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© 2011 Copyright Genpact. All Rights Reserved.
1
Breaking Down SilosTurning The End To End Vision Into A Reality
John Sorci, Symantec
Robert Pryor, Genpact
Conference: 15th Annual NA Shared Services Week
Orlando, FL
March 3, 2011
© 2011 Copyright Genpact. All Rights Reserved.
What is a Silo?
• Organization Silos are when individual people, departments, or companies, conduct business in a vacuum without taking into consideration the impact their actions have on the entire organization
• In an American Management Association survey - 83 % of executives said that silos existed in their companies and 97 % think they have a negative effect
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Silo is a tall cylindrical structure, usually beside a barn, in which fodder is stored
Manufacturing IT Department Recently Acquired Company
Marketing Department
Organizations need an end to end process visionTo break silos and improve business outcomes
Organizations need an end to end process visionTo break silos and improve business outcomes
© 2011 Copyright Genpact. All Rights Reserved.
An End To End Vision On Processes Can Significantly Improve Business Outcomes And Break Silos
1. Traditional View of The Process – Efficiency of a Sub-Process
2. Enterprise-wide View of the Process – Effectiveness of The True E2E Process
© 2011 Copyright Genpact. All Rights Reserved.
Strategic Imperatives In Realizing The End To End Vision4
Identify End to End process1
Align operating model2
Consolidate / Standardize3
Manage Change4
© 2011 Copyright Genpact. All Rights Reserved.
1. Identify An End To End Process And Key Business Outcomes5
Business Outcomes
TCO, Cost of processing
DSO, Cycle time
Time to Close, Compliance
Source to Pay
Order to Cash
Record to Report
Finance Sales Marketing Procurement
© 2011 Copyright Genpact. All Rights Reserved.
2. Align Operational Models To Achieve The Business Outcomes
Organization charts
Budgets and P&Ls
Traditional Operations Focus
Business Process Focus
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Example : PHARMA DEVELOPMENT TO COMMERCIALIZATION
Formed a number of small, customer-focused business units to improve the way in which the company anticipates and responds to patients’ needs, and integrated pharma development to commercialization into the business units …earlier development and manufacturing were independent functions and cost centres
Formed a number of small, customer-focused business units to improve the way in which the company anticipates and responds to patients’ needs, and integrated pharma development to commercialization into the business units …earlier development and manufacturing were independent functions and cost centres
© 2011 Copyright Genpact. All Rights Reserved.
3. Consolidation And Standardization Of Processes…Understanding silos better
Integrated several of its Healthcare business units into one main Business unit
Consolidated suppliers, distribution and manufacturing networks
Help save $300m by 2011 by cutting COGS
Consolidate front end offices -dedicated to servicing clients
Consolidate support resources –CHF400m by 2010
Consolidate operations
Annual cost savings $1.3b -$1.6b
Consolidating businesses
Reduced annual expense by ~$65m
Global F&A Consolidation with outsourcing
In Market Distribution consolidation
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McKinsey Study:• Consumer goods companies with a global shared service model has 8% less SG&A on average
• Energy companies with a global shared service would have 18% less SG&A
McKinsey Study:• Consumer goods companies with a global shared service model has 8% less SG&A on average
• Energy companies with a global shared service would have 18% less SG&A
© 2011 Copyright Genpact. All Rights Reserved.
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4. Managing Change Effectively Is Fundamental
• Change is disruptive and almost always encounters resistance
• Organizations undertaking change face a variety of challenges
• Underestimation of effort
• Organizational silos
• Unclear process ownership
• Changing nature of jobs
• Impact on your customers
• Employee resistance
• Loss of talent/attrition
• Dealing with loss of jobs
• Fear of the unknown
• “Loss of control”
• Lack of transparency
• Informal grapevine
• Unrealistic expectations
• Mistrust
PEOPLE CHALLENGES
EXECUTIONCHALLENGES
COMMUNICATION CHALLENGES
Whatever your business objective, success ultimately depends on how well you address the “people” issues—at every process step.
Whatever your business objective, success ultimately depends on how well you address the “people” issues—at every process step.
© 2011 Copyright Genpact. All Rights Reserved.
SymantecSource to Pay Process Transformation
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© 2011 Copyright Genpact. All Rights Reserved.
