GBS maturity results - Steve McCrystal (Vodafone) & Don Ryan (KPMG)

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GBS Market and Maturity Assessment Analysis: European and Netherlands Perspective

GBS Roadmap: Driving Value and Performance

Don Ryan, KPMG LLP

October 2015


It’s a new day for GBS

DEALS & DEAL MAKERS

Rising Optimism Fuels Deal ReboundAt the current pace, M&A volume for the full year would exceed $3.7 trillion, making it the second-biggest year in historyBy Dana Cimilluca, Dana Mattioli and Shayndi Raice

April 8, 2015 8:18 p.m. ET

Takeovers are booming as companies gain more confidence about the economy, use stockpiles of cash to reach for future growth and get boosts from low interest rates and the surging stock market.Source: http://www.wsj.com/articles/rising-optimism-fuels-deal-rebound-1428538721 – 4/9/2015


It’s a new day

REDUCED COST STRUCTURE OF OPERATIONS

87%

IMPROVED QUALITY OF OPERATIONAL DATA TO DRIVE MANAGEMENT DECISIONS

88%

BETTER USE OF AUTOMATION TO REDUCE RELIANCE ON MANUAL LABOR

82%

GREATER SCALABILITY OF OPERATIONS

84%

IT ENABLED BUSINESS PROCESSES TO PROVIDE SOLUTIONS, NOT TECHNOLOGY

80%Source: HfS research

Organizations say that all these factors are important or critical to the success of the GBS program


What is Global Business Services (GBS)?

An integrated platform to deliver enterprise business services

Drives efficiency and business outcomes

Evolves with the market and company needs

Key Capabilities:

■ Multi-functional business processes

■ Multi-channel service delivery –outsourced, shared services and centers of excellence

■ Process ownership and management

■ Common information technology

■ Enterprise-wide governance


Maturity survey analysis: The Netherlands View

Public Sector companies are not included

Netherlands Europe

75% over 10k

employees

29% one ERP

67% Process Owners

MultiplierEffect of

Technology& Talent

71% over 10k

employees

39% one ERP

71% Process Owners

MultiplierEffect of

Technology& Talent


Key Value Drivers Reported – Europe and Netherlands alignment

Align the operating model to mitigate overall business risk and ensure compliance

4 HighLow 4

NetherlandsLEGEND Europe

- Relative Importance -

Drive growth & realize synergies from acquisitions 3 HighLow 3

Growth

Drive growth in emerging markets 2 HighLow 2Emerging Markets

Optimize the global operations footprint 4 HighLow 4

Global Operations

Build internal repository of high quality talent

HighLow 33Talent & Human Capital

Operational Efficiency

Connect, collaborate and mine data to drive greater insight

HighLow33

Data Insight

Protect the Brand and foster a common customer experience HighLow 2 3

Customer Engagement

Drive process excellence and collaboration

HighLow 44Process Excellence

http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/hr-transformations-survey/Pages/Default.aspx

http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/seven-steps-better-customer-experience-management.pdf


GBS maturity survey dimension parameters

Delivery and SourcingStrategy

Little or no alignment between GBS and corporate missions, strategy and planning.

Bi-directional formulation of strategy & planning between GBS, functional, BU and corporate management

GBS operates on multiple IT systems for each GBS customer. GBS operates on a single instance ERP across enterprise with standard enabling technologies. Enabling Technology

GBS delivery groups are aligned singularly to functional leadership. Functions are responsible for all aspects of process development, performance management andtalent management.

GBS serves as an independent operating unit on par with other Functions/BUs providing output based services to Functions/BUs based on policy and requirements

Enterprise Governance

Decentralized service delivery model with single function Multi-functional, multi-channel service delivery modelServices Portfolio

GBS provides transaction processing and staff mix and skills reflect this narrow focus

Broad talent management practices ensure GBS people and leaders are recognized for their insight, innovation and customer-orientation.

Talent Management

No formal analysis of service supply-demand. Formal supply-demand of services is used to optimize consumption and evaluate service sourcing. Formal analytics in place.

Commercial Orientation

Business processes are managed solely within their delivery teams, which are discrete to a function and/or geography.

Global process ownership incorporating both the GBS and non-GBS portion of an end to end process. Process Excellence

Information is created and distributed through a combination of static reporting and limited ad-hoc requests; analysis is performed on as-needed basis.

