Published on November 28th, 2014 | by Daniel Sherman Fernandez0
Porsche Cayenne Success Explained
Two decades and a push into the hot-selling SUV segment later, Porsche’s sales have risen more than tenfold to 162,000 cars last year, and its operating profit margin is 17 percent, compared with premium rivals BMW and VW’s Audi, whose return on sales barely tops 10 percent. Porsche Consulting says it is passing on its secrets. Under its guidance, SAP halved development time for Web-based software products to six months from 12, contributing to productivity gains of over 30 percent. To ensure lasting success, the Porsche experts redesigned office spaces to promote better teamwork. “Speed is hugely important,” SAP’s Kniese said. “Without those insights, we would probably still be facing a need for optimization on development matters.”
Porsche Consulting is still just a sideline for the sports car brand. It made 83.5 million euros in revenues last year out of total brand sales of 14.3 billion euros, and its chief executive, Eberhard Weiblen, is cautious in a highly competitive business consulting market dominated by global players such as PwC, Deloitte, KPMG, Accenture and McKinsey & Co.
“Customers have greater demands and the number of competitors is growing,” Weiblen told Reuters. “The consulting business is becoming increasingly more difficult.”
But Porsche Consulting has been growing quickly. Sales rose 17 percent and 19 percent in 2011 and 2012, respectively, and while growth dropped to 1.8 percent last year as it set up new offices in Hamburg and Shanghai, it believes a differentiated business model and the support of clients will bring success. Unlike other advisory firms, Porsche Consulting avoids lengthy analyses, engages executives directly in staff coaching and aims to solve problems in their entirety rather than just fixing root causes, a senior manager at a German builder, which has used various consulting firms over the years. About 70 percent of Porsche Consulting’s staff are engineers or people with an industry background. By contrast, many rivals hire generalists, not specialists, the manager said, asking to remain anonymous due to the sensitivity of the matter.
VW this summer hired Porsche Consulting to oversee the 5 billion euro cost cutting plan it is seeking to implement with workers at its passenger car brand, after labor leaders called for the replacement of McKinsey.
Porsche’s own brush with insolvency and radical overhaul has perhaps encouraged its consulting business to be bold too. When MTU Aero Engines was grappling with erratic parts supplies for maintenance in 2008, its own directors shunned a major overhaul and instead recommended stockpiling parts. But Porsche Consulting helped MTU, which makes engines for planes built by manufacturers such as Boeing and Airbus, to restructure its logistics system to slash maintenance periods by about half to 60 days, Weingartner said. “Porsche was the only consulting company that recommended to alter processes very quickly and radically,” he said.