WORLD-CLASS IN GLOBAL BUSINESS SERVICES - ABSL · WORLD-CLASS IN GLOBAL BUSINESS SERVICES - OVERVIEW & TRENDS . ABSL, Prague . Tom Olavi Bangemann . SVP Business Transformation ,

WORLD-CLASS IN GLOBAL BUSINESS SERVICES - OVERVIEW & TRENDS ABSL, Prague

Tom Olavi Bangemann SVP Business Transformation , The Hackett Group October, 2014

Statement of Confidentiality and Usage Restrictions

This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein,

in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.

Copyright © 2012 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.

Global business services (GBS) Overview & Trends | 3 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

The Presenter


The Hackett Group defines and enables World-Class performance


1,15% 1,21% 1,22% 1,17% 1,10% 1,05% 1,04% 1,17% 1,22% 1,15% 1,00% 1,08% 1,05%

0,64% 0,63% 0,57% 0,57% 0,58% 0,57% 0,62% 0,59% 0,65% 0,59% 0,64% 0,54% 0,51%

2,90% 2,58% 2,34% 2,38% 2,36% 2,19% 2,30% 2,28% 2,34% 2,06% 2,04% 1,90% 1,83%

0,51% 0,42%

0,33% 0,30% 0,30% 0,31% 0,30% 0,30% 0,28%

0,28% 0,28% 0,26% 0,26%

5,20% 4,83%

4,46% 4,42% 4,34% 4,12% 4,25% 4,35% 4,48%

4,09% 3,95% 3,79% 3,65%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

FN HR IT PR

Hackett benchmark historical moving median Hackett forecasted results

Cost of G&A as % of Revenue

The good news: costs are down…


G&A Performance from 2004 through 2013

0,78%

0,60% 0,60%

1,11% 1,13% 1,17%

0,00%

0,20%

0,40%

0,60%

0,80%

1,00%

1,20%

1,40%

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13

Finance Cost as a % of Revenue

- 30% - 47% - 48% 0,74%

0,60% 0,60%

1,01%

0,80% 0,75%

0,00%

0,20%

0,40%

0,60%

0,80%

1,00%

1,20%

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13

Procurement Cost as a % of Spend

- 27% - 24% - 20%

$7,6 $7,3

$6,2

$9,2

$7,8

$7,3

$5,0$5,5$6,0$6,5$7,0$7,5$8,0$8,5$9,0$9,5

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13

IT Cost per End User Equivalent (x 1000)

- 18% - 6%

- 15%

World-Class Peer Group

$1,4

$1,8 $1,7

$1,9

$2,2 $2,2

$0,0

$0,5

$1,0

$1,5

$2,0

$2,5

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13

HR Cost per Employee (x 1000)

- 27% - 17% - 22%


4,9%

-1,3%

-0,2%

6,7%

-0,7%

0,5%

Revenue growth Number of staff (FTEs) Operating Budget

2012 - 2013 actual 2013 - 2014 projected

Productivity Gap 7.4%

Efficiency Gap 6.2%

Tactic 1; Manage cost Business service functions to need to delivery 6-8% annual productivity improvement

Business Services Functions


Reinvesting in innovation enablement is occurring across G&A

64% 53%

36% 47%

World-ClassPeer

Knowledge- centric

Transactional

Finance

Procurement

69% 58%

31% 42%

World-ClassPeer

HR

58% 56%

42% 44%

World-ClassPeer

Transactional

IT

46% 38%

54% 62%

World-ClassPeer

Transactional (Run IT)

Knowledge- Centric

(Design / Build)

Knowledge- centric

Transactional

Knowledge- centric

Source: Hackett 2014 Benchmark Data


Multi-functional GBS for G&A is the standard – the debate is into non-traditional functions and progressive placement

39%

44%

56%

46%

38%

38%

38%

33%

50%

58%

58%

CorporateComms.

Marketing

Legal

Supply Chain

Risk & Security

Industry-specific

CCC(outbound)

DirectProcurement

OrderManagement

CCC (inbound)

Inclusion of non-traditional functions in GBS scope by Industry

Healthcare Consumer DiscretionaryFinancials IndustrialsIT MaterialsConsumer Staples Energy & Utilities

Source: The Hackett Group’s annual Global Business Services (GBS) Performance Study, 2014

% companies with single- function shared services vs. multi-function GBS

28%

72%

2004

72%

28%

2004

multi function single function

2014

Service Placement – Finance, HR, IT, Proc. combined

8%

16%

11% Median

34%

35%

31%

Corporate

Business Units

GBS

Organization structure

BU - Local centers

One global delivery center

Geographical structure Multiple regional delivery centers


GBS keep pushing the boundaries to include more value-adding finance processes and knowledge centric-activities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Outlook/Interim forecastBudgeting

