Upload
gabriel-douglas
View
214
Download
0
Embed Size (px)
DESCRIPTION
0 87 Increased cost efficiencies Improved service quality Mitigation of operational risk Increased agility Creating ‘Fuel for Growth’ GSS Objectives Profitable Growth Release of Funds Efficiency Improvements New Investments At Least EUR 500mln....to support further strategic flexibility GSS’ goal - to create ‘fuel for growth’
Citation preview
“Fuel for Growth” Creating strategic advantage through business transformation
Hugh Scott-BarrettGroup COO
0 2
GSS - vehicle for delivering x-SBU operational synergy opportunities Restructuring programmes to date concentrated within (S)BUs, focus is
now on broader agenda of x-(S)BU synergies
Group COO, GSS and Group Business Team (GBT) established Jan 2004 to realise (S)BU synergies
Real opportunity to deliver step-change in performance across Services cost base of ~EUR 5bln
Benchmarking against top-quartile Banks revealed significant potential to take out costs
Current estimates point to at least EUR 500 mln annual savings from 07 onward (delivered by IT, Real Estate, HR, Procurement and Transaction Processing)
0 3
Increased cost efficiencies
Improved service quality
Mitigation of operational risk
Increased agility
Creating ‘Fuel for Growth’GSS Objectives
Profitable Growth
Release of Funds
Efficiency Improvements
New Investments
At Least
EUR 500mln
....to support further strategic flexibility
GSS’ goal - to create ‘fuel for growth’
0 4
Note 1: This excludes annualised savings relating to the EDS outsourcing deal (previously announced)
45
215
140
4555 500
0
100
200
300
400
500
600
IT RealEstate
Off-shoring
HR Other Total
€m
1
CommentsGSS Savings 2007 Onwards
GSS - will release at least EUR 500mln of annual savings by 2007
Represents ~ 10% further
reduction across the Services cost
base (EUR 5 bln)
Delivered by EUR 700 mln - EUR
725 mln spend over 2005-2007
period
Details of major GSS initiatives are
provided as attachments to this
presentation
0 5
GSS - limited P&L impact in 2005 and positive impact from 2006 onwards
Funding details will be announced in either the third or fourth quarter
This may include a one-off charge to the 2004 profit and loss account
Significant proportion of funding requirement will be offset against savings over the period
Limited negative impact in 2005, with positive impact on cost base expected in 2006/2007, assuming one-off charge is made in 2004
0 6FTESOperating Expenses
0
5000
10000
15000
20000
25000
30000
2001 2002 20032500
2550
2600
2650
2700BU-NL
# FT
Es
EU
R M
lns
0
5000
10000
15000
20000
25000
2001 2002 20033000
3500
4000
4500
5000
5500WCS
# FT
Es
EU
R M
lns
Strong track-recordRestructuring 2001-2003
GSS - building on existing experience
AAB has developed strong cost management culture
Biggest savings been driven by WCS and BU NL restructuring– WCS and BU NL reduce headcount
by ~20 %– Combined operating expenses
reduced ~12.5%
GSS will continue to build on on this success by leveraging an experienced management team to drive this forward
0 7Note 1 (incl. Finance, SDS, Change Management & Communications)Note 2 (incl. Global Real Estate & Facilities Management, Global Procurement & Information Management)
Group COO
Hugh Scott-Barrett
Note 1 (incl. Finance, Strategic Decision Support (SDS) & Communications)Note 2 (incl. Global Real Estate & Facilities Management, Global Procurement & Information Management)
GSS CEO
Ron Teerlink WCS TOPS transition prog.
WCS Offshoring
EDS IT outsourcing
GSS CFO Note 1
Caroline Rainbird WCS Change Management
WCS Offshoring
Group Offshoring
GSS CIO
Lars Gustavsson WCS IT transition prog.
EDS IT outsourcing
HR (GSS)
Madelon Flint WCS TOPS transition prog.
EDS IT outsourcing
ACES
Meera Sanyal Building offshore centre
Group Offshoring
Corporate Services Note 2
Jolle Dekker Global Procurement
Global Real Estate
European PaymentsCentre
Robert Langefeld BU (NL) transformation
WCS restructuring
GSS ExCo
GSS Management Team has considerable delivery experience
0 8
GSS - strategy already delivering results
Shared Services &
Process Improvement
Outsourcing /Joint Venturing
Offshoring
ExamplesTechniques
Efficiency improvements from consolidation will be underpinned...
