˘ ˇ ˆ˘ - IBM · (GERS) Su ite: Purchasing Card, Travel Booking Integration, Standard Reporting...

IBM Managed Business Process Services

Use or disclosure of data contained in this document is subject to the restrictions on the last page.

change management

learn + perform

scal

e

expertise

globalization

Technology

OperationalExcellence

Measure

EnableProcess

People

Opt

imiz

e

Autom

ate

Transform

Stand

ardi

ze

© Copyright IBM Corporation 2009

��

��

FEI Annual Conference May 28, 2009



��

� Implications of the Current Economic Climate on CFO’s

� Driving a New Vision for Finance Through Finance and Accounting Business Process Outsourcing

� IBM’s Transformation Story

� Benefits of Business Process Outsourcing of Procurement

� Customer Case Study

� Wrap-up



�!��" ��!��" !��#�" ��

� FEI Breakfast Seminars April 2009 Feedback Results

– Greater than 70% of FEI member respondents on feedback form saidthat they are focusing on process improvements within the next six months

– 58% of respondents said their key focus was driving short term cost savings (either 1 or 2 priority)

• 33% as top #1 priority

– 58% of respondents said their key focus was driving long term cost savings (either 1 or 2 priority)



$��" ��%�� $��!��" ��&�$��'�(��$��#��#�� " ��$��

Profitable Growth & Cash Flow

� Global Expansion� Performance Analytics� Manage Working Capital

Optimizing the Business Portfolio

� Capital Management� Corporate Development� Insight Driven Decisions� Shareholder Value

VA

LUE

TIME

Cost Pressures

ERP-driven transformation

Cost Rationalization

� Global Sourcing� Scale � Process Optimization

Transparency & Risk Management

� Regulatory Compliance� Improved Controls� Consistency & Analytics

CFO Agenda

requires continual

renewal

CFO Agenda

requires continual

renewal



Strategic Outsourcing | Hosting

��" ��%�� )�� '��" !��$��#��!�)��#��$��)��" �

Operate

Managed Business Process Services

Hardware | Software | Smarter Planet

Design / Build

Manage

Application Management Services

Infrastructure

Consult

Human Resources & Learning

Customer Relationship Management

Supply Chain Management

Industry Verticals:

Banking Back OfficeInsurance Administration

Mortgage OriginationHealth Care

Telco

Product Development Procurement Manufacturing

LogisticsDistribution

ConsumerMarketing

Customer Management

Finance & Administration



Best Practice

Decisionsupport

18%

Transaction processing

55%

Reporting & Control

27%

Transaction processing 30%

Reporting& Control 20%

Decisionsupport

50%

CurrentRole transformationä Focus on decision supportä Business partnerä Using Information to Enhance

Shareholder Valueä Business Improvement

Role transformationä Focus on decision supportä Business partnerä Using Information to Enhance

Shareholder Valueä Business Improvement

Value added systems & process redesign

ä Translating Data into Business Information

ä Compliance/Governanceä Central Point of Controlä High Integrity

Value added systems & process redesign

ä Translating Data into Business Information

ä Compliance/Governanceä Central Point of Controlä High Integrity

Integrated systems & functional consolidations

ä Integrating with Operational Processes

ä Low Cost and Efficiencyä Outsourcing Opportunities

Integrated systems & functional consolidations

ä Integrating with Operational Processes

ä Low Cost and Efficiencyä Outsourcing Opportunities

*��!��$��$��" ��+!��'��" ��" �#��$� $�#��'��&��)��!��" ��



��" ��+!��!��#�� !��$��!��)��

Allocation of Processes Outsourced vs. Retained

� Accounts Payable

� Travel & Expenses

� Order Capture

� Credit & Collections

� Billing / Invoicing

� Disputes / Deductions

� Accounts Receivable

� Revenue Acctg

� General Ledger� Acct Policies� Account

Reconciliations� Fixed Assets� Tax Accounting

� Project Accounting

� Cost Accounting

� Inventory Accounting

� Financial Consolidations

� BU Financial Statements

� Statement Prep� SEC Filings

� Cost Mgmt� Customer

Product Profitability

� New Product Eval

� Life Cycle Costing

� Performance Mgmt

� Continuous Improvement

� Periodic Budget Prep

� Periodic Forecast Prep

� Cash Mgmt� Compliance

Mgmt� Tax Mgmt

� Investor Relations� Budget Policies /

Procedures

� Strategic Planning

� Corporate Development

� Bank Relations Financial / Invest Risk Mgmt

� Fundraising

� Dept Mgmt

� Tax Advisory & Planning

Transaction Processing

Cash Disbursements(A/P / T&E)

