Smoothly passing the baton from captive to outsourced service delivery in just a few months

Michelle Adams – European Service Delivery Director Judith Morris-King – Global Process Expert 14th March 2012

1

What you will get from this presentation

2

2. How did we do it?

1. Introduction to AZ & Project Bridge

Journey

5. Did we achieve what we set out to?

3. Key Challenges and how we overcome

them

6. What did we learn?

4. How did we keep staff motivated?

We employ over 61,000 people, 47% in Europe,

30% in the Americas, 23% in Asia, Africa and Australasia

In 2010, our worldwide sales totalled $33.3 billion, with operating

profit of $11.5 billion.

We invest over $4 billion in R&D each year

and have over 15,500 people in our R&D organisation

A 70-year track record of innovation that includes the

introduction of many world-leading medicines.

Global Pharmaceutical Company

14 major R&D sites in 8 countries, 23 supply and manufacturing

sites in 16 countries

AstraZeneca

4

This is what we did over 3 years

GFS NAM

GFS APBS

GFS LATAM

Genpact AZ,

Guatemala

Genpact AZ,

Sao Paulo

Genpact AZ,

Rabat

Genpact AZ, Lublin

GFS EMEA &

Central

Genpact AZ,

Delhi

Genpact AZ, Cluj

Realised our vision for

one Global

Organisation

Delivered the new transactional finance

Operating Model

Established an

in-house Shared

Service Centre

in Asia Pac

Transferred our services to be

delivered out of 6 locations in

Genpact & 4 in AZ

5

Why did we do it?

AZ Finance Landscape – “Before” Transition Model

400

Rest of Europe 330

530 UK

Sweden

210

LatAm

210

AsiaPac

210

Japan

45

NA

30

MEA

Business Partnering Specialist Finance

Transactional Finance

Administrative staff Other staff

Area totals are rounded and approximate Objective of Bridge - to improve further the effectiveness of

AstraZeneca’s finance function in driving, measuring and reporting

business performance, while simultaneously reducing the costs of the

finance function toward external best practice levels of efficiency

So how did we do it?

• Overview of Project Bridge Methodology, Transition and

Work Stream approaches

Project Bridge Summary

7

Change Costs Compliance

• Transfer of transactional activities through a combination of Business Process Outsourcing and in-House Service Centre delivery

• Reshaped how and where we deliver our services globally

• Transitioned services out of 53 Marketing Companies across EMEA the Americas and Asia Pacific

• Standardised KPI reporting approach across all regions

• $55m project which involved a global project team with regional experts based in region

• Significant improvements in cash allocation and manual invoicing on overdue credit card spend

• More than 75% of cost saving benefits realised to date with the remainder being tracked to completion

• We are 80% complete in standardising controls across all regional areas GTF supports

• More efficient compliance reporting and senior leadership report outs

• Clear control ownership and traceability of controls for audit purposes

• Genpact enforcing and improving our compliance models

Global Transition Plan

8

Q4

2009

Q2

2010

Q4

2010

Q2

2011

Q4

2011 Q1

2010

Q3

2010

Q1

2011 Q3

2011

UK

Russia

Greece &

Turkey

Sweden

CEE

MEA

LATAM

North America

Asia &

India

Will finish

in AZ

Turkey

Started in Sweden

Communications

Finance & Benefits

HR

IS

Global Processes

How we organised ourselves.....Programme Structure

Sweden

Transition

Director

UK

Transition

Director

CEE/MEA

Transition

Director

LATAM

Transition

Director

NAM

Transition

Director

Global Transition Director

Programme Mgmt Office

SMEs SMEs SMEs SMEs SMEs

Global Finance Services - Global Programme Director

9

Transition Methodology - Planning Toll-gates

Initiate Sol ID Preparation (Hire - Train)

Knowledge Transfer (and On-the-Job Training)

Pilot Production Stabilisation

Production

Stabilisation

Pilot

Initiate

Preparation

Knowledge

Transfer

Sol ID

“Plan, Execute and Completion” phases used the Tollgate approach to align to the major

milestones & service transfer to Genpact.

Planning and preparation for

Transition. Contract completion

and education. Team roles &

responsibilities agreed

Complete Genpact team recruitment.

Prepare Genpact and AZ teams for

Knowledge Transfer. Complete

preparation for systems access and

arrival on-site. Commence AZ

retained recruitment. Define / refine

AZ retained ways of working

Service Delivery through existing

AZ roles and staff. Complete

Knowledge Transfer and quality

assurance. Commence retained

roles education and training.

Agree detailed solution for each

process. Finalise retained

capabilities and organisation design

Service Delivery by Genpact starts.

AZ remain accountable. New AZ

retained organisation known and

educated.

Service Delivery through new

service model Genpact & AZ.

Service Governance operational.

Refine and improve AZ and

Genpact ways of working. Benefit

delivery underway.

