PROJECT REPORT

ON

MANAGEMENT OF INFORMATION SYSTEM

CONTENTS OF THE REPORT

Case Study:1 – Asian Paints Company’s profile at a glance Industry Analysis – Porter’s 5 Force Model; Overall Corporate Strategy, Business

Strategy CRM Vision at AP Flow of Information at AP Key Challenges Future Trends Implementation Process & Best practices CRM at AP; Business process transformation and value realized Optimizing critical processes Future Road Map The Benefits Customer Focused Strategies; Lessons Learnt

Case Study: 2 – IDBI Bank Improves Profitability with Integrated Management Accounting System

Background – Bank’s Profile, Shareholding Pattern Contribution of IT Department @ IDBI Technology & Tech Initiatives, Overall IT Spending 06-07 Vision; Business Strategy IDBI Bank’s Business Chart and Organizational Chart IDBI’s Approach, Analysis Across all Business Units and Products Oracle Financial Services Pricing Management, Transfer Pricing Component; Profitability

Manager Ability to assess employee performance Implementation process The Benefits Achievements and New Business Initiatives

Case Study: 3 – The Procter & Gamble Company Background – Company’s Profile, Products, Culture Key Challenges Understanding Customer Needs Implementation process & realization of value Unique Implications For Supply; Information Flow in P&G Results Benefits; Lessons Learnt

CASE STUDY – 1

ASIAN PAINTS – THE CUSTOMER EXPERIENCE GETS ANEW LOOK WITH SAP® CRM

COMPANY’S PROFILE AT A GLANCE

India’s largest & among top 10 decorative coatings, paints company in the world. Five Paint & two Chemical Factories in India and over seventy sales establishments. 3000 in India 1400 employees in International operations.19,000 + dealers in India Has joint ventures in 22 overseas markets and operates through five corporate brands viz. Asian

Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. Forbes Global magazine ranked Asian Paints among the 200 Best Small Companies in the World

for 2002 and 2003 and presented the 'Best under a Billion' award. Started by four entrepreneurs, Champaklal Choksey, Chimanlal Choksi, Suryakant Dani and

Arvind Vakil Turnover: INR 0.35 million(1945) to 54.3 million(2009)

Asian Paints Limited, with annual revenues totaling US$680 million, is India’s largest paint company and the third-largest paint company in Asia today. The company has an enviable reputation in the corporate world for professionalism, fast-track growth, and customer-centricity. Asian Paints has offices in 22 countries, and its 30 paint manufacturing facilities service consumers in over 65 countries.

INDUSTRY ANALYSIS: PORTERS 5 FORCE MODEL

DISCOVER: • This forms the basis of fast growth. • AP has identified opportunities abroad in developing countries similar to India. • To enter into these countries they adopted the process of acquisition.

DEVELOP:• Paint industry is primarily a product-oriented industry up till now. • Huge potential exists in the service side also. • Introduction of color-world, providing service in painting and interior decoration etc are steps

taken to acquire the whole chain and becoming full service provider.• Need to ensure value-adding services are possible. These can be integrated to provide an

umbrella service.• Constant reminders to the customers to repaint, or upgrade.

DEFEND: • Consists of rural and the urban market in which AP is playing.• They are a target to many global companies, which are playing in Indian market via Indian arm

of their operations like ICI has Berger, Kansai has JN

DEEPEN:• Industrial segment of Indian paint industry where AP has a weak presence.• It has a presence in automotive segment but ranks a poor second. • It needs to form alliances with foreign players to enter into this segment.

OVERALL CORPORATE STRATEGY: ASIAN PAINTS

• It can also look for tie-ups with the company. Its move of taking over Haucoplast is one step in this direction. Their tie-up with PPG has given them a good presence in automotive segment, capturing clients like Santro, GM, Ford etc.

BUSINESS STRATEGY: ASIAN PAINTS

• AP has acquired short-term competitive advantages by using its distribution strength and logistical efficiency in order to raise the Cost of doing business for all its competitors to attain this advantage.

• The advantage is short-lived and ultimately imitable. • Moreover, AP has established such an extensive network that getting incremental advantage

would be very difficult. • Futuristic approach should be gaining competitive advantage through channel control or

occupying mind space.

ASIAN PAINTS - CRM VISION

“The implementation of SAP CRM gave Asian Paints greater visibility into all financial transactions during a job.”“SAP CRM transformed our organization and allowed us to expand into the services business.” Deepak BhosaleSenior Manager, CRM InitiativesAsian Paints Limited

“As a result of our implementation of SAP CRM, we have improved process control and accounting transparency.”Aroop ChatterjeeGroup Brand Manager of AsianPaints Home Solutions andInteractive MarketingAsian Paints Limited

To emerge as a truly “Customer Centric” Organization wherein we understand and manage the ever-changing expectation of our existing and prospective customer in a profitable way

CRM @ ASIAN PAINTS

Not technology but an approach a company takes towards its customers. About setting up processes for interacting and building relationship with customers. Spans most of the customer touch-points Unified view of the company to the customer

FLOW OF INFORMATION AT ASIAN PAINTS

KEY CHALLENGES

A Fresh Approach to the Customer ExperienceAsian Paints Limited, India’s largest paint company, has a reputation for professionalism and fast-track growth. Customers are at the core of all Asian Paints business activities. A simple but unbeatable concept of “going where the customer is” drives all its major initiatives. In 2001 Asian Paints executives realized that the firm’s long term growth depended on their ability to forge ever-closer ties to the end consumer. At the same time, the Asian Paints help line had received calls from these consumers expressing a need for a more complete solution to their home painting needs – and Asian Paints learned that they had demanding expectations when it came to service and overall project execution. But because the company sold its products through a network of dealers, it lacked visibility into the entire painting process and the needs of the homeowner. This situation prompted Asian Paints executives to explore ways to establish a more direct link to the end customer.

A TYPICAL CUSTOMER’S TOUCH POINTS:-

Launching a Service BrandWith this in mind, Asian Paints made the decision to move from a strictly product-based manufacturing business to a services model. With the launch of Asian Paints Home Solutions, the firm would build a “service brand” by offering value-added services ranging from in-person color recommendations to feng shui consultations. The goal was to deliver an Asian Paints “signature look” through the use of specific color combinations and themes. To achieve this goal, Asian Paints needed a scalable customer relationship management (CRM) system that could map the major business processes of Asian Paints Home Solutions and provide visibility into all customer interactions. First, it required state-of-the-art call center capabilities that would include activity management for customer calls and activity scheduling, as well as a lead management system that could prioritize and route leads for proper handling.

Developing a Customized SolutionStandardizing the sales delivery processes and establishing financial controls would necessitate developing a custom solution. This solution required a secure Web interface enabling leads from the help line to be forwarded to a home solutions service provider for handling. This service provider might be an independent home painting firm or interior designer, for example, in the Asian Paints network. The home solutions provider is responsible for using the system to

perform all major tasks associated with a job: schedule appointments, record completion of site surveys, submit job estimates, order paints through Asian Paints dealers, record progress of jobs, invoice customers, and conduct customer satisfaction surveys. The new solution would allow both the provider and Asian Paints Home Solutions to view all customer interactions and financial information in real time. This same system would also provide updates on the status of marketing rewards programs. In addition, robust reporting functionality was required to generate a variety of sales, lead, and activity analysis reports. This functionality would also be used to tabulate results of the customer surveys submitted at the completion of a job.

Preparing for GrowthWhen the time came to select a new system, Asian Paints studied the functionality of the most recent release of the SAP® Customer Relationship Management (SAP CRM) application very carefully. The company was already using SAP solutions and had implemented SAP CRM in its existing call centers. Asian Paints determined that SAP CRM best met its criteria and opted to build on existing infrastructure. Notably, total cost of ownership considerations did not play a major role in this decision. Asian Paints was building a new service business and realized that there would be attendant costs in creating a custom solution.The custom solution was a separate project that would require integration with the basic CRM system. After considering other options, Asian Paints decided on the SAP NetWeaver® platform. The Web Dynpro development environment allowed for rapid application development as well as custom development of the user interface. And it would integrate seamlessly with SAP CRM. The architecture called for the new solution, branded “project Tantra,” to retain the lead and opportunity management functionality of SAP CRM. Then, all process associated with sales delivery would be implemented through the custom solution. Integration with the SAP NetWeaver Business Intelligence (SAP NetWeaver BI) component was also a critical factor. Data from both SAP CRM and the custom solution would be uploaded to SAP NetWeaver BI to generate various reports. Lastly, Asian Paints, as an existing SAP customer, realized that development of a custom solution would require the strong support that SAP could provide.

FUTURE TRENDS

Increased customer expectations.

Exponential customer base.

Increased number of interaction channels.

Information on all touch points for effective marketing

Accountability of every rupee spent

Need for increased customer satisfaction/ customer loyalty

Complaint to opportunity

IMPLEMENTATION PROCESS AND BEST PRACTICES

Deepening Ties with End CustomersIn launching its new service business, Asian Paint’s key objective was to deepen its ties to the end consumer. As a result, the CRM system needed to offer visibility into all customer interactions and financial transactions. At the same time, this system would standardize business processes at each stage of a painting job. Thanks to the implementation of SAP CRM and the custom solution, processes were optimized in the following areas:

Financial controls – There is now greater transparency into all financial transactions from billing and collections to contractor–dealer payments.

Sales delivery – Asian Paints standardized the sales delivery processes to be followed by each provider. Since the sales delivery process can be lengthy, the system allows Asian Paints to monitor the quality of service its customers receive from the start of a project to its completion.

Customer data management – Asian Paints now has one centralized system for managing all customer data, which provides greater visibility into customer needs and is now available for use in campaign management and in the development of predictability models, among other activities. And because this data is available in real time, reports can be generated instantaneously.

Getting the Job Done QuicklyThe implementation project launched in December 2001, and the first component, the interaction center, went live in April 2002. All other components including the custom solution were implemented by August 2002. The project team was comprised of both business and IT staff, ensuring that both business and technical requirements were addressed.Close collaboration between Asian Paints and SAP resulted in adherence to tight schedules. The SAP Customer Competence Center location in Singapore developed prototype scenarios specific to Asian Paints, and SAP Labs made valuable contributions to the design and configuration of the custom solution. A workshop on enterprise service oriented architecture, held for IT staff, assisted Asian Paints in developing a blueprint of its custom solution as an extension of its existing infrastructure. Two Asian Paints Home Solutions providers participated in a three-month pilot – an essential element of the project. Because many of the providers did not have strong computer skills, a simple, intuitive interface would be crucial for user adoption. The feedback received during the pilot was critical to the successful deployment of the solution and prevented delays when the system ultimately went live. The system initially went live in four major cities, and the remaining eight cities were added in early 2007.

Ensuring Success through Strong GovernanceStrong governance proved to be another key to success. Asian Paints established a review committee to conduct interim reviews at key stages of the deployment, which ensured that all major business and technical issues were addressed prior to rollout. Strong project management ensured that key milestones and the go-live date were met.

Supporting Service Providers with Training and ToolsBecause the providers using the solution were not particularly proficient computer users, training was essential. Asian Paints organized an extensive training program consisting of classroom sessions that included training in basic computer skills and office applications, as well as in the use of the custom solution. Since both the business processes and IT infrastructure were new to the providers, Asian Paints also established a provider support system. A front-line support person who is trained to field business questions handles initial queries. Questions of a technical nature are forwarded to an IT rep. The IT rep then replies to the front-line support person who, in turn, conveys the response to the provider. This support system ensures that any operational issues at the home solutions business level are addressed in a timely manner.

CRM AT ASIAN PAINTS

Simplicity drives Adoption …Home

User Friendly User-interface. Personalization. Higher acceptability. Intuitive interfaces and hence lower training effort. Browser based access. Easy to deploy.

Flexible Enterprise CRM …

E-SOA enabled Ready to deploy enterprise services Easy Customization of screens. Faster deployment Quick Report Creation Rich Email, Calendar integration. Offline access using Adobe interactive forms Clear upgrade & migration from previous CRM release.

Comprehensive SAP CRM 2007 …

Superior Customer Insights 360 degree view Key Stake Holders Tight integration between SAP CRM 2007 – backed ERP to support for end-to-end business

processes. Flexible to connect to other communication applications via web-services. Able to achieve seamless integration between customer channels.

BUSINESS PROCESS TRANSFORMATION AND VALUE REALIZED

MOVING ASIAN PAINTS CLOSER TO CUSTOMERS

Asian Paints has made clear gains in achieving its long-term goals, as follows.

Faster customer acquisition – The new online system for forwarding and following up on leads improved overall response times and reduced the time required to acquire new customers.

Revenue – In the four years since the implementation went live, 17,500 persons registered for Asian Paints Home Solutions consultations, and of these, 5,000 signed up for painting jobs. Targeted revenue for the period 2006 –2007 is US$8 million to $10 million, and the company crossed the 30,000 mark in cumulative number of customers.

Optimized visibility into customer needs – The new solution gives Asian Paints greater visibility into all customer interactions. As a result, the company has gained a deeper understanding of the needs of its end customers and has tailored its service business to meet these needs.

Scalability – This new solution can accommodate Asian Paints’s continued growth well into the future. In fact, Asian Paints doubled the number of cities covered without modifications to the CRM system.

CUSTOMER TOUCH-POINTS IN SAP CRM

CRM TOUCH POINTS – ENGAGEMENTS!!!

OPTIMIZING CRITICAL PROCESSES

The implementation of SAP CRM enabled Asian Paints to establish a direct link to its end customers and to meet customers’ need for a home painting service. The following table illustrates the processes that changed as a result of this implementation and the impact of these changes.

FUTURE ROAD MAP

Through its implementation of SAP CRM, Asian Paints has established a direct link to its end customers, and put in place processes to ensure that their high expectations will be met. In an effort to realize an even greater return on its IT investment, Asian Paints used its SAP CRM infrastructure to develop an e-recruitment platform in 2006. This platform allows employment agencies to review openings and upload job candidate information, reducing the time required to fill open positions. In the future, Asian Paints plans to leverage itsSAP CRM investment in the following areas:

Campaign management – With improved customer intelligence, Asian Paints now plans targeted campaigns to its customers.

