Industralized enterprise business process operations

© 2014 Copyright Genpact. All Rights Reserved.

Industrialized Enterprise Business Process OperationsGlobal transaction processing and decision support – a future-proof business model architecture to combat volatility

February 2014Gianni GiacomelliCMO, Genpactwww.genpact.com

http://www.genpact.com/

© 2014 Copyright Genpact. All Rights Reserved. 2

A Global Leader In Business Process Services: Process Transformation and Outsourcing, Analytics, Technology

About Genpact ► Overview

We help leaders of some of the largest enterprises transform and run their processes and operations, including the very complex and industry-specific

What we do

Unbiased, agile combination of process science, related technology and analytics limiting upfront costs and enhancing future adaptability

Right critical mass: we are large (62,000+ global staff) but our solutions appropriately flexible; our top management is directly involved in our client partnerships

How we do it Our impact

We help enterprises to bemore competitive by becoming more intelligent: adaptive, innovative, globally effective and connected…

…by enabling tighter management of costs, risks, regulations, and growth enablement

The results: US$22B* of impact for 800+ global clients

*US$22B is a cumulative figure since 2006


The Challenge


Countering volatility with mature enterprise operationsVolatility requires agility of cost and decision-making

• Maintaining cost structure (G&A, COGS) and asset intensity in line

• Faster data-driven decisions and related, granular execution (e.g. budgets, S&OP, customer interaction in both developed and developing markets)

But existing business process operations were built in less-volatile times, optimized for scale, and struggle with current requirements

• Rigid cost structure

• Little innovation aimed at supporting effective value chain decision making and execution

The rapid rise of Global Business Services (GBS) hints at viable enterprise operation strategies

• Industrialization of services: specialized and advanced process, people and technology practices

• Decouple and scale operations, yet run end-to-end extended enterprises

• Reduce and variabilize cost, increasing business effectiveness

• More tasks and processes being in-scope


Unprecedented volatility is a challenge and an opportunity – Operations have a strategic role in both

Need to attack

A shift in the “art of possible” will change operations

• Developing markets largest new demand – but tricky to serve

• “Granularity of growth” – micro verticals in developed markets

• Explosion in structured and unstructured data: analytics savvy players compete better

• IT in a flux - ERP, and BI/DW have not always delivered ROI, cloud offers promise but practices still evolving

• Collaboration technology and practices inflecting right now

• Scientific understanding of GBS operating models and process performance (cost, risk, quality) to serve key functions (finance, supply chain, run-the-bank, sales & marketing)

Operations were designed for scale and cost – in today’s volatile environment, enabling the enterprise requires a new operations strategy and robust execution

Need to defend• Volatility of demand and supply (talent, capital, materials etc.)

• Regulations burden increasing (finance, environment)


Why volatility and surges are here to stay Demand-side problems vicious cycle – consumer products example

• Global population expected to reach 8 billion by 2030, accompanied by a huge increase in the emerging middle class in economies like China and India

• More people with more disposable income demand more energy, food, raw materials and consumer goods, driving prices up

Emerging Global Middle Class

• Growth in energy demand is expected to be 60% higher by 2030

• Roughly two times more than the rate of population growth

• Supply is not keeping pace

Energy


Why volatility and surges are here to stay Demand-side problems vicious cycle – consumer products example

• Higher fossil fuel incent diversion of crops to use for gas additives and bio-fuels

• E.g. corn for ethanol, soybeans for biodiesel - further increasing pricing for such commodities.

Alternative Fuels

• More people can afford to eat more, leading to higher long-term food and feedstock prices

• Higher prices for grains, seeds, animal feed-stocks and other commodities lead to higher prices in staples like bread, milk, eggs, oils, flour, meats, poultry etc.

Food

• Increased global demand for consumer packaged goods drives higher demand and prices for their commodity and raw material inputs

• Higher fuel prices, and related higher transportation and distribution costs

Consumer Goods


The Solutions

© 2014 Copyright Genpact. All Rights Reserved.

Industrialized operations use specialized and advanced process, people and technology practices

Superior metrics

management

Targeted org

design and HR practic

es

Focused Technology

Analytics

driven proces

ses

Effectiveness

Efficiency

Cost

Op

tim

izat

ion

Labor

Scale

9


Industrialized operations use specialized and advanced process, people and technology practices

Metrics management(1)

Effectiveness

Efficiency

Cost

Technology(2) Org design and HR practices

Analytical process science

Scale

Labor

Optimization

(1) cost structure, performance(2) ERP wrappers and config, BI and big data, workflow, collaboration, social, mobile


Industrialized operations as extended enterprise

Corporate

Res

ultsSt

rate

gic

guid

ance

Service Requirements

Performance Contracts

Service• Rules-based processes common

across business units

• Significant process transaction volumes

• Remote interaction with rest of business

• Common systems infrastructure

• Processes requiring deep expertise in specific functional disciplines

• Highly advisory in nature, may require frequent face to face

Run processes efficiently, drive best practices and valueProvide corporate governance

and strategic guidance, establish policies

• Services that require on-site presence or that directly impact the end customer experience

Business Business Partner

SIMPLIFIED

GBS

Source: Genpact experience

Internal Partner

Input


Operating models and industrialized operations

GBS

OUTSOURCED

REGION 1

REGION 2

RETAINED

Other management Operations

IN-HOUSE FINANCE FUNCTION

IN-HOUSE SUPPLY CHAIN FUNCTION

CAPTIVE OUTSOURCED

INDUSTRIALIZED OPERATION

TARGET OPERATING MODEL


Operating model choice depends on the objectives and the additional impact of key levers

Lev

ers

Business partner

Corp central

Co

st

ben

efit

sP

roce

ss

effe

ctiv

en.

Oth

er

ben

efit

s

Sig

nific

ant

Lim

ited

Typ

ica

l b

en

efi

ts

Captive

GBS

BPO

Labor arbitrage*

Process optimization

Economies of scale

Absolute (FTE related, Infra, IT, G&A)

High-volume process

Custom, location & context dependent proc.

Standardization

IP and business integration

Compliance and control

Variability

Market entry, scalability

Ease of setup, management

SIMPLIFIED

*includes cost arbitrage, and availability of skills


Industrialized business process operations are increasingly adopted and contribute to counter volatility

From F&A and IT, to multiple functions including decision and compliance support

Beyond traditional lift-and-shift cost focus

• Decoupling and global delivery of “industrializable” components

• Stronger process and organizational metrics linked to business outcomes

• Data-to-insight embedded into process

• Advanced use of collaboration technologies and practices

• In-house and outsourced mix continues to evolve

Benefits from

• Scale (10X = 50% less cost per transaction)

• Optimization (10-70% improvements)

• Cost arbitrage (up to -70%)

Efficiency

• Cost structure: leaner, more predictable, and easier to flex

• Better timeliness, accuracy, consistency

Effectiveness

• Finance ops (O2C, S2P, R2R) - best practices applied consistently globally, better scalability

• Sales & Marketing, supply chain data – transactional and analytics heavy lifting

• Across functions, ability to scale up and down geographies, accommodate M&A

Strong emergence of GBS model… ….enables resilience


Significant potential still exists for industrializing operations in the Life Sciences* industry DIRECTIONAL

Manufacturing

DistributionCustomer Care

Marketing & Sales

Back-office Support

General Management

R&D

Procurement

Industrialized Enterprise OpsScope and Impact

Research support

Sourcing and procurement support

Inventory and demand forecastingProduct cost accounting

Logistics optimization

Contact center support

Sales and Marketing ops and analytics support

All G&A support

Decision and transformation support

% already industrialized % not applicable% industrialization potential

Source: Genpact Analysis, BLS *includes Pharmaceuticals and medicine manufacturers

4%1%

95%

50% 30% 20%

20% 5% 75%50% 25% 25%

10% 20% 70%

100%

30% 30% 40%

20% 15% 65%

Average # of FTEs


Significant potential still exists for industrializing operationsIndustrial Manufacturing

DIRECTIONAL

0%

1%

1% 90%

4% 95%

60%

50% 30% 20%

25% 5% 70%30% 30% 40%

25%5% 70%

100% 0%

30% 10%

9%R&D

Procurement

Manufacturing

DistributionCustomer Care

Marketing & Sales

Back-office Support

General Management

% already industrialized % not applicable% industrialization potential

Source: McKinsey Research Institute, Genpact Analysis

Industrialized Enterprise OpsScope and Impact

Research support, engineering services

Sourcing and procurement support

Inventory and demand forecastingProduct cost accountingEngineering Services

Logistics optimization

Contact center support

Sales and Marketing ops and analytics support

All G&A support

Decision and transformation support

Average # of FTEs


Significant potential still exists for industrializing operationsCPG* industry

DIRECTIONAL

95%

50% 30% 20%

25% 5% 70%30% 30% 40%

1%4%

25%

5% 70%

0% 100% 0%

30% 10% 60%9% 1% 90%

* includes metal products, rubber and plastics, printing and publishing

R&DProcurement

Manufacturing

Distribution

Customer CareMarketing & Sales

Back-office SupportGeneral Management

% already industrialized % business as usual% industrialization potential

Source: McKinsey Research Institute, Genpact Analysis

Average # of FTEs

CPG


Significant potential still exists for industrializing operations in High Tech Companies* DIRECTIONAL

50% 30% 20%

25% 5% 70%30% 30% 40%

25%

5%

4%

0% 100% 0%

30% 10%

70%

9% 1% 90%

1% 95%

60%

R&D

Procurement

Manufacturing

Distribution

Customer CareMarketing & Sales

Back-office SupportGeneral Management

% already industrialized % business as usual% industrialization potential

Source: McKinsey Quarterly, Genpact Analysis

Average # of FTEs

* computers and office machinery, semiconductors and electronics

Software, Internet Services Companies


Contact Genpact to Explore The “Art of the Possible”


About Genpact

Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and operations, including those that are complex and industry-specific. Our mission is to help clients become more competitive by making their enterprises more intelligent through becoming more adaptive, innovative, globally effective and connected to their own clients.

Genpact stands for Generating Impact – visible in tighter cost management as well as better management of risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune Global 500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and technology, which limits upfront investments and enhances future adaptability.

We have global critical mass – 62,000+ employees in 24 countries with key management and corporate offices in New York City – while remaining flexible and collaborative, and a management team that drives client partnerships personally.

Our history is unique – behind our single-minded passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 15 years.

For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn.

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Industralized enterprise business process operations

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