Point of View on Demand Organisation Development

Point of View on Demand Organisation Development

• 1.
  How to designyour Demand organisation?March 2010
• 2.
  A significant proportionof an organisation’s value is created by outsourced processes and should get the right management attention Value leakage during operationsIncrease in outsourcing initiatives - more organisations focus on their coreShift from outsourcing standard operational activities towards outsourcing complex (complete) processesAgility and time-to-market are more important drivers in today’s volatile and rapidly transforming global marketRole of the supplier is increasingIntroductionDirectly after the outsourcing deal is settled, the expectations are met,…however after 3 years the benefits of outsourcing decrease and value leakage is increasing:Dissatisfied internal clients on delivered servicesPerceived loss of qualityUnsustainable contract termsLack of control or coordinationBattle for talent and retaining knowledgeMeasures to make changes in control and governance often fall shortConventional 1-on-1 customer-supplier relationNetwork of internal and external demand-supply relations… delivering sustainable value of an outsourcing decision can only be achieved by effective alignment of business needs with the capabilities of the service providers
• 3.
  The way companiesmonitor, control and manage their sourced process(es) should adapt/match the developments in demand and supplyThe demand organisation enables an effective alignment of demand and supply and ensures the potential value of the sourced process is deliveredDefinitionDemand organisation is the intermediary between the core business processes and the supporting processes
• 4.
  Demand organisation istypically established when supporting processes are delegated to a separate business unit (e.g. shared service centre) or third party (outsourcing).
• 5.
  In the demandorganisation activities are executed to manage the supply side (internal/external suppliers) as well as the demand side (business).Shared support organisation or external suppliersBusinessIntermediaryBusiness unitIT processDemand organisationBusiness unitFinance processBusiness unitProcurement processSupply management(external SLA’s)Demand management(internal SLA’s)Business unit... processA good structured Demand Organisation guarantees the right level of service, quality and costs in accordance with business requirements by maximising the benefits and minimising the risks.
• 6.
  Market trends stressthe importance of the demand organisation as the engine of managing sourced processesTrends and issues Trends in Outsourcing, SSC and Demand organisationIdentified trends in the marketOutsourcing & SSCThe Dutch outsourcing market has grown by 17% since 2005. 51% of subcontractors expect to grow in the future [Source: Morgan chambers, 2007]
• 7.
  More companies considerSSC and BPO for their support activities [Source: Capgemini, 2009]
• 8.
  The combination ofdifferent sourcing options (Hybrid; SSC and BPO) will increase in the coming years
• 9.
  Most important reasonfor companies to outsource is to reduce cost, penetration of new markets, reduce cycle times, increase customer service, access to innovation and reduce logistics cost
• 10.
  Research has proventhat directly after the outsourcing deal is settled, the expectations are met. However, after 3 years the benefits of outsourcing decrease [Source: Capgemini, 2007]Demand OrganisationManagement and the structure of decision making from the customer side are not captured by 50%+ of Dutch companies that outsource [Source: research community Digital Boardroom, 2005]
• 11.
  About 60% ofall customer organisations is in a insufficient extent satisfied on their suppliers
• 12.
  Directing or professionalisingtheir demand organisation is mentioned by 80% of companies to be most important element for improvement. For 53% of the organisations it has real priority
• 13.
  The mean scorethat organisations give their demand organisation is a 6 on a scale from 0 to10 [Source: Morgan Chambers, 2008]
• 14.
  Organisations interpret thedemand organisation differently, leading to large differences in the design[Source: Capgemini, 2009]Business process outsourcing3Shared service Centre2Cost savingsInternal provision ofservice 1Degree of maturity
• 15.
  Companies encounter thefollowing issues when the demand organisation is operationalTrends and issuesIssues regarding the demand organisationOnce a sourcing deal is signed, many organisations falsely believe that their work is done
• 16.
  A major causeof sourcing dissatisfaction and failure is the assumption that a few people acting just as ‘liaison officers’ can manage complex sourcing relations
• 17.
  Organisations experience alack of control and insufficient coordination of suppliers
• 18.