Dynamic reporting, with predictive modeling provide users with prescriptive analysis of real time data from internal and external sources

Data & Analytics

Absence of organizational flexibility and senior management ownership

High degree of management buy-in and formal processes for driving GBS acceptance in the organizationChange Management

Assurance reporting requirements are not included in service provider contracts, and no coordination occurs with providers on assurance related matters

Assurance reporting with impact to the organization's financial reporting, operational, and compliance objectives with due diligence occurring for new and existing providers

Risk and Tax OptimizationLow

High

1 3 5


Mapping results against the GBS maturity model – An industry view Europe

Serv

ice

Del

iver

y M

anag

emen

t Mat

urity

Cross Industry Levels of Maturity

Major USA and European Enterprises

FRAGMENTED■ Decentralized service delivery model■ Duplicative functions, processes, and technology■ Little central control and governance over business support services

SUB-SCALED■ Consolidated delivery model■ Leverage economies of scale for highly transactional

services ■ Shared services or outsourcing typically on a single-function

SCALED■ Functionally oriented■ Global shared service model■ Variation around processes, tech

and governance standardization

INTEGRATED■ Multi-functional, multi-channel service delivery model ■ Provides transactional and analytic

services■ Managed through integrated,

outcome-oriented governance ■ Synced end-to-end

STRATEGIC■ Enterprise wide multi-functional service delivery platform■ Coordinated processes, technology, governance, and

multi-channel delivery for scale and adaptability

EuropeCurrent Average 2.8

EuropeAspirational Average 3.8

Leve

l 05

Leve

l 04

Leve

l 03

Leve

l 02

Leve

l01

Focu

s

CPG Food & Beverage (Top

Performers)

Public Sector

CPG Food & Beverage (Overall)

Industrial and Manufacturing

Tech and Telecom

Pharma Financial

Services

Energy & Utilities

Netherlands Current Average 2.6

Netherlands Aspirational Average 3.6


Governance & Process Excellence vs Functional & Geographic Spread

Masters - Higher maturity overall

Conservative - Wider scope with less maturity

Focused - Higher maturity in limited area

Beginners - Limited scope and maturity


GBS Maturity Survey Results Europe

% change

Low

High 33%

Low

High 31%

Low

High 39%

Low

High 56%

Low

High 33%

Low

High 36%

Low

High 27%

Low

High 39%

Low

High 43%

Low

High 20%

3.62.3

3.92.9

4.13.1

3.1 4.0

3.72.6

2.8

3.9

3.82.7

3.1 3.7

2.9 4.0

2.8 3.7

Commercial Perspective

Enterprise Service Governance

Process Excellence

Data and Analytics

Delivery and Sourcing Strategy

Change and Program Management

Service Portfolio

Enabling Technology

Talent Management

Tax and Risk Optimization

1 3 5

Aspirational

LEGEND

Current

Preliminary Benchmark

Average Best in Class –3 or

more in process and governance


LowLow

LowLow

LowLow

LowLow

LowLow

GBS Maturity Survey Results Netherlands

1 3 5 % change

Commercial Perspective

High 25%Aspirational

LEGEND

Current

Preliminary Benchmark

Average Best in Class –3 or

more in process and governance

Enterprise Service Governance

High 36%

Process Excellence

High 53%

Data and Analytics

High 65%


High 37%

Change and Program Management

High 42%

Service PortfolioH

igh 26%

Enabling Technology

High 42%

Talent Management

High 44%

Tax and Risk Optimization

High 0%3.

82.7

3.0 3.8

3.42.0

2.5 3.5

2.6 3.9

2.5 3.6

3.62.5

2.4 3.3

3.83.0

3.5

3.5


Priority Dimensions – Europe


Where do we focus?

KeyDrivers

Key Drivers to Maturity among all companies■ Strategy■ Governance■ Process Excellence■ Commercial Orientation

Netherlands maturity also driven by■ Enabling Technology ■ Process Ownership

Data and Analytics linked to■ Drive growth in emerging

markets■ Talent Management

GBS organizations distinguished by■ High Degree of focus on

governance, commercial orientation and service portfolio/strategy

Key Linkages■ Commercial

Orientation and Governance

■ Process Ownership and Strategy

Companies at highest levels of maturity ■ Optimize the global operations

footprint■ Drive process excellence and

collaboration


Show me the money: Factors that drive cost savings

■ Labor arbitrage is predominant driver for initial cost savings at lower levels of maturity

■ Cross-functional process implementation and end-to-end process ownership drives savings as organizations become more mature

■ Implementing enabling technologies also important as maturity increases

0% 10% 20% 30%

Labor arbitrage (captive)

Staff mix / spans of control

Rationalization of ERPplatforms

Scale economies

Rationalization of third partyproviders

Standardization &simplification

Labor arbitrage(outsourced)

Implementation of enablingtechnologies

Cross-functional processimplementation

Level 3 to 4-5 Level 1-2 to 3


Where’s the value in the future?

