analyze, redefine, and develop our key performance indicators. And we pay each employee a bonus based on obtaining measurable results that are strictly aligned with our corporate strategy.”
The SAP software has also helped the company focus more strategically on fiscal responsibility. When Gitter joined the company, the financial data was close to 75 days old. “With data that is so far in arrears, you can’t manage a business in a dynamic, fast-growth area – particularly in view of the massive competition we are facing,” he says.
Nor does he have to now: Today, three years after implementation of SAP Business Planning and Consolidation, GVTC has a 20-day close cycle, which it is aiming to further reduce to 12 days. “Combined with daily customer and product data, the reduced close cycle is giving us a huge advantage. Now, GVTC can be truly nimble.”
Prior to purchasing the SAP software, GVTC had already acquired and was using products from Business Objects. “We sometimes kid ourselves that we’re turning into an SAP shop,” laughs Gitter. “But joking aside, we welcome the fact that Business Objects is now an SAP company.” Both Sorrells and Gitter foresee greater benefits for the IT structure of GVTC, anticipating easier implementation and integration of the products and greater commonality of data. “And from a support standpoint, things will become easier because we will only be dealing with one company,” concludes Gitter. “It’s nice to know that SAP is moving in this direction.”
GVTC is not just operating more efficiently, but it is also more creative in doing so. The company, for example, has started to run business cases. “We run a business case on critical key decisions we need to make,” Gitter explains. “We try to use it as a crystal ball to give us a view into the future.”
In this way, Gitter can ascertain whether a particular decision makes good financial sense for the company and whether the return on investment warrants executing the decision.
Getting to the customer
A fundamental strategy of GVTC can be expressed in five words: Get to the customer first. Faced with telecommunications titans like Time Warner, it is essential to make inroads by reaching the growing customer base first. After all, everyone knows Time Warner, but “how many people have ever heard of GVTC?” asks Sorrells wryly.
By moving and responding fast and by sending out salespeople to visit customers, GVTC has achieved high penetration rates in many of the subdivisions sprouting up in the Hill Country. The company has also invested in new products to excite and attract new customers. By rolling out fiber to the home, for example, it acquired a technological edge and advantage over the competition.
The competition is waking up to the existence of GVTC. “They know who we are now,” says Sorrells. “And I am pretty sure that they did not think that GVTC was going to compete to the level that we did. We are now on their radar screen.” Companies are also realizing that they cannot afford to be slack around GVTC – this midsize company of only 235 employees has just taken away one-third of the market share from Verizon in Boerne, Texas, one of the fastest growing suburbs in the San Antonio metropolitan area.
With its successes, its determination, its foresight to change, and yes, its nimbleness, GVTC is becoming a known name in the Hill Country community. “We got the community to embrace us and to understand that we are a technological powerhouse,” says Sorrells. And while GVTC cannot necessarily offer more than the megacompanies that have encroached on its territory, it can provide more value and be more effective in the ways it approaches potential customers.
In fact, it sees customer focus and customer service as the differentiator over and against the competition. And with its new speed and agility, GVTC can get to customers first and keep them satisfied.
GVTC began more than half a century ago as a telephone cooperative with the purpose of providing modern phone service to remote parts of the Texas Hill Country and other rural areas north of San Antonio. Today, GVTC has evolved into a comprehensive communications provider with offerings that go well beyond residential and business telephone service. The products and services also include cable TV, high-speed Internet, security, long distance, advanced data services, and more.
GVTC’s product diversity reflects its long history of technical innovation. In the 1980s, it became the first telephone cooperative in Texas to offer cable TV and security system options. In the 1990s, GVTC was the first telephone cooperative to install fiber optic lines between its central offices. Today, GVTC’s expanding services also include high definition TV, digital video recorder, video on demand, local and unlimited long-distance calling plans, voice mail systems, fiber-to-the-home technology, fiber-to-the-premises business service, and voice over its cable system for Boerne residents.
Despite its growth, GVTC maintains a high level of accountability to its customers and strong ties to the communities where they live.