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This article appeared in the JAN FEB MAR 2014 issue of insiderPROFILES (insiderPROFILESonline.com) and appears here with permission from WIS PUBLISHING.

When Lenovo acquired the PC division of IBM in 2005, beginning a

steady climb to become the top-selling PC manufacturer in the world, it

truly became a global organization. Lenovo had long been the No. 1 PC

maker in China, where the company was originally founded as Legend

Holdings in 1984. Since IBM owned a large market share in North Amer-

ica, the acquisition immediately made Lenovo a global player in the PC

market. A quick visit to the company’s website will reveal the scope of

the Lenovo brand — as a drop-down menu provides site visitors with

130 options for a country/region, from Algeria to Zimbabwe.

This global diversity of online users filling their configure-to-order

(CTO) shopping carts helps illustrate the size of the challenge Lenovo

faced at the time of the IBM acquisition. Imagine the complexity of

bringing an array of different IBM businesses, all operating on legacy

systems, onto a standardized IT platform. Admittedly, the Lenovo busi-

nesses did have some shared systems, but it lacked a centralized plat-

form that could be used to standardize — and thus streamline — pric-

ing throughout the expanded company. Without a unified approach for

price management across the organization, Lenovo’s vision for improved

revenue and margin through a standardized global CTO shopping cart

wasn’t feasible. Language and cultural barriers were just a couple of the

obstacles to standard pricing practices; but the biggest hurdle was the

multitude of systems in use that set and maintained pricing, analyzed

margins, or drove trade promotions — all of which conspired to muddle

the true profitability picture for Lenovo, which in turn added cycle time

to pricing changes demanded by the market.

by Ken Murphy, Senior Writer

Conf igures a Lenovo

Pricing Makeover

Top-Selling PC Maker Aims for Greater Organizational Consistency and Market Responsiveness


At a Glance

“When we began our transformation journey, we had to keep an eye out to standardize whatever we built, and to synergize around similar business processes. With a core template, we could then extend that to all of our regions.”— Cliff Preddy, Senior Manager of Marketing

and Sales Processes for Corporate Business Transformation, Lenovo

Cliff Preddy, Lenovo’s Senior Manager of Marketing and Sales

Processes for Corporate Business Transformation, describes the

immediate post-acquisition landscape, and the company’s rough

plans to standardize its overall IT landscape. “We were living in a

hybrid world,” he says. “When we began our transformation jour-

ney, we had to support the legacy IBM systems during transition

while also continuing to support the business needs. We had to

keep an eye out to standardize whatever we built, and to syner-

gize around similar business processes. With a core template, we

could then extend that to all of our regions.”

A New Look at PricingThe hybrid world Preddy describes, where there was no standard-

ized pricing, central data warehouse, or concrete business model,

was not the optimal environment to provide for a 360-degree view

of business processes as well as performance tracking and analysis

of product lines. “The systems were all over the place, meaning

that some regions were using different methods or processes than

other regions to achieve the same end,” Preddy says.

With responsive pricing and true margin visibility clearly a busi-

ness priority, one of Lenovo’s first initiatives was to extend CTO

shopping cart availability to every region, with a central system

responsible for ensuring that, for example, a ThinkPad T430 series

laptop configured to order by a customer in, say, Finland, would

have the same user experience as if purchased from the United

States. Just as importantly, Lenovo wanted pricing information

available globally, to be used as a baseline to model promotional

campaigns, or enable CTO changes based on a certain product or

product line’s sales.

With a patchwork of pricing systems around the globe, it would

be a challenge for Lenovo to assemble this disparate informa-

tion together to form a baseline, let alone to make timely and

informed business decisions.

“There was a lot of manual work in pulling data, manipu-

lating that data in spreadsheets, and releasing it in various

systems; and all of that was error-prone because of the many

different processes,” says Preddy. Clearly, this existing system

infrastructure was impeding Lenovo’s ability to react quickly

to market and competitive change. To remedy this, as part

of an overall solution, Lenovo turned to the SAP Price and

Goal: Lenovo sought to accelerate responsiveness to market and cost changes, while automating and standardizing pricing practices and profitability metrics across the business

Strategy: Implemented SAP Price and Margin Management by Vendavo

Outcome: A more market-responsive, standardized, and price-optimized configure-to-order platform, with automation of channel program pricing strategies that resulted in fewer resources expended, more accurate pricing, and increased revenues


Margin Management application by Vendavo, and tar-

geted its CTO shopping cart functionality as the first step

toward achieving pricing visibility across the business.

