"Delta" Restructuring and Realignment Program.
In fiscal 2015/2016, Wincor Nixdorf made rapid progress and achieved considerable success in the implementation of its Delta restructuring and realignment program, which was launched in the previous year.
The objective of the seven-point program is to accelerate the company's transformation into a software and IT services company capable of generating attractive margins alongside an innovative and profitable hardware business. Although the associated restructuring measures were originally expected to generate non-recurring costs in the region of €120 million, Wincor Nixdorf managed to limit this expense item to around €100 million. In total, 80% of these one-off expenses were incurred in fiscal 2014/2015 and the remaining 20% in fiscal 2015/2016. By fiscal 2017/2018 the program is expected to produce a positive effect on earnings equivalent to €120 million per year. Wincor Nixdorf has been moving towards this target faster in recent months than it had anticipated at the start of Delta. The boost to earnings in fiscal 2015/2016 was as much as €90 million, visibly higher than the figure of €50 million originally predicted for this period.
The Delta program was designed in response to changes in our markets.
Among banks and retailers, demand for software and high-end services is being driven by increasing digitalization; we aim to benefit from this trend over the long term. Additionally, we plan to seize further opportunities for dynamic growth in the promising field of cashless payment.
As regards the overall depth of the value chain, our Hardware activities, which remain an important part of our business, have been redimensioned so that we can achieve adequate margins even against the backdrop of slower growth and more pronounced market and price volatility. As part of the restructuring program, Wincor Nixdorf is streamlining its costs and significantly adjusting its capacity, above all in those corporate functions that are linked to the Hardware business, such as development, global production and the supply chain, sales, and HQ operations.
Seven-point Program for Strategic Realignment.Enlarge image
Considerable acceleration of growth in the Software business and associated Professional Services.
As part of our drive to boost growth in the Software business, we have appointed a number of software engagement managers to strengthen our sales teams in the areas of Software and Professional Services. In line with our nearshoring efforts, we have taken further steps to adapt our supply model for Professional Services. Our Software development and testing activities are now concentrated at two global supply centers in Katowice (Poland) and Pilsen (Czech Republic), which are also responsible for delivering our system integration projects.
With a view to strengthening its capacity in the area of Professional Services, Wincor Nixdorf acquired a majority stake in the Belgian consulting firm Projective. Projective specializes in project management for the financial services industry, advising primarily on the design and implementation of omnichannel solutions.
Expansion of high-end IT services for operations management such as Managed Services and Outsourcing.
In the IT Services business we focused on measures to increase profitability. With regard to product-related services, we outsourced less profitable orders to external providers. This allowed us to utilize our in-house capacity more efficiently with regard to our service teams and boost profitability. Turning to the Managed Services and Outsourcing business, we have now started to build up our nearshoring capacity.
Fundamental realignment of hardware strategy.
In the Hardware business we concentrated on the final stages of system production and on our core competencies in the field of technology. To this end, we scaled back the level of vertical integration, increased the volume of supplies we obtain from countries with more favorable cost structures, and further reduced our own manufacturing capacity.
The focus of our Hardware portfolio was on competitive and profitable products. We consistently avoided less profitable models and prioritized those configurations which offered greater potential as regards unit sales. In the case of our CINEO systems, for example, we discontinued more than 100 of the models previously available to order, stopping production of complete systems and reducing the number of teller safe models. We introduced a 'One Wincor PC' as a way of reducing the number of PC variants in our systems.
In order to maximize availability and cost-efficiency throughout the supply chain, country-based and client-specific modifications of standard systems are now centralized at the sites where the systems are actually produced. As a result, we were able to downsize and even close some of our distribution and configuration centers in various countries.
As regards the development of new hardware, we have opened ourselves up to business partnerships and collaborative activities with other companies. This strategy includes the OEM distribution of core technologies and the OEM procurement of niche technologies. One example of the implementation of this strategy is our cooperation with Hess Cash Systems. Hess will now supply coin handling components. It has taken over the workforce at Wincor Nixdorf's Coin Competence Center as well as the production of coin deposit and recycling systems.
As part of its overall plan to scale back manufacturing capacity, Wincor Nixdorf sold its toolmaking unit to Autmaring GmbH (Paderborn, Germany). Under the terms of the deal, Autmaring also took over the 70-strong workforce and will now act as one of Wincor Nixdorf's strategic suppliers in the area of toolmaking.
Independence and advancement of business unit for cashless payment.
We separated our successful Cashless Payment business unit and established it as an independent operation. The new company – referred to as AEVI – was formed on October 1, 2015, and is now trading as a start-up in the fast-growing market for cashless and mobile transactions. AEVI has formed partnerships and cooperations with other players in the payment market with a view to harnessing new opportunities for growth. Additionally, the private equity investors HPE and Adveq acquired non-controlling interests.
Program for price optimization.
In the fiscal year under review we set up a Pricing Office with the objective of improving our margins and price discipline. The Pricing Office plays an active role in all cases where orders expose the Company to economic or technical risks or where the costing process involves substantial volumes. Its introduction has allowed us to speed up implementation and create greater transparency in the tendering process.
Streamlining of administration costs.
We have implemented a wide range of measures at every level of the organization in order to reduce complexity, simplify functions and processes, and therefore reduce our costs further. For example, we revised and streamlined our regional management models and defined and implemented new and complete go-to-market approaches geared to market conditions. We also reviewed our global office and building capacity and adjusted it to match our current needs.
Organizational support to implement changes.
Alongside our existing Banking and Retail segments, which are responsible for customer support across the entire portfolio, we have established three dedicated business units entitled Software, Services, and Systems. As horizontal units, they are accountable for the complete value chain – from development through to deployment.