  Insufficient control onSLA, resulting in bilateral disappointments on contracts/ dissatisfied customers.
• 19.
  Expectations keep onchanging, the contract does not
• 20.
  Continuous discussions aboutthe quality and timeliness of the service
• 21.
  The success insourcing is determined by the people and the organisation, not the technology
• 22.
  The gap betweeninternal client satisfaction and the service levels in the SLA needs to be managed carefully
• 23.
  Very often alack of a professional portfolio management leads to a ‘cheap’ contract and very expensive add-on work
• 24.
  Direct management ofoutsourced processes is not possible anymore
• 25.
  Most companies haveto professionalise their own organisation for governing the relationship to achieve the best from their outsourcersdemand for specialised servicessupply of highly standardised servicesThe demand organisation has to balance demand and supply
• 26.
  When designing andimplementing a valuable demand organisation you have to consider the following success factorsSuccess factorsStrategySourcing strategy needs to be aligned with corporate strategy and purchasing strategies.
• 27.
  Demand organisation andstrategy has to be established, before (out)sourcing takes place
• 28.
  Bilateral strategy: customerfocus as well as maximising synergiesSourcing strategyGovernanceA certain level of maturity (formality/structure)
• 29.
  Clear line ofauthority and responsibility
• 30.
  Consistent, understandable policiesand standards that are embedded in operating processes
• 31.
  Exchange of informationfrom suppliers as well as business units.
• 32.
  Proactive decision makingon how to manage the demand organisation and service providersProcessrequirementsGovernanceProcessesStandardised processes which are compliant with policies and regulations
• 33.
  Transparency in processeson demand and supply management.
• 34.
  Manage expectations ofthe user-organisation in a structural way
• 35.
  Clear split andhanding over between the in-house processes and the outsourced processesDemand organisation designPerformancemanagementSLAsTechnology /IT strategyPerformanceSteer on quality delivery, targets and realised service levels
• 36.
  Alignment of KPIsand objectives with corporate targets
• 37.
  Clear and commonunderstanding of specifications,
• 38.
  Periodical evaluation ofcontracts, SLA’s, and performance
• 39.
  Quality of internalunderpinning contracts (services, volumes, price)People &OrganisationTechnology / ITSystems need to be aligned with the external party (or vice versa)
• 40.
  Advanced web-enabled requisitioningand management tools
• 41.
  Integrated portals supportingreports on performance and communicationPeople and organisationAlignment organisation with the operating processes
• 42.
  Flexibility and abilityto absorb environmental changes
• 43.
  Clear defined operatingmodel (processes, roles, communication)
• 44.
  Choice centralisation/decentralisation, numberof SLA’s/ customers reflect size and place organisation
• 45.
  Steering on competenceswithin demand organisationAn effective demand organisation consists of the following 7 building blocksBuilding blocksDemand organisationOrganisation & GovernanceVision / strategyPerformance managementProcess, activities and roles (RACI)Demand managementSupply managementHuman resourcemanagementTechnology / ITFinancialmanagementInfrastructure/enablersbuilding blocksBusinessExternal / internal suppliers
• 46.
  Implementing the 7building blocks enables your company to realise more value out of your sourced processesBuilding blocks
• 47.
  A sustainable demandorganisation is interwoven with your sourcing strategy and should continuously go through a closed loop processAnalysis and DefinitionDelivery or OperationsScenario Planning and Business CaseTransition or MigrationSelection and PreparationApproachSourcing strategy1 creates a vision on the right mix on
• 48.
  Ownership: In houseor Outsourced
• 49.
  Location: Onshore orOffshore
• 50.
  Management required: Lightor Tight
• 51.
  Sourcing strategy setsthe scope of the demand organisation
• 52.
  Design of thedemand organisation for multiple scenarios
• 53.
  High level oforganisation and governance
• 54.
  Processes
• 55.
  Set up thebusiness case on the demand organisation design
• 56.
  Evaluate regularly onmultiple organisation levels:
• 57.
  Performance service providers
• 58.
  Client satisfaction (business)
• 59.
