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Kenya ICT 2012 SummitIndia Case Study
EXCELLENCE IN BUSINESS MANAGEMENT AND STRATEGY
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Global Business Outlook …
•Inflation - Consumer price inflation
easing due to weaker demand and
price decline
•back suggested that the GDP of India had crossed the trillion-dollar mark. The recent
appreciation of the Rupee since January 2007 by approximately 10% helped reach the
milestone far earlier than it would have been otherwise possible.
•In short, at Rs 45 to a US dollar it would still be roughly $900 billion. At Rs 40 to a US
dollar, the GDP of India now stands at $1 trillion. Let us extrapolate these arguments
mathematically on a 'linear scale.' At Rs 20 to a US dollar, India's GDP would be $2 trillion;
at Rs 10 it would be $4 trillion, at Rs 5 it would be $8 trillio
n; at Rs 2.5 it would be $16
trillion and at 1 Rupee to a dollar it w
ould be approximately $40 trillion.
• Unemployment high, but signs of
recovery in US jobs, •News reports a few weeks back suggested that the GDP of India had crossed the trillion-
dollar mark. The recent appreciation of the Rupee since January 2007 by approximately 10%
helped reach the milestone far earlier than it would have been otherwise possible.
•Poor infrastructure a major hurdle
for growth•News reports a few weeks back suggested that the GDP of India had crossed the trillion-
dollar mark. The recent appreciation of the Rupee since January 2007 by approximately 10%
helped reach the milestone far earlier than it would have been otherwise possible.
•In short, at Rs 45 to a US dollar it would still be roughly $900 billion. At Rs 40 to a US
dollar, the GDP of India now stands at $1 trillion. Let us extrapolate these arguments
mathematically on a 'linear scale.' At Rs 20 to a US dollar, India's GDP would be $2 trillion;
at Rs 10 it would be $4 trillion, at Rs 5 it would be $8 trillion; at Rs 2.5 it would be $16
trillion and at 1 Rupee to a dollar it would be approximately $40 trillion.
•Fears of US slowdown haunt IT
companies
•News reports a few weeks back suggested that the GDP of India had crossed the trillion-
dollar mark. The recent appreciation of the Rupee since January 2007 by approximately 10%
helped reach the milestone far earlier than it would have been otherwise possible.
•In short, at Rs 45 to a US dollar it would still be roughly $900 billion. At Rs 40 to a US
dollar, the GDP of India now stands at $1 trillion. Let us extrapolate these arguments
mathematically on a 'linear scale.' At Rs 20 to a US dollar, India's GDP would be $2 trillion;
at Rs 10 it would be $4 trillion, at Rs 5 it would be $8 trillion; at Rs 2.5 it would be $16
trillion and at 1 Rupee to a dollar it would be approximately $40 trillion.
•Economic Growth - Global GDP
Growth estimate for 2012 - 2.5%
(2.8% in 2011); Euro area in mild
recession•News reports a few weeks back suggested that the GDP of India had crossed the trillion-
dollar mark. The recent appreciation of the Rupee since January 2007 by approximately 10%
helped reach the milestone far earlier than it would have been otherwise possible.
• Emerging Markets – Tight money,
declining capital flows, currency
volatility•News reports a few weeks back suggested that the GDP of India had crossed the trillion-
dollar mark. The recent appreciation of the Rupee since January 2007 by approximately 10%
helped reach the milestone far earlier than it would have been otherwise possible.
2
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Global Trends – shifting dominance
3Organizations willing to diversify risks while pursuing labor arbitrage
Global outsourcing growing at over 25% CAGR with huge unaddressed market
Traditional sourcing destinations – down from 52% to 27%Newer Locations – up from 7% to 23%
India and Philippines and preferred destination – steady to stagnant growth
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Facets of India – Success of ICT industry
4
The Indian Information Technology industry accounts for a 7.6% of the country's GDP and export earnings as of 2011
More than 2.8 million people are employed in the sector either directly or indirectly, making it one of the biggest job creators in India and a mainstay of the national economy
In 2011-12, annual revenues from IT-BPO sector is estimated to have grown over US $100 billion
India's outsourcing industry is expected to increase to US $225 billion by 2020. The most prominent IT hub is IT capital Bangalore
Each year India produces roughly 500,000 engineers in the country
IT-BPO employees
India’s share of the global sourcing market
Number of companies offering IT services, BPO, ER&D and Software Products
Number of MNC centers in India
Number of countries serviced by India
Number of languages served
2.8 mn
58%
5,000+
750+
~70
35+
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Convergence of Eco System …
5
Chennai Detroit of India
Top 20 Auto makers Ford and Hyundai, the German luxury car maker BMW, Daimler, Mitsubishi , Renault-Nissan, Peugeot………..
Bangalore Silicon Valley and other states
Innovation and R&D
Software Economic Zone IT-ITES , Jewels , Apparels, Handicraft – Over 200
40 Incubators
Regulatory bodies
GIC657
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Right Track – To achieve global competitiveness
6
Education & Training Capital Standard and Framework Industry Promotion Government and Legal
Delivery Company – Dominators Supplier and sub contractors SME and Niche Players
In ICT - it is far more effective to develop and promote a nation as opposed to promoting individual enterprises.
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Critical Success Factors to establish ICT
7
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Evolving Service Delivery Model
8
Key Characteristics• Staffing people at the client site for face to face
client interaction• Used for specialized tasks requiring high
customer involvement
• Transferring work to a different location to reduce cost of sourcing
• Suited for well defined tasks with low customer interaction
• Presence of delivery centres in vicinity of the client for gaining dual benefits of cost and customer proximity
• Suited for specialized tasks with moderate customer interaction
• Multi tier operating model with hub acting as SPoC and central interface with clients
• Focus is to leverage location advantages and de-risk operations
• Suited for complex and specialized tasks which require moderate to high customer interaction
Onsite
Offsite/ Offshore
Near shore
Hub and Spoke
1980s 1990s 2000s 2010 and beyond...
Source: KPMG in India Analysis – Hub and Spoke operating model 2012
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Take away from the manufacturing experience
Focus on core competency
Leverage benefits offered by emerging locations
Appreciate the cultural nuances of operating in a region
Maintain cost leadership at all times
Ensure brand value is not compromised
9
One common philosophy of Leadership, Quality , Teamwork , People , Process and Technology
improvement across the organization .
Focusing on the needs of the customer, empowering employees, and optimizing existing activities in the
process.
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
What , Where , Who
10
Business Excellence : Systematic use of quality management principles and tools in business management, with the goal of improving performance .Aligned to principles of customer focus, stakeholder value, and process management.
Where is it applicable : Applied across functional areas in an enterprise include continuous and breakthrough improvement, preventative management and management by facts.
What tools : MBNQA, EFQM , ISO , Balanced Scorecard, Lean, Six Sigma , process management, and project management………
Which Industry : IT - BPO ,Telephony and communication , Banking & Insurance , Financial Sector , Pharma, Hospitality , Healthcare , Manufacturing, Logistics etc .
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
• IT Development
CMMI DEV , ISO 20000 , PCMM, TMMI , Six Sigma,
BPO and IT IS
CMMI SVC, COPC, eSCM , ISO 27000, COBIT,PCMM, HIPAA, Six Sigma…
Communication :
TL 9000, eTOM CMMI SVC, ISO
Global Framework s and Business models adopted
11
Management Function
HR
FinanceAdmin
Vendor ManagementIT Support
Service Management IT Infrastructure Services Production Support Application Management IT Enabled services/BPO
Product Management Test Factory Product Development - Application Development
Customers 3rd party Service providers/ Suppliers
PCMM , Competency Assessment
CMM
I DEV
, TM
MI
Cert – RMM, ITIL, PMP , Agile , Lean Sigma
Voice of Customer, COPC , eSCM
ISO 9001 COBIT
CM
Mi S
VC, I
SO 2
0000
, C
OPC
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Why BE framework ?
12
GLOBAL
High Level of Performance
Self Assessment for continuous improvement
Strategy Agility and correlate to performance .
Recognition and visioning
Designing and Managing Performance Management system .
Common Language of Excellence across Stake holder, customer and employee
Project Management and Supplier Management
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Correlation between adoption of frameworks and ICT maturity
13
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Global trends – Productivity Improvements
14
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Suggestive Implementation Road Map for Kenya ICT- maturity of delivery engine
Draft sub-vision:
• By 2014 / 2015 : ‘X’ firms to be L3 on CMMi –DEV and CMMi - SVC: ‘Y’ firms to be L5 on CMMi –DEV and CMMi – SVC: ‘Z’ firms to be on PCMM L3: ‘XX’ firms to be on TIL: “XY” Six Sigma GB & BB: ‘XYZ’ firms to be on ……….
Draft sub-vision:
• By 2017 : ‘X1’ firms to be L3 on CMMi –DEV and CMMi - SVC: ‘Y1’ firms to be L5 on CMMi –DEV and CMMi – SVC: ‘Z1’ firms to be on PCMM L3: ‘XX1’ firms to be on TIL: “XY1” Six Sigma GB & BB: ‘XYZ1’ firms to be on ……….
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Tested, successful collaborative methodology to achieve the vision of maturing the delivery model
Public
GoKKICT+
Private
Delivery EngAdvisorsAssessors
Donors
Create CoE
GoKKICT+KPMG +
Clustering
Awareness BenchmarkingReadiness check
Pilot
Implementation CertificationCapacityCapabilityCompetency
Finance modeling
Measures of success
AwarenessBenchmarkingReadiness
TrainingBaselineStructured Support
© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
17
Mahesh Punia Partner, Head Management ConsultingKPMG East AfricaTele : +254 20 2806126 mpunia@kpmg.co.ke
Thank YouThank You
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