Revenue Cycle(Order to Cash)

Record to Report

General Accounting

Project & Cost Accounting

Financial / External

Reporting

Performance Mgmt / Decision Support

Business Performance

Mgmt

Planning Budgeting

Forecasting

Capital Platform Mgmt

Cash MgmtTreasury Mgmt

Risk MgmtTax Planning & Compliance

Typical starting point

70%70%70% 80% 50% 40% 30%95%

5% 30% 30% 20% 30% 50% 60% 70%

RetainPolicy managementStrategy developmentDecision makingAcceptance / approval

OutsourceTransaction processingProcedure Process maintenanceBusiness Process maintenance



� Improved risk, controls and compliance

Additional Business Impact:

� Effective management of resources

� Cost avoidance

� Revenue enhancement

� Reduction of variability in performance

� Improved customer experience

� Smoothing of upfront costs

Annualized Run Rate Savings

B. Scale &

Expertise

5 -10%

A.Globalization

10 -25%

30 - 60% from

baseline

D. Standardization &

Measurement

C. Tools

Enablement

Speed to benefit

VA

LUE

TIME

10 -15%

EXAMPLE

Operating Cost Savings

5 -10%

E. Working Capital

F. Procurement Sourcing & Compliance

3 - 7%

(against procurement

spend)

15 - 25%

(against receivables

balance)

��" �� #��!!��$��$��" ��

Client Economic Value

Spend & Bal. Sheet Reductions



��!��#��'��,��+�)��#��" ��-��!�" �,��$�� )�� & ��%

Regional Support Centers:Language and standard non-

transactional activities; work is transferred to global centers

for processing

Expertise Support Centers: Non-standard expertise processes, can be client specific; dedicated centers include locations in Bratislava (IBM),

Istanbul (BP), others

Global Support Centers:Transaction/accounting

activities; work received from regional centers for

processing

Technology & Infrastructure Enablers:

- Process tracking & workflow provide the ability to move work across centers and monitor progress

- Query & exception management processing enable issue identification and tracking

- Communication vehicles enable real-time updates

- Document management tools allow for end to end management



AP T&E

Transaction Processing

Record-to-reportRevenue Cycle (O2C) Payment Systems

Workflow Tools: RAPID, DCIW, Issue Escalation Management (JIRA)

Delivery excellence: TVC, Auto e-mailer, Auto-resizing, QC tool, Scrapper, Automation of trackers, Macros, Hot Keys

Document Management Tools: Document imaging (Xerox), Electronic forms (eForms)

Standardization Tools: Desktop Procedures & Policies Repository (Quickr) , Service level management (Service Flow)

Expense reporting

(GERS) Suite:

Purchasing Card,

Travel Booking Integration,

Standard Reporting

ARCollect Suite:

CDR,

Dashboard,

Open Pay

Payment Systems Suite

(Transaction Processing Engine, Integration Tools, Value Add

Features)

General Accounting Suite:

Account Reconciliation, Close Monitoring,

Audit Tracking,Quickr Repositories,

Journal Entry, Reporting Process

Tracking

Accounts Payable Suite:

eInvoicing/Portal

AP Recovery/ Duplicate Payments

Invoice Translation

*./ 0��1��)�� &��!��+�� " ��&�� !��,��&�$�" ��" ��$�� &$��" !��" !��" ��



��#��+��2 ��" !��$��#��)��!��$��!��,��!��

Openinvoice index open

invoicevalidateindex

process:enter into

SAP

audit(80%) payment

ID unenterables& put in queue

openinvoice

validateunenterable

send 1st

query to clientcontinue toquery untilresolved

process:enter into

SAP

IndexingGroup

ProcessingGroup

UnenterablesGroup

Today’s process

Redesigned process

Accounts Payable Example

�Open

invoice index openinvoice

validateindex

process:enter into

SAP

audit(80%) payment

ID unenterables& put in queue

openinvoice

validateunenterable

send 1st

query to client

continue toquery untilresolved

process:enter into

SAP

x x

xx

#2re-engineer

audit process – low cost reentry and

auto compare

#1 Merge indexing,

processing

#3Reduce false un-enterables

#4: automatequeries, use auto-unblock

#5 Dual screens#6 Launch multiple invoices simultaneously



��!�" �,��" �� #��'��&�� #��3

The TVC utility is installed on each agent's desktop to monitor sub-activity times

Selection of sub-activity

"Break" option

R2 = 0.50

0

1

2

3

4

5

0 1 2 3 4 5Number of lines per invoice

Invoice Processing time = 0.99*(avg. number of lines) – 0.76

Invoice Processing: Number of lines

Work drivers can be linked directly to activity unit times

Selection of sub activity



Availability %

Effi

cien

cy %

0.0020.0040.0060.0080.00

100.00120.00140.00160.00180.00200.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

Below average efficiency

Bel

ow a

vera

ge a

vaila

bilit

y

Top quartile

Agent Efficiency/Availability

Performance Management Activities:

� Break down work into detailed tasks

� Measure performance of tasks

� Track availability / efficiency of agents against standard

� Analyze performance and results

� Manage performance by implementing process changes, additional training, and redirection of resources as needed

� Identify work drivers

80%

60%

40%

Processed volume and utilization - Unilever NA

0%

20%

40%

60%

80%

100%

12/3 12/10 12/17 12/26 1/3 1/10 1/17Date

Uti

liza

tio

n

0

500

1000

1500

2000

2500

3000

3500

Pro

ce

ss

ed

vo

lum

e

Utilization Volume

80%

60%

40%

80%

60%

40%

Utilization %

Utilization Increase Over Time (20% increase within 2 months of launch)

Utilization %

�

��

��

75%

90%

Car

ter,

Nicho

lle

Stu

art,

John

Fran

ke, M

ark

Gulley, R

ober

t

Dun

can,

Mat

t

Kelly, M

elissa

McB

eath

, Mike

Rud

d, F

rank

Sch

iltz, D

ennis

Bea

usoleil, M

.

Pou

ncil, S

idra

Sav

oy, M

ary

Sim

mon

s, Leo

n

Ford

, Alic

ia

Availability (%)

Availability reported by accountantAvailability Reported by Accountant

�+!�� " ��*" !��#�" ��



*��$��" ��#��" ��!�� #��#��%��" !��#��

SAVINGSPOTENTIAL

OUTSOURCING

PROCESSES 5-15%

� 15-23%� 25-35%� 20-40%� 20-30%� 20-35%� 4-8%

� Cash conservation– Lower spending– Higher margins

� Working Capital optimization

– DSO, A/P– Inventory

20-35%


� Improved Controls– Process

harmonization– Standardization

AREAS FOR IMPROVEMENT

� Eliminate work steps� Streamline remaining work� Reorganize work� Assign work to right level� Realize economies of scale

� IT infrastructure� Applications� CRM� HR� F&A� Procurement of indirect spend

� Optimize labor rates with offshoring� Establish shared service centers� Focus on Core processes – outsource

other� Global Enterprise model

� Consolidation, virtualization, automation� Optimized infrastructure and shared

services � Self service technology� Move to variable cost model� Energy efficiency

5-30%

� Cash conservation– Lower spending– Higher margins– Lease vs. buy

� Higher ROI/ROA


� Cash Generation– Sale of infrastructure– Quick payback

BALANCE SHEETIMPACT

OPERATINGMODEL

TECHNOLOGY



*./ �$��!��$��#��" �(�� " ��!�� " '�-��%��$��#�� " ��)��-��#��" !��#�" ��

Measurable Benefits Qualitative Benefits

IBM after the Finance Transformation

PROCESSES

OPERATING MODEL

DATA STRATEGY& TECHNOLOGY

IBM before the Finance Transformation

� No global process leadership– Inefficient processes– Inability to implement best practices across units–No measure of process efficiency–Slow close process