Business performance analysisCost analysis

Business performance reportingTax filing & reporting

Cost AccountingExternal reporting

Order EntryInventory Accounting

TreasuryCash management

Time and AttendanceCustomer billing

CreditGeneral ledger accounting

PayrollCollections

Intercompany accountingFixed assets

Travel ExpenseCash application

Accounts payable

GBS - Transactional GBS - Knowledge-centric GBS - Outsourced Outside the GBS organization

Service Placement – Finance processes

5 years ago today In 5 years


GBS continue to move up the value curve with a modest increase of companies developing stage-2 type models

Focus, Value

Time

8%

35%

57% Single Function Consolidation

Single Function Optimization

Multi-function Aggregation

Strategic Enterprise GBS

Integrated Services Operations

Multi-function Integration

Single Function Shared Services

Stage

3 Stage

2 Business Service

Excellence

Enterprise Strategic

Enablement

Source: The Hackett Group

Stage

1 Function

Transactional Excellence


Process split example: Best practice based budgeting process All activities can be categorized by where in the organization they should ideally be performed

Top-down target setting

Bottom-up planning

Data submission

Data validation

Data aggregation

Budget discussion

Report preparation & variance

analysis

Board approval

Thinking about the future

35%

Data collection and validation

37%

Report preparation & variance analysis

28%

Retained organization 50%

CoE 40%

SSC 10%

Tasks that require close cooperation of central management and Finance as

Business Partner understanding business needs

Tasks that require local knowledge

and local presence

Tasks that are repetitive and standardizable and do not require

local presence

Time Spent

High-level process split


GBS think strategic alignment is key to creating value, and most think they deliver on this promise

50%

60%

76%

68%

31%

46%

50%

59%

Delivering a high-quality servicesportfolio (service excellence focus)

Delivering operating cost reduction (costleadership focus)

Contributing to effective enterprisecompliance (compliance focus)

Alignment with corporate and businessunit strategic goals

GBS Objectives according to GBS (Importance vs. Perceived Effectiveness)

Importance – Highly important to have a GBS that meets this objective Effectiveness – Highly or mostly effective in achieving this objective


*Each year, The Hackett Group conducts a study of mid-sized and large companies surveying executive management and leaders of business services functions including finance, HR, IT and procurement about enterprise and business services priorities and initiatives for 2014 to identify their strategic priorities for the coming year.

C-suite executives value strategic alignment and quality of service equally, cost reduction is not the only goal

52%

53%

56%

42%

67%

49%

56%

65%

Delivering a high-quality servicesportfolio (service excellence focus)

Delivering operating cost reduction (costleadership focus)

Contributing to effective enterprisecompliance (compliance focus)

Alignment with corporate and businessunit strategic goals

GBS Objectives according to C-suite Executives* (Importance vs. Perceived Effectiveness)

Importance – Highly important to have a GBS that meets this objective Effectiveness – Highly or mostly effective in achieving this objective


The war for talent is here, and will be waged on a few key battlefields Ex

trem

e Di

fficu

lt Mi

nor

Very strong Significant Demand: Low

R E D

Source: 2011 Hackett Business Services Skills and Talent Performance Study

Diff

icul

ty to

attr

act/r

etai

n

Z O N E

Finance HR IT Procurement

Strategic Thinking & Analysis

Transactional Process

Global Business Acumen

Relationship Management


The mix of talent management practices used changes in each stage of GBS

Stage 2 Stage 1 Stage 3

13% 5% 38%

16% 38%

50%

9% 26% 13%

40% 51% 50%

7% 11% 25%

21% 23% 50%

23% 46% 50%

17%

23%

38%

38%

42%

46%

54%

11%

8%

25%

12%

22%

45%

31%

Virtual work practices (work fromhome)

Job rotation outside GBS

Bonus tied to GBS performance(e.g. productivity, quality, or

productivity)

Opportunity for advancement inpositions outside GBS through

career planning

Flexible working practices

Bonus tied to companyperformance

Job rotation within GBS

HR practices (Used to a high extent)

Peer World Class


Offshoring levels across functions are still lower than most would expect

20% 14% 11% 30%

80% 86% 89% 70%

26% 9%

20%

74% 91%

80%

56%

17% 25% 30%

44%

83% 76% 70%

Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3

Finance HR Procurement IT

Onshore vs. Offshore delivery of transactional services by Function across GBS maturity stage