  Alignment of thedemand organisation to changing environment
• 60.
  List requirements andset up SLAs - demand and supply side
• 61.
  Detail way ofworking (organisation and processes)
• 62.
  In house: inputfor business process redesign (e.g. set up SSC)
• 63.
  Outsourcing: input forselection process and process improvement
• 64.
  Plan transition ormigration
• 65.
  Finalise way ofworking (organisation and processes)
• 66.
  Finalise SLAs andKPIs
• 67.
  Transfer critical knowledge
• 68.
  Train employees and/orrecruit new employeesAfter the implementation you need to regularly evaluate the demand organisation whether the current design is still successfulAnalysis and DefinitionDelivery or OperationsScenario Planning and Business CaseTransition or MigrationSelection and PreparationApproach
• 69.
  Why Capgemini?Why Capgemini?BusinessTransformation Capabilities – Based on our unique multidimensional Business Transformation ® framework Capgemini supports leading companies on their journey towards measurable and sustainable competitive advantages. We are focused and committed on delivering transformationRightshore™ BPO – Our Rightshore model will provide flexibility and scalability based on the right process at the right location within the Capgemini global delivery network. We leverage European and US onshore expertise for planning, consulting and strategy roles while leveraging offshore expertise for execution and administrative rolesThe Results We Achieve – Capgemini works in a strictly results-oriented way, focusing on sustainable improvements and less on academic concepts. Capgemini supports transformations until the expected results are deliveredCapgemini way of working - Collaborative Business Experience. A key strength in our working style is that we do work WITH our clients. Capgemini believes this joint working to be essential in effecting sustainable change in an organisationThought leadership – Capgemini has a clear vision about the evolvement of service management. We provided and implemented this vision in the aftermarket of several clients helping them to become market leaderCapgemini’s Global Sourcing of Services (GSS) cube ©“Point of view on Sourcing Strategy”“Outsourcing strategy survey 2009-2010”Capgemini has the people, culture and experience to deliver high quality results and solutions that work
• 70.
  Capgemini has broadexperience in all aspects of Demand organisationWhy Capgemini?Business challenge3 casesChosen solutionby companyApproach and resultsNeed to professionalise the organisation and to reduce costsPhase 1: The feasibility study - Business Case; Survey of the processes and ICT in place, and the ICT incl. it's bottlenecks; Vision on the future processes and ICT; Headlines of an implementation plan; Project charters for the planning in details; Migration script; Plan for change management.
• 71.
  Phase 2: Describingthe future processes and operating procedures incl. pilot - design of ICT, Processes, Personnel and Organization; and, Migration preparation
• 72.
  Phase 3: Migration- the financial administrations pass to the support centreCentralise accounting processesImplement SAP Shared Services Centres and achieve cost savingsConsolidate IT processes into global SAP Shared Service Centres
• 73.
  Used extensive globalexperience in establishing shared service establishment, process re-engineering and SAP implementation to effect an ideal solution for the client
• 74.
  Consolidated parallel ITsystems that were costly to operate and maintain
• 75.
  Incorporated SAP methodologyand leveraged experience from prior SAP implementations to design, develop and implement global SAP solution.Shared Services CentresImperative for improvement in business support processes – both cost and serviceProvide information technology, call centre, billing, human resources, supply chain, accounts payable, and finance and accounting services
• 76.
  Develop and implementnew business processes and rationalize existing services in order to enhance operational efficiencies and leverage new technologies
• 77.
  Minimise business disruptionand achieve significant reduction in cost of provision of these servicesBPO
• 78.
  R. (Robin) AdriaansSeniorConsultantM. (Marjolein) DijkshoornConsultantCapgemini Nederland B.V.Papendorpseweg 100, P.O. Box 2575, 3500 GN Utrecht - The NetherlandsT. +31 30 689 4062F. +31 30 689 55 60Mob. +31 615 030 344 [email protected] Nederland B.V.Papendorpseweg 100, P.O. Box 2575, 3500 GN Utrecht - The NetherlandsT. +31 30 689 5594F. +31 30 689 55 60Mob. +31 615 031 022 [email protected]