KPMG Sourcing Governance

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  • 1. Sourcing & Governance Dagens Industri | Strategisk IT 2012-03-28 Sheraton Hotel Carl Rönnerstam KPMG Stockholm© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 2. Carl RönnerstamHead of IT Strategy & Transformation KPMG Advisory Sweden Management Consulting Telephone +46 766 312 590 carl.ronnerstam@kpmg.se
  • 3. KPMG Advisory – Core Propositions Value creation and minimization of risk KPMG can help companies enhance revenue from M&A, integration and separation. and implement sustainable cost reductions. KPMG can help improve the Providing support to ensure effectiveness and efficiency of the availability, efficiency and finance function and generate real confidentiality in information systems insights to deliver additional value TRANSACTIONS & by translating to the business. RESTRUCTURING operational knowledge into IT knowledge. Guidance on the most RISK & COMPLIANCE KPMG can support appropriate strategies for: companies in adapting to  Creating and implementing and addressing the Shared Service Centers consequences of new Forensic regulatory standards,  Outsourcing/offshoring including of IT services  Ensuring implementation  FATCA of effective controls  IFRS Optimization of operational activities by Improvement of business performance identifying improvement opportunities and management and utilization of technology contributing with experience on to support governance and control. implementation.© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 4. Provider Performance & Satisfaction Study | Drivers 78% Cost savings 72% 67% 49% Access to skills 46% 42% 44% Quality improvement 36% 29% 27% Financial flexibility 19% 17% 25% Time to market 17% 6% 13% Change agent© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 5. Provider Performance & Satisfaction Study | Governance How would you qualify the overall skills/competencies of your organisation to manage your outsource providers? 8% 2% 43% 47% Do you agree that your service provider has an efficient and effective governance model. 80% 76% 74% 72% 70% 70% 69% 68% 68% 64% 63% 63% 64% Medelvärde 65% 63% 63% 61% 60% 59% 58% 57% 57% 54% 54%© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 6. Relationship Management is key to success© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 7. Demand & Supply The platform for successful IT organizations is based upon the understanding of the core of demand management and supply management. ■ Demand Mgmt | doing the right things ■ Supply Mgmt | doing the things right How do we understand to focus both on doing things right, and also doing the right things?© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 8. Demand & Supply Management Framework Verksamhet Demand Supply IT-leverans Management Management EFFECTIVENESS EFFICIENCY “göra rätt saker” ”göra saker rätt ” Varför? Hur? Vad? Vem? Affärsprocesser Applikationer Funktionalitet Infrastruktur Krav IT-lösningar© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 9. KPMG Sourcing Lifecycle STRATEGY SOLUTION IMPLEMENTATION G OPTIMIZATION GOVERNANCE© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 10. KPMG Sourcing Lifecycle Internal Sourcing Strategy Improvements Service Delivery Model Shared Services - Sourcing Assessment Captive centre Governance scan/survey Outsourcing – Offshore Opportunity Analysis InSourcing and Business Case Negotiation & Contracting Governance Service Delivery Management Business Alignment Diagnostic and Benchmark Transition Renegotiation Support Transformation Contract Review Change Management Performance & Project Management Satisfaction Interim Management Measurement© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 11. Strategy Do you know why to do what? • Sourcing conversations usually starts with IT. The problem is, it often ends there, too. • Sourcing is a major game changer. How would you like to transform your business by taking advantage of sourcing and governance?© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 12. Strategy | Methodology Sourcing strategy Define baseline Detail strategy Reasons Sourcing objectives Results - Selection approach Implementation ■ Business focus ■ Maximize financial flexibility ■ Baseline (financial - Governance and ■ Reduction of operational IT focus and increase focus plan (core / non core) retained organisation and operational) on actual ICT demand - Impact & risks ■ Improve quality - Business Case ■ Market insight ■ Actual sourcing ■ Get access to more innovative and more advanced ■ Sourcing model experiences service concepts (scope, service ■ Standardize 2 towers and delivery service delivery Preferred sourcing model options) Service towers and preferred delivery options ■ Increase ■ Vendor model Service tower Preferred Risks and attention points financial ■ Governance impact delivery option flexibility ■ Implementation plan A: Housing + Outsourcing Feasibility in terms of ■ Cost reduction Hosting changing the organization ■ Business case ■… C: Work place Outsourcing Impact for every country has services to be detailed Input for: D: Specific Share service Preferred location has to be Business Center determined ■ Selection process D1 D2 D3 D1 + D2 D3 D1 D2 D3 Applications: SAP E: Specific Business No changes Complex demand / supply organization ■ Detailed Shared Services implementation plan T1 1 3 2 T1 1 3 2 T1 1 3 2 Applications: SAAS ■ Transition / T2 2 3 1 T2 2 3 1 T2 2 3 1 … Transformation plan T3 T3 T3 3 2 1 3 2 1 3 2 1 ■ Benefits monitoring© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 13. Organization Too Late to Wait • How does a successful retained organization look like? • How big organization is needed to execute necessary governance? • How do I transform my retained IT organization to effectively support a modern sourcing landscape?© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 14. Organization | Methodology A B C D As-is Analysis & High level Organisation Detailed Organisation & Preparation of PHASE Strategy & Process Design Continued Process Implementation Design 1 4 8 11 Mapping current Develop to-be High level process Define final situation on Demand organisation based on design for remaining organisation including Supply Model EQ role clustering processes functions STEPS 2 5 9 12 Strategy definition for Role-function Select relevant Implementation business case and mapping: function process chains plan new organisation descriptions 3 6 10 Define products and High level process Design principles RACI mapping per design product/roles 7 Define organisation incl functions and sizing Go/no go decision Benchmark database input© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 15. Organization | Example Beställarorganisation Verksamhet Demand & Supply IT-leverans Management Affärsenhet/Avdelning Intern IT-leverans Decentral Governance Central Governance Affärsenhet/Avdelning Extern IT-leverans