Small sample

Transactional Finance – Cash Disbursements, Revenue Cycle, General Ledger Accounting & Reporting) Transactional HR – Employee Data Management, Payroll Administration Transactional Procurement – Supply master data mgt, Requisition & PO processing, Receipt Processing Transactional IT – Infrastructure mgt., Infra. Development, Application Maintenance, End-user Support

% of activities delivered offshore by GBS maturity stage % of activities delivered onshore

Source: The Hackett Group’s annual Global Business Services (GBS) Performance Study, 2014


SSC/BPO distribution in CEE

SSC BPO

Poland Czech Republic

Slovakia Romania

Latvia Lithuania Bulgaria Estonia

Hungary

96

25

29 25

45

9

10

35

16 27

8

29 18

11

115

26

310

195


Companies have been producing productivity improvements, and utilizing off-shoring – but wage arbitrage is an ending game !


Automation remains the single largest optimization potential

Labor arbitrage gap Transformation opportunity % %

$1,63 $2,23

$5,17

$3,50

$1,63

70% Offshore, Highautomation

World-class, (30%Offshore, HighAutomation)

Peer, (20% Offshore,Low Automation)

70% Offshore, Lowautomation

70% Offshore, Highautomation

Automate, Reengineer Offshore

Offshore

Automate, Reengineer

57% 32%

27%

53%

AP Transaction


Both top performers and peer have a hybrid sourcing model in place for business services

38%

27%

35%

Sourcing Mix – Top performer

Captive onshore Captive offshore Outsourced

38%

24%

37%

Sourcing Mix – Peer

Captive onshore Captive offshore Outsourced

Source: GBS effective sourcing performance study, 2013


Main take-aways as summary..…

Multi-functional GBS is the model of today and the model of the future 2.

Hybrid sourcing and progressive placement are becoming the norm 3.

Multi-dimensional is the holistic view of tomorrow: ops cost, cash, risk and spend 4.

Globalization keeps us busy in improving efficiency and effectiveness – the pendulum swings back and mature organizations require both 1.

The journey is about using technology to eliminate work – higher productivity requires higher standardization as prerequisite 5.

Finance - Insights from the Leaders and Performance Assessment

Appendix


Shared Services in Finance and Accounting offers a route-map to implementing your shared service program. Comprehensive theory is fully supported by hands-on practice and case studies involving some of the world’s leading organizations and enriched with real metrics and KPIs. Shared services work, and this book shows you just how to achieve the same results.

www.

gowe

rpub

.com

/ ISB

N: 05

6608

6077

“A must have tool and reference source” Axel Hesslenberg, Head of Shared Services, Novartis Consumer Health

Profile: Tom Bangemann

“First of all, I don’t know what to say. I was very surprised and feel humble about winning this prize. I would like to thank our partners. I think shared services is a team sport. I was making a joke about our customers, what should we have done without our customers? Of course, they are our partners and we do have some advisors in the audience as well. I’d like to thank The Hackett Group and in particular Tom Bangemann and Martin Wolleswinkel who have been supporting us throughout the years with best practice advice, consulting support, benchmarking..” Hans Jakob Hegge, SVP Global Business Services , StatoilHydro at IQPC SSWeek Awards Ceremony receiving prize for BEST OVERALL SSC, Budapest April 2009

Thought Leader of the Year Winner: Tom Olavi Bangemann Vice President Business Transformation, The Hackett Group Judges’ comment: 'Tom needs no introduction. He has served as an exemplary member of our industry, and stands out by his passion to do whatever it takes. It’s all about heart, connectivity and passion – and Tom has it all.'

http://www.gowerpub.com/


The Hackett Group – enabling world-class performance through a fact-based approach to consulting

BEST PRACTICES INTELLIGENCE CENTER™

PROVEN STRATEGIES WHICH REDUCE RISK & ALEO PharmaLERATE BENEFIT REALIZATION

BENCHMARKS

SOFTWARE CONFIGURATION

BEST PRACTICE PROCESS FLOWS

BEST PRACTICES PERFORMANCE METRICS

HIGH LEVEL ROADMAP

DETAILED PROCESS DESIGN

PROCESS

IMPLEMENTATION

Profile & Mission The Hackett Group is an IP-based consultancy focusing on enabling

G&A performance improvement through leveraging our intellectual capital, based on over 7,500 benchmarks and performance studies

More than 20,000 performance metrics More than 1,900 best practices Best practice process flows and configuration guides

Approach We help clients to measure current performance compared to peers

and World Class performers We identify project opportunities and develop a business case leading

to an actionable roadmap, supported by a Transformation Management Office

We implement recommended change and empower our clients to improve the organization, processes and the culture that enable agility, leading to sustainable growth

