Point of View on Demand Organisation Development

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Point of View on Demand Organisation Development

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

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