....by Centres of Excellence
Non core services sourced from external providers
Quality services can be delivered from low cost locations
IT
ACES1
Rationale
EuropeanPaymentsCentre
Global Real Estate& Facilities Management
Doing already
1: ABN AMRO Central Enterprise Services in India
0 9
Technology outsourcing in WCS is already delivering valueScope of existing transaction
EUR 1.3bln, 5 year deal covering top 7
WCS locations signed with EDS (now
extended to 10 locations
2,300 FTEs transferred to EDS
User base ~ 20,000 FTEs
Data centres ~ 6 (large)
Sites ~ 60 using 3,500 server
ADM effort transferred ~ 1,200 man
years
Impact
At least EUR 40m savings on track for 2004
At least EUR 300m savings by 2007/2008
Consolidation benefits in progress
Improved flexibility and agility
Capabilities developed
Vendor management experience
Contract structuring and negotiation
Effective communication
Benefits tracking & change management
0 10
Note 1 - This represents the entire Technology cost base for ABN AMRO Group
… which will help in driving group-wide IT consolidation through GSSScope of new transaction
Group IT cost base of ~ EUR 2.4bln Note 1
Group IT FTEs ~ 9,000 FTEs
User base ~ 100,000 FTEs
Datacentres ~ 35
Sites ~ 6,100 using 7,000 servers
ADM effort ~ 3,800 man years
Self service cash devices ~ 11,000
Timetable
RFP issued on 12th July
Formalise execution strategy and vendor
selection by end Q4 2004
Strategy execution starts Q2 2005
Select initiatives which will deliver ‘low
hanging’ rationalisation savings by
Q1 2005
Expected Value
Minimum of EUR 215 mln of annualised
savings by 2007
0 11
Value of IT consolidation is real and supported by external benchmarking Current IT spend positions ABN AMRO in third quartile in its peer
group based on IT Benchmarking conducted with external advisers
Emphasis placed upon analysis of “Horizontals”, identifying savings through cross (S)BU sharing:– Application Development & Maintenance ~ 40%
– IT Infrastructure (Voice/ telecom, data centres and desktop) ~ 60%
GSS’ objective is to close “value gap” and position group-wide Technology spend in the top quartile
0 12
0
500
1000
1500
2000
2500
3000
2003Actuals
2004Forecast
2005Forecast
# FTEs
Added ValueProcessing
StandardProcessing
21001900
800
i
2600
/Target
Analysis of current initiatives
Captive offshore centre also delivering benefits
Impact Existing (S)BU initiatives on track to deliver
~EUR 25mln annualised savings from 2005
New GSS opportunities (additional ~EUR 45mln)
Improved service quality and improved flexibility
Capabilities developed Robust infrastructure to support remote
processing in India (e.g business continuity)
Knowledge & expertise
Migration risk mitigation using standardised approaches and methods
0 13
WCS CCC PCAM
GSS is an internal services company working across the (S)BUs to realise cost
efficiencies
NA BR NL
Services Services Services
COO Committee
NGM
GSS governance - the COO driven approachOperating model Comments
COO Committee responsible for setting
cross (S)BU strategic agenda
GSS is responsible for delivery and
accountable to the (S)BUs
Funding of GSS initiatives managed
centrally through ‘gated’ funding
GSS will track and report regularly on
realisation of benefits
0 14
Results will be measured in several ways Tracking of operational efficiencies will be through a combination of:
– Absolute reduction of cost in some areas
– Improvements in efficiency ratio and
– KPI reporting for service drivers (cost, operational risk, service quality, agility/ flexibility)
(S)BU impact of savings will be disclosed - expectations are that WCS, BU NL and BU PC/NGM will be major beneficiaries of savings
Reporting of results will be on a 6 monthly - adjusted for scope and volume changes in the period
0 15
Conclusions ABN AMRO has a proven capability to deliver significant
transformation programmes
GSS will be vehicle for realising at least EUR 500 mln annual savings from 2007 onward
A ‘one company’ approach for Services delivery underlines belief that shareholder returns can be enhanced by enabling increased business performance
Further details will be delivered with end of year results
Appendix 1Action Track overviews
0 17
High-level Description of Action Track Specific Initiatives Delivery Milestones
…Manage Operational Risk KPIs
Delivery Risks
KPIs
Key Risks How mitigated
...Create Value
...Improve Service Quality
…Increase agility
KPIs
Date MilestoneKPIs The IT Action Track is examining the rationale for the consolidation of IT Service Provision across all (S)BUs
Internal and/or external consolidation has identified a value gap with our top quartile Peers of at least €215m
The IT Action Track aims to reduce this Value Gap via the implementation of both Vertical and Horizontal Savings Initiatives
Applications Development & Maintenance (ADM) via Offshoring/ Appl. Rationalisation
IT Infrastructure
At Least
40% saves
60% saves
Customer Satisfaction Surveys
Speed of Delivery
Higher quality staff involved in Service Provision
Access to Centres of Excellence within specialist Technology organisations
IT Service provision will be transferred to World Class Service Providers or consolidated internally