Results Sustainable performance improvement leading to an agile enterprise

with lower costs, higher quality and better margins


97% of the Dow Jones

Industrials

80% of the

Fortune 100

88% of the Dow Jones

Global Titans

80% of the

DAX 30

49% of the

FTSE 100

35% of the

CAC 40

Hackett’s Intellectual Capital is derived from engagements with the world’s leading companies…


Hackett has a full SG&A taxonomy…

Marketing Marketing Communication Brand and Product Management Planning and Strategy Market Research and Analytics Function Management

Service Order and Contract Management (OTC) Service Execution Service Operations Planning and Strategy Function Management

Executive and Corporate Services Administrative Services Travel and Transportation Services Real Estate & Facilities Management Government Affairs Legal Quality Management Risk and Security Management Corporate Communications Planning and Strategy Executive Office

Procurement Supply Data Management Requisition and PO Processing Supplier Scheduling Receipt Processing Compliance Management Customer Management Sourcing Execution Supplier Management and Development Sourcing & Supply Base Strategy Function Strategy & Performance

Management Function Management

Finance Cash Disbursements Revenue Cycle General Accounting and External Reporting Tax Management Treasury Management Compliance Management Planning & Performance Management Business Analysis Function Management

Human Resources Total Rewards Administration Payroll Services Data Mgmt., Reporting & Compliance Staffing Services Labor Relations Workforce Development Services Organisational Effectiveness Total Rewards Planning Strategic Workforce Planning Function Management

Information Technology Infrastructure Management End User Support Infrastructure Development Application Maintenance Application Development & Implement. Quality Assurance Risk Management IT Business Planning Enterprise Architecture Planning Emerging Technologies Function Management

Sales Sales Execution Sales Operations Planning and Strategy Function Management

Sales, General & Administrative Scope (SG&A)

Capture FTEs and Costs as defined regardless of where they are organizationally located

Global Business Services Service Strategy Service Design Service Transition Service Operations Continual Service Improvement GBS Contact Centre Plus any other process executed inside the

centre

http://www.sherlock-holmes.co.uk/home.htm


End-to-end process management is foundational

Purchase-to-Pay End-to-End Process Management

Process groups

Process participants

Procurement

Supply data management

Req. & PO processing

Supplier scheduling

Receipt processing

Invoice processing Settlement

Compliance management

AP Business Unit

Purchase-to-Pay End-to-End Process Scope

Purchase Pay (Settle)

Legal/Contracts Treasury

IT

Business Unit Supply chain planning

Logistics/Operations Quality

AP Procurement

Business unit Treasury

Controller Risk mgmt.

Source: The Hackett Group


Contact Information

Amsterdam | Atlanta | Frankfurt | Hyderabad | London Miami | New York | Paris | Philadelphia | San Francisco | Sydney

Tom Bangemann Senior Vice President Business Transformation

+49 174 3469 974 | Telephone [email protected] I Email

Corporate Headquarters 1001 Brickell Bay Drive 30th Floor Miami, Florida 33131 TEL: +1 305 375 8005 Amsterdam Camerastraat 25 1322 BB Almere Amsterdam TEL: + 31 36 535 00 82 Atlanta 1000 Abernathy Road NW Suite 1400 Atlanta, GA 30328 TEL: +1 770 225 3600 Chicago 525 W. Monroe Street Suite 1550 Chicago, IL 60661 TEL: +1 312 325 2900 Frankfurt Torhaus Westhafen Speicherstrasse 59 60327 Frankfurt am Main TEL: +49 69 900 217 0 Hyderabad 8-2-120/112/88&89 1st Floor, Aparna Crest Road #2, Banjara Hills Hyderabad 500034 TEL: +91 40 66544000

London Martin House 5 Martin Lane London EC4R 0DP TEL: +44 20 7398 9100 New York 110 Wall Street 17th Floor New York, NY 10005 TEL: +1 646 354 4400 Paris 8, rue de Port Mahon 75002 Paris TEL: +33 1 53 43 0400 Philadelphia 225 Washington Street Conshohocken, PA 19428 TEL: +1 610 234 5500 San Francisco 100 Montgomery Street Suite 2225 San Francisco, CA 94104 TEL: +1 415 249 3500 Sydney Suite 403 35 Lime Street Sydney, NSW2000 Australia TEL: 1300 457 779 (within Australia) TEL: +61 2 9299 8830


Statement of Confidentiality and Usage Restrictions

This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.

www.thehackettgroup.com

Documents

WORLD-CLASS IN GLOBAL BUSINESS SERVICES - ABSL · WORLD-CLASS IN GLOBAL BUSINESS SERVICES - OVERVIEW & TRENDS . ABSL, Prague . Tom Olavi Bangemann . SVP Business Transformation ,