UAT

UAT

Tollgate 5

Tollgate 0

Tollgate 1

Tollgate 2

Tollgate 3

Tollgate 4

10

Key challenges and how we over come them

Initiate Sol ID Preparation (Hire - Train)

Knowledge Transfer (and On-the-Job Training)

Pilot Production Stabilisation

12

Challenges

Impact of late joiners to Genpact teams- knowledge and access

Front Line Manager (FLM) capabilities during training

FLM Presence, sponsorship and support

Decisions about which team members were suitable for on the job

training (OJT)

Quality of pre OJT training plans

Scoring of assessments – Genpact Vs AZ

Initiate Sol ID Preparation (Hire - Train)

Knowledge Transfer (and On-the-Job Training)

Pilot Production Stabilisation

13

Challenges

On the job (OJT) Plans - significant amount of work for subject matter

experts (SME’s), particularly in relation to country specifics

Length of OJT period, impact of 100% Vs portion of team (particularly

Helpdesk)

Impact & pressure of workload on Genpact teams

Standard operating procedure submission & review

Front Line Manager (FLM) Quality

Assessments-teach backs Vs practical assessments

Demands placed on AZ resources

IS – Citrix Solution – use of AZ laptops

Initiate Sol ID Preparation (Hire - Train)

Knowledge Transfer (and On-the-Job Training)

Pilot Production Stabilisation

14

Challenges

Not proactive in issue resolution

More Market dependencies

No root cause analysis on KPI misses

Lack of Communication across Genpact sites & Working in silos

Minimum sharing of best practice

AZ driving Service Governance structure & process improvement

initiatives

Attrition & effective knowledge transfer in the teams

Capability change for retained AZ teams

How did we keep staff motivated throughout the Transition?

How did we keep staff motivated?

Shared Service Centre Bridge Programme Team

•Open & honest communication

•Retention Packages

•Created excitement for change

•Embeded change in the culture

– change workshops & coaching

•Used people from teams in key

project roles

•Celebrated & communicated

short term wins

•Recruitment plans with new

shared service centre opening in

area

Judith to share her personal

journey from being a Process

Manager within Cash & Bank

and then moving into a Subject

Matter Expert role (SME) on the

project.

How did she get though it all

with the uncertainty of having a

job at the end of the project?

Did we achieve what we set out to?

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In 3 years we have.......

GFS NAM

GFS APBS

GFS LATAM

Genpact AZ,

Guatemala

Genpact AZ,

Sao Paulo

Genpact AZ,

Rabat

Genpact AZ, Lublin

GFS EMEA &

Central

Genpact AZ,

Delhi

Genpact AZ, Cluj

Realised our vision for

one Global

Organisation

Delivered the new transactional finance

Operating Model

Established an

in-house Shared

Service Centre

in Asia Pac

Transferred our services to be

delivered out of 6 locations in

Genpact & 4 in AZ

What additional benefits did Bridge deliver.....

Change Costs Compliance

• Project Bridge key enabler of change through flexible approach to project management

• Centralised and delivered

efficiencies in additional transactional finance scope

• Delivered finance services to support new global commercial business models

• KPI reporting now in place across all regions for all processes

• SOTC – backlogs recovered resulting in $Ms cash back into the system.

• Un-allocated cash reduced by 80% in Europe Region

• Significant increase in payment-on-time across Western Europe by October 2011

• Previously limited reporting of Fixed Assets across any AZ Region – now in place across all

• Balance sheet reconciliation policies harmonized and strengthened - improving the accuracy of the balance sheet

• Cash & Banking CPI around number of open items on bank reconciliations improved from 1,700 pre transition to less than 97 at end of 2011

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We have over delivered on original scope & taken on new

scope.....

20

% o

f F

TE

s w

ith

Ge

np

ac

t

Genpact operating service in production for:

UK, Sweden, GC Europe (most countries), CEE, India, NAM (P2P, T&E), MedImmune,

CAMCAR, Venezuela, South Africa, Maghreb , Saudi, Gulf (P2P) and Brazil

(except R2R)

We are here

We have transitioned more than 106% of original scope

Focus for Q4 and Q1 2012 • Transition remaining services in

Production: Egypt, Gulf (R2R), Brazil (R2R), NAM (SOTC, Banking), Greece, Turkey, Russia, Columbia, Chile, Argentina, Peru

• Complete Final Tollgates (TG5)

What did we learn?

• What went well, what would we do differently?

It’s not what we do, it’s the way we do it...

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Engagement

Resources

Project

Methodology

What would we

do differently

• Clear succession plans for critical resources • Recruitment in Genpact • KPI model • Over invest in time for new delivery centres • Language Dependencies • Develop AZ Retained Operating Model straight away

• Project run at regional/country levels • Visibility of senior team members, open & honest culture • Focus on personal journey

• AZ team primarily in-house and specific contract resources • Balance risk & reward of early exits • Clear approach and criteria applied to retention

• Simple project methodology • Standardised risk & issue methodology across all regions • Significant volume of 1:1’s between AZ leaders and AZ & Genpact leaders

Questions