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TiVo turns to SAP, BearingPoint after outsourcing disaster

Lauren Soucy
ORLANDO Fla. -- Last fall, the third-party provider that handled TiVo Inc.'s logistical operations -- including huge components of its business, such as manufacturing, shipping, fulfillment, store front, and customer support -- gave TiVo 48-hour notice that it was ceasing operations.

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IT is no longer viewed as a controller of funding, but rather the business has true insight into what they're spending and what they're getting for it.
Steve Zoppi
CIOTiVo Inc.

"It was a case of too many eggs in one basket," TiVo CIO and vice president Steve Zoppi said last week in a session at Sapphire, SAP's user conference. "We had 48 hours to think through how we were going to do this."

Not to mention that this slap in the face came just months before the holiday season, when TiVo, like many retailers, typically makes 70% of its annual sales. TiVo, based in Alviso, Calif., sells a popular brand of digital video recorders (DVRs), a consumer video device that allows users to capture television programming to internal hard disk storage for later viewing.

Those who know of TiVo, probably don't know the beginning of the TiVo story, Zoppi said. Early on, the company relied heavily on third-party providers and outsourced critical factors of its business. Once the logistics provider crashed and burned, he said, things had to change.

This was the defining moment for the company, Zoppi said. TiVo turned to BearingPoint Inc., a consulting firm it used for an SAP R/3 implementation in 2000. Together with BearingPoint, TiVo worked quickly not only to save immediate logistical plans but to create better business processes for the future.

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TiVo wanted to take advantage of BearingPoint's experience from the initial implementation in 2000. Albert Kleynhans, senior manager for SAP and CRM at BearingPoint, worked as an adviser on the initial implementation and was brought in for the latest project.

Some of the challenges TiVo was facing in 2005, besides the implosion of its logistics provider, are common dilemmas for the midmarket, according to Kleynhans. TiVo had a growing business -- it added as many as 1.4 million customers in fiscal year 2006 -- and, coupled with a lack of resources and a need for speed, it needed to make every dollar count. At the same time, TiVo was facing threats to its market share from increased competition and more sophisticated customer demands.

TiVo brought BearingPoint on board because it needed to make many quick changes, Zoppi said. TiVo also looked for guidance on how to prioritize all of the changes it wanted to make.

One of the first things Kleynhans noticed was that TiVo needed to augment its internal resources.

"There was clear understaffing in some areas," Kleynhans said.

BearingPoint advised TiVo to reduce its dependency on the knowledge of a core group of SAP super users, as the entire staff struggled under these constraints, and to free up support for the creative ideas coming from the sales and marketing side of the business.

Once it had logistics in place to handle the work its outsourcer left behind, TiVo turned its attention to improving business processes that had been overlooked for some time. During this phase, employees discussed not only the top priorities but other bugs and business process enhancements.

"We took a lot of time to blueprint," Zoppi said. "We didn't have the time, but we [took it]. This was the time to say, 'You don't like this process, you have never liked this process, [let's change it].' "

TiVo also decided to reinforce its current SAP R/3 system before moving on to CRM. Working with BearingPoint, the company created a phased CRM approach. TiVo teamed employees with BearingPoint consultants to enhance CRM knowledge in-house. By doing this, they hoped to reduce future implementation costs and third-party dependency. TiVo is also gradually working toward a unified view of the customer. This, Zoppi said, has in turn enhanced e-marketing capabilities.

"Being able to target specific products and services to the customer and having them be interested [is a huge benefit]," Zoppi said.

Looking ahead, CRM and BW are the most logical next steps, Zoppi believes. But for now, TiVo seems pleased with the benefits of its process changes. Increased business accountability and alignment of the IT and business sides of the organization are two additional project gains for TiVo, according to Zoppi.

"Before, the business unit didn't really understand the magic of IT," Zoppi said. "Now, IT is no longer viewed as a controller of funding, but rather the business has true insight into what they're spending and what they're getting for it."


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