New market segments – Asian Paints plans to extend its CRM initiative to indirect customer influencers such as architects and interior designers.

Complaint-handling system – Asian Paints plans to develop a formal complaint-handling system to tackle customer problems with both service and paint. By having selected a scalable system such as SAP CRM, Asian Paints has laid the foundation for its long-term growth.

THE BENEFITS

Asian Paints is creating a strategic, competitive advantage for itself. The company is experiencing increased employee productivity and faster adoption of innovations. In addition, the total cost of ownership of the company’s IT solutions and overall infrastructure has decreased dramatically. The integration with Adobe Acrobat and the ability to create, complete, and submit reports and integrate mail has proved to be helpful in streamlining Asian Paints’ processes. With this implementation, we exponentially increased our visibility into and governance over our business processes and all internal and external parties involved in the recruiting effort.

By leveraging existing solutions and improving efficiency through better processes and practices, the IT group is able to add new, customized services and applications in-house—eliminating the need to purchase new software or hire consultants to develop software that may not integrate easily with existing IT systems.

Asian Paints is able to compose an enterprise architecture that supports efficient processes and applications that are reusable and can be built on. In addition, by lending its expertise in HR business processes, the HR team is able to influence the applications and services provided by IT. As a result, the company is certain that its investment in future technology development will be time and money well spent.

The SAP® Customer Relationship Management (SAP CRM) application provides the necessary flexibility to quickly develop distinctive capabilities and deliver superior customer experiences. SAP CRM drives rapid user adoption and productivity and provides quick time to value while supporting your strategic CRM initiative. It also delivers best-in-class, front-office functionality

and support for end-to-end, industry-specific processes. As a company evolves, the organization can ensure outstanding customer experiences and respond immediately to market requirements.

Delight CustomersSAP CRM helps foster collaboration between your organization and your customers, facilitating superior interactions and experiences across all channels.

Empower TeamSAP CRM empowers employees to perform business functions and manage interactions with their customers – anytime, anywhere. With SAP CRM, organizations can employ comprehensive, real-time views of all customer information to drive its actions and support collaboration across its global business network.

Grow BusinessSAP CRM delivers simplified access to insights into customers, so one can differentiate and grow its organization, provide superior customer experiences, and make the most of business advantage.

Differentiate Business

Customer relationship management involves developing close relationships with customers and driving profitable growth. At the same time, the connected, global economy provides customers with a wide variety of options available at the press of a button. Before a salesperson’s first visit, a potential customer has researched company, products, and competitors’ prices, and has read other customers’ reviews about their service experiences – good and bad. As a result, CRM is no longer just about streamlining sales, service, and marketing operations. With information just a click away, products quickly becoming commodities, and margin pressures increasing, differentiation is key. To differentiate an organization, maximize profits, and deliver superior customer value and exceptional customer experiences across all touch points, one must design and continuously improve business processes and interaction channels. SAP CRM provides the flexibility needed to create unsurpassed customer experiences. With support for a wide range of end-to-end business processes, the application helps address an array of marketing, sales, and service situations. One can deploy SAP CRM incrementally and easily adapt and extend the application as customer needs change and your business environment evolves. With SAP CRM, one can ensure consistent and relevant interactions across all channels. Access to accurate and timely customer information helps you make the most of every contact during a customer’s entire relationship with your organization. SAP CRM helps drive customer value, loyalty, and profitability across your value chain. With best-in-class front-office functionality that supports industry-specific processes, SAP CRM helps turn the vision of customer driven growth into reality.

Setting New Standards for CRMIn the last 35 years, SAP has become the global leader in business software, serving more than 43,000 customers worldwide, including organizations of every size and type. Along the way,SAP has accumulated a unique knowledge base of best practices in more than 25 industries – including yours. The SAP tradition of leadership continues with a new generation of CRM software that gives your company unprecedented speed and flexibility to improve bottom line by improving customer relationships.

Drive GrowthIncrease revenues by improving customer loyalty, boosting wallet share, speeding new products to market, and closing more sales. Launch new products faster. Deploy new channels to reach new customers, penetrate underserved segments, and enter new markets. Help sales teams focus on strategic tasks as increase win rates and convert more leads into sales

Maintain Operational ExcellenceImprove efficiency and effectiveness by streamlining end to- end business processes, enhancing service levels, and cutting costs and errors. Shorten cycle times, increase order accuracy, reduce the volume of customer calls, decrease billing disputes, and lower inventory costs with better order-to-cash processes. One can resolve issues faster and boost customer satisfaction with low-cost interaction channels such as Web-based self-service and online order management.Enhance Competitive Agility

Respond faster to change, optimize customer experiences, and differentiate company from competitors with innovation. Adapt your business processes quickly to respond to changing market conditions and customer demands. Launch new initiatives rapidly to speed time to market. Align channels with customers’ interaction needs and preferences to ensure consistency and convenience across all customer touch points. With complete customer insight, one can drive innovation that differentiates products and services.

FINANCIAL AND STRATEGIC BENEFITS

Targeted revenue of US$8 million to $10 million in 2006–2007 Established direct sales channel to customers thanks to help from the home solutions business Built relationship with applicator community across 30,000 customer sites

CUSTOMER-FOCUSED STRATEGIES

WHY SAP WAS SELECTED

Ability to meet all criteria Integration of the SAP NetWeaver® Business Intelligence component Scalability SAP support

LESSONS LEARNED

SAP CRM enabled Asian Paints to build a service brand through Asian Paints Home Solutions. With its scalable CRM infrastructure, Asian Paints is poised to continue its expansion into the services market.The following are the key takeaways from this implementation.

CASE STUDY – 2

IDBI BANK IMPROVES PROFITABILITY WITH INTEGRATED MANAGEMENT ACCOUNTING SYSTEM

“The implementation of Oracle’s Financial Services applications has provided improved visibility of the contribution of each business unit to the overall profitability of the bank. This has created a staff culture that is focused on generating higher value products and exceeding customers’ expectations.” R.K. Bansal, Executive Director and CFO, IDBI Bank

Background

Industrial Development Bank of India (IDBI) was established in 1964 by the Government of India to provide credit and other facilities for the development of industries.

IDBI Ltd is one of the top ten Development Banking Institutions in the world. Over the years since its inception, it has proven itself as a strategic investor and successfully promoted several world-class institutions within India, which have revolutionized the Indian financial markets. Established as a DFI with the following functions:

Plays the role of coordinator at all India level. Providing financial assistance for the establishment of new projects as well as for

expansion, diversification, modernization and technology up-gradation of existing industrial enterprises.

Undertakes wide-ranging promotional activities including entrepreneurship development programmes for new entrepreneurs, provision of consultancy services for small and medium enterprises, up-gradation of technology and programmes for economic upliftment of the underprivileged.

Assistance to backward areas by setting up of voluntary agencies, support to Science and Technology Entrepreneurs’ Parks, Energy Conservation, Common Quality Testing Centers for small industries, SIDBI etc..

TCOs offer diversified services to small and medium enterprises in the selection, formulation and appraisal of projects, their implementation and review.

IDBI played a prime role in setting up of the Entrepreneurship Development Institute of India for fostering entrepreneurship in the country.