Fewer service relationships to manage
SLAs
Reduction in capital utilised
Conversion of IT fixed to variable cost
Funding Charge
FC: VC ratio
Key-man attrition Select a vendor with proven capability to manage staff transfer
Lack of Business Support
Brief business on a frequent basis
Governance Effective governance structures implemented to allow strategic technology decisions to be made
Social Legislation NL Workers Council/ ESC and other Employee Representative bodies kept informed of developments
Completed RFP published to market
Q4 2004 Vendor response deadline
Q4 2004 Complete vendor evaluations
Note 1
Q4 2004 Formalise execution strategy
Q2 2005 Strategy execution
Technology
0 18
Specific Initiatives Delivery Milestones
…Manage Operational Risk KPIs
KPIs
...Create Value
Space efficiency gains and surplus space elimination
Facilities management rightsizing
At least
€130m savings
€ 10m savings
GREFM is responsible for Real Estate and FM of WCS, PC-NGM, AM,CC and GSS
Mandatory advice role on major property projects (larger than EUR 5 mn) in the home markets
Savings realised by reducing number,as well as the square meters, per work station, surplus space elimination, facilities management cost reductions and proactive lease restructuring
...Improve Service Quality
…Increase agility
KPIs
Date MilestoneKPIs
Proactive geographic headcount planning by SBU / BU s
City plans and proactive key lease event management
Best practice space efficiency programmes
FTE forecasts
Sq m & desks available
Sq m per FTE
IAS reporting - surplus space provisioning /management
Property governance implementation on leases and capex
Align and optimise timing of additional geographic offshoring strategies with existing lease exit strategies
Prov’n & sq m surplus
Value & sq m of leases signed
Overlap/dual property costs
Global portfolio lease flexibility
Optimisation of surplus space
% lease break within 36 months
% surplus
Programmes delivered and resultant surplus space eliminated
2004 Confirmation of action tracks, accountability/responsibility, programming, resources & reporting
2006
2007
First wave property elimination following commencement of efficiency etc programmes
Disposal and efficiency programmes activated
2005
Delivery RisksKey Risks How mitigated
Surplus space not eliminated
Facilities mgm’t rightsizing
Proactive lease restructuring
Market conditions prevent achievement of subletting goals
Effective x-(S)BU governance implemented
(S)BU commitment to programmes
Transparency over programmes
Focused disposal programme
High-level Description of Action Track
Group Real Estate and Facilities Management (GREFM)
0 19
Specific Initiatives Delivery Milestones
…Manage Operational Risk KPIs
Delivery Risks
KPIs
Key Risks How mitigated
...Create Value Offshoring is focused on migrating processing activities to lower cost locations and delivering benefits through:
...Improve Service Quality
…Increase agility
KPIs
Date Milestone
• ....
KPIs
Reduce operational costs
At least
€ 45m savings
Adoption of process improvement methods (e.g. Six Sigma)
Maintain service levels during transition
Improve service levels post transition
Long term BCM strategy
Robust release management process
Creating a more flexible workforce
Creating shared services across different time zones
2004
2005
2006
Recruit 1100 FTEs in India
Recruit 700 FTEs in India
Recruit 300FTEs in India
Staff retention in send sites
Operational Risk/BCM
Competitive recruitment market in India
Communications plan
Staff support services
Adoption of captive offshoring model
BCM implementation and testing included in standard methodology
Evaluate second low cost location
Investment in ACES culture
Roll-out of career development plan
Regular assessment of salaries against market
# of processes six sigma compliant
Service Levels by process
Service levels by process
Strategy definition (completed)
Approved sign off by migration
Improved service quality: Experience over the last 2 years shows that we can make significant improvements to service quality
Low cost of service: There are clear cost benefits with typical savings ranging between 40–50%, primarily through labour cost arbitrage
Variable/flexible resourcing: Locations such as India provide large pools of educated resources at short notice allowing volume fluctuations to be managed more effectively
Asset utilisation: Offshoring enables cost effective 24/7 operations, thus significantly improving asset utilisation. i.e. desk and workstations can be optimised through shifts working on a 24x7 basis
# countries serviced from global hub
High-level Description of Action Track
Note 1 - Excludes GSS offshoring opportunities - these have been reflected in the other GSS Action Tracks e.g. HR, Procurement
Note 1
Offshoring
0 20
Specific Initiatives Delivery Milestones Globally co-ordinated sourcing and
category management of key categories of spend
The establishment of 4 Regional procurement units (AmLo, NA, Brasil and ROW) to maximise regional economies of scale and skill
