Outcome-Based Models for Business Transformation

Randy WalkerGeneral Manager, Growth Markets UnitsManaged Business Process Services

Randy WalkerGeneral Manager, Growth Markets UnitsManaged Business Process Services

10 June 2009

The Evolution of the Enterprise

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International Corporation

Multinational Corporation

Globally Integrated Enterprise

Becoming a Globally Integrated Enterprise

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Serve clients by integrating capabilities horizontally and

globally

Global IntegrationGlobal IntegrationGlobal FootprintGlobal FootprintLocates operations anywhere in the world based on economics,

expertise and business environment

Global OptimizationGlobal Optimization

Leverages Global Footprint to access global markets and gain

operational advantage

Key: Being Local in Global MarketsKey: Being Local in Global Markets

Building a Smarter Planet

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Sam Palmisano, Chairman, President, and CEO, IBM Corporation

The World is Becoming Flatter and Smarter … Business Pressures are Increasingly Driving Need for Transformation

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Economic Pressures A strained global economy Visibility and control in business models Risk mitigation and profit optimization

Global Competition

Competitive pressure driving market efficiency

Agility of business models

The Demanding CustomerAll time high customer expectations Companies utilizing latent opportunities Innovative products/services aligned to real consumer needs

IT IntegrationCloud Computing and Web 2.0 empowering business usersDriving convergence of business and IT Thin line between companies and customers

Clients’ Reaction to the Current Environment

Focus on financial survival• Reduction: cost slashing, cash

preservation

• Rigor: balance sheet health

• Resilience: size and optimize cost

structure

Reprioritize projects /

investments• Payback period under one year

• Defer large investments

• Return and risk

Build strategy for new reality• Focus on few big investments,

reprioritize projects

• Build resilient business models6

Cost & Cash

Opportunistic Business Growth

Business Outcome Focus

Increased Pressure To Do More With Less

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VA

LU

E

Cost Pressures

CEOAgenda

Requires Continual Renewal

TIME

Making the Transition to a Business Outcome-Led Model

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Business Process Outsourcing

Improved Cost Efficiency Gain Advantage

Labor Arbitrage

Transformation

Process Transformati

on

Labor Cost Reduction

Operational Improvements

Existing Process Improvements

+ + +TechnologyEnablement

Business Transformation Outsourcing

Companies demand certainty of outcomes and speed-to-benefit that extends beyond operational cost savings

Develop a strong operational foundation

Enablers for transformational partnership Benefits Realization Model Assets to enable productivity

improvements Governance structures

Shift clients’ fixed costs to a more variable model

Align partner and client incentives to reduce cost of service

Partner with client to improve operations and share in the benefits

Leverage gain share models to align partner and client incentives

IBM: Transformation of Global Supply Chain Resulting in $3 – 5 Billion Savings Every Year

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Why?

The ISC is accountable for $40 billion (approx. 50%) of IBM’s total cost and expense

ISC was a fragmented cost center – distributed and ‘hard wired’ to business

Pockets of integration but no enterprise-wide common processes

What we’ve done

Established online links to suppliers, partners and clients

95% of business partner orders are now ‘touch less’

Manage entire ISC on a global basis – from procurement and logistics to strategy and planning

How we’ve done it

Tied up the ISC with shared measurements to support end-to-end operations

Leveraged global scale 20,000 employees at 100 locations in 62

countries, speak 80 languages, 31,000 suppliers online

Introduced the world’s first supply chain business transformation outsourcing capability

The business outcomes

Averaging $3 – 5 billion in savings every year for the last 5 years

A 5 point improvement in margins since 2003 Improving sales force productivity – they now

spend 38% more time with clients Turning orders 32% faster and improving

client satisfaction

Business Outcomes Established enterprise-wide common

processes

Removed functional silos

Consolidated transaction processing in

global delivery centers

Cut average processing time for POs from

30 days to less than 1 day

Average $3 – 5 billion in savings every

year for the last 5 years

Business Outcomes Established enterprise-wide common

processes

Removed functional silos

Consolidated transaction processing in

global delivery centers

Cut average processing time for POs from

30 days to less than 1 day

Average $3 – 5 billion in savings every

year for the last 5 years

Global CPG Company: Successful Integration Across End-to-End Global Processes to Drive Standardization and Transformation

