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Outcome-Based Models for Business Transformation

Outcome-Based Models for Business Transformation. 10 June 2009. Randy Walker General Manager, Growth Markets Units Managed Business Process Services. The Evolution of the Enterprise. International Corporation. Multinational Corporation. Globally Integrated Enterprise. 2.

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Outcome-Based Models for Business Transformation

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  1. Outcome-Based Models for Business Transformation 10June 2009 Randy Walker General Manager, Growth Markets Units Managed Business Process Services

  2. The Evolution of the Enterprise International Corporation Multinational Corporation Globally Integrated Enterprise 2

  3. Becoming a Globally Integrated Enterprise Leverages Global Footprint to access global markets and gain operational advantage Locates operations anywhere in the world based on economics, expertise and business environment Serve clients by integrating capabilities horizontally and globally Key: Being Local in Global Markets Global Optimization Global Footprint Global Integration 3

  4. Building a Smarter Planet Sam Palmisano, Chairman, President, and CEO, IBM Corporation 4

  5. The World is Becoming Flatter and Smarter … Business Pressures are Increasingly Driving Need for Transformation • The Demanding Customer • All time high customer • expectations • Companies utilizing latent • opportunities • Innovative products/services • aligned to real consumer needs • Economic Pressures • A strained global economy • Visibility and control in • business models • Risk mitigation and profit • optimization • Global Competition • Competitive pressure driving • market efficiency • Agility of business models • IT Integration • Cloud Computing and Web 2.0 • empowering business users • Driving convergence of business • and IT • Thin line between companies • and customers

  6. Clients’ Reaction to the Current Environment • Focus on financial survival • Reduction: cost slashing, cash preservation • Rigor: balance sheet health • Resilience: size and optimize cost structure • Reprioritize projects / investments • Payback period under one year • Defer large investments • Return and risk • Build strategy for new reality • Focus on few big investments, reprioritize projects • Build resilient business models Cost & Cash Opportunistic Business Growth Business Outcome Focus

  7. Increased Pressure To Do More With Less Cost Pressures VALUE CEO Agenda Requires Continual Renewal TIME

  8. Develop a strong operational foundation • Enablers for transformational partnership • Benefits Realization Model • Assets to enable productivity improvements • Governance structures • Shift clients’ fixed costs to a more variable model • Align partner and client incentives to reduce cost of service • Partner with client to improve operations and share in the benefits • Leverage gain share models to align partner and client incentives Companies demand certainty of outcomes and speed-to-benefit that extends beyond operational cost savings Making the Transition to a Business Outcome-Led Model Business Transformation Outsourcing Business Process Outsourcing Process Transformation Technology Enablement Operational Improvements Labor Cost Reduction + + + Transformation Existing Process Improvements Labor Arbitrage Gain Advantage Improved Cost Efficiency

  9. What we’ve done • Established online links to suppliers, partners and clients • 95% of business partner orders are now ‘touch less’ • Manage entire ISC on a global basis – from procurement and logistics to strategy and planning • Why? • The ISC is accountable for $40 billion (approx. 50%) of IBM’s total cost and expense • ISC was a fragmented cost center – distributed and ‘hard wired’ to business • Pockets of integration but no enterprise-wide common processes • Business Outcomes • Established enterprise-wide common processes • Removed functional silos • Consolidated transaction processing in global delivery centers • Cut average processing time for POs from 30 days to less than 1 day • Average $3 – 5 billion in savings every year for the last 5 years • The business outcomes • Averaging $3 – 5 billion in savings every year for the last 5 years • A 5 point improvement in margins since 2003 • Improving sales force productivity – they now spend 38% more time with clients • Turning orders 32% faster and improving client satisfaction • How we’ve done it • Tied up the ISC with shared measurements to support end-to-end operations • Leveraged global scale • 20,000 employees at 100 locations in 62 countries, speak 80 languages, 31,000 suppliers online • Introduced the world’s first supply chain business transformation outsourcing capability IBM: Transformation of Global Supply Chain Resulting in $3 – 5 Billion Savings Every Year

  10. Finland Sweden Estonia Denmark • IBM Partnership • Partnered & Planned a 2-year road map on integration journey; single ERP platform, common supply chain & multiple outsourcing initiatives • Faster transformational journey & world-class change management practices • Transitioned processes from 20+ countries, 3 business lines and multiple systems into 4 IBM delivery centers created a CoE model • Partnered in client’s growth journey; executed transformational projects in Treasury & managed the books for disposition of business • Contract Overview • 850+ FTEs in F&A across 4 delivery centers • Dedicated centre in Portugal • End-to-End Suite of Transformational Tools • Accounts Payable : DCIW • T&E : GERS • O2C : AR Collect • 24 Countries in EMEA & 2 Countries in NA • Multiple language requirements • End-to-end process scope : P2P, R2R & O2C • Multiple External Recognition • 2008 FAO Award of Distinction • 2009 Outsourcing Excellence Award Germany Latvia Netherlands Lithuania • Business Outcomes • Transformed client from a fragmented multi-country organization to an integrated, efficient global model • Partnered with client to establish a common platform for key business processes • Delivery executed through 4 global delivery centers – India, Philippines, USA, Poland • World class tool sets deployed for end-to-end processes UK Ireland Poland Belgium Czech Republic France Slovakia Spain Romania Hungary Portugal Croatia Switzerland Slovenia Austria Italy • Client Locations & FTEs: • NA – 130 • EMEA - 735 • IBM Delivery Locations & FTEs: • India 430 FTEs • Poland 410 FTEs • US 10 FTEs • Philippines 10 FTEs Global CPG Company: Successful Integration Across End-to-End Global Processes to Drive Standardization and Transformation Poland USA & Canada Philippines India

  11. Challenge Following the success of IT and Network services contract with IBM, Bharti sought to drive more efficiencies, consistency and improve service in its contact centers • Business Outcomes • Strategic outsourcing partnership based on joint business outcome objectives • Standardized and consistent customer experience across the circles • Efficiencies through integration of contact centers • Scalability to support rapid growth • A successful domestic BPO engagement • Anticipated Outcomes • Scalability to support rapid growth • Standardized, consistent interactive customer experience, in all 23 mobile phone circles in India • Efficiencies through the integration of contact centers • Reduction in capital investment for technology upgrades • Long term business partnership: Working with IBM Daksh, Bharti can create a roadmap for future business transformation needs IBM Daksh Helps Bharti Transform the Customer Experience Through Global Best Practices • Support for 12 million wireless customers • In 2008, 5,300 employees provided customer care to mobile customers and support for international calling cards • 15 million calls in a month in 15 languages across 6 locations • Supports customers across 23 telecom circles • Chosen as the no.1 partner for 3 out of the 4 quarters in 2008 • IBM Daksh is the only partner to service Platinum customers for Airtel

  12. Critical Success Factors to Enable Mutually Beneficial Business Outcomes • Client Intimacy • Deep account relationships • Global industry knowledge, skills and resources • Technology & Process Innovation • R&D investments • Reusable assets • BPR capability • Risk Management / Mitigation • Business Model Innovation • Globally Integrated Delivery engine • Virtual workforce • Industrialized service delivery model • End-to-End Solutions • Integration Capability • Integration of Process – Technology – Solutions

  13. Thank You

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