Make Mine a ThinkPadThe solution for the CTO platform involved SAP Price

and Margin Management enabling the CTO shopping cart

functionality by providing pricing master data that the

CTO configuration engines would then execute to control

the CTO experience. Additionally, Lenovo targeted the

solution to achieve fully integrated campaign planning

and pricing. With the CTO functionality geared toward

the end consumer, campaign planning controls would

ensure an alignment of release strategies and pricing for

Lenovo’s many channel partners. Though a different cus-

tomer base, the goal was the same: to align disparate pro-

cesses onto a single pricing platform to give Lenovo a truer

profitability picture.

The first step was turning on the CTO shopping cart

functionality around the globe. Lenovo was able to initially

role this out to 18 different countries in just eight months.

Today, building a custom-order Lenovo PC starts by select-

ing one of the 130 regions or countries. Offers appear in the

appropriate language, and customers can select upgrades,

alternative options, and accessories on the model of their

choice. For many ThinkPads, for example, customers can

select from one of four processors and operating systems,

as well as choose a hard drive during the same transaction.

Product strategy teams finally had the baseline data

they needed to calculate various pricing scenarios. With

the new CTO platform, these teams were now equipped

with the insight to understand how a product’s price

affects sales on a global scale, giving them a view to wheth-

er a product is priced accurately, and helping them quickly

decide whether a product might benefit from a change in

campaign strategy.

With CTO functionality up and running, Lenovo then

focused on pricing controls for its channel programs. Simi-

lar to pricing controls on the CTO platform, SAP Price and

Margin Management gives Lenovo greater insight into pric-

ing considerations for its channel programs and provides

product teams the ability to set appropriate clip levels and

rebate offers.

“Not having organizational control was one of our big-

gest pain points,” says Preddy. “That’s what SAP Price and

Margin Management brings to the table; it integrates with

our strategic solutions, pulls all of the necessary data that

concerns products and costs, provides the ability to set pol-

icy that allows users to manage the pricing, and gives those

users the ability to establish proper hierarchies of control

and workflow approvals for releases.”

Integration OpportunitiesBecause SAP Price and Margin Management allows for

easy integration with master data through Lenovo’s SAP

ERP system, the company is exploring how it can use the

application to improve pricing collaboration via integration

with its other SAP applications. “Thus far, we have focused

mainly on price-setting,” says Preddy. “But, in the future,

we’re looking to integrate more into the sales experience

and the sales cycle.”

Future opportunities include leveraging the integration

with the front-end tools supporting the price negotiation

process, which would provide sales reps the ability to adjust

quotes on the fly by tying price approval requests directly

to SAP Price and Margin Management. This would provide

Lenovo with greater product pipeline management and

give sales reps a tool to help better manage their accounts.

As Preddy says, any future integrations will be icing on

the cake. “There’s a lot of expansion opportunity with SAP

Price and Margin Management as a powerful suite of ana-

lytics tools, but we’ve just made a monumental achieve-

ment in terms of finally taking control of our own systems,”

he says. “After this major milestone, we will now have the

ability to be a bit more agile in what we go after.”

Company Snapshot

Headquarters: Beijing, ChinaIndustry: Personal technology, consumer manufactured goodsRevenue: $30 billionEmployees: More than 30,000Company details:• The Lenovo brand has been in existence since 2004, but

the company’s history begins two decades earlier. In 1984, Legend Holdings was formed in China, and was incorporated in Hong Kong in 1988, becoming the largest PC company in China. Legend Holdings changed its name to Lenovo in 2004. In 2005, Lenovo acquired the PC division of IBM.

• In the last 20 years, Lenovo has sold more than 75 million ThinkPads.

• In 2013, Lenovo overcame HP to become the top-selling PC company in the world with 16.7% market share to HP’s 16.4%.

SAP solutions:• SAP ERP• SAP CRM• SAP Price and Margin Management by Vendavo

Lenovo


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