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International Target Operating Model Design
The document outlines the importance of a target operating model (TOM) as a framework for aligning business strategy with operations, ensuring efficiency and effectiveness. It emphasizes that a well-implemented TOM facilitates faster decision-making, improved client service, and increased operational performance, while also mitigating risks. The document also discusses steps for creating and enhancing a TOM, including gap analysis and prioritization of transformation opportunities.
In this document
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Introduction to Target Operating Model (TOM) and its importance for alignment and effective implementation in a business.
Definition of a TOM, detailing its key components and benefits such as competitive advantage and operational efficiency.
The relationship between Corporate Strategy and TOM, emphasizing alignment across different operational layers.
Key initiatives for optimizing business processes and technology, introducing client value propositions and risk management.
Step-by-step approach for planning and designing TOM, including documentation, project execution, and performance tracking.
Overview of essential components in the Operating Model of a software business, addressing various operational aspects.
Methodology for conducting gap analysis between current and target operating models, highlighting transformation opportunities.
Framework for prioritizing improvement opportunities based on impact and complexity, including immediate and long-term plans.
Do's and don'ts for executing an international TOM initiative, stressing the importance of understanding and support.
Summarization of important aspects of TOM initiatives, including documentation needs and leadership commitment.
Session conclusion with an invitation for questions, reinforcing the significance of the TOM in business strategy.
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International Target Operating Model Design
- 1. Target Operating ModelDesign Chris Oddy
- 2. Chris Oddy • APlan is only of value if it is successfully implemented • A good Strategy is important… A Great Target Operating Model is more beneficial to everyone involved in the business • A Target Operating Model ensures everyone is aligned and knows what to do • A Target Operating Model is a critical step on the path to building a sustainable and scalable business 1
- 3. Chris Oddy What Isa Target Operating Model? 2 What is an Operating Model? • A breakdown of a business into its key components • A framework for how an organization operates in terms of people, processes and technology • A basis for formulating strategy and making informed decisions • A structure that dictates how the business should be organized • A target state informed by strategy and opportunities for optimization • An operational design that depicts how the business strategy will be achieved • A basis for developing operational improvement and transformation plans • A framework that enables goal congruence
- 4. Chris Oddy Why isa Target Operating Model Important? • Without a Target Operating Model operations often evolve and do not fully align to the business vision and strategy – People, processes and technologies build and a complicated web of inefficient and ineffective systems and processes is created • A Target Operating Model often leads to a significant competitive advantage: – Faster decision making in launching products, services and partnerships – Improved client service through greater role clarity – Better investments, assessed and prioritized based on business impact – Reduced risk from a more controlled and stable operating environment – Higher colleague engagement and alignment – Greater long-term operational efficiency and optimization • Businesses without a Target Operating Model typically: – Deploy increasingly greater resources to address operational deficiencies – React slowly, struggling to make decisions due to a lack of clarity and data – Experience exponential growth in costs as they evolve and try to scale 3
- 5. Chris Oddy Where doesthe Target Operating Model Fit In? 4 A Corporate Strategy must be reflected in a Target Operating Model for the Strategy to be successfully implemented • The Target Operating Model can be created in layers • The Target Operating Model for an international business is likely to require separate layers for corporate, country and function level operations • Each layer will need to be aligned and congruent with the Corporate Strategy Country Regional Corporate Function Vision Corporate Strategy Target Operating Model Operational Planning and Execution
- 6. Chris Oddy 5 Buildingand Enhancing Local, Regional and Global Process Optimization and Technology Plans Client Value Proposition(s) Business Process Simplification Reduce repetitive processes across the company, clients and other third parties Templates Monitoring Performance Track progress along the service delivery chain Regionalization Including hub branches Role Clarity, Training & Development Drive efficiency through automation Strengthen controls and mitigate risks of E&Os and data protection breaches Provide e-connectivity to clients, employees and third parties 1 2 3 4 5 6 7 Focus Areas for Transformation and Optimization Simplify Standardize Manage Risk
- 7. Chris Oddy 6 1.Client Value Proposition(s) – Develop clearly defined offerings for each market segment to help deliver appropriate products and solutions and account management, moving to more "value add" services such as claims analytics – Robust collaboration with third parties 2. Templates – Create standard templates for repetitive tasks (e.g. collection and review of policy, census, claims and billing data) touching clients and third parties to aid efficiency and enhance controls 3. Business Process Simplification – Reduce repetitive processes across with third parties, ensure consistency in delivery, understand processes and enable monitoring and control – More structured workflow, with additional commissions and fees earned for extra services provided to carriers and clients 4. Monitoring Performance across the Delivery Chain – Review completeness, accuracy and timeliness across the delivery chain, including measurement of turn around times (internal teams, clients and third parties) against Service Level Agreements 5. Regionalization (including hub branches in countries) – In country and / or regional hubs to drive efficiency and maximize ability to leverage expertise across geographies - including IT, training, product development, administration and client support – Opportunity to better manage and lead with best practices in delivery of support services 6. Role Clarity and Training + Development – Align organizational structures to tasks, not accounts – Assess HR needs and requirements 7. Building and Enhancing Local, Regional and Global IT Plans – Address client value proposition gaps and opportunities through software with client, employee and third party interfaces – Strengthen internal and external controls to mitigate risks of E&Os and data protection policy breaches – Drive process efficiency through automation of manual tasks ProcessPeopleTechnology Focus Areas for Transformation and Optimization - Detail
- 8. Chris Oddy 7 Document Currentand Target Operating Models Implement Target Operating Model Execution Hold Workshops and Interviews Approach to Target Operating Model Planning and Design Leadership. Commitment. Project Management. Execution Planning. Communications. Training. Develop Transformation Playbook Planning and Design
- 9. Chris Oddy 8 UnderstandMarket Opportunity + Client Value Proposition • Consider clients’ changing needs and evolving opportunities in your market • Establish project management and assemble the right resources • Engage and gain support from country leadership 1 Document Current Operating Model • Conduct analysis of current model including people, process and technology • Document existing processes and develop process maps • Identify current KPIs and confirm baseline 2 Develop Target Operating Model • Document target state business model and processes • Establish target KPIs and metrics • Develop technology framework 3 4 Implement Plan to Transform the Business • Execute against project plan • Strengthen role clarity and extend training where needed • Track progress and measure KPIs • Deploy and enhance IT solutions 5 6 Sustain and Improve Performance • Deliver outstanding client service and mitigate risk • Ongoing tracking of KPIs across service delivery model against established targets Identify Improvement Opportunities • Perform gap analysis on current versus target operating model • Prioritize people, process, and technology improvement opportunities • Develop phased project plan with colleagues Steps in Target Operating Model Planning and Design
- 10. Chris Oddy Market Segments Client Value Proposition Products& Services Internal Operations Marketing & Lead Generation Sales Account Management Delivery Client Service Technology Infrastructure Research & Development Corporate Strategy. Leadership & Governance. Finance. Human Resources. Legal. Training. 9 Components of a Typical Software Business Target Operating Model
- 11. Chris Oddy 10 IdentifyingImprovement Opportunities - Gap Analysis After the Current Operating Model and Target Operating Model have been documented, Gap Analysis is next …. • Compare the current and target operating models in order to document all the transformation opportunities • Quantify the revenue, expense and risk implications of each opportunity • Prioritize opportunities to ensure appropriate focus. Typically plans should include prioritization of opportunities across two axes: impact on the business and complexity • Group opportunities based on prioritization, three possible groups: i. Immediate changes, e.g. actions required to implement a new software platform ii. Short term important transformational opportunities that will have a high impact iii. Long term “Blue Sky" transformational opportunities that are complex and high risk but present significant opportunity
- 12. Chris Oddy 11 TargetOperating Model Prioritization of Opportunities Transformational changes to "get ready" for New Technology Platform 1 Product Innovation 2 Training and Development ("People Plan") 3 Monitoring Performance 4 Business Process Simplification 5 Regionalization Difficulty (time, cost, effort, risk, complexity) Importance (revenue,costsavings,risk) Possibly Drop Strategic (simplify or drop?) Definitely 1 Claims Analysis based on Complete Claims Data 3 2 Web portal claims tracking Web portal claims and census reporting 4 Stop Duplicate Client Billing Processes 5 Stop Medical Card Review 6 Stop Census Management Important Opportunities (to be completed by end of xxx) Blue Sky Opportunities (to be considered, revisit in xxx months) To "get ready" for New Technology Platform
- 13. Chris Oddy Do’s andDon'ts for a Successful International Operating Model Initiative 12 DO’s DON’Ts • Take the time to understand all businesses before making decisions at a regional or global level that will impact them • Ensure country leadership understanding, commitment and buy-in • Enable colleagues and leadership in each country to be successful in executing THEIR plans • Take lessons learned in one country to help other countries • Assume a target operating model for one country will work in another country • Push initiatives without leadership support or without addressing resistance or misunderstanding • Leave execution up to others without providing sufficient oversight and support • Ignore the opportunity to simplify and standardize across geographies
- 14. Chris Oddy 13 Pointsto Remember • Defining the Target Operating Model is an important step in the successful execution of any Business Strategy • A Target Operating Model initiative, particularly one spanning multiple countries, will require support and commitment of leadership • Operating Model documentation for more complex organizations, particularly those with International operations, must be layered to reflect how the business is organized • To achieve the Target Operating Model, the related Transformation Plan must include: a. Documentation of the Current Operating Model b. Documentation of the Target Operating Model c. Gap Analysis d. Roadmap of Prioritized Transformation Opportunities e. Specific Project Plans with the relevant tasks, responsible individuals, target timelines and benefits (quantified / qualitatively qualified) for each opportunity
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