Pioneered capital market development By setting up National Stock Exchange – an electronic Stock Exchange, NSDL – a

Securities Depository, CARE – a Rating Agency, SHCIL – a Depository, etc. Products and services. Project finance, equipment finance, asset credit, equipment lease etc. Professional advice and services for issue management, project evaluation, corporate

restructuring, share valuation etc. Set up subsidiaries:

IDBI Bank IDBI Capital Market Services Ltd.

IDBI Investment Management Company Ltd. In line with the reforms in the Indian financial sector and to meet emerging post-reform

challenges, IDBI transformed from a development finance institution into a full-fledged commercial bank in 2004.

In 2005, IDBI merged its commercial banking subsidiary IDBI Bank. In 2006, the bank acquired United Western Bank to further strengthen its position in the banking sector. Following these mergers, the bank was renamed as IDBI Bank Ltd. The bank has a network of 564 branches and 955 ATMs across India. It offers a range of products and services covering: retail, corporate, international banking, treasury management, merchant, and investment banking.

In 2008, IDBI Bank was restructured into several customer-focused business units to streamline processes and improve customer service. Following the restructure, the bank needed to develop a system to better assess the performance of each business unit and take corrective action if they were not delivering adequate profit.

IDBI Bank engaged Oracle Consulting to deploy a range of Oracle’s Financial Services applications that enabled the bank to measure each business unit’s contribution to profitability. Using these applications, the bank can determine the performance of products, customers, and branches, allowing it to devise strategies that boost revenue and overall profitability.

Shareholding Pattern: Dec 31, 2008

Contribution of IT Department @ IDBI

IT Team at IDBI Ltd under the strong management leadership has successfully aligned business objectives with the smart technological implementations to the optimum utilization for the organizational advantage.

The concept of anytime, anywhere banking has been made possible by offering uniform services across various alternate channels such as ATM, Phone banking, Mobile banking, Internet banking, etc. All the channels are integrated to the core banking system in a secure and real time basis.

In the last 12 months IDBI Bank has launched several technologically innovative and customer-centric key initiatives, providing effective alternate channels of payment to the customers. This has also resulted in weaning away a number of customers from the traditional banking channels to the more cost-effective alternate channels. Furthermore, there has been a substantial improvement in the staff productivity, since the employees now focus on business development rather than mundane operations.

IDBI Ltd believes in the principle of keeping the tech-team trim and utilize their services optimally to deliver cutting-edge; rather bleeding-edge technological solutions. We have very judiciously decided on the outsourcing strategy. This enables our internal team to focus on new initiatives and enhancements to existing products. We also endeavor to ensure that the technological solutions that we provide are scalable and cost-effective.

Technology and Tech Initiatives

In IDBI Ltd, expenditure on technology is considered to be an investment and not a cost. Investment in technology is part of the plan to put in place building blocks for creating the right organizational infrastructure. Large investments have been made in back-end technology to strengthen processes, systems and control. This, in the long run, propelled by a top quality management team has clearly set IDBI Ltd apart from its competitors.

Keeping in line with the policy of leveraging technology to drive its business, IDBI Ltd constantly endeavors to implement and deploy new & emerging technology to drive the business needs to the extent of not just meeting, but exceeding customer expectations. IDBI Ltd has always endeavored to use its high-technology platform to provide cutting-edge services to its customers.

IDBI Ltd offers its clients, fully secured and real time electronic delivery channels, providing convenient and secure access to the banking information. It also provides its customers centralized multi-branch connectivity integrated to a heterogeneous Core Banking System across branches in India. This integration provides a seamless access point for clients for all the banking products and services across the channels.

IDBI Ltd is the only bank that allows its customers to pay all their bills across any channel i.e. Branch, ATM, Phone Banking, Mobile banking and Internet banking with Auto pay facility. For example, a customer may register for his mobile bill payment through Internet banking. He can pay the bill through ATM or Phone banking or Mobile banking, when the bill is presented.

Keeping pace with the ever-rising demands of our modern day clients, it has been our endeavor to provide value added service with cutting edge technologies to our clients. In this direction our Bank has launched many payment initiatives. The capabilities of Internet banking and web-enabled talking ATMs have been fully exploited in most of these initiatives.

Using a single access to IDBI Ltd's Internet Banking, a customer can query & transact a variety of information related to different applications / products, access the Demat particulars, access the details with respect to GOI bonds, make a Card-to-Card transfer, effect an online tax payment, purchase National Savings Certificate, Cash Management, etc.

IDBI Ltd was also the frontrunner with respect to secured electronic transmission of tax collection data through the usage of Digital Signature Certificates.

IDBI Ltd launched a strategic Internet Banking platform to facilitate on line payments to & from corporate customers & its dealers /agents, thereby enhancing corporate business through new-age technology and offering supply chain financing solutions.

Overall IT spending for year 2005-2006

Overall IT spending for year 2005-2006 was approximately 50 Crores approximately. Major spending this year has contributed to the branch automation initiative and the data center set up catering to computing requirements of the growing organization. In tangible benefits derived from smart implementations of IT initiatives are summarized as follows:

The Returns on Investment (ROI) for implementing IT in organizational processes in the range of 50-75%. Organizational processes have improved and tasks get completed with great efficiency, speed and accuracy.

Customer centric initiatives improved the customer satisfaction as measured in terms of Number of Positive responses by customers.

Improved performance levels measured interims of TAT through State of the art computing infrastructure and technology platform Integration for centralized Monitoring, Control and Reporting.

In the Post merger scenario, the very important activity was completed that is to seamlessly integrate the IT team at both the units of IDBI Ltd. The major IT initiatives were focused towards centralization and Application/system integration of both the units i.e. the erstwhile IDBI and IDBI Bank to consolidate and bring it to the common technology platform. Also there was a pressing urgency to set up the state- of-the-art IT Infrastructure to cater to the ambitious growth needs of the merged entity.

Vision

To be the trusted in progress by leveraging human capital and setting global standards of excellence to build most valued financial conglomerate.

Business Strategy

Optimize mix of corporate and retail banking Increase product offering by leveraging corporate relationships Rationalize and reorient human resources through on-going training Improve technology infrastructure Enhance & implement enterprise-wide risk management systems Focus on fee based income to boost profitability Strengthen brand equity Enhance market share Pursue organic growth opportunities Leverage core competency in project financing while creating additional business opportunities

in retail & commercial banking Inorganic growth domestically through bank acquisitions/ mergers Entry into Insurance, Asset Management Business operated as separate Retail Banking and Corporate Financing SBU(strategic business

units)s A common Treasury, Risk Management, Audit, IT and other support operations Integrated and Rationalized branch network

IDBI Bank’s Business Chart

IDBI Bank’s Organizational Chart

IDBI Ltd' Approach

IDBI Ltd was prompt to respond & adept to emerging scenario by understanding the impact of changes in distribution of services, customer profiles & preferences, industry trends and acted upon the same to convert the change to its advantage. IDBI Ltd has devised a customer centric service delivery strategy, focusing on simple & value added services by utilizing the most convenient and commonly used delivery channels. This required enhancing the existing technology base to meet the varied and diverse customer requirements.

