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2. MCGRAW-HILL FINANCIAL:
THE PERFECT STORM:
TRANSFORMATION,
OUTSOURCING AND AN ERP
IMPLEMENTATION
The Hackett Group
October 3, 2013

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© 2013 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
GBS Executive Advisory Program | 2

4. The Hackett’s Group 2013
European Best Practices Conference
Join a select group of senior executives for this exciting event that provides opportunities to:
Reduce costs and improve effectiveness. Learn proven cost-saving strategies and business improvement
examples that yield actionable next steps that can have an immediate return on your investment.
Leverage the experience of your peers. Hear real-life case studies with ample opportunities to network with
other senior executives and thought leaders representing the most successful companies and recognised brands in the
world.
Access The Hackett Group's full breadth of research and expertise, including the latest data, metrics and
models aligned with your job function.
Gain excellent value for the level of intensive education. Experience nearly 10 hours of keynote and
practitioner sessions and more than 10 hours of networking.
© 2013 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
GBS Executive Advisory Program | 3

5. Speakers:
Kelli Skaff, Global Director Process
Transformation Office, Boston Scientific
Dorota Maciaszek, Director Mondelez
International Enterprise Shared Services,
Mondelez
2013 Global Business Services
Advisory Leadership Forum
Achieving World-class GBS
Globalization & Outsourcing
Service Management
Executive & BU Buy-in
C-Level KPIs
Governance, Migration
November 19, 2013
Westin Diplomat | Hollywood, FL
Michelle Ferguson, Senior Vice President,
McGraw Hill Financial
Honorio Padron, Principal & Global Practice
Leader, Global Business Services, The Hackett
Group
Vin Kumar, Associate Principal & GBS Global
Operations Leader, The Hackett Group
Penny Weller, Global Business Services North
American Practice Leader, The Hackett Group
Patrick Connaughton, Senior Director GBS
Advisory, The Hackett Group

6. 12th Annual Global Business Services (GBS)
Performance Study
Global Shared Services/Shared Services: Is your organization keeping pace or
getting left behind?
Participants in this study will:
 How your organization compares with
World-class performance
 Learn how GBS/shared services can
enhance the enterprise value it delivers
 Receive a report with key research findings
and an assessment of your GBS/shared
services’ performance
 Have a one-on-one session with Hackett’s
GBS Advisors to review your performance
Participate by using the link on the GBS
portal or contacting
advisor@thehackettgroup.com
The Hackett Group's 2014 Annual GBS Performance Study is open from
October 8 – December 6, 2013

7. GBS Advisory - Save the dates (webcasts & in person events)
Note: Past events are recorded and
available on the GBS portal
2013
Dow Chemical: Service
Management
January 24
Boston Scientific:
Human Capital Metrics
Drive Data-Based
Decisions Across a
Global Organization
February 14
Hackett: GBS Talent
Approach - March 19
TRW: Single Instance
ERP Not a Reality At
The Moment? - March
21
Jan ‘13
Feb ‘13
Mar ‘13
Hackett: GBS
Performance Study - IT
Highlights – July 9
Pitney Bowes: Hidden
Benefits of the Cloud
February 21
Hackett GBS
Performance Study
Results Presentation
March 7
Hackett: GBS
Performance Study Finance Highlights –
July 15
United Airlines: Using
Lean & Six Sigma to
Keep a Business
Process in House
– August 15
GBS in Poland, Key
Benefits & Learnings
September 5
Jul ‘13
Aug ‘13
Sep ‘13
Hackett: GBS
Performance Study Procurement
Highlights - July 24
Hackett: GBS
Performance Study –
HR Highlights – July 30
Hackett: Hackett GBS
Payroll Study
August 27
Unisys: Creating a COE
for Knowledge
Management &
Reporting
September 26
© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
ATOS: Leveraging
Social Media
Collaboration Tools April 16
Cytec: Implementing
GBS by the Book!
April 18
Apr ‘13
CINDE: Costa Rica
Trends, Location Details
April 23
EU Best Practice
Conference (Berlin) –
October 30-31
Oct ‘13
McGraw Hill Financial The Perfect Storm:
Transformation,
Outsourcing and an ERP
Implementation –
October 3
US Navy Makes
Progress On Their
Journey – October 10
Hackett: Effective
Sourcing Strategy Study
Results – October 24
North American Best
Practices Conference
(Miami) – May 20-22
May ‘13
Global Business
Services Workshop
(Miami) – May 20
Unisys: Social Collaboration
Tools – November 7
Coca-Cola Enterprises : The
Value Proposition –
November 21
North American Best
Practices Conference
in Review - June 13
Corning: Performance
Excellence Approach
(Six Sigma/DMAIC,
Lean, and DESGN)
June 20
Jun ‘13
EU GBS Leadership
Forum (London)
June 19
Hertz – End-to-End
Process Design
December 19
Nov ‘13
Dec ‘13
North American GBS
Leadership Forum
(Hollywood, Florida) Speakers: Hackett,
Boston Scientific,
Mondelez Intl, McGraw
Hill Financial & Panel
Discussions November 19
Hackett: European Best
Practices Conference
Highlights – December 5
|6

8. GBS Advisory - Save the dates (webcasts & in person events)
2014
Cisco: Building
Collaborative BPO
Relationships; Guiding
Principles for Success January 16
Jan ‘14
Boston Scientific:
Service Infrastructure
February 20
Feb ‘14
Hackett: Global
Business Services
Performance Study
March 13
Mar ‘14
Apr ‘14
JD Irving: Senior
Leadership Required for
Effective Change
Management – April 10
Hackett: GBS Advisory
2013 Top Inquiries – Vin
Kumar - January 23
Available
National Grid: Using
KPIs/Metrics Dashboard
to Motivate and Drive
Performance – March 20
Hackett: GBS
Performance Study –
HR Highlights
July 17
Hackett: GBS
Performance Study – IT
Highlights
August 14
Hackett: GBS
Performance Study –
Finance Highlights
September 18
Aug ‘14
Sep ‘14
Jul ‘14
Available
Hackett: GBS
Performance Study –
Procurement
Highlights
August 21
Hackett: How to Make
GBS Stick! – Honorio
Padron
April 17
British American
Tobacco: Finance
Shared Services,
Global SAP roll-out,
and Advanced A2R
Services
September 4
© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Hackett: Continuous
Improvement;
Developing a Global
Framework for Success
October 16
North American Best
Practices Conference
(Location) – May
May ‘14
Kiewit: KPIs - C-Level,
Key Stakeholders, &
Operational - May 15
Hackett: GBS Trends – Key
Learnings & Global Location
Update – November 13
Mondelez International:
Technology Rollout &
Transitioning Work
June 12
Hackett: Best
Practices Conference
Highlights – Sean
Kracklauer
June 19
Jun ‘14
EU GBS Leadership
Forum (London)
June
December 18
Oct ‘14
Nov ‘14
Dec ‘14
EU Best Practice
Conference (Location) –
October
Available - November 20
Hackett: European Best
Practices Conference
Highlights – December
North American GBS
Leadership Forum
(Location) November
|7

9. GBS Member Profile – McGraw Hill Financials
McGraw Hill Financial Global Business Services
Industry:
Revenue:
Employees:
Countries:
Media
$4.4 Billion (2012)
17,000
200
Hightstown,
NJ, USA
London, UK
Mexico City,
MX
Singapore
Vision:
To excel as a global shared services organization by delivering high quality, consistent services at the lowest, most
flexible cost.
Mission:
Global Business Services supports McGraw Hill Financial by:
• Providing superior and expanding services to our colleagues
• Delivering financial value and innovation
• Maximizing the effectiveness of our systems and processes
• Partnering with world class service providers
Shared Service Centers:
GBS organization consists of four captive locations and multiple outsourcing arrangements:
 Captive: Hightstown, New Jersey (170 fte) services USA
 Captive: London, England (35 fte) services EMEA (UK, France, Germany, Spain, Italy)
 Captive: Singapore (20 fte) services APAC (India, Singapore, China, Malaysia)
 Captive: Mexico City, Mexico (2 fte) services Latin America (Argentina, Mexico)
 Outsourced: Finance (AP, OTC, R2R) – Genpact - Hyderabad, India; Dalian, China; Bucharest, Romania;
Juarez, Mexico
 Outsourced: Global Payroll – NorthgateArinso – Manila, Philippines
 Outsourced: HR Services – AON Hewitt - Customer Service Support: Portal, Taleo, Success Factors, Workday
– Charlotte, North Carolina, Gurgaon, India
 Outsourced: System Development – Tata – Oracle – Kolkata, India
 Outsourced: Quality Control – Wipro – Oracle – Chennai, Bangalore, India
Outsourced Processes:
Services Provided:
Finance & Accounting: AP, T&E, HR Financial Reporting
Human Resources: Payroll, Employee Care, Global Mobility
Information Technology: Oracle ERP System
Procurement: Global Sourcing and Procurement
Other Services: Global Real Estate
© 2013 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Member Profile | 8

10. Presenter
Michelle Ferguson
Senior Vice President, Global Business Services
Michelle has developed a shared services strategy as part of the
organizations Growth and Value Plan and now leads that
organization. It includes Financial, Human Resources, Shared
Services and Real Estate. Her responsibilities also include
leading a multi-phase Oracle implementation.
She has held senior leadership roles in Real Estate, Human
Resources, Corporate Finance and McGraw-Hill Education. Most
recently as SVP of International Operations at MHE, Michelle led
the Latin American business, managed financial reporting for
international operations, and improved service workflows.
Michelle is founder and President of WINS (and the corporations
first and largest ERG). She was co-founder of a mentoring
program, which has expanded to included world-side employees.
She continues to be a role model and advocate for women at
McGraw-Hill Financial.
Michelle holds a BBA from the University of Notre Dame and an
MBA from Columbia Business School.
© 2013 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
|9

11. The Perfect Storm: Transformation,
Outsourcing and an ERP Implementation
Michelle R. Ferguson
Sr. Vice President – Global Business Services
McGraw Hill Financial | Global Business Services

12. Today I will Discuss
A New Company with 125 Year Heritage
Global Business Services
Transformation
Outsourcing
ERP Implementation
Challenges / Lessons Learned
5 Rules NOT to Follow
Q&A
McGraw Hill Financial | Global Business Services
11

13. A New Company: McGraw Hill Financial
New name, new vision, new look, and a new ticker — MHFI
McGraw Hill Financial | Global Business Services
12

14. McGraw Hill Financial
• A new company, with a 125‐year‐old heritage, focused on
providing essential intelligence
• Our vision is to be the foremost provider of ratings,
benchmarks, and analytics in the global capital and
commodity markets
• Strong balance sheet enables financial flexibility
• Will continue to invest in businesses while returning cash to
shareholders
• Solid track record of top‐ and bottom‐line growth
• 2013 guidance indicates solid growth:
 High single‐digit, top‐line growth
 Adjusted diluted EPS guidance of $3.15 ‐ $3.25
McGraw Hill Financial | Global Business Services
13

15. A Global Network
17,425 FTEs
McGraw Hill Financial | Global Business Services
14

16. McGraw Hill Financial — Leadership Change
Harold McGraw III
•
•
•
Douglas L. Peterson
Transition – Ensure a seamless and smooth transition
Meet with leaders around the company to better understand:
– Strategy
– Corporate governance & planning process
– Regulation
– Capital allocation
Key balance of year priorities to prepare for 2014:
– Refined corporate vision
– Ensure alignment of individual business strategies
– Realign leadership as necessary
– Set 2014 performance targets and initiatives
McGraw Hill Financial | Global Business Services
15

17. McGraw Hill Financial: Exceptional Growth Continues
($ in millions)
2Q 2013
2Q 2012
Change
$1,250
$1,072
+17%
$446
$347
+29%
Adj. Operating Margin
35.7%
32.3%
+340 bps
Diluted Adjusted EPS
$0.92
$0.70
+31%
Revenue
Adj. Operating Profit
McGraw Hill Financial | Global Business Services
16

18. About Michelle
•
•
•
Senior Vice President, Global Business Services
• Finance
• Human Resources
• ERP System
• Global Real Estate
BBA – University of Notre Dame
• Advisory Council for DeBartolo Performing Arts Council
• Member of Alumni Board
MBA – Columbia Business School
McGraw Hill Financial | Global Business Services
17

19. GBS Organization Chart
Michelle R. Ferguson
Global Real
Estate
ERP
Shared
Services
Payroll
P2P
HR Employee
Care
Contract
Administration
McGraw Hill Financial | Global Business Services
18

20. Global Business Services
•
Three process “towers” with cross functional support
–
–
–
–
–
•
Global Payroll
Global Employee Care / Special Programs
Global Sourcing and Disbursements
Special project support (e.g., People Fluent, Physical Separation)
Cross tower support (financial planning/estimating, contract administration, service delivery and
governance)
OBJECTIVE: Deliver predictable, scalable, lower cost HR/Finance service
consistently across company. Outsource transactional activities
–
–
–
–
–
–
Relationships with industry leading providers that have global capabilities
Strong governance
Measurements focused (e.g., service level agreements, process health)
Aligned to support our businesses
Process improvement mindset
Opportunities for direct access, self service
McGraw Hill Financial | Global Business Services
19

21. Transformation Requires a Focus on Growth and
Required Capabilities
MHFI Transformation Goals & Enterprise Value Creation
Transformation Goals
Growth: Position great businesses for scalable growth
 Achieve higher and sustained global
growth
Performance: Enhance enterprise impact
 Capture horizontal synergies across
businesses
People: Become a high-performance employer of choice
 Drive scalability in cost structure
 Treat talent and data as strategic
corporate assets
Cost: Reshape to be fit for growth
Operating Model: Increase speed, agility and global
connectivity, while building selective enterprise capability
McGraw Hill Financial | Global Business Services
20

22. Enabled by Management Process and Cultural Change…
Growth & Value Plan
Theme
Stand Up MHFI
“Evolving”
“Sustained High Performance”
 Vertical and layered
 Flatter and compressed
 Competing metrics and opaque allocations
 Transparent, consistent, precise
Governance &
Decision-Making
 Uneven criteria and pace
 Clear, selective shifts to align on emerging
enterprise decision rights
Capabilities & Talent
 Individual business-based
 Selective shared enterprise capabilities & talent
 Shifting to greater flexibility and
cross-business leverage
 Leadership alignment, with mechanisms
established and integration underway
 Publishing heritage, avoidance of risk
 Market orientation with risk management
 Hesitant but building momentum
 Shared common purpose and vision
 US-focused with shifting focus to global – Limited
accountability for regional results
 Regional measurement with cross-LoB
management and accountability by geographic subregion (i.e., ex-Americas)
 Revenue and profits
 Financial and strategic metrics, with clear
accountability
Organization Architecture
P&Ls
Collaboration & Alignment
Culture
Change Orientation
Geographic Leadership
Critical Metrics
McGraw Hill Financial | Global Business Services
21

23. Outsourcing Approach: A swift yet structured process
Rapid Outsourcing Approach and Timeline
Month 1
Month 2
Month 4
Month 5
Month 8
Provider Selection & Contract Development
RFP Responses &
down-selection
Base Case
Solution
Development
To be Vision
Provider
Selection
Negotiations and
Contract Award
Outbound Due
Diligence
Transition
Begins
Site Visits &
Inbound Due
Diligence/BAFO
Outsourcing
Objectives
Transition
Ends
RFP/Spec
Package
MH specific activities
Joint activities with Provider
Governance Design & Transition Planning
Change and Risk
Management
Communication and Change Management
Specifications Package &
MSA to Pre- Selected
Providers
McGraw Hill Financial | Global Business Services
Providers Down
Selected
Provider Selected
Contract
Awarded
22

24. Outsourcing summary accomplishments
Function
Position
Scope
(MHP)
% Annual
Savings
(Compensation
ONLY)
Approach
Finance &
Accounting
295
41%
• “Lift and Shift”
• FTE model for staffing;
dedicated to McGraw-Hill
• Timeline driven by stand
up of Education and rollout
of Oracle
• Split of shared accounting functions with
Education
• Super storm Sandy coverage
• Provisioned access to ~100 applications
across all service towers
• Strong executive level governance
• SLA improvements in areas of OTC
• Six Sigma projects initiated
HR / Payroll
50
17%
• Fix, eliminate and ship
• Shared resource model
• Timeline driven by rollout
of Workday
• Global HR portal
• New customer service tools
• Coverage for other markets outside of the US
and UK
• Reporting and analytics on employee care
McGraw Hill Financial | Global Business Services
Year 1 Highlights (achieved/targeted)
23

25. Meetings Framework – Governance (FAO example)
Category
Name
Frequency
Tower
Timeline
Steering Committee
Bi-annual
All
Q2 and Q4
Management Committee
Quarterly
All
Q1 and Q3
AP and T&E
2nd Monday
Executive Reviews
Monthly
(Global)
Contract Administration
Weekly
Operational Reviews
OTC
20th of the month
R2R
Service Delivery Committee
4th Tuesday
All
Every Friday
R2R US
R2R EMEA
Progress Meeting
Weekly
(Regional)
Every Wednesday
Every Wednesday
R2R & AP – APAC
AP (Global)
OTC
McGraw Hill Financial | Global Business Services
Every Friday
Every Tuesday
Daily
24

26. Outsourcing Partners
Business
Focus Area
What they do
for us
Locations
Finance
AP, OTC, R2R
Hyderabad, India
Dalian, China
Bucharest, Romania
Juarez, Mexico
Payroll
Global Payroll
Manila, Philippines
HR services
Customer Service
Support: Portal, Taleo,
Success Factors,
Workday
Charlotte, NC
Woodland Hills, TX
Gurgaon, India
System development
Oracle
Kolkata, India
Quality control
Oracle
Chennai, India
Bangalore, India
McGraw Hill Financial | Global Business Services
25

27. ERP Implementation
•
•
•
Atlas ERP Implementation
– Project One launched June 2010; Go-live
July 2012
– Replacement of Lawson Financials
with Oracle 12 e-Business Suite
– Chart of Accounts
Atlas Hard Separation
– Project launch March 2012; go-live
January 2013
– Financial and operational segregation
– Separate and distinct bank accounts and
ledgers
Atlas Physical Separation
– Project launch January 2013; go-live
February 2014
– Two independent Oracle environments
McGraw Hill Financial | Global Business Services
26

28. Challenges & Lessons Learned
•
Challenges were many…
Outsourcing Finance and going live with a new ERP system the same day
Outsourcing Payroll, a new Human Capital Management System for MHE at the
same time
Understanding key controls early in the project lifecycle
•
Lessons Learned were many…
Communicate, communicate, communicate
Coordination
Project management
Know a Project Manager when you see one
Need different skill set in the leadership team
Don’t panic, overreact to anecdotal and isolated issues
One group does contract administration
Pricing, SOW, MSA, IT Requirements
McGraw Hill Financial | Global Business Services
27

29. When you become your own worst enemy
5 RULES NOT TO FOLLOW
1.
2.
3.
4.
5.
Rebuilding legacy systems
Allowing consultants / experts to drive your projects
Aiming for perfection
Hobbling the project
Asking internal resources to provide their time to a project and maintain
their daily responsibilities
Don’t hesitate to break virtually every rule held sacred by conventional wisdom
McGraw Hill Financial | Global Business Services
28

30. Q&A
McGraw Hill Financial | Global Business Services
29

32. Office Locations and Contacts
Miami - Corporate Headquarters
1001 Brickell Bay Drive
30th Floor
Miami, Florida 33131
TEL: +1 305 375 8005
Amsterdam
Camerastraat 25
1322 BB Almere Amsterdam
TEL: + 31 36 535 00 82
Atlanta
1000 Abernathy Road NW
Suite 1400
Atlanta, GA 30328
TEL: +1 770 225 3600
Chicago
525 W. Monroe Street, Suite 1550
Chicago, IL 60661
TEL: +1 312 325 2900
Frankfurt
Torhaus Westhafen
Speicherstrasse 59
60327 Frankfurt am Main
TEL: +49 69 900 217 0
Hyderabad
8-2-120/112/88&89
1st Floor, Aparna Crest
Road #2, Banjara Hills
Hyderabad 500034
TEL: +91 40 66544000
London
Martin House, 5 Martin Lane
London EC4R 0DP
TEL: +44 20 7398 9100
Melbourne
Suite 122B & 122C, Level 1
530 Little Collins Street
Melbourne Vic 3000
TEL: +61 3 99097657
New York
110 Wall Street, 17th Floor
New York, NY 10005
TEL: +1 646 354 4400
Paris
8, rue de Port Mahon
75002 Paris
TEL: +33 1 53 43 0400
Penny Weller
NA GBS Advisory Practice Leader
Phone:
269 345 7240
pweller@thehackettgroup.com
Lindsay Murphy
GBS Account Manager
Phone:
904 374 1478
lmurphy@thehackettgroup.com
Philadelphia
225 Washington Street
Conshohocken, PA 19428
TEL: +1 610 234 5500
San Francisco
100 Montgomery Street, Suite 2225
San Francisco, CA 94104
TEL: +1 415 249 3500
Sydney
35 Lime Street, Suite 403
Sydney, NSW2000, Australia
TEL: +61 2 9299 8830
© 2013 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
GBS Executive Advisory Program | 31