� 14,000 Finance employees – 2x competition� Decentralized organization� High percent of time spent on administrative tasks� Finance organization viewed as low value add

� Lack of corporate-wide data strategy– Inconsistent definitions & unique measurements– Inconsistent data & lack of transparency–Vital information lost at every consolidation level

� Multiple data centers / applications–Lack of integration, 20-25 years old

� Functional best practices� Standard / common processes and simplification� Rules based transactional processes – run once� Automation and web enablement for ease of

execution, e.g., planning tools, CFO Portal� Increased use of modeling

� Common data definitions – one worldwide chart of accounts

� Common ledger and transaction applications� Common information through single worldwide

consolidation system, single FIW� Use of dashboards to deliver headlights

� Common charts of account� Data consistency, integrity, reliability & available earlier� Higher flexibility to accommodate changes� Model for transforming other global functions� Allowed Finance to focus on analysis & business issues� From: taillights to headlights, gathering to interpreting

� Financial data centers� Key applications� Days for accounting close� Estimated Finance operations expense� Estimated Finances ops exp / revenue

199467

14518

$2.1B3.3%

199615958

$1.4B1.8%

20056

447

$1.2B1.3%

� vs.1994-91%-70%-62%-43%

-2.0 pts

� Worldwide process owners drive trans./execution� Front/Middle/Back Office concepts; Front Office

collocation only for high value decision support� Consolidated shared services: global COEs deliver

standardization and economies of scale� Finance seen as trusted advisor



��" ��!�� " ��#��$�� $��#��

KEY LESSONS LEARNED

An effective transformation requires:� Strong Executive support� Clear targets and measurable objectives� Balance across three dimensions with a

focus on quality and cost of delivery:– Business Design and Processes– IT Operating Environment– Organization and Cultural Change

� Continuous effort – need to dedicate resources

� Comprehensive communication

Transformation never ends� Standardization

� Consolidation �Shared Services

� Globalization� Leverage Global Capabilities

� Standard / Common Processes

� Automation� Functional best

Practices� Financial Reporting

� Shared Services� Web Enablement� Core Competency� Decision Support

� Process Outsourcing / Global COEs

� Technology Exploitation

� Rationalized ERP� Information on

Demand

E/R > 3%

E/R < 2%

E/R < 1%

Basics

Enterprise Integration

Globalization

1994

1998

2002

EFF

ICIE

NC

Y

TIME

EVOLUTION OF FINANCE PROCESSES AT IBM



4 ��$�#��" !��" ��" ��!�� " ��" ��

PROVEN ABILITY TO PERFORM WIDE RANGE OF COST REDUCTION

FINANCIAL STABILITY

AND TRUST IN

DELIVERY

STRUCTURED WORK FOR

6-12 MONTHS PAYBACK

� Proven Cost Take out methodologies� IBM Financing to further improve payback of projects

Key differentiators of IBM

� Enterprise wide view of pockets of savings opportunities � Industry specific benchmarks drawn from client and internal experiences� Consulting knowledge to streamline business processes � Ability to lower cost through outsourcing or out-tasking� Access to labor in low cost countries� If needed, capacity to PMO and track realization of savings

� Financial strength and stability of IBM providing reliability� Long record of successful, risk mitigated transition and service delivery� Robust governance capabilities



*./ �� ,��" ��%��1��.��

2009 Winner: Best BPOUnilever Europe and IBM

Cover Story: A Unified Unilever Europe

Winner: Unilever Europe - IBM FAO Research’s annual FAO

Award of Distinction

F&A

Respondent Segments

IDC’s research identified IBM as the #1 F&A BPO provider across 4 categories:

ADPHewittUnisysUnisys5

InfosysInfosysFidelityFidelity, Infosys4

HP-EDSAccenture, Unisys

ADPADP3

AccentureHP-EDSAccentureAccenture2

IBMIBMIBMIBM1

InnovationIntegrationCost OptimizationTransformationOverall Rankings

F&A

Respondent Segments

IDC’s research identified IBM as the #1 F&A BPO provider across 4 categories:

ADPHewittUnisysUnisys5

InfosysInfosysFidelityFidelity, Infosys4

HP-EDSAccenture, Unisys

ADPADP3

AccentureHP-EDSAccentureAccenture2

IBMIBMIBMIBM1

InnovationIntegrationCost OptimizationTransformationOverall Rankings

Customer perceptions of Top 5 Ranked BPO Vendors by Transformation, Cost Optimization, Integration, and InnovationSource: IDC Research, 2008

#1 in all categories

Our relationship with Unilever Europe continues to win awards…

…and recent public customer surveys rank us #1 across our business

2008 Award of Distinction



� Efficiency levers– Simplify, Integrate, Automate

• Negative confirmations, ERS, PO Commitment accounting, non-valuated receipt

– Three Tier delivery - consolidation of procurement and accounts payable functions into regional and global centers

� Effectiveness levers– Typical Category savings of 3-8% per year

– Drive Process Compliance > 90%

– Typically strategically source all direct and indirect categories within 6-12 months

�� " ��#�� #��

Procurement Operations

Technology

Accounts Payable

Operations

Customer Assistance

Strategic & Tactical

Sourcing



*./ �� ,��$��" ��%��$�� .��

#1 in ACV, TCV, managed spend, and number of

active contracts**

Largest Managed Spend Base of PO Providers*

#1 Delivery*

*Everest Research PO Annual Report, April 2009**Everest Research Institute 2009

Subcontract Services22%

Travel7%

Uncategorized1%

Software5%

Connectivity5%

Facilities Mgmt & Construction

6%

Production22%

Telecom4%

Business Services5%

Facilities Svcs & Op Supplies

4%

Logistics/Distrib3%

IT Equip7%

CapEx3%

Marcom6%

Chemicals0%

#1 in Quality1#



��#��" !��#�� $�5��&$�� " ��!��)��#��



Transformational Levers

��$�5��#��!��" �!��#��6��/7��8 ��,��69�:/7

Working Capital improvements

Global SSC/ Outsourcing

2%

.25

.30

1.5%

.9%

Retained Finance Realignment – locally, regionally, globally

Planning & budgeting, Finance master data.20

Treasury/Consolidation.10

SAP Harmonization .15

CPG Industry Target

Promotional Analysis

Gross to net

Finance Efficiency Finance Effectiveness

Pricing Analysis

Retailer Account

MgmtDeduction

Improvements

$125M+

� $10B CPG Company: Cost of Finance $200M �Roadmap to drive out $90M+

� Finance focus – shifting finance resources to focus on driving profitable growth, margin, and supporting the customers of finance



��" ��$��" !��$��$�#��" ��$��$�#��*./ �!��" �$��2��)��!��



4 ��!2;!

� Top performing finance organizations drive higher business value and continuing improvements

� Outsourcing Finance and Procurement can:

– Accelerate this transformation to within a 6-12 month period

– Drive substantial operational savings and financial improvements

• E.g. DSO Improvement, Reduced spend, working capital improvements, etc.

� Leverage best practices and lessons learned



��;

Brent Cameron, Director of Managed Business Process Services – IBM Canada

[email protected]

David Wiseman, Director of Finance and CFO - IBM Canada

[email protected]

Website: www.ibm.com/services/ca/cfo

www.ibm.com/services/ca/fr/cfo




IBM Managed Business Process ServicesRoute 100Somers, NY 10589U.S.A.

Produced in the United States of America02-09All Rights Reserved

IBM, the IBM logo and the On Demand Business logo are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both.

Other company, product and service names may be trademarks or service marks of other companies.

References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates.

˘ ˇ ˆ˘ - IBM · (GERS) Su ite: Purchasing Card, Travel Booking Integration, Standard Reporting...

Documents

Transcript of ˘ ˇ ˆ˘ - IBM · (GERS) Su ite: Purchasing Card, Travel Booking Integration, Standard Reporting...