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Contract Overview

850+ FTEs in F&A across 4 delivery centers Dedicated centre in Portugal End-to-End Suite of Transformational Tools

– Accounts Payable : DCIW– T&E : GERS– O2C : AR Collect

24 Countries in EMEA & 2 Countries in NA Multiple language requirements End-to-end process scope : P2P, R2R & O2C Multiple External Recognition

2008 FAO Award of Distinction 2009 Outsourcing Excellence Award

IBM Partnership

Partnered & Planned a 2-year road map on integration journey; single ERP platform, common supply chain & multiple outsourcing initiatives

Faster transformational journey & world-class change management practices

Transitioned processes from 20+ countries, 3 business lines and multiple systems into 4 IBM delivery centers created a CoE model

Partnered in client’s growth journey; executed transformational projects in Treasury & managed the books for disposition of business

France

Spain

Portugal

NetherlandsGermany

Sweden

Denmark

Finland

Latvia

Estonia

Poland

Lithuania

Czech Republic

Slovakia

Romania

HungaryCroatia

Austria SloveniaSwitzerland Italy

UKIreland

BelgiumUSA & Canada

India

Client Locations & FTEs: NA – 130 EMEA - 735

IBM Delivery Locations & FTEs: India 430 FTEs Poland 410 FTEs US 10 FTEs Philippines 10 FTEs

Poland

Philippines

Business Outcomes

Transformed client from a fragmented multi-

country organization to an integrated, efficient

global model

Partnered with client to establish a common

platform for key business processes

Delivery executed through 4 global delivery

centers – India, Philippines, USA, Poland

World class tool sets deployed for end-to-end

processes

Business Outcomes

Transformed client from a fragmented multi-

country organization to an integrated, efficient

global model

Partnered with client to establish a common

platform for key business processes

Delivery executed through 4 global delivery

centers – India, Philippines, USA, Poland

World class tool sets deployed for end-to-end

processes

IBM Daksh Helps Bharti Transform the Customer Experience Through Global Best Practices

Support for 12 million wireless customers In 2008, 5,300 employees provided customer

care to mobile customers and support for international calling cards

15 million calls in a month in 15 languages across 6 locations

Supports customers across 23 telecom circles Chosen as the no.1 partner for 3 out of the 4

quarters in 2008 IBM Daksh is the only partner to service Platinum

customers for Airtel

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Anticipated Outcomes Scalability to support rapid growth

Standardized, consistent interactive customer experience, in all 23 mobile phone circles in India

Efficiencies through the integration of contact centers

Reduction in capital investment for technology upgrades

Long term business partnership: Working with IBM Daksh, Bharti can create a roadmap for future business transformation needs

Challenge Following the success of IT and Network services contract with IBM, Bharti sought to drive more efficiencies,

consistency and improve service in its contact centersBusiness Outcomes

Strategic outsourcing partnership based

on joint business outcome objectives

Standardized and consistent customer

experience across the circles

Efficiencies through integration of contact

centers

Scalability to support rapid growth

A successful domestic BPO engagement

Business Outcomes

Strategic outsourcing partnership based

on joint business outcome objectives

Standardized and consistent customer

experience across the circles

Efficiencies through integration of contact

centers

Scalability to support rapid growth

A successful domestic BPO engagement

Critical Success Factors to Enable Mutually Beneficial Business Outcomes

Client Intimacy Deep account relationships

Global industry knowledge, skills and resources

Technology & Process Innovation R&D investments Reusable assets BPR capability

Risk Management / Mitigation Business Model Innovation

Globally Integrated Delivery engine Virtual workforce

Industrialized service delivery model

End-to-End Solutions Integration Capability Integration of Process – Technology –

Solutions

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Thank You