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Fujitsu’s management of contingency

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  • 1. COMMERCIAL IN CONFIDENCE © Copyright 2013 Fujitsu Services LimitedApm Risk SIG ConferenceFujitsu’s Management ofContingencyDave Scarbrough
  • 2. 1 COMMERCIAL IN CONFIDENCEAgendaFujitsuRisk in Context of our BMSBids and our business modelDelivery – Projects, Programmes and PortfoliosSummaryFujitsu’s Management of Risk Contingency
  • 3. 2 COMMERCIAL IN CONFIDENCEA powerful presence in UK & Ireland >30 service locationsUK & Ireland CEO: Duncan Tait FTSE100 company equivalent by revenue & profit Largest Japanese employer in UK and Ireland Strength in public sector, financial services,telecoms, retail and mid-marketRevenue: £1.8 billion*>20,000 serverskept secure &fully operational24/365The first Tier IIIcertified datacentre in EuropeManaging >1 millionend user devices(>2.5 million acrossEurope)Europe’s first GoldAccreditation for datacentre operations(Uptime Institute)Manages Ireland’sfirst Mobile VirtualNetworkManaging theworld’s thirdlargest OracleeBusiness suite Over 14,000 employees* Revenue figure April 2011Over 70% of the UK’sbroadband network is built onFujitsu infrastructure.Delivering the UK’s largestprivate cloud deploymentKEYFujitsu System Management CentresFujitsu Data CentresFujitsu Cloud Centres
  • 4. 3 COMMERCIAL IN CONFIDENCEUK & Ireland customers include…Private SectorGovernment
  • 5. 4 COMMERCIAL IN CONFIDENCERank Company#1 IBM#2 HP#3 Fujitsu#4 Accenture#5 CSC#3 in global IT services revenue2011 IT Services Vendor Revenue.Source: Gartner, "Market Share: IT Services, 2011" 9 April 2012
  • 6. 5 COMMERCIAL IN CONFIDENCEAgendaFujitsuRisk in Context of our BMSBids and our business modelDelivery – Projects, Programmes and PortfoliosSummaryFujitsu’s Management of Risk Contingency
  • 7. 6 COMMERCIAL IN CONFIDENCEOur Risk ProcessRisk is integrated with our BMS and Review FrameworkEvery Framework review must review the risks
  • 8. 7 COMMERCIAL IN CONFIDENCEHierarchical Enterprise Risk ManagementUKIrelandContract/Programme/Service PortfolioBids ServicesCSLC reviewsAccount reviewsBU reviewsGovernanceProjectsPortfolio reviewsAccountsCommon & big risksRisks @ this level &Functional RisksBusiness ReviewFrameworkFlow MTP objectives downReport risks upServiceLines,MFUs, RFAs&Communicaterisks down
  • 9. 8 COMMERCIAL IN CONFIDENCEAgendaFujitsuRisk in Context of our BMSBids and our business modelDelivery – Projects, Programmes and PortfoliosSummaryFujitsu’s Management of Risk Contingency
  • 10. 9 COMMERCIAL IN CONFIDENCERisk Exposure is the overall level of risk (time and money)calculated across the portfolio of risksIt is a function of the cost of the Reactive Actions (Fallback) not thevalue of the contractNeed (reasonable) Max Risk Cost of the Reactive Strategy/Actions(Fallback) i.e. direct cost not indirectUse Post-Containment Probability/Impact values (assuming proactiveactions (containments) have ‘worked’ to level they can (i.e. residualrisk)Contingency is a sum of money allocated above the baseestimate of the ActivityManagement decision/judgement about the actual ContingencyallocatedContingency is judged and held at higher level e.g. AccountContingency Definitions and Calculations
  • 11. 10 COMMERCIAL IN CONFIDENCEUnderstand and manage the risksInternal Excel macro tool – RiskProAutomatic calculation of exposureAssistance to judge contingencyForecast contingency across contract length by monthsInto Oracle FinancialsRisk and Contingency in Bids
  • 12. 11 COMMERCIAL IN CONFIDENCERiskPro Helps Understand Risk
  • 13. 12 COMMERCIAL IN CONFIDENCEFujitsu Business ModelService Lines –aligned to how ourcustomers buy ITService LinesHelen LambBusiness &ApplicationServicesRichard BullEnd UserServicesAndy StevensonHosting,Networks &SecurityMichael KeeganTechnologyProduct Group
  • 14. 13 COMMERCIAL IN CONFIDENCEAllocating Contingency Contingency is a business judgement based on Risk Exposure: Probability x Impact Cost (Factored Exposure) across all risks Biggest single risk Experience13
  • 15. 14 COMMERCIAL IN CONFIDENCEAllocating Contingency 2 Contingency is a business judgement based on Risk Exposure: Probability x Impact Cost (Factored Exposure) across all risks Biggest single risk Experience14
  • 16. 15 COMMERCIAL IN CONFIDENCEConting by Capability with guidelines
  • 17. 16 COMMERCIAL IN CONFIDENCEDelivery Executive for the contract:Agrees with Service Line/Capability budget holders their contingencyJudges an appropriate Contingency for the contractRequests that Contingency from the Bid Approval Review managementBid Approval Review management judges an appropriateContingency for the contractRiskPro Helps Judge Contingency 2
  • 18. 17 COMMERCIAL IN CONFIDENCEAgendaFujitsuRisk in Context of our BMSBids and our business modelDelivery – Projects, Programmes and PortfoliosSummaryFujitsu’s Management of Risk Contingency
  • 19. 18 COMMERCIAL IN CONFIDENCEOn a journeyDelivery Executive for the remainder of contract:Agrees with Service Line/Capability budget holders their• Their Contingency forecast• Any change control to utilise, increase, release/reduce contingencyJudges an appropriate Contingency for the contractRequests that Contingency/Changes from the Review managementReview managementApproves any change controlsJudges an appropriate Contingency for the contractDuring Delivery (Project & Programme)
  • 20. 19 COMMERCIAL IN CONFIDENCE(Risk Process mandatory)Business level risks harder to financially quantify direct costRequest a ‘Business Impact’Expressed in terms of orders, revenue, margin, cost or cashFinancial provisionBusiness Level Contingency (Portfolio)
  • 21. 20 COMMERCIAL IN CONFIDENCEStrong ProcessesManagement CommitmentRisk sits with business doing workTool support to judging contingencyDelivery - on a journeyFuture:Learn Lessons• Judgement v actuals• Contingency Guidelines by CapabilityManagement Reserve?Quantification Analysis?Summary