Petra williams final

© 2008 Cisco Systems, Inc. All rights reserved. Cisco Confidential Presentation_ID 1

Petra Williams, Senior Global Controller

Former Finance Transformation Lead, Cisco Systems

Going Global: A two step approach to Scalability and Growth


Agenda

Introduction to Cisco

Overview of Finance environment

Changes necessary to align with Business

View on our latest evolution

Questions


Changing the Way We Work, Live, Play, and Learn

Work Live Play Learn

to shape the future of the Internet by creating unprecedented value and

opportunity for our customers, employees, investors and ecosystem partners

The Cisco Mission…

The Cisco Vision…


Challenges to Finance at Cisco

1991-2000

• Company growth

(56% CGR)

• Acquisition activity

(over 80)

2005-2008

• Re-ignite Sales Growth

• Emerging Markets

2012

• Busy in BRICs

• New Business Models

• Acquisitions restart

2000-2004

• Slowing economy and

changing

market conditions

2009-2011

• Global Markets Slow


As we moved past 2005 other Cisco forces began to shape how we organized for the future

Cisco growth +15%: evolve organization to enable and sustain growth

Emerging Markets growth 35% +: develop long-term solutions for global scalability

Increasing business complexity: more diverse customer, product & geographic mix

Organization realignment to address customers holistically

Cisco evolving: globalization, regulatory requirements, emerging markets, business model, mergers and acquisitions


Where were we by 2005?

Finance organised by Region

ERP instance per region

Systems only processing US GAAP

People based in country in traditional model

Variety of local in country processes, often manual

Needed a SCC to help scale to changing business cycles and cope with economic challenges and business opportunities brought by organic or acquisition growth of the future


F&A combines our functional, process, and geographic expertise to

provide integrated best-in-class service offerings

Delivering to Cisco's multiple lines of business

Enabling ―Support the Business‖ growth in

scalability, quality and productivity

Quote to Cash (QTC)

Billing

A/R

Collections

Hire to Retire (H2R)

Payroll

Stock Administration

Procure to Pay (P2P)

PO & VM

Accounts payable

Expense management

Record to Report (R2R)

GL accounting

Fixed assets and other B/S accounting

Statutory reporting

Royalty accounting

Finance and Accounting Shared Services Today


What Did we tackle first?

Phase I - Regional Shared Service Centre program (May 2006)

Rebuilt ERP platform for Established Markets

Six Sigma review for systems deployment in Emerging Markets

Process centric methodology, simplification and alignment

Split of Front Office and Back Office, Dedicated Deals desk and Revenue teams, new verticals for SSC tracks

Creation of Business Partner Finance Manger Role


Location Evolution: Phase 1 - Regionalisation

Singapore

Tokyo

Amsterdam

San Jose


Global Center Enabler

Efficiency

Effectiveness

Flexibility / Scalability

High cost

Too decentralized

High cost locations

Service quality and customer

sat in need of improvement

Inconsistent service

experience

Too much non-value added

activity

FASSO capabilities has not

kept pace with growth &

increasing business

complexity

>50% of work focused on non-

transaction processing

Emerging Markets not scalable

Centralized delivery in lower cost

location will help F&A become

more cost competitive

Reinvest savings into further F&A

improvements

Drive more consistent, satisfactory

service experience

Allow non-GC resources to focus

on more value-added activity

Better controls & risk management

through centralization

Catalyst to drive common

business architecture scaling to

meet Cisco‘s growth and

increased business complexity

Leverage & integrate future

investments more quickly and

effectively

Enabler for Emerging Markets

Prior state GC Creation


Operationalize

The Steps To Globalization…

Define the Strategy

Stabilization

Project team

Enable with people, processes and infrastructure

Criteria Defined

Contract Negations

Operational Metrics

Governance

Define Model

Gain Sponsorship

Select Vendor

Implement Plan

Operations Center

Web 2.0 and Collaboration


Hybrid model (Managed Captive) was the Best Option

Functional

supervisors

Mgmt

Individual contributors

In-house Hybrid (Managed Captive) Outsource

Model:

Description: Build and operate Global Center internally

Operate Global Center internally

Use 3rd party to provide majority of staffing and help develop Global Ctr (‗managed captive‘)

Transfer responsibility for operations to a 3rd party

Manage to a service level

Financial: Highest savings and investment

High savings and investment Moderate savings and investment

Non-Fin benefits:

Slow to implement due to mgmt time required; little capability/scalability improvement

Faster since leverage vendor capabilities; high scalability/flexibility with option to bring work in & out

Fastest option leverages vendor capabilities

Risks: High risk: No management experience

Medium risk: Must manage transition and remote operations

High risk: Lose control / must manage transition & supplier through GSD‘s ―in-between‖ position

Functional

supervisors

Mgmt

Individual

contributors

Functional

supervisors

Mgmt

Individual contributors

Hybrid model (Managed Captive) offers best mix of savings, other benefits & risk

= Cisco controlled

= 3rd party controlled


Key Transition Elements

Planning & PMO

• Establish PMO

• Develop detailed plans

• Kick off project

• Project oversight

Knowledge Transfer

• Establish knowledge Transfer process:

- Documentation requirements:

- Current state

- Future state

- Define service levels

- Training requirements

- Transition of work

- Transfer of documents

Implementation

• Set up new facilities:

- Define facility requirements :

- Secure and build out new facilities

- Acquire & set up office equipment

• Set up tech. infrastructure

- Design/define requirements

- Acquire equipment

- Build out & test

• Wind down existing facilities & technology

Stabilize

& Improve

• Establish on-going

center policies &

practices

• Ongoing training

• Institute quality

framework and teams

• Test DRP and BCP on

routine basis

Stabilize &

Improve

Center Planning

Knowledge Transfer/

Implementation

Program Management Office (PMO)

HR / Organization Adoption

HR/OA

• Develop HR strategy

• Develop comm strategy

• Set up HR function in new

center

• Build culture in new center

• Separation support in

existing locations


Multi-Wave, Accelerated Transitions 2008 2009

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

End year

Wave 1 I2P

Wave 1.0 India

Wave 1.1 Singapore

Wave 1.2 USA

Wave 1.3 Europe

Wave 1.4 Tokyo

Wave 1.5.1 (A) CEE, MEA & Small Euro

Wave 1.5.2 (B) LATAM

Wave 2 I2C

Wave 1.0 Singapore

Wave 2.2 Tokyo

Wave 2.3 USA Volume Ramp

Wave 2.4 Europe

Wave 3 R2R

Wave 3.0 India

Wave 3.1 Singapore

Wave 3.2 Tokyo

Wave 3.3 Europe

Wave 3.4 USA

Wave 3.5.1 (A) CEE, MEA & Small Euro

Wave 3.5.2 (B) LATAM

KT Planning Job Shadowing/Remote KT (for EM and US R2R Waves) Delivery Center Training Coaching/Stabilization Go Live

FUSION Transition Overview

Process Tower Gantt Chart


Phase 2 – Globalization .... A New Delivery Model

Four Established Shared

Services—Regional Centers

High touch

Statutory Theater/Country

requirements

Localization Services and

Support

Provides multiple language

support capabilities

Opened Fifth Shared Service

Center—Global Center

Co-managed by Cisco and

Partner

Driving efficiency to enable

scalability

Provides multiple language

support capabilities

Global Process Ownership

Tokyo

Singapore

Amsterdam

Bangalore San Jose


Vendor Selection – Lessons Learned

Staying Aligned to Business Strategy

The up-front work of identifying the problem and defining the objective helps keep everyone focused

It takes a strong team – commitment, open mind, communication

Leverage makes a difference

Playing position

Knowing each others role & playing to strengths

Executive Support & Trust

On-going Communication

Keeping on task & Keeping to the facts


Key Lessons Learned

Joint theatre-level transition management and business process leadership

Retained team planning (Org charts, leveling reviews, job descriptions)

Well designed and orchestrated global communication and announcement

Knowledge transfer & training curriculum maps

Leverage global, standard DTPs, technology solution / platforms to minimize gaps and adhere to the standard

Governance Structure – clearly defined; detailed walk through of ―Paper to People‖ flow

Readiness Reviews

Infrastructure – don‘t underestimate building/technology needs & resources


What did we achieve?

