<Operation Scorecard>Track: <Mercko Meter>

Presented by: Saravanan Veeraiyan (51348368) Merck PMO Balaji Prasad Nandagopal saravanan-v@hcl.com

The MERCK-HCL Engagement started functioning from 2005. It grew rapidly with new projects

coming in and new associates joining the team. Today the engagement has 1500+ associates under various

projects with dedicated support teams for finance, HR and a Program Management Office (PMO).

With an engagement of such great magnitude and the activities involved, keeping a tab on the

revenues coming through existing and new projects, Profit Margins, Profitability Ratios on a regular basis and

other information related to finances has become tedious and cumbersome. This was proving to be a

bottleneck during review meetings and a mismatch was observed in the data that was received from various

teams during reviews.

In order to avoid such gaps in numbers, it was felt that there was a necessity to have an

automated tool that would track the project wise numbers on a monthly basis and generate a trend based on

the numbers and also predict the trend for the coming months based on the current figures. Based on this, the

Mercko Meter was developed by the Merck PMO.

Good Practice - Overview

Incorporated is a brief video presentation about Merckometer;

by Balajiprasad Nandagopal, Integrated Service Delivery (ISD) Head,

Merck Engagement, HCL Technologies

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Merckometer

Mercko Meter - Description

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1. This Mercko Meter Tool helps to analyze the vital metrics that are responsible for

driving the margins for a particular project.

2. The user can pick up the metrics from the available set of metrics that decide the

fluctuations in the profit margins.

3. These “Key Metrics” can be selected and the trend can be analyzed at the LOB, Division,

Account Manager and Project level.

4. The Tool also consists of Projections prepared at Project, division and at LOB level on a

monthly and Quarterly basis.

5. The numbers are reviewed on a monthly basis and based on the performance; the

monthly projections are reset so that they are in sync with the projections set for the

year.

Problem Faced

The Delivery leadership had to depend on multiple sources for information and the information so

received was in an unstructured format as each division used their own format to share the data.

Also, as the data so received was from multiple sources, there was discrepancy all across which created

gaps in Operational efficiency. Such gaps hampered effective decision making by the Delivery and

Account management teams.

There was need for an ‘Integrated Performance Management Review Tool’ (Merckometer as its called

now across the engagement) that helps analyze vital metrics responsible to drive profit margins, help the

user choose metrics and analyze the reasons causing a ‘dip’ in his profit margins and plan for the

ensuing period based on the analysis.

The tool should also consist of projections at a Project, Division and at a LOB level on a monthly and

Quarterly basis to facilitate the Delivery leadership identify ‘Pain areas’ and take corrective measures to

arrest at different levels

Agenda

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1. Summary of LOB Wise Revenue & Project Margin (QoQ & MoM) Trends

2. Review Action Tracker

3. LOB Wise PM% Correlation Key Metrics

4. ARC (Asking Rate Calculator) – Project Margin (Financial Year wise)

5. Project Margin Projections (Financial Year wise)

6. HCL - Line of Business Key Metric Trends

7. HCL - Merck Division Wise Key Metric Trends

8. HCL - Account Manager Wise Key Metric Trends

9. HCL - Merck Project Manager Wise Key Metric Trends

10. HCL - Delivery Unit Wise Project Margin Stack Ranking

11. HCL - Account Manager Wise Project Margin Stack Ranking

12. HCL - Project Manager Wise Project Margin Stack Ranking

Summary of Revenue & Project Margin

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Objectives Benefits

To get an insight into the Project Margin

Trends for all Merck Line of Business HC,

ETS, AXON, EAS, ERS & EBI in

Single window on QoQ and MoM basis.

Analysis help senior management

identify the Low Margins and Revenues

in the Line of business and take

corrective actions.

Review Action Tracker

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Objectives Benefits

To track the action items pending against

respective Managers and help close the same

within the stipulated timelines

Helps the Delivery Leadership to track

the action items against individual

Managers and help close the same

within the stipulated timelines

LOB Wise PM% Correlation Key Metrics

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Objectives Benefits

To observe the impact of the defined set of

Secondary Metrics on the Primary Metric

To analyze the impact of the defined set of

Secondary Metrics on the primary

Metric which is the Profit Margin at both

LOB and Division levels to help the

leadership take corrective actions if

required.

ARC (Asking Rate Calculator) – PM (Financial Year wise)

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Objectives Benefits

Gives a broader picture on the Revenue and

Profit Margin Targets to be achieved at

the LOB level on a monthly basis

In case of a slippage in the PM% for a

particular month, the percentage

deviation of that month gets adjusted

in the consecutive months such that

the final PM% to achieved remains the

same

Project Margin Projections (Financial Year wise)

