HCLT Case Study : HCL enables Strategic Transformation & Business focused Innovation for a leading Global Music Company
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HCL enabled Total IT Outsourcing - Transformation and Business Focused Innovation for a leading global music company. HCL worked with the client towards its strategic objective – to create an optimized model for music distribution and revenue creation through successful talent discovery and artist management. HCL worked on three core mandates: cost reduction - minimization of Opex, bolstering operational excellence and streamlining existing IT systems for superior flexibility and agility. HCL’s uniquely integrated RTB (Run The Business) and CTB (Change The Business) into the same contract to provide savings which could be ploughed back into several Transformation oriented projects.
HCLT Case Study : HCL enables Strategic Transformation & Business focused Innovation for a leading Global Music Company
Let’s change the business: TOTAL IT OUTSOURCING enables strategic TRANSFORMATION and business focused INNOVATION for the WORLD’S LEADING MUSIC COMPANYCLIENT BACKGROUNDThe client is one of the world’s leading music companies and is home to some ofthe most successful and best known recording artists. It is the fourth largestrecorded music business globally. Its business primarily focuses on monetizing itsextensive catalogue, discovery and development of artists, and relatedmarketing, distribution and licensing of recorded music produced by such artists.Through its companies and network of licensees, it is able to serve artists,consumers and partners all over the world. It owns some of the best-knownrecord labels in the world. It represents a diverse roster of artists from almostevery musical genre and owns a globally successful compilation brand.Headquartered in London, it also owns two iconic recording studios. Thecompany’s strategic vision is to deliver successful outcomes for artists inevery available channel and evolve into a Global Rights Managementcompany.
BUSINESS CHALLENGE World over, the music industry is faced with a “virtual annihilation”, with physical CD sales plunging and traditional ways of consuming music biting the dust. A business focused on the sale of physical albums and digital downloads is doomed. The industry must refocus the business model on finding value wherever and however music is consumed and manage and successfully monetize the entire asset and artist eco-system. Therefore, moving from a “traditional music company” to a successful rights management company is critical in this scenario. To achieve this objective, the company needed to focus upon strategic priorities like, new artist discovery, providing end-to-end artist management, maximizing outcomes, building capabilities to maximize new channels, and differentiating through new strengthened core offerings. It aimed at working in partnership with artists across as many channels and revenue streams as possible to maximize their outcomes, creating “Life Time Value for Artists”. For this, it is working towards two core competencies: Discovery – acquiring rights to music only where they believe they can dramatically broaden their reach and Connection - developing and deploying a unique set of capabilities to create demand for music amongst fans. To enable these strategic objectives they needed to make core changes to their business and aligned IT systems. They needed to work on critical issues such as enhanced visibility, supply chain optimization and gain better insights, but at the same time also optimize existing processes, and reduce Opex, as due to flat IT budgets this was essential to be ploughed back into business for fostering innovation. ENGAGEMENT MANDATES HCL understood and worked with the client towards its strategic objective – to create an optimized model for music distribution and revenue creation through successful talent discovery and artist management. The engagement had three core mandates/ objectives: • The first was around cost reduction - minimization of Opex: The client had separate teams for support and change. They were not able to consolidate and leverage resources to their optimum capacity – including setting up the right onsite-offshore mix and managing ramp up/ ramp down. They were not able to therefore reduce YoY IT cost through productivity gains, which was essential to ensure cost savings for technology innovation projects. • Secondly, they were looking to bolster operational excellence by streamlining current application/ incident/ process and SLA management. Applications were predominantly regional or local, supported by IT teams locally, which were not operating collaboratively. Also, SLAs were not linked to criticality, tool usage was low and fragmented, and there was an overall lack of process documentation.2
• Thirdly, they wanted to streamline their existing IT systems for superior flexibility and agility. The Demand Management processes needed streamlining. Also, there was a need for optimized release management. IT SLAs needed to be aligned to business cycle times, and re-classification of applications according to business criticality was the need of hour.Additionally, there was a need to deal with excess capacity in PMO roles. HCLworked to address the mandates/ core objectives of cost optimization, agility, andbusiness value and also fostered innovation (in change the business) in a fixedprice model. This was done by effectively deploying the Opex savings achieved inRun the Business (RTB) to Change the Business (CTB) and building a marketleading “Transformation group” within IT from HCL’s solutions team. Thishigh-end IT “Transformation group” within HCL comprised of the best of breedSMEs with extensive domain expertise, who delivered projects across manyconsumer segments such as digital supply chain, archiving, multi-channel, etc.This strengthened HCL’s position as a “Trusted Innovation Partner”,consistently and continuously driving innovation, closely aligned to theirstrategic objectives.AREAS OF ENGAGEMENTThis engagement was extremely unique, as it involved HCL as the client’scommitted innovation partner.HCL not only provided the benefits and cost optimization associated with aManaged Services implementation, but also built an innovation construct withinthe Change the Business part of the contract. HCL and the client entered into atotal IT Outsourcing Managed Services implementation. This includedapplication and infrastructure services, with 300 FTEs working on more than 350applications and over 30 technologies and platforms.The engagement spread across all major territories except France & Japan,delivered through a Globally Integrated Delivery Model with teams deployedacross locations such as: Noida (India), London, New York, Los Angeles, Cologneand Krakow.HCL proposed to focus on two critical aspects in one contract:Run the Business• Run without change (operations support including defect fixes) to Run the Business (Globally Integrated Operations).• The scope included application development and enhancements, support (L1, L2, L3) and maintenance services for approximately 400 applications.• Infrastructure support across Multi-lingual Service Desk, Remote Desktop Support, Data Center, Webmaster, Networks and Desk side Services.Change the Business• Innovation and business change (development) to Change the Business (transformation). 3
• HCL was involved in transformation led consulting initiatives in collaboration with the client’s transformation team in the following areas: Supply Chain, Royalties, Master Data and Rights, Finance, Artist Launch and Insight Work Streams. This was done to help them bring about transformation in the IT landscape to support the implementation of new business strategy. • HCL is also engaged in leading certain key transformation programs to support Global Rights Management strategy, which include: - Automation of digital supply chain to reduce time to market from 4 weeks to 4 days. - Consolidation of processes and systems to store and interpret the artist’s contracts. - Automation of assets’ digitization and archiving to improve catalogue exploitation. ENGAGEMENT OUTCOMES As part of the extended relationship, HCL has been working across RTB and CTB initiatives for the client. Even though the engagement is relatively new - commenced only six months ago, HCL has strived to achieve the following key benefits for the client in line with their core objectives. Cost reduction and enhanced revenue creation: • Opex savings to the tune of 25-30% through HCL’s Managed Services Operations: 57.5% FTE and productivity gains over a 5 year deal term. The resource cost could be effectively minimized as the contract was drawn on the basis of an APO exercise, which helped outline the FTE requirement accurately, ensuring alignment with business criticality. • Maximizing through put for the same spend by deploying a small core projects team onsite, leading a larger offshore development pool to deliver on the client’s CAPEX program. • Enhanced revenue through new channels such as Sync licensing. Operational excellence: HCL’s solutions deliver efficiency of 18% over a 5 year term. • This was done through the implementation of a Target Operating Model for consolidating various operations across geographies and providing managed services, while ensuring a seamless engagement between the two teams with clearly defined roles, responsibilities and minimum oversight. • Establishing uniform processes and SLAs. • Operational efficiency achieved through co-located offshore team. Boosting business agility and flexibility by: • Avoiding overstaffing and enabling quick and efficient ramp up/ ramp down as per business requirement.4
• Customized Agile development process for all changes.• Better alignment of territories to map business P&Ls/ leads.• Focus on key functional areas.HCL worked hand-in-hand with the client to achieve transformationcollaboratively and rapidly.HCL DIFFERENCE• Executive commitment: - CIO alignment: HCL worked with the President of procurement (of the client) to reinstate the CIO’s role with someone who had past experience of running a similar large outsourcing program. - CEO approval: HCL peered off with the client’s CEO as well as COO to build trust & confidence on their personal sponsorship.• Compelling commercial and contractual case: HCL created a very flexible and customer friendly contract so that the client could seek their board’s approvals easily.• HCL’s strong M&E practice: - Over 13 years of experience, with more than 6,000 people and deep domain competencies to help customers leverage the latest industry insights and trends. - Strong co-creation model with key customers and vertical partners. - Innovation in outsourcing through customizable business models, delivery approaches, service standards, processes and methodologies for effective cost optimization. - Product development expertise across mobility, consumer electronics, telecom, broadcasting and digital marketing. - Technology centers of excellence, which include application development and application support CoEs. - Key partnerships with Microsoft, Oracle, Cisco, EMC, Tibco and a host of micro-vertical focused partnerships.• Innovation led new services: Through the digital media and publishing lab, utilizing key solutions such as Content on Demand, Digital Rights Management, Digital Asset Management, Artist Management, Social Media, etc.• Excellence in implementing Full Services Co-Sourcing through Enterprise Shared Services, Global Governance, and Process Target Operating Model.• HCL’s strong SAP capability, which was strengthened through the acquisition of Axon, and leveraged to implement Enterprise Services. 5
KEY SUCCESS FACTORS Some key points that have worked well for this relationship are: • HCL implemented a seamless zero business disruption transition, leveraging HCL’s state of the art transition framework (ASSeT) as part of the Managed Services Model MaSCoT™. This resulted in the following benefits for the client: - Reduced IT intensity. - Achieved cost predictability through application-based pricing - based on industry standard estimation methodologies for application development. - Gained access to the best of breed tools at a reduced cost. - Freed up management bandwidth to focus on the core business. - Enabled improvement in processes by leveraging the mature processes (CMMi/ITIL) of the partner. - Enabled creation of a Knowledge Management framework. - Gained from productivity levers (YoY improvements). - Delivered to agreed SLAs and OLAs. • HCL successfully implemented Managed Services with minimal oversight and ensured a seamless engagement between the two teams by using its Target Operating Model. HCL provided a “Well balanced”, “Realistic” and optimized solution, which avoided the risks of an overtly aggressive “light-on” only operations and an expensive, heavily staffed operating model. This was done on the basis of a prior APO exercise, which helped outline the FTE requirement accurately, ensuring alignment with business criticality. • HCL’s superior understanding of the client’s business objectives/ process knowledge and operationalizing the same through the I-BAIM – Integrated Business Aligned Incident Management Process. • Core team enabling transformation: HCL provided a core project team of SMEs and Business Analysts to enable transformation for the client. A total of 22 SMEs were deeply involved in initiating and proposing innovation projects for them. HCL not only delivered and achieved its productivity and cost optimization goals, but also worked collaboratively with the client’s team on several innovation projects which were closely aligned to business objectives through streamlined approval process. • HCL’s Agile Based Methodology enabled a flexible and quick ramp up/ ramp down and enabled business to see results quickly through “Sprint” based development cycles. • HCL’s core delivery and performance metrics have been defined for the engagement. These help to measure and ensure quality, process compliance, and schedule management. These metrics work towards improving process and people efficiencies, measuring and tracking goals and ultimately in defining a Managed Services Model.6
• Multi-governance model: HCL set up a structured communications and reporting approach for the client with project level governance, operational reviews and regular Steering Committee meetings.• Tools and technology leadership for business advantage: - Innovation dashboard - An analytics and dashboard framework that allows leaders to assess the health of the project and potential areas of implementation.implementation. - ProcessWatch - HCL’s framework to visualize the business process down to application and infrastructure, outline constraints, bottleneck and redundancies for improveme BusinessWare - A systematic business case development framework to determine the cost benefit analysis of new digital/ IT initiatives and draw several “what-if” analyses. - Process compliance: A comprehensive process compliance framework (PCI) for ensuring quality assurance across all service lines. } Process management tools: HCL PMSmart for integrated project management (including task management, risk, issues tracking, defect management). } Microsoft Project for project plans (part of PMSmart). } Team Track for project state management. } TFS - Code and defect management. } GDR - document repository.Key Success factors from the client’s side : that led to success include HCL’sexcellent relationship with the account. HCL built this relationship by workingclosely with the CIO, who also became a key sponsor of this new engagement.HCL received tremendous support from the senior leadership (of the client)to build these bridges and establish cxo relationship with stakeholders. 7
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