SciQuest to align resources with technology and solutions business plan
SciQuest is aiming to decrease its cash outlay by approximately $10 to $12 million annually and align the company's assets to the strategic business focus of providing technologies and solutions to customers.
Since joining SciQuest as CEO in February, Stephen Wiehe, along with the SciQuest management team, has reviewed the company's market opportunities, assessed customer needs and evaluated the assets of the company. "As we worked through the assessment of the current state of the business it became clear to us that we had take fundamental steps to grow the business and control of our cash position," said Wiehe.
According to SciQuest, the business plan is designed to enable the company to effectively leverage its existing technology solutions, both for research enterprises and its supply chain partners; accelerate sales of its high-margin technology and services offerings; resize its human resource levels; reduce its overall operating expenses, narrowing its focus to profitable customer segments and solution delivery engagements; and effectively communicate its business model to the marketplace.
"Historically, the SciQuest business model was perceived as a 'virtual distributor' with revenues based primarily on transactions fees flowing through our e-commerce platform." Wiehe said. "The model no longer fits the dynamics of the scientific marketplace and does not accurately compensate SciQuest for the value we deliver. While much of the technology, content, and services that drove the revenue model remain central to our technology and solutions focus, the means by which we generate fees and the associated cost structure for that business model are now fundamentally different. SciQuest's EMAX team has been successfully employing such a solutions-based approach in their work with some of the world's leading research enterprises. Our new staffing level corresponds to our new approach and significantly extends our cash position.
"Going forward, our business goals are to provide technology, services and integrated e-commerce and research asset management solutions to research enterprises and their supply chain partners," Wiehe said. "To accomplish our objectives changes had to be made to the overall business structure."
In accordance with the company's solutions-based business model it announced it will take the following steps: reduce staff by approximately 30% and realign the SciQuest and EMAX management teams to best serve our solutions-based business model; reduce capital expenditures which are not aligned with our business goals; significantly reduce expenses related to external service providers; leverage prior investments in automation technologies and productivity tools; and modify policies and protocols in managing the transaction flow that consume significant working capital reserves
"These are not easy business decisions, especially when so many talented and hard working people are involved, but they are necessary to effectively grow our business," Wiehe said. "These decisions should give us the working capital to efficiently implement our solutions-based business model, support continued investment in high-margin technology and services offerings for global research organizations, and stimulate profitable growth, without affecting our core competencies or service to our customers."