Model: Phase II concluded - Europe (2008), Emerging (2009)

Systems: 2010 concluded Oracle ROI model & Oracle R12

Process: Aligned by global process not by ‗theatre‘

People: Partnering, GPM‘s, Councils, Change Managers

Policy: Global from Strategic Enterprise Program Managers

Portfolio Management…..People, Process and Technology

….So better prepared to support business


Post Globalisation – What Next & Why

First Globalisation, then Stabilization, next continued evolution

Options:

More of the same scope - for new entities

New scope - for same entities -move up the value chain

New Finance groups in scope – Sales Finance, Channels…

New groups outside Finance – Marketing and more

Retention of Regional Hubs as Centre of Excellence

Incubator…..Standardizing new tasks for globalisation

Leadership, Collaboration and CRM skills

Organisational evolution - Virtual Controller role

Leveraging technology to work across borders

Strong Change management skills


High Basic Complexity of Interaction

High

Basic

Accounting & Reporting

Financial Planning

& Analysis

Decision Support

Corp. Svc. & Mgmt.

Val

ue

Ad

ded

Revenue Cycle

Disbursements

Strong outsourcing candidate

Possible outsourcing candidate

Strong retained candidate

Certain activities are stronger candidates for outsourcing, while others are more likely to be retained.

* Payroll may report to CFO or HR

F&A Services Next Evolution


Suitability and ease of implementation Strategic relevance

Stable and mature processes Complexity of migration

Regulatory and other restrictions

Benefit potential

Cost savings Expertise Benefits

Quality Service

Flexibility

High

Low

Difficult Easy

Second priority First priority

Second priority Not feasible

WWSFOps

CSF—Country controllers

Business Ops Fin

CSF—CA Finance

QTC

Other GCCO

Tax/treasury

Cisco Capital

Cisco Org.

PRELIMINARY

Rev.

recognition

Tax

GSO Process

reqs GSM

PO

team

Cisco

Capital

Accg.

Commissions

Stock

admin.

Rebates

Treasury

CA Fin (Spare parts,

def. rev., etc.)*

Potential Scope Expansion Opportunities

Manu. SSC

(standard costs, inv.

Acctg)


What did we do next to evolve?

Natural Stabilization period

Operational Excellence program

Further transaction transition from hubs

Organizational re-design

Entity Support Model

Cisco Captive

3rd Party Relationships

Improved OE

Evolved EY/ACCN relationship for Stat & Tax returns

Engaged ADP to drive Payroll evolution into regional hubs

Country Enablement

Supported organic growth & new business models eg. Utility based billing

Accelerated acquisition integration with new systems strategy & BPO


FY'08

3rd party BPO evolve from hub

to Global processing

Deploy Oracle R12 & design

Entity Support Model

FY‗10

FY'06

Co-location: 35 geographic locations into four regional

centers

Shared Services Journey F&A Shared Services model continues to evolve…

Deploy ESM and drove Country

Enablement

FY‘12


High cost—Cost was

not a consideration

Low cost

provider

Flexibility/Scalability

Ability to meet needs of Cisco‘s existing

changing business models

Ability to grow with Cisco‘s rapid growth

Ability to integrate acquisitions

Efficiency

Improved efficiency overall

Effectiveness

Higher quality of service

Global consistency of services

Improved customer satisfaction

Improved operational metrics

Improved employee satisfaction and retention

“Competitive”

Standard

offerings

Keep

lights on

Industry

standard

“Top Quartile”

Fully custom

offerings

“Segmented offerings and

Service levels”

Shared Services Model Expected Benefits


Accomplishments

Establishment of F&A SSO Delivery and Service

―Operationalization‖

Extended Quality & Service

Globalization and Consistency of Processes

Evolvement of Organization

Flexibility to support the business

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