LABOR ARBITRAGE CHARACTERISTICS

LABOR AUTOMATION CHARACTERISTICS

cost take out for relevant functions40% -75%15%-30%

Model is scalable and islargely independent of labor growth

Transformative – New way ofdoing business

Access to “Rocket Scientists”who can codify manual processes

Revenue/Profit NOT correlatedto People

cost take out

Model is scalable to the extent that you can scale labor

Custom/complex, legacy:our mess for less

Access to Low Cost Labor necessary to provide continuous value

Revenue/Profit correlatedto People


Above line benefits can dwarf labor and outsourcing benefits

Above line benefits associated with cash flow increases, revenue growth, acquisition integration associated with process improvement may more than double any hard core OH cost savings

2015 20192016 2017 2018

50 – 100%


What maturity looks like and how to achieve

Action Plan


■ Use outsourcing partners to give access to technology enablers and leading practices

■ Identify a champion at senior level to help gain alignment with Executive objectives

■ Monitor & report benefits to increase GBS buy-in

■ GBS strategy tied directly to overall corporate strategy

■ Mix of captive and outsourcing to have the best labor arbitrage and value delivery

Enabling Technology

■ Rationalize existing systems

■ Invest in technology led process improvements and innovations

■ Create dedicated IT organization and/ or CoE to support GBS

■ One ERP system with 2 or less instances

■ Use of Enterprise Service management for non-IT governance activities

■ Automation in all possible parts of a process

Governance

■ Formalize, regularize and document all governance practices

■ Drive an overall functional expansion and transformation agenda within GBS

■ Single governance structure with head of GBS reporting to COO or CEO

■ COO or other C-level management are process owners or sponsors

Services Portfolio

■ Expand functional scope and BU coverage

■ Extend to cross functional end to end process opportunities

■ OH functions are delivered by GBS; IT is in GBS

■ A large majority of back office operations are standardized, transactional services

■ GBS provides five or more services

Desired State


What maturity looks like and how to achieve (continued)

Action Plan

Talent

■ Assess workforce capabilities across employee lifecycle and form clear career paths

■ Enable cross-training and placement across functions and processes, regular staff rotation

■ Talent management tailored to operations

■ Turnover less than 15% per year

■ Continuous learning and development, robust training, knowledge management and collaboration are part of GBS culture

Commercial Orientation

■ Invest in GBS brand building activities

■ Perform benchmarking on price and performance against third party providers

■ Measure SLAs that cover more than just operational/ cost metrics, focus on performance

■ Operate GBS like an independent business unit with P&L

■ Services as competitive as a third party provider

ProcessExcellence

■ Empower process owners to design and manage end to end processes; hire black belts

■ Perform process benchmarking with peers

■ Regularly report productivity gains to demonstrate GBS benefits

■ Process owners with complete ownership

■ At least 5% efficiency improvement YoY

■ Process optimization using lean/six sigma expertise. Change management and corporate gov to drive transformation agenda

Data andAnalytics

■ Expand functional scope and BU coverage

■ Extend to cross functional end to end process opportunities

■ OH functions are delivered by GBS; IT is in GBS

■ Provide services to GBS and across functions to help drive better and faster business decisions leading to better outcomes

Desired State


Case Study Global Brewer


Background

The challenge

Today

■ Consumer products company, with ~70,000 employees globally■ Established finance BPO in 2008 and a number of local/regional SSC projects■ Globalised IT function, with single ERP in deployment

■ Ambition to develop more globalised ways of working and to free up resources to focus on winning in market

■ Identified GBS as lever to enable future growth as part of global restructuring ■ Initial GBS maturity assessment ~ level 2, target to get to ~ level 4

■ GBS design complete – leverages learnings and best practices from others■ GBS build well underway – global structures and leadership team in place and

deployments in progress■ Outsourcing is a key lever with finance BPO leading the way on a global basis

Case Study: moving up the maturity curve


Case Study: moving up the maturity curve (continued)

Key focus areas & current actions:


Governance

Services Portfolio

ProcessExcellence

■ Establishing a predominantly outsourced model, leveraging long term as well as new service provider relationships

■ Creating additional capability in service management through key roles to focus on outsourced services

■ Extending services portfolio beyond back office transactional processes front office customer contact services

■ Services managed on an end-to-end basis with output KPIs

■ Head of GBS reports to board – sponsored by the CEO■ Governance forums developed at the local, regional and global levels with

standardized ToR and reporting packs■ Direct interaction between customer markets and outsourced services providers on

a day to day basis

■ Clear accountability for process design and evolution■ Process design extends beyond technology into full services operating model■ Dedicated process excellence and continuous improvement resources to drive

operational excellence


Case Study: moving up the maturity curve (continued)

Future ambition:

Enabling Technology

Data & Analytics

Talent

■ Single ERP is well into deployment and will continue to roll out ■ Focus now on exploiting technology to drive efficiencies through process

management/optimization and through automation

■ Recently appointed a new HRD for GBS■ Focus is now on building sustainable talent, to engage with customer markets and

ensure successful execution■ Embed consistent GBS culture across the organization

■ Develop data and analytics as a service■ Starting with master data management and core KPIs■ Building to unstructured data management and social listening

Vodafone Shared Services

23

Vodafone

One of the world’s largest telecommunications companies with a

presence in Europe, Africa, the Middle East and Asia Pacific

£63 billionMay 2015

Market capitalization

The Group has significant international presence with

mobile operations in 26 countries, 55 mobile partner networks worldwide and fixed broadband

operations in 17 markets

Vodafone Shared Services: Maximizing value to Vodafone by…

Standardised

Processes

Excellent Performanc

e

Engaged Partners

Experienced People

• Delivering efficiencies and effectiveness by taking processes to scale

• Simple but excellent operations

• Value delivered by our ‘own’ people

• Partner/ customer satisfaction at the core of everything we do

Shared Services has accelerated greatly over the last 3 years

20062007

2009

2011

2014

2015

050

600

4,200

17,000+

13,500

Approved a single ERP to enable standardisation

First shared service centre established

in Budapest

India & Egypt begin to deliver Customer Operations and

Technology services opportunistically across Vodafone

Shared Services Mgmt Committee

Established

Optimise global footprint; Romania

One Vodafone Shared Services to maximise

value

SHARED SERVICES

Vodafone Shared Services snapshot

Szia Buna Ziua

AhlanNamaste

EU 2,000 FTEFinance & Supply ChainEnterprise marketing and salesCustomer care

Egypt ~4,000 FTETechnology developmentCustomer careBusiness intelligence

India ~11,000 FTEFinance OperationsTechnology OperationsCOPS & Enterprise Operations

Vodafone is a global leader for its Shared Services’ adoption, size and speed of

implementation.

Vodafone Shared Services has matured, delivering value to our partners and significantly contributing to customer experience

Net value FY 14/15 exit run rate savings

Value delivered from continuous process improvement

Market leadership in consumer NPS

Cost reduction on average for each role migrated

Professionals in Shared Services

£320m

£40m

NPS Leader

60%

17,000

A continually expanding portfolio of capabilities…

Finance

• Procure to Pay• Reporting cycle• Cash management• Management accounting

2 million invoices

(total value: €42bn) paid

in 14/15

• Sourcing• Contract mgmt.• Master Data• Purchasing operations• Supplier evaluation• Responsible SCM

4k contracts and 820k

PO processed in 14/15

• International mobility• Front/back office (Ask HR)• Learning & Development • HR Data & Reporting

25k calls and

15k transactions per month

HR

SCM

• Bid & Pricing• Marketing & Sales• Contracting & Legal• Design & Delivery• Global Service Centres• Technology Operations

70% VGE bids

managed in 14/15

• Live chat• Voice• E-mail• Back office

3.8m contacts

handled per month

(international)

• Application development• Application operations• Application testing• Application maintenance• SAP services• Roaming services

500k+ tickets

handled & 360k test

cases

• Firewall services• IP & VPN connectivity• NW bandwidth provisioning• Operations support systems• Assurance services

150k alerts

managed per month

• Network Optimization• SON products and Integration• Capacity Management Services• Telecom Tooling and

Management

30 projects

delivered in 14/15

• Data Management • Reporting • Universe design• Predictive / descriptive analytics

Reporting lead time

reduced by 2 weeks

• Fraud monitoring and analytics

• AML support incl. watch list screening

230k fraud alerts verified per month (6 markets)

Customer Care

Networks

Mobile Networks

BI/Analytics

Fraud & SecurityIT

Enterprise

Enabling VSS to maximise value

Key success factors… What could be better…

Global footprint…leveraging the Vodafone Brand

Benefits of being captive

Our commitment to quality and partner satisfaction/NPS

Process Improvement mindset and Robotic automation

Flexible Hybrid model focused on Value

Less selling more telling especially as we matured

Starting Innovation fund earlier

Centre v Function dynamics

Middle management talent pool


Roundtable #1Building a Better GBS to Support Higher Level Objectives – moving beyond cost reduction

GBS Roadmap: Driving Value and Performance

Don Ryan, KPMG LLP

October 2015


The Four Sectors – Everyone does one

Governance Challenges and Best Practices – Don

Value Optimization – Steve

Functional Expansion/Process Focus –Joanna

GBS maturity results - Steve McCrystal (Vodafone) & Don Ryan (KPMG)

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Transcript of GBS maturity results - Steve McCrystal (Vodafone) & Don Ryan (KPMG)