Analysis Across all Business Units and Products

Prior to implementing the Oracle solution, IDBI Bank did not have an adequate system to assess the profitability of each line of business at branch, product, and customer levels. This type of analysis would help the bank allocate resources in the right areas, and evaluate the performance of various products to ensure these businesses stayed profitable.

“Being able to evaluate the performance of our business units and products at a granular level was crucial to the bank’s future growth,” said P. Sitaram, chief general manager, finance and accounts at IDBI Bank. In March 2008, IDBI Bank selected Oracle Transfer Pricing, Oracle Transfer Pricing

Online, Oracle Profitability Manager, and Oracle Financial Services and Oracle Profitability Analytics to build an enterprise performance management system. Data is stored

in an Oracle Database whilst the applications act as knowledge engines and eventually enrich the data collected from transaction processing systems. The bank is also a user of Oracle Financials and Oracle Human Resources.

The Oracle solution enables IDBI to objectively assess performance at the desired granular level, so IDBI can monitor the actual performance of each business unit, versus their target, each month.

Regular performance monitoring is crucial to devise strategies, initiate appropriate actions, and drive business in line with the overall performance objectives of the bank.

ORACLE FINANCIAL SERVICES PRICING MANAGEMENT, TRANSFER PRICING COMPONENT

Key features and benefits Real Time Transfer Pricing Results including TP Rates, Add-on Rates and Option Cost

Calculations Pricing Queries incorporate Allocated Costs, and Risk Based Capital Standard and custom product definitions Integration of Risk, Performance Management, Customer Insight, and Financial Compliance

Self-Service Usability and Real-Time InformationFrom their web browser, customer-facing users can generate deal-specific pricing information in real time to help them understand hurdle rates inclusive of the transfer rate, multiple add-on rates, allocated expenses, loss estimates and required capital. Queries can be run for pre-defined standard products or custom products. The self-service user interface is designed to support query and response, functionality required by lending personnel in the field. Any user familiar with the products of the institution can readily access relevant pricing information. This information is returned quickly and accurately, so that loan officers can react to customer inquiries as fast as possible.

Consistent MethodologiesOracle Financial Services Pricing Management assigns a transfer rate, multiple add-on rates, including the option cost, to each modeled instrument by applying the same transfer pricing techniques defined within the standard transfer pricing process.

Flexible Transfer Pricing for Customized InstrumentsOracle Financial Services Pricing Management custom queries allow users to create customized instruments by defining non-standard term, payment, and re-pricing characteristics. Users can define cash flow properties for individual instruments, enabling the pricing engine to generate deal- specific cash flows, or users can directly input custom payment schedules along with other

relevant properties. Either way, the system will use the assigned transfer pricing method and return resulting transfer rate details to the user.

Flexible System ConfigurationOracle Financial Services Pricing Management provides flexible administrative functionality, allowing the system administrator to define and modify transfer pricing assumptions, methodologies, and product properties, such as default cash flow characteristics, including a product’s payment, re-pricing, and term attributes.

Standard Product DefinitionsThe Pricing Management administrator is responsible for defining instruments that represent a standard set of products that the organization offers to its customers for which transfer rates should be calculated and made available for queries.Oracle Financial Services Funds Transfer Pricing provides a wide range of transfer pricing methodologies to ensure that the correct level of precision is set for each account. These same methodologies are available in Oracle Financial Services Pricing Management, and they can generate transfer rate indications for both standard and custom products in real time. These methodologies incorporate centrally defined transfer pricing yield curves and customized prepayment expectations into the final transfer rate. Product characteristics are defined by selecting predefined products from the drop-down list or by using the system default settings.

Scheduled Transfer Rate CalculationsBased on a set frequency specified by the Administrator, Oracle Financial Services Pricing Management automatically calculates new transfer rates and option costs for standard products. The transfer pricing engine used for calculations is the same engine employed by Oracle Financial Services Funds Transfer Pricing, guaranteeing consistent results.

Integrated ArchitectureOracle’s Financial Services Analytical Applications are integrated solutions based on “industry best practices” components. Solutions can be assembled with confidence, knowing that all the pieces fit together: data, analytics, business rules, hierarchies, and reporting. Although the solution was designed to be delivered on an integrated basis, each of these product components can stand on its own as a best-of-breed solution. Be implemented in any order Be implemented on either a simple or sophisticated basis, and support ongoing evolution of analytical methodologies.Oracle’s open, scalable architecture is also designed to take advantage of emerging technologies. While using Oracle’s Financial Services Analytical Applications, IDBI can choose where and when to process results, based on their combination of business processes, data volumes, and technology infrastructure.

About Oracle Financial Services Analytical ApplicationsOracle Financial Services Pricing Management, Transfer Pricing Component is part of Oracle Financial Services Analytical Applications suite, an integrated suite of applications that sit on top of a common account level relational data model. Oracle

Financial Services Analytical Applications enable IDBI to measure and manage risk-adjusted performance, cultivate a risk management culture through transparency, and lower the costs of compliance and regulation.In addition, Oracle Transfer Pricing Online allows staff to view the transfer price for all products as they are completing transactions.

ORACLE PROFITABILITY MANAGER

Traditional methods of measuring and managing profitability are no longer sufficient. Shareholders and regulation demands increased understanding of business and more importantly recognition that management has the same insight into the business. Analytical tools cannot simply measure value; they must be active components in creating it. Analysis can no longer be held closely by a few, centralized analysts. It must be deployed throughout an organization so all users have access to information and analytical capability in order to make both tactical as well as strategic decisions. Now more than ever, the ability to efficiently manage, access, and analyze business information can make the difference between leading an industry and being lost in the crowd.

Understand: determine what drives valueWith Profitability Manager, managers are afforded insight into the true structure and purpose of costs, as well as access to accurate profitability information by product, channel and customer - or any other business segment. This wealth of information supports more effective and forward-looking decisions. Profitability management quickly realizes a number of important benefits, like being able to reduce costs, maximize process value and increase profitability. Improving pricing practices and product rationalization, enhancing customer service and supporting customer relationship management, and targeting and monitoring cost improvements. Plus better product development, life cycle management, business planning and capital investment decisions. It all adds up to a powerful value proposition for implementing an active approach to profitability management.

Where once a spreadsheet model was often the tool of choice, Oracle Profitability Manager can bring the disciplines necessary to provide credible results. With Oracle Profitability Manager, enterprises are able to move beyond just being able to measure performance to being able to improve it, by delivering improved profitability results as part of a continuous improvement process. This includes security, centralized administration, auditing of processes and results, and work flowed authorization of changes to business rules. In order to make the tough decisions today’s business environment requires, you need to have 100% confidence in your results, something spreadsheet and PC based applications simply cannot deliver.

Act: formulate and communicatePerhaps the most important characteristic of the profitability measurement process is in the ability to communicate and disseminate profitability information through an organization. Even

the best analysis and most comprehensive view of the company are of limited value, if it remains in the hands of a limited few. Transparency is an often-used term in these days of heightened competition, and increased regulatory pressures, but transparency doesn’t mean simply a complete view of the business: it means a complete view of the business available to the complete business.

OperationalA common convention for reporting is to separate ‘operational’ from ‘decision support’ information. Operational reports are required while decision support information is a ‘nice to have’ that doesn’t require the same timeliness and accounting meticulousness. In today’s regulatory environment, this traditional dichotomy has broken down. Profitability Manager applies the same operational rigor to the development of performance information to deliver timely and credible results. A key criterion of a profitability management application is the dissemination of usable information throughout the organization.Because it is based on Oracle’s Internet architecture, Oracle Profitability Manager is easily deployed throughout the organization. Users access the application through web browsers so whether an employee sits in Auckland or Zurich, access to powerful analysis is only a browser screen away.

Deliver: measure and improve resultsOracle Profitability Manager gives IDBI a complete set of tools for developing profit and performance measures at the level you require. Its multi-dimensional approach takes advantage of the richness of detailed data. Oracle Profitability Manager helps to manage all the significant facets of business. Armed with this information, IDBI was able to make solid, supportable decisions about customers, your products, and your business policies and procedures.

ActionablePM goes far beyond traditional cost allocation and allows companies to model the complexity of all costs based on activities, materials, resources, and product or service components. Using PM, organizations have the benefit of knowing the value added to the organization by each activity and can easily perform detailed performance analysis to enable continues improvement and competitive benchmarking.

ThoroughOracle’s Profitability Management solution addresses the reality of today’s complex organization, specifically including the support functions and indirect expenses that represent a rising share of total enterprise cost.

AccurateTraditionally businesses have measured profitability through the use of generalized cost data, which is allocated across products based on subjective decisions. However, this measure of profitability was not always accurate, since the costs were not related to the products, services or customers that actually caused those costs to be incurred. It’s hard to make critical business

decisions when your data is suspect or based upon arbitrary assumptions. Profitability Manager removes that hurdle so decisions can be made with confidence.

Oracle Profitability Manager is fully integrated with other Oracle Applications to provide comprehensive, Internet based solutions for corporate performance management needs. Using Oracle’s market leading technology, users can rapidly implement solutions that integrate corporate information regardless of system or format, tailor functionality to meet specific requirements and expand the system to keep pace with dynamic business evolution.

Being able to assess operating profit this way has far reaching benefits for performance analysis and management at the product and business unit level.

Oracle Financial Services Profitability Analytics delivers profitability information to users over the internet. Staff can analyze variances, trends, and rankings across products, geographies, and lines of business.

Relationship managers and decision makers now have better access to critical information that allows them to objectively evaluate the performance of their respective portfolios and areas of responsibility on a regular basis,” said Ishwar Padhan, head of the balance sheet management group at IDBI Bank. Armed with this information, they can make better business decisions and ultimately make a larger contribution to the profitability of the bank.”

Ability to assess employee performance The Oracle solution will soon provide building blocks to conduct performance assessments on individual staff members. We will be able to assess employee performance at the group level, which will allow us to develop an appropriate performance-based incentive and reward system,” said R.K. Bansal, executive director and CFO at IDBI Bank. With this system in place, we have better visibility on the contributions being made at different levels which is generating a culture focused on customer service and creating more value.”

Why Oracle? IDBI Bank chose Oracle due to the functionality offered by solution and Oracle’s success in implementing similar infrastructure at other top-tier banks in India. The flexibility of the Oracle system has to incorporate tailor-made configurations on various performance measurements, and cost allocation principles of the bank, as well as the expertise of the Oracle implementation team, convinced them to choose Oracle.

Implementation process In March 2008, Oracle Consulting began rolling out the solution at IDBI Bank. The policy and design principles were handled by a core team with domain expertise, while the system

integrated and technical tasks were managed by IDBI Intech, the technology subsidiary of IDBI Bank.

In April 2008, a pilot project was conducted at 12 IDBI branches. Integration and user testing was completed across the bank’s entire operations and branch network by September 2008.

“The project’s aggressive deadlines were met thanks to the dedicated resources and close co-ordination between the Oracle implementation, user, and IT teams,” said Devendra Hedaoo, associate consultant, IDBI Intech.

“The integration and testing went well because Oracle Consulting worked with the bank in the past so they understood our infrastructure,” said Sanjay Sharma, IT advisor at IDBI Bank. All teams made a concerted effort to complete the project in a timely manner.

The Benefits: IDBI Ltd is now virtually a universal bank. Total business size of around Rs.1,34,189 crore, It uses information technology (IT) platform to structure and deliver personalized banking

services and customized financial solutions to its clients. Pole position in the technological arena

- Card-to-Card Money Transfer- Online tax payment- Visa Off-us mobile recharge facility- Air Ticketing through ATM etc.

Gained insights into the performance of products at many levels, allowing the bank to devise strategies to improve profitability

Enabled managers to analyze the true contribution of customers, products, and branches to the bank’s bottom line

Provided objective assessments of performance at account level to facilitate better decision making

Allowed regular monitoring of actual financial performance against budgets Provided the potential to conduct detailed performance assessments on employees working at

bank branches Positive impact on the Bank’s overall cost of funds and facilitates lending at more competitive

rates to its clients. Highest standards - corporate governance (operations) IDBI would continue – Products and services as part of its development finance role and an

array of wholesale and retail banking products, for specific cash flow requirements of corporate and individuals.

Core income growth

The provision coverage to the tune of 97% of gross NPAs is by far the highest in the sector.

Strong Investment Portfolio

Name Listed/Unlisted % HoldingIDBI Capital Unlisted 100.00IDBI Homefinance Unlisted 100.00IDBI Gilts Unlisted 100.00IDBI Fortis Unlisted 48.00ARCIL Unlisted 19.95CARE Unlisted 26.75CCIL Unlisted 6.50NSDL Unlisted 30.00NSE Unlisted 5.00STCI Unlisted 7.28SIDBI Unlisted 19.21SHCIL Unlisted 16.96IDFC Listed 1.79IFCI Listed 5.01

Network & delivery channels (Current Scenario)

504 branches, 496 counters 871 ATMs Presence in 316 important commercial centers in India Presence in 100 cities Internet banking Retail customer base: 5 million + Corporate customers: 3000 +

Achievements

Awards Won during the year IT Team of the Year(2007) Award of IBA5 Best IT Security Practices Award of NASSCOM Best CTO Award of Cyber Media Won two special awards, for “Best Payments Initiative” and “Outstanding Achiever of

the Year" (2007) Key Projects

Airline ticketing through ATMs Setup of Data Center and Disaster Recovery Center

Internet Banking Enabled Multi-Functional KIOSK Kolkata and Haldia Port Trust Internet Banking Payment and MIS Modules Online Payment of Central Excise & Service Tax

New Business Initiatives

IDBI completed the reorganization of its business into separate verticals focused on SME, Agri-business, Personal Banking, Mid Corporate, Large Corporate and Infrastructure.

• IDBI Fortis Life Insurance• IDBI Gilts• Bank will also open branches in Singapore, Dubai and Shanghai, with either the Dubai or

Singapore branch opening likely by the end of March • Steps initiated for mortgage guarantee business• Took another initiative in reaching out to the smaller clients by introducing facility of

online application for educational loan.• Bank introduced a new product for encashment/sale of Foreign Currency by NRI Clients

and encashment of Travelers Cheques by Bank’s existing NRI customers.

CASE STUDY – 3

THE PROCTER & GAMBLE COMPANY

Background

Established in 1837, The Procter & Gamble Company began as a small, family operated soap and candle company in Cincinnati, Ohio, USA.

The Procter & Gamble Company (P&G) is one of the world’s premier consumer product companies, with one of the largest and strongest portfolios of trusted brands. Three billion times a day, P&G brands touch the lives of people around the world.

Today, Procter & Gamble is a recognized leader in the development, distribution and marketing of superior Fabric & Home Care, Baby Care, Feminine Care, Family Care, Beauty Care, Health Care, and Snacks & Beverages products.

P&G markets nearly 300 brands - including Pampers, Tide, Ariel, Always, Whisper, Pantene, Bounty, Pringles, Folgers, Charmin, Downy, Lenor, Iams, Crest, Actonel, Olay and Clairol – to more than 5 billion consumers in almost 160 countries around the world.

Procter & Gamble's corporate tradition is rooted in the principles of personal integrity, respect for the individual and doing what's right for the long-term. Nearly 102,000 people in more than 80 countries worldwide work every day to provide products of superior quality and value to the world's consumers.

Key Challenges

Improve productivity for all involved in sales order–related processes Create a tailored cockpit for resolving sales order issues Make cockpit extensible for future enhancements in order management Avoid custom development and retain standard SAP maintenance contract coverage Improve understanding of how to benefit from enterprise services Make connections and leverage shared knowledge with peers facing similar efficiency

challenges

Understanding customers needs

Supply chains are made up of multiple companies, working both competitively and cooperatively to produce, transport, and sell products to the consumer. Today’s supply chains have an order of magnitude more “links” or business relationship contact points than those in the past, and this density will continue to increase as e-commerce advances into the B2B arena. These supply chains look more like a dense web of relationships than a narrow distribution pipeline. As the density of webs increases, there is a corresponding change in the performance of the systems that operate in these topologies. Optimization techniques that work well for a distribution pipeline, or within discrete portions of a supply chain, are no longer as effective and can be significantly outperformed by newer, non-linear approaches.

Using state-of-the-art supply chain management techniques, Procter & Gamble had identified means of reducing both cycle time and inventory by 50% throughout its supply system.

Like any other company, P&G considers the processes surrounding sales orders vital to maintaining customer satisfaction and strong revenues. But sales order processing is complex. Before committing to delivery dates, users may face availability-to-promise and allocation issues. Expediting order delivery while maintaining efficient logistics often requires finding products in the distribution network, checking customer credit limits, obtaining sales approvals, moving materials to new locations as a mass change, and much more. To improve productivity for everyone involved in sales order–related processes, P&G conceived the notion of a sales order cockpit – a single monitor that supports the everyday activities related to sales orders.

P&G wanted to create such a tool and tailor it to the company’s precise needs without performing custom application development. So P&G approached SAP to find a way to accomplish this while retaining coverage under its standard SAP maintenance contract and without incurring substantial costs. SAP explained the concept of its Enterprise Services Community (ES Community) program, a gathering of customers and partners that together comprise a force capable of helping firms like P&G achieve their goals. Through a forum called a community definition group (CDG), customer ES Community members contribute their extensive experience to aid in requirements definition for an application, such as the sales order cockpit, while partners provide their SAP-certified applications that fulfill roles in its construction.

Finally, SAP provides the key ingredients: a set of enterprise services that glue together SAP software and partner applications to form the ultimate composite application. Since all these contributions are built using standard SAP software, the final solution is fully compliant with the provisions of standard SAP maintenance contracts, relieving customers like P&G from concern about ongoing support. P&G was excited about the idea and allied in forming CDGs to turn the sales order cockpit concept into a reality. Together, the companies recruited five other consumer products firms with needs similar to P&G’s, along with three software suppliers with relevant SAP certified offerings to provide important functionality.

Implementation process & realization of value

Unique Implications for Supply

The Organizational Performance Model is applied to the supply organization differently from how it is applied to most other functions. This difference relates to the fact that the supply organization is, by definition, a boundary function. Its role is to link the company's business needs with the capabilities of external suppliers. For this linkage to provide real value supply must be able to interface with two very different worlds—the external world of the marketplace and suppliers and the internal world of business units, projects, and functions. At P&G, for example, use a unit of volume called a "statistical case" to compare wide range of consumer packaged goods products. This internal language means absolutely nothing, however, to suppliers, who count in tons, kilograms, thousands of units, hours of service, and so on.

Design Element 1: Tasks

When designing an organization, most managers leap directly to the structure of the group— boxes, reporting lines, and responsibilities. But that puts the "cart before the horse." The place to start is with tasks—what people in the organization actually do. In supply, two sets of tasks quickly emerge:

1. Commercially linking with external suppliers and markets to deliver value to the company, its products, and customers/consumers. These are the external-facing tasks.

2. Operationally linking with internal customers to understand business needs in order to accurately present those needs to suppliers and to provide internal functions with external supply market intelligence and actionable opportunities. These are the internal-facing tasks.

External-facing tasks form the core focus of a purchasing or supply organization: commodity management, industry interaction, and supplier relationship management.

Internal-facing tasks enable the purchasing organization to communicate corporate needs to external partners and to survive within the company's internal structure, which is often configured quite differently than the outside world. There are two types of internal tasks: business process management and organizational management. The first is the supply organization's version - Tasks, Responsibilities, and Practices: price, cost, and profit forecasting; project and new product launch processes; cross-functional team formation; budgeting; change management; and operational collaboration.

The second set of tasks include: recruitment and staffing, coaching and people development, salary management, coordination of the supply organization, and clarification and deployment of the deluge of demands and information from the corporate center.

Successfully carrying out these internal and external facing tasks is only one aspect of the tasks element as it applies to supply organizations. A second dimension is how tasks are bundled within and across the organization to deliver needed results. This bundling depends on the business situation and strategy. For example, P&G's realized that sourcing/commodity trading, logistics, and coffee tasting/quality were all intimately connected. This realization led to broaden the supply organization to include people and tasks that previously had resided in manufacturing and product development organizations. At the other extreme, when P&G acquired Giorgio Cosmetics, it was found that their supply group was focused on complex logistics flows rather than sourcing. The pressure of day-to-day product replenishment require dividing the tasks between a small cadre that could focus on strategic sourcing and supplier relationship and a larger group that stayed focused on the critical logistics flow.

Design Element 2: People

From the "what" of tasks, now turn to the "whom" of people. "People" includes not only individuals, their abilities, aptitudes, and skills but also the processes that acquire, retain, develop, and sometimes terminate individuals (through firing) or groups (through outsourcing). The people element also, includes the aggregation of individual skills into organizational strengths and weaknesses. At the organizational level, this element represents the sum of the

individuals, the resources that support them, and the relationships both inside the purchasing/supply organization itself and across other functions in the company and suppliers. Just as with tasks, sourcing organization design must consider both those aspects of the people element that are necessary for interacting externally with suppliers and those aspects that are necessary for successfully interacting internally.

External-facing people factors are those skills, resources, and processes that are necessary for interacting successfully with groups outside one's own company. They include the skills your people need to successfully collaborate, negotiate, and communicate with these groups.

Internal-facing people factors are the resources and support required to enable your sourcing people to improve and effectively perform their key tasks. At the organizational level, we are also talking about hands-on coaching and peer skill support throughout the organization.

P&G purchases to redesign its organization to respond to changes in the external and internal business environment. For many years, Purchases was a "functionally pure" organization. Today the organization has a blend of functional backgrounds at nearly all levels up to director and vice president. The corporate "promote from within" culture continued, while the mix, capability, and diversity of talent all expanded.

Design Element 3: Information

For supply, information is the raw material from which sourcing is fabricated; without information, sourcing professionals will make flawed decisions with catastrophic business

results. As the building block of sourcing, information is a critical design element. Organizational structure needs to consider where information comes from, where it goes, where it resides, and how it is controlled.

There are several different types of information: transactional information (such as specifications, prices, and purchase orders), business management information (volume and cost plans, exception management, and new product introductions), and market information (commodity supply and demand and industry and supplier analytics). All of this information flashes through, across, and within the supply organization to internal and external parties (see Exhibit 2).

There are also three main flows of information. They are: (1) external flows between companies (such as information about markets, suppliers, economics, and currencies), (2) internal flows across internal boundaries (such as information about cost, volume, availability, and demand); and (3) intra flows within the supply organization itself (for example about budgets and staffing).To design an effective supply organization, it is needed to know what information flows run through organization and to envision how these flows interface. It is also needed to understand how the information would be used in practice. For example, sourcing managers do not need information about strategy development in real time, but they may need daily management information available in real time. Performing this mental hook-up will help you gain a more overarching analysis of your information needs, requirements, and uses.

Design Element 4: Decision Making

How decisions are made is a key design element—one that can make or break an organization. Supply organization design needs to consider both the internal and the external sides of the decision-making process. The internal piece involves ensuring cross-functional alignment, or getting all of the company's functions on the same page.

Decision making should be an interactive process between the external and internal sides—neither should be addressed in isolation. Who must agree, who actually decides, and how the internal/external iterations are sequenced all matter. Pity the buyer who cuts a deal and then must sell it to the internal stakeholders whose input was ignored or never gathered.

Getting internal cross-functional alignment is often the toughest part of the process. Before attempting a market intervention with suppliers, it is needed to understand who the internal players are. The loss of credibility and level of embarrassment when a commitment is overturned internally can undermine the ability to get best value—both "this time" and in the future. The supply organization must be able to paint the broader strategic and market pictures to the internal players while also understanding their needs. The organizational design must truly map out this interaction so that the supply organization can successfully create the right internal connections and expectations to get strong executable decisions.

The external side of decision making spans not only reviewing the final supplier and terms of purchase but also determining what levels of review and involvement are required from sourcing management. At P&G, typical criteria used to make such choices include:

Size, implications, length, and risk of the business to be awarded. Skill, experience, and knowledge of the people closest to the work.

Accountability for results. (Who is responsible, and how comfortable are they with the choice?)

An important concern here is the balance between a decision-maker's accountability, specific operational knowledge, and ability to apply general expertise to a particular situation.

Design Element 5: Rewards

Organizational design should ensure that it encourages and rewards actions that meet the business's needs and are in line with corporate strategy. When P&G began global sourcing, it rewarded its global teams based on three criteria:

Strong overall corporate results or the global aggregate result. No single region having to take a huge loss so that others would gain. This avoids competitively

disadvantaging one region. No single region consistently losing over time. This avoids incrementally creating a competitive

disadvantage for a region in the long run.

The rewards had elements of both global and regional priorities, and supply chain/finance/purchases recognition was included in the overall reward system.

Organizational design needs to ensure that rewards are relevant to the individuals as well. For the short term, that typically means money and recognition. Longer term, however, rewards must come in the form of career development and growth.

Design Element 6: Structure

Form follows function and must align with business strategy, culture, and rewards as well as the structures of other internal organizations. For supplier-facing organizations, this requires a three-part structural design.

1. An "extra" design or the structure that interfaces with the outside world of suppliers and markets. "Extra" here means focusing outside the company.

2. The "inter" design, or the structure that interfaces with internal units, sites, and projects. "Inter" here means interdepartmental across the company.

3. The "intra" design, or the structure inside the supply organization that translates, coordinates, and integrates the extra and inter designs. "Intra" here mean within the supply organization.

The success of these designs depends on how compatible they are with the other five elements as well as the ability of people to maintain both internal and external viewpoints when doing their work.

Conceptually, "structure" should represent the summary of the design process. In 2000, some P&G businesses created purchasing subunits to focus on new types of products with components that had never bought before—such as Swiffer implements and electric batteries for the Crest Spinbrush. These new P&G products also needed materials from traditional spends with existing commodity structures, like packaging or chemicals, but at extremely small volumes that could be lost in a larger aggregated requirement.

The use of the Organizational Performance Model allowed P&G to embed these "inter-designed" subgroups within the existing commodity-based organization. The new-product subgroup's shadow structure linked to the primary group's visible commodity structure, and the larger commodity structure's shadow organization linked to the visible new product group's internal business structure. This design allowed the new-product people to focus on new spends and coordinate the smaller "old" spends, while the primary group focused on our large existing businesses. P&G's experiences show that using a holistic design model, like OP model, helps organizations recognize that structural success depends on nonstructural systems—in other words, those first five design elements. For a design to be successful and deliver results, all of these elements need to be incorporated.

Results

Over the course of 15 months, the team launched and completed seven CDGs that employed more than 20 enterprise services built on the SAP ERP and SAP Supply Chain Management applications to create the sales order cockpit. The solution can be readily extended by P&G for additional purposes, such as truck load optimization. Other end users can tailor it for differences in their own environments. P&G and others in the CDGs plan to begin pilot production use shortly and are already planning further business innovations to take advantage of SAP collaboration platforms and the SAP partner ecosystem that contributed so much on the sales order cockpit.

Benefits

Improved user productivity by integrating functionality that required many scattered transactions into a single cockpit. Avoided the cost impact of custom development. Remained compliant with provisions of SAP maintenance contracts. Created connection to peers and leveraged shared knowledge to improve productivityThrough iterative simulations, the agents within the simulation tool began to "learn" optimal behavior. The supply network was capable of self-organization and adaptation to the evolving connected economy. Goods, relevant information, and services flowed smoothly through the supply network, around obstacles, and in a way that maximized network yield-laminar flow through an ever-changing environment. Through this approach, the company was able to

identify the additional 50% savings in cycle time and inventory. As a result of these findings, Procter & Gamble has undertaken field trials, which have confirmed the effectiveness of all the policies for which field trials have been completed. Procter & Gamble is preparing to roll out the internal changes recommended, as well as investigating ways of affecting external policies.

Lessons Learned

Use enterprise services and Community Definition Group to achieve the benefits normally associated with custom development without its disadvantages. Tap the Enterprise Community to find motivated peers at customer companies with similar needs and software solution partners with the technologies to address them. Use SAP® Developer Network to obtain answers to specific questions and obtain valued insight via online collaboration.