Symantec At a Glance
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More than 18,500 employees
Founded in 1982 IPO in 1989
Operations in more than 40 countries
99 percent of Fortune 1000companies are customers
#353 on the 2010 Fortune 500
$6.0 billion revenue in FY 2010
More than 600 global patents
More than 120 million active consumer users
110 million enterprise customers
Invest 13% annual revenue in R&D
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© 2011 Copyright Genpact. All Rights Reserved.
CFO Operating Model Changes For Driving Transformation
• Commerce LifecycleConsumer touch – Make – Sell – Serve processes
• R2R – Record to Report ( F&A )
• Q2C – Quote to Cash (Customer business order operations, Pricing & Licensing, Trade compliance and Accounts Receivable)
• S2P - Source to Pay (Strategic Sourcing, Procurement Operations, Accounts Payable, Disbursements)
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Processes are being viewed end to end to drive transformationProcesses are being viewed end to end to drive transformation
© 2011 Copyright Genpact. All Rights Reserved.
What Drove The Decision In S2P?Value Leakages & Focus on TCO Improvement
Business Impact
Symptom
Inadequate spendvisibility
Spend Management
Category Strategy
Negotiation & Contracting
Procurement Payment
Hindered actionablecategory strategy
Incomplete marketassessment
Wrong negotiation
strategy
Failure to linkprocurementto contracts
Savings leakages Manual accruals
Delayed or inaccuratereceipt transactions
Delayed payments
Inadequate negotiationleverage
Non PO invoices
Contract non-
complianceInadequate
spend
visibility
Everything was related and inter dependentEverything was related and inter dependent
© 2011 Copyright Genpact. All Rights Reserved.
Effectivenessvs.
Efficiency
We Engaged with Genpact to Improve the Overall Effectiveness of the Source to Pay Process
Best-in-class
Strategic
Proactive
Reactive
Me
Competitors
Process 1 Process 2 Process 3 OutputOutputProcess 1 Process 2 Process 3 OutputOutput
Process 1 Process 2 Process 3 OutputOutputProcess 1 Process 2 Process 3 OutputOutput
Beyond the Organizational Silos
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Genpact’s Smart Enterprise Process -SEPSM provided a holistic, very granular framework for managing the end to end process
Genpact’s Smart Enterprise Process -SEPSM provided a holistic, very granular framework for managing the end to end process
Measure Approach Benchmark Transform
© 2011 Copyright Genpact. All Rights Reserved.
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SourcingEffectiveness
Compliance OperationalEfficiency
AP Overall Opportunity
$10-14MM
$8-10MM
$5-10MM
$5-6MM*
$28-40MM
Year on Year Savings
% Spend Managed
Procurement Cost as % of Spend
Cost Per PO
PO Transaction per Buyer
Cost Per Invoice
Invoice Processed / AP FTE
3.55% 8.33%
82% 98%
0.64% 0.33%
$3 $29
2.7%
20%
0.8%
$38
4.2%
80%
4k 6k
$16 $9.6
3.2k 4.2k
Median Best-In-Class
$4$11
12k7k
20k11k
Current State Future State
0.69%
The Bigger Picture – Hidden Value In Silos Were Exposed
© 2011 Copyright Genpact. All Rights Reserved.
How Are We Driving Engagement …
• Create awareness of the change
• SymSource
• Assess desire to support the change
• Executive sponsor readiness
• Stakeholder analysis & action plans
• Provide knowledge of the change
• Web portal, Job aids, Training, Posters
• Involve Stakeholders
• Business review meetings
• Category planning
• Approval on savings
• Reinforce the success
• Spend & Savings visibility
• CXO Updates
• Reward early adopters
• Publish non-compliance (name and shame report)
© 2011 Copyright Genpact. All Rights Reserved.
Results And Learning’s After 2 Yrs……
• Results
• Sourcing Savings at $71MM
• Spend under management improved by 100% from 26% in yr 1 to 52% in yr2
• Early engagement at 67%
• Learning’s
• Executive sponsorship is key – Start early
• Patience - Stakeholder engagement will be tough to obtain but “buckle your chin strap” and continue to forge ahead
• Understand your corporate culture and implement change accordingly (mandate if possible)
www.genpact.com
John SorciVP, Global Operations
Symantec
Robert PryorEVPGenpact
Genpact and SEP are Genpact trademarks. All trademarks appearing herein belong to their respective owners..