Decentral Governance© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 16. Organization | Benchmarking Utgifter för Demand Mgt + Supply Mgt 1 3 som % av total IT - utgift B % 2 A % €X €Y Total IT - utgift miljoner miljoner© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 17. Organization | Benchmarking Demand Supply Business IT Delivery Management Management Strategiskt Alla roller inom Demand och Supply Management Taktiskt och Taktiskt X-Y% operativt supply management Cirka Z % Operativt© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 18. Organization | Example Processes Verksamhet Demand Supply IT-leverans Management Management Strategy & policies Strategic Portfolio management & architecture Planning Strategic Annual planning cycle Organisation development & human resource management Business Governance Security, compliancy & quality management Project portfolio management Change & Requirements, project & change management Innovation Tactical Release, test & transition management Finance Management Contracts & service agreements Control Service level management Opera- Support tional Operational Control Operations & operational control© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 19. Benchmarking Do you really gain the full value? ■ Price ■ SLA ■ Satisfaction ■ Performance How do you understand if your current delivery gives you enough competitive advantage?© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 20. Governance & Sourcing Advisory Target Operating Models Processmodell Rollmodell Demand&Supply Ansvar Transparent Target Operating Model Ihopkopplade demand-supplyprocesser Tydlig referensmodell för roller Tydliga roller och ansvar Vi designar tydliga TOM-strukturer genom Vi etablerar ihopkopplade demand- Vi introducerar en tydlig och väl definierad Vi kopplar ihop demand-supply- hela värdekedjan för att säkerställa supplyprocesser för att säkerställa väl rollmodell för att analysera roller i er organisationen, processer och roller i en transparens från demand till supply. fungerande processer från strategisk till organisation och för att stödja er i designen sammanfattande och direkt användbar RACI- taktisk nivå. av framtida organisationen. matris, vilken tydliggör ansvar för varje roll i Demand Supply varje process. Business IT Delivery Demand Supply management management Business IT Delivery management management CEO CIO IT director Business director Process owner Information strategy Application portfolio Service portfolio Vendor (portfolio) Strategic analyst manager manager manager Strategy & policies planning Enterprise architect Business process Information architect IT landscape architect Solution architect architect Portfolio management & architecture Auditor Strategic Annual planning cycle Business Information security Risk & compliance Security & compliance officer officer officer governance Quality officer Organization development & human resource management Manager Security, compliancy & quality management Management Business process Demand manager Supply manager Delivery manager Manager Information owner Project portfolio Program manager manager Project portfolio management Application owner Business consultant Business project Project sourcing manager IT project manager manager Change Business process Information analyst Application/ infra Solution designer Solution engineer Requirements, project & change management & designer consultant innovation Meta data manager Test manager Test coordinator Solution test manager Solution tester Release, test & transition management Change manager Release manager Deployment manager Tactical Finance Business service Contract manager IT purchaser Contract delivery manager manager Service manager Service level Manager Service delivery Contracts & service agreements Management manager control IT controller Asset manager Service level management Administrative support End user Key user Functional support Data quality analyst Service coordinator IT process manager Application engineer Support Operational Data administrator Service desk agent Systems engineer Operational control Database Operations & operational control administrator Organisationsstrukturer Processdesign Governanceutvärderingar Effektivitet – Lean, Six Sigma Tydlig organisationsstruktur Skalbara processflöden Transparens i storlek, roller och förmågor Addera värde till processer Vi etablerar en (“retained”) Vi designar och implementerar varje Vi benchmarkar och utvärderar roller och Vi kan öka effektivitet och addera värde till organisationsstruktur som är logisk, processflöde på en detaljerad nivå så att förmågor inom demand-supply- processer i enlighet med t ex Lean och Six genomförbar och relevant med avseende på organisationens anpassas till respektive organisationen och levererar ett business Sigma och motsvarande. komplexitet och IT-budget. processteg. case för möjliga förändringar. Value Add Analysis Value  In order to eliminate waste – it must be identified adding  Categorize all activities within a process into the following activities types: Non-Value − Value added Added (Waste) − Business Value added − Non-Value added (Waste) 1 3  Often times value added activities represent a small fraction Non-value adding Spend on 4 of the total process Demand mgt 24%  Non-Value added activities (Waste) should be eliminated + Supply mgt immediately. as a % of total IT spend 2 Activity Category Definition/Characteristics Value adding activity  Activities that directly add value 12%  Something a customer will pay for  Adds form, feature or function  Enables competitive advantage (increase customer satisfaction, faster delivery, reduced price. Business Value Added  Maintenance activities and unavoidable waste  Legal/Financial reporting requirements € 25 MiO € 75 MiO  Regulatory requirements. Non-Value Added (Waste)  Activities that are unnecessary and should be eliminated and/or simplified (lean out) Total IT spend  The seven types of Lean Waste see next slide.© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 21. Qualified Glocal Research© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.
  • 22. Key Take-Aways It is never too late to establish best practice Inadequate governance erodes sourcing value heavily. Learn how to realize the value of your sourcing It is essential to focus on the what and not the how. The demand and supply framework puts it together. Ensure goal alignment with your provider There is a risk to not deliver on the “intent” of the deal. Track and measure internal satisfaction Keeping an open dialogue and obtaining regular feedback from internal clients is key to managing expectations. Determine your organization’s level of trust Do whatever necessary to maintain or regain trust toward your provider to avoid diminishing value.
  • 23. Carl RönnerstamHead of IT Strategy & Transformation KPMG Advisory Sweden Management Consulting Telephone +46 766 312 590 carl.ronnerstam@kpmg.se