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Objectives Benefits

To understand the Levers defined in the tool

that help achieve the percentage

deviation if any, that eventually helps in

reaching the defined PM%

To achieve the percentage deviation

slippage that was carried forward to

consecutive months with the help of the

defined Levers. This shall ultimately

lead to the achievement of the overall

PM%

HCL - Line of Business Key Metric Trends

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Objectives Benefits

Gives a broad idea about the trends of

various Key Metrics at the LOB level

Gives an insight into the trends of various

Key Parameters namely Project Margin,

Revenue, Realization, Cost per

Employee, Resource cost % & Unbilled

%, TP Margin & Utilization for both

offshore and Onsite at a LOB level

HCL - Merck Division Wise Key Metric Trends

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Objectives Benefits

Gives an insight into the trends of various

Key Parameters namely Project

Margin and Revenue, Avg Bill Rate,

Avg Resource Cost, FTE Utilization &

Hours Utilization at a Division level

Gives a broad idea about the trends of

various Key Metrics at the Division level

within the Engagement

HCL – AM’s Wise Key Metric Trends

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Objectives Benefits

Gives a broad idea about the trends of

various Key Metrics at the Account

Manager level within the Engagement

Gives an insight into the trends of various

Key Parameters namely Project Margin

and Revenue, Avg Bill Rate, Avg

Resource Cost, FTE Utilization & Hours

Utilization at a at an Account Manager

level

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Objectives Benefits

Gives a broad idea about the trends of

various Key Metrics both at the Project

Manager level within the Engagement

and at the LOB level

Gives an insight into the trends of various

Key Parameters namely Project Margin

and Revenue, Avg Bill Rate, Avg

Resource Cost, FTE Utilization & Hours

Utilization at a at a Project Manager

level and at the LOB level

HCL – LOB & PM’s Wise Key Metric Trends

DU Wise Project Margin Stack Ranking

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Objectives Benefits

To Rank all the projects within the

Engagement in a chronological order

based on each project’s performance

Such a ranking will help the Delivery

leadership in identifying projects

performing below expected levels and

take corrective measures at the project

level

AM Wise Project Margin Stack Ranking

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Objectives Benefits

To rank projects in a chronological order

under each Account Manager

This ranking helps in identifying individual

underperforming projects at an Account

Manager level and helps both Delivery

and Account Management teams to take

steps to improve the project profitability

PM Wise Project Margin Stack Ranking

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Objectives Benefits

To rank projects in a chronological order at a

Project Manager level

Such ranking helps in identifying individual

underperforming projects under each

Project Manager which eventually helps

the Delivery Leadership chalk out

improvement plans with the respective

Project Managers

Key benefits The dependency on multiple sources for information can be avoided and this will reduce the scope for errors and help

Delivery take decisions based on the extracted ‘precise’ information from the integrated tool. The lucid style and built of the tool makes it easy for the end user across Delivery and Sales to use it effectively and

efficiently without much difficulty. The ‘Merckometer’ brings together the flexibility and convenience to a common place thus helping the Delivery

Leadership in reducing the effort hours considerably The tool enables the Delivery team do a ‘Comparative analysis’ of all the projects within the engagement with the help

of all or select parameters from those available to analyze their performance and arrive at conclusions necessary to draw future strategies

Enable Delivery to do a ‘What If’ analysis at various levels to come up with solutions at a project, LoB, Division and Engagement levels taking into consideration various business assumptions and scenarios.

The tool is particularly helpful in obtaining information on the best performing projects and those that require attention thus prompting the delivery to carry out a detailed analysis for such projects and take corrective measures

A through ‘Root Cause Analysis’ can be carried out to understand the dip in revenue and PM% and thus initiate measures to reduce the same

The Sales and Delivery teams can identify groups/units whose projects are running efficiently on all operational parameters

The ability to forecast revenue margins for ensuing period based on existing revenue numbers is another advantage for the end user as it eliminates the dependency on multiple sources for data and simultaneously reduces effort hours required for analysis of the information gathered thus improving process optimization as part of Review rhythm

As the tool maintains a data of ‘Profit margins’ at a Project level, it becomes easy to detect which project is ‘Negative’ and this will help the Delivery Leadership to review the same with the concerned Project Manager

Learning / Improvements

•The maiden version of the Merckometer required information to be fed across multiple sheets which consumed

considerable effort and time.

•Though exhaustive this exercise had to be carried out as the tool was being developed and implemented for the

first time in the engagement to ensure the information fed was precise and error free.

•The Merckometer v 2.0 released after 6 months did away with the entry in multiple sheets as the information

gathered under the tool was automated. This automation helped in the reduction of both effort and man hours as

the end user had to feed the data in one page.

•Other features such as navigation within pages and tabs was also improved during automation of the tool to

improve the ease of use

Appreciations

Saravanan: What you have done here has NEVER been done before. This is what I call having “Escape

Velocity”. Whoever missed this, needs to see the next version which will really help us PROACTIVELY take

decisions.

Abhishek Shankar, AVP, Healthcare, Client Partner (Merck)

Applicability to Other Projects Merck engagement is counted among the top accounts at HCL Technologies. The ‘Integrated Delivery

Structure (ISD) of the engagement which utilize all service lines namely ETS, EAS, AXON, ERS, EBI, IMTS and BServ which itself explains the complexity of the engagement.

Also, the number of projects and the resources working under them which is about 1500+ globally is another clear example of the engagement’s complexity.

For such a complex engagement, a tool like Merckometer helps greatly in giving precise information to the leadership in Delivery and Sales across various parameters like Revenue & Budget, Project Margins, Forecast, Resource cost and billing to help them in their Strategic and Tactical Decision Making.

Taking a cue from this, the tool was successfully adopted and implemented as organization level Financial analysis tool in HCL LIVE by IDAX Team.

A clear example for the same is the replication of the tool in BFSI domain in the form of ‘Operations Performance Scorecard’ (OPSC) at L1 & L2 level.

This tool was modified in 3 weeks to suit the domain and was implemented last quarter. Similar to Merckometer, the Operations Performance Scorecard enables the delivery leadership at

BFSI domain to review the health status of various projects across sub-verticals, accounts, LoBs etc to take corrective measures and also build strategies based on the forecasts available

Q & A

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