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© 2012 KPMG AB, a Swedish limited liability company 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.
Sourcing & Governance
Dagens Industri | Strategisk IT 2012-03-28 Sheraton Hotel Carl Rönnerstam KPMG Stockholm
Carl Rönnerstam Head of IT Strategy & Transformation
KPMG Advisory Sweden Management Consulting
Telephone +46 766 312 590 carl.ronnerstam@kpmg.se
© 2012 KPMG AB, a Swedish limited liability company 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.
KPMG Advisory – Core Propositions
KPMG can help improve the effectiveness and efficiency of the finance function and generate real insights to deliver additional value to the business.
Guidance on the most appropriate strategies for: Creating and implementing
Shared Service Centers Outsourcing/offshoring of IT services Ensuring implementation of effective controls
Improvement of business performance management and utilization of technology
to support governance and control.
KPMG can support companies in adapting to
and addressing the consequences of new regulatory standards,
including FATCA IFRS
Providing support to ensure availability, efficiency and
confidentiality in information systems by translating
operational knowledge into IT knowledge.
KPMG can help companies enhance revenue and implement sustainable cost reductions.
Value creation and minimization of risk from M&A, integration and separation.
Optimization of operational activities by identifying improvement opportunities and contributing with experience on implementation.
TRANSACTIONS & RESTRUCTURING
RISK & COMPLIANCE
Forensic
© 2012 KPMG AB, a Swedish limited liability company 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.
Provider Performance & Satisfaction Study | Drivers
78%
49%
44%
27%
25%
13%
72%
46%
36%
19%
17%
67%
42%
29%
17%
6%
Cost savings
Access to skills
Quality improvement
Financial flexibility
Time to market
Change agent
© 2012 KPMG AB, a Swedish limited liability company 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.
Provider Performance & Satisfaction Study | Governance
How would you qualify the overall skills/competencies of your organisation to manage your outsource providers?
Do you agree that your service provider has an efficient and effective governance model.
2%
43%
47%
8%
80%
76%
74%
72%
70%
70%
69%
68%
68%
64%
64%
63%
63%
63%
63%
61%
60%
59%
58%
57%
57%
54%
54%
Medelvärde 65%
© 2012 KPMG AB, a Swedish limited liability company 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.
Relationship Management is key to success
© 2012 KPMG AB, a Swedish limited liability company 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.
How do we understand to focus both on doing things right, and also doing the right things?
The platform for successful IT organizations is based upon the understanding of the core of demand management and supply management.
■ Demand Mgmt | doing the right things
■ Supply Mgmt | doing the things right
Demand & Supply
© 2012 KPMG AB, a Swedish limited liability company 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.
Demand & Supply Management Framework
IT-leverans Verksamhet Demand Management
Supply Management
EFFECTIVENESS “göra rätt saker”
Varför? Vad?
Affärsprocesser Funktionalitet
Krav
EFFICIENCY ”göra saker rätt ”
Hur? Vem?
Applikationer Infrastruktur IT-lösningar
© 2012 KPMG AB, a Swedish limited liability company 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.
KPMG Sourcing Lifecycle
G IMPLEMENTATION
SOLUTION
STRATEGY
OPTIMIZATION
GOVERNANCE
© 2012 KPMG AB, a Swedish limited liability company 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.
KPMG Sourcing Lifecycle
Governance Service Delivery
Management Business Alignment
Sourcing Strategy
Service Delivery Model
Sourcing Assessment
Governance scan/survey
Opportunity Analysis and Business Case
Internal Improvements
Shared Services - