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Demand Organisation 2010
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Demand Organisation 2010

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The Demand Organisation helps you to manage your sourced / outsourced processes in an excellent manner

The Demand Organisation helps you to manage your sourced / outsourced processes in an excellent manner

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  • 1. How to design your Demand organisation?
    March 2010
  • 2. A significant proportion of an organisation’s value is created by outsourced processes and should get the right management attention
    Value leakage during operations
    Increase in outsourcing initiatives - more organisations focus on their core
    Shift from outsourcing standard operational activities towards outsourcing complex (complete) processes
    Agility and time-to-market are more important drivers in today’s volatile and rapidly transforming global market
    Role of the supplier is increasing
    Introduction
    Directly after the outsourcing deal is settled, the expectations are met,
    …however after 3 years the benefits of outsourcing decrease and value leakage is increasing:
    Dissatisfied internal clients on delivered services
    Perceived loss of quality
    Unsustainable contract terms
    Lack of control or coordination
    Battle for talent and retaining knowledge
    Measures to make changes in control and governance often fall short
    Conventional 1-on-1 customer-supplier relation
    Network of internal and external demand-supply relations
    • … delivering sustainable value of an outsourcing decision can only be achieved by effective alignment of business needs with the capabilities of the service providers
    • 3. The way companies monitor, control and manage their sourced process(es) should adapt/match the developments in demand and supply
  • The demand organisation enables an effective alignment of demand and supply and ensures the potential value of the sourced process is delivered
    Definition
    • Demand organisation is the intermediary between the core business processes and the supporting processes
    • 4. Demand organisation is typically established when supporting processes are delegated to a separate business unit (e.g. shared service centre) or third party (outsourcing).
    • 5. In the demand organisation activities are executed to manage the supply side (internal/external suppliers) as well as the demand side (business).
    Shared support organisation
    or external suppliers
    Business
    Intermediary
    Business unit
    IT process
    Demand organisation
    Business unit
    Finance process
    Business unit
    Procurement process
    Supply
    management
    (external SLA’s)
    Demand
    management
    (internal SLA’s)
    Business unit
    ... process
    A good structured Demand Organisation guarantees the right level of service, quality and costs in accordance with business requirements by maximising the benefits and minimising the risks.
  • 6. Market trends stress the importance of the demand organisation as the engine of managing sourced processes
    Trends and issues
    Trends in Outsourcing, SSC and Demand organisation
    Identified trends in the market
    Outsourcing & SSC
    • The Dutch outsourcing market has grown by 17% since 2005. 51% of subcontractors expect to grow in the future [Source: Morgan chambers, 2007]
    • 7. More companies consider SSC and BPO for their support activities [Source: Capgemini, 2009]
    • 8. The combination of different sourcing options (Hybrid; SSC and BPO) will increase in the coming years
    • 9. Most important reason for companies to outsource is to reduce cost, penetration of new markets, reduce cycle times, increase customer service, access to innovation and reduce logistics cost
    • 10. Research has proven that directly after the outsourcing deal is settled, the expectations are met. However, after 3 years the benefits of outsourcing decrease [Source: Capgemini, 2007]
    Demand Organisation
    • Management and the structure of decision making from the customer side are not captured by 50%+ of Dutch companies that outsource [Source: research community Digital Boardroom, 2005]
    • 11. About 60% of all customer organisations is in a insufficient extent satisfied on their suppliers
    • 12. Directing or professionalising their demand organisation is mentioned by 80% of companies to be most important element for improvement. For 53% of the organisations it has real priority
    • 13. The mean score that organisations give their demand organisation is a 6 on a scale from 0 to10 [Source: Morgan Chambers, 2008]
    • 14. Organisations interpret the demand organisation differently, leading to large differences in the design[Source: Capgemini, 2009]
    Business process outsourcing
    3
    Shared service Centre
    2
    Cost savings
    Internal provision ofservice
    1
    Degree of maturity
  • 15. Companies encounter the following issues when the demand organisation is operational
    Trends and issues
    Issues regarding the demand organisation
    • Once a sourcing deal is signed, many organisations falsely believe that their work is done
    • 16. A major cause of sourcing dissatisfaction and failure is the assumption that a few people acting just as ‘liaison officers’ can manage complex sourcing relations
    • 17. Organisations experience a lack of control and insufficient coordination of suppliers
    • 18. Insufficient control on SLA, resulting in bilateral disappointments on contracts/ dissatisfied customers.
    • 19. Expectations keep on changing, the contract does not
    • 20. Continuous discussions about the quality and timeliness of the service
    • 21. The success in sourcing is determined by the people and the organisation, not the technology
    • 22. The gap between internal client satisfaction and the service levels in the SLA needs to be managed carefully
    • 23. Very often a lack of a professional portfolio management leads to a ‘cheap’ contract and very expensive add-on work
    • 24. Direct management of outsourced processes is not possible anymore
    • 25. Most companies have to professionalise their own organisation for governing the relationship to achieve the best from their outsourcers
    demand for specialised services
    supply of highly standardised services
    The demand organisation has to balance demand and supply
  • 26. When designing and implementing a valuable demand organisation you have to consider the following success factors
    Success factors
    Strategy
    • Sourcing strategy needs to be aligned with corporate strategy and purchasing strategies.
    • 27. Demand organisation and strategy has to be established, before (out)sourcing takes place
    • 28. Bilateral strategy: customer focus as well as maximising synergies
    Sourcing
    strategy
    Governance
    • A certain level of maturity (formality/structure)
    • 29. Clear line of authority and responsibility
    • 30. Consistent, understandable policies and standards that are embedded in operating processes
    • 31. Exchange of information from suppliers as well as business units.
    • 32. Proactive decision making on how to manage the demand organisation and service providers
    Process
    requirements
    Governance
    Processes
    • Standardised processes which are compliant with policies and regulations
    • 33. Transparency in processes on demand and supply management.
    • 34. Manage expectations of the user-organisation in a structural way
    • 35. Clear split and handing over between the in-house processes and the outsourced processes
    Demand organisation design
    Performance
    management
    SLAs
    Technology /
    IT strategy
    Performance
    • Steer on quality delivery, targets and realised service levels
    • 36. Alignment of KPIs and objectives with corporate targets
    • 37. Clear and common understanding of specifications,
    • 38. Periodical evaluation of contracts, SLA’s, and performance
    • 39. Quality of internal underpinning contracts (services, volumes, price)
    People &
    Organisation
    Technology / IT
    • Systems need to be aligned with the external party (or vice versa)
    • 40. Advanced web-enabled requisitioning and management tools
    • 41. Integrated portals supporting reports on performance and communication
    People and organisation
    • Alignment organisation with the operating processes
    • 42. Flexibility and ability to absorb environmental changes
    • 43. Clear defined operating model (processes, roles, communication)
    • 44. Choice centralisation/decentralisation, number of SLA’s/ customers reflect size and place organisation
    • 45. Steering on competences within demand organisation
  • An effective demand organisation consists of the following 7 building blocks
    Building blocks
    Demand organisation
    Organisation & Governance
    Vision / strategy
    Performance management
    Process,
    activities
    and roles
    (RACI)
    Demand management
    Supply management
    Human resource
    management
    Technology / IT
    Financial
    management
    Infrastructure/
    enablers
    building blocks
    Business
    External / internal suppliers
  • 46. Implementing the 7 building blocks enables your company to realise more value out of your sourced processes
    Building blocks
  • 47. A sustainable demand organisation is interwoven with your sourcing strategy and should continuously go through a closed loop process
    Analysis and Definition
    Delivery or Operations
    Scenario Planning and Business Case
    Transition or Migration
    Selection and Preparation
    Approach
    • Sourcing strategy1 creates a vision on the right mix on
    • 48. Ownership: In house or Outsourced
    • 49. Location: Onshore or Offshore
    • 50. Management required: Light or Tight
    • 51. Sourcing strategy sets the scope of the demand organisation
    • 52. Design of the demand organisation for multiple scenarios
    • 53. High level of organisation and governance
    • 54. Processes
    • 55. Set up the business case on the demand organisation design
    • 56. Evaluate regularly on multiple organisation levels:
    • 57. Performance service providers
    • 58. Client satisfaction (business)
    • 59. Alignment of the demand organisation to changing environment
    • 60. List requirements and set up SLAs - demand and supply side
    • 61. Detail way of working (organisation and processes)
    • 62. In house: input for business process redesign (e.g. set up SSC)
    • 63. Outsourcing: input for selection process and process improvement
    • 64. Plan transition or migration
    • 65. Finalise way of working (organisation and processes)
    • 66. Finalise SLAs and KPIs
    • 67. Transfer critical knowledge
    • 68. Train employees and/or recruit new employees
  • After the implementation you need to regularly evaluate the demand organisation whether the current design is still successful
    Analysis and Definition
    Delivery or Operations
    Scenario Planning and Business Case
    Transition or Migration
    Selection and Preparation
    Approach
  • 69. Why Capgemini?
    Why Capgemini?
    Business Transformation Capabilities – Based on our unique multidimensional Business Transformation ® framework Capgemini supports leading companies on their journey towards measurable and sustainable competitive advantages. We are focused and committed on delivering transformation
    Rightshore™ BPO – Our Rightshore model will provide flexibility and scalability based on the right process at the right location within the Capgemini global delivery network. We leverage European and US onshore expertise for planning, consulting and strategy roles while leveraging offshore expertise for execution and administrative roles
    The Results We Achieve – Capgemini works in a strictly results-oriented way, focusing on sustainable improvements and less on academic concepts. Capgemini supports transformations until the expected results are delivered
    Capgemini way of working - Collaborative Business Experience. A key strength in our working style is that we do work WITH our clients. Capgemini believes this joint working to be essential in effecting sustainable change in an organisation
    Thought leadership – Capgemini has a clear vision about the evolvement of service management. We provided and implemented this vision in the aftermarket of several clients helping them to become market leader
    Capgemini’s Global Sourcing of Services (GSS) cube ©
    “Point of view on Sourcing Strategy”
    “Outsourcing strategy survey 2009-2010”
    Capgemini has the people, culture and experience to deliver high quality results and solutions that work
  • 70. Capgemini has broad experience in all aspects of Demand organisation
    Why Capgemini?
    Business challenge
    3 cases
    Chosen solution
    by company
    Approach
    and results
    Need to professionalise the organisation and to reduce costs
    • Phase 1: The feasibility study - Business Case; Survey of the processes and ICT in place, and the ICT incl. it's bottlenecks; Vision on the future processes and ICT; Headlines of an implementation plan; Project charters for the planning in details; Migration script; Plan for change management.
    • 71. Phase 2: Describing the future processes and operating procedures incl. pilot - design of ICT, Processes, Personnel and Organization; and, Migration preparation
    • 72. Phase 3: Migration - the financial administrations pass to the support centre
    Centralise accounting processes
    Implement SAP Shared Services Centres and achieve cost savings
    • Consolidate IT processes into global SAP Shared Service Centres
    • 73. Used extensive global experience in establishing shared service establishment, process re-engineering and SAP implementation to effect an ideal solution for the client
    • 74. Consolidated parallel IT systems that were costly to operate and maintain
    • 75. Incorporated SAP methodology and leveraged experience from prior SAP implementations to design, develop and implement global SAP solution.
    Shared Services Centres
    Imperative for improvement in business support processes – both cost and service
    • Provide information technology, call centre, billing, human resources, supply chain, accounts payable, and finance and accounting services
    • 76. Develop and implement new business processes and rationalize existing services in order to enhance operational efficiencies and leverage new technologies
    • 77. Minimise business disruption and achieve significant reduction in cost of provision of these services
    BPO
  • 78. R. (Robin) Adriaans
    Senior Consultant
    M. (Marjolein) Dijkshoorn
    Consultant
    Capgemini Nederland B.V.
    Papendorpseweg 100, P.O. Box 2575,
    3500 GN Utrecht - The Netherlands
    T. +31 30 689 4062
    F. +31 30 689 55 60
    Mob. +31 615 030 344 Robin.Adriaans@capgemini.comwww.nl.capgemini.com
    Capgemini Nederland B.V.
    Papendorpseweg 100, P.O. Box 2575,
    3500 GN Utrecht - The Netherlands
    T. +31 30 689 5594
    F. +31 30 689 55 60
    Mob. +31 615 031 022 Marjolein.Dijkshoorn@capgemini.comwww.nl.capgemini.com