The development of a global functional infrastructure of policies, processes, systems and staff development plans to support the regional units and enable the realisation of the benefits of better sourcing
The implementation of global performance management
…Manage Operational Risk KPIs
Delivery Risks
KPIs
Key Risks How mitigated
...Create Value
...Improve Service Quality
…Increase agility
KPIs
Date MilestoneKPIs
Regional SLAs, enabled by:
Global training curriculum
Global e-Sourcing platform
Implementation of Global policy framework
Rollout of a single global repository of contracts data
Suite of model contracts
SLA
# of users
Compliance & Coverage
Q4 2004
Q4 2004
Q1 2005
Q1 2005
Global eSourcing Platform across major regions
Delivery of global training curriculum and programme
Mobilisation of Outsourcing Centre of Excellence
Mobilisation global Supplier Relationship Management
Poor business buy-in
Benefit leakage through low levels of compliance / control
Poor supplier mgt
Resource capability
Continue to actively engage Senior Management
P2P compliance mgt solutions
Mobilisation of supplier relationship management
Continued training and development of staff
Multiple initiatives at regional/global level covering process improvement, revised commercial terms and better supply and demand management
At least
€ 35 m savings
The establishment of an outsourcing centre of excellence
N/A
High-level Description of Action Track
Procurement
0 21
Specific Initiatives Delivery Milestones
Increased employee satisfaction, and its positive impact on attrition and retention
Improved employee access to organisation learning and information, anytime, anywhere
Improved access to HR information, leading to informed decision making and enhanced strategic focus
Increased productivity leading to increased company profits
SLAs
Reduction in number of regretted leavers
Improvement in HR : FTE ratio
Q4 2004
Q3 2005
Q4 2005
Operating model design complete & senior management appointed
PeopleSoft 8.8 upgrade complete
GSS HR Shard Service Centre established
…Manage Operational Risk KPIs
Delivery Risks
Global technology platform (PeopleSoft)
Standardised, global processes
# of countries that have access to PeopleSoft
SLAs
Data protection issues across global borders
Concerns that shared services may increase the unit cost for the (S)BUs due to cost allocation mechanism to fund the shared services operation
Efficiencies may not be realised if managers have access to alternative channels for HR transactions
KPIs
Key Risks How mitigated
4 regional hubs with streamlined / standardised global processes allows easy integration in the case of acquisitions
Addressed on a case by case basis taking legal advice
Clear and transparent cost reporting, with costs benchmarked to the market pricing
Ensure that shadow HR operations do not re form within the (S)BUs
...Create Value
Annual steady state cost reduction based on headcount and cost efficiency savings
At least
€ 45m savings
The HR service delivery action track covers the transformation of HR with the development, detailed design and implementation of a new target operating model. The operating model is built on four pillars of HR namely: Group HR, Business Partners, Centres of Expertise and HR Operational Shared Services. The transformation of HR will lead to a step change in HR across the Bank with a focus on high quality service delivery and associated benefits including cost reduction
...Improve Service Quality
…Increase agility
KPIs
Date Milestone
# of staff roles migrated to hubs
KPIsHigh-level Description of Action Track
HR Shared Services
Appendix 2Insourcing Opportunity
0 23
Example of ABN AMRO Insourcing OpportunitiesABN AMRO Trade Services Capability ABN AMRO well placed to become one of the industry
leaders for delivery of Outsourcing / Strategic Partnership services– global presence, brand recognition, award winning product
capability
– not seen as competitive threat by local banks
– track record of delivery
– cost pressures in industry requires focus on core-competencies
60% of mid-tier FIs will outsource (part of) non-strategic processes (source BCG payment study & Deloitte Consulting)
AAB demonstrated success – Barclays and AIB Trade Servicing Agreements
– GTA established ~ 30 insourcing relationships in US, Asia, and Europe, CFA outsourcing deals include X-border payment processing, CLS white labelling and Corporate Account Services
– FX: initials steps made and a small number of mandates won
Barclays Case Study re ABN AMRO Selected ABN AMRO on basis of:
– Leading Trade Bank/ seen by customers as a partner
– Global offshore processing centre in India with Insourcing
experience
– Geographic reach
Business Model adopted– Barclays Front Office systems
– ABN AMRO undertakes back office processing
Current status– Started migrations in January
– Rollout scheduled for completion by August
– 3 weeks after conversion, performance @ 98%+
Benefits realised for Barclays– Significant cost reduction
– Enhanced service provision
– Improved service levels
– Improved flexibility to grow into new geographies
Barclays concludes that this is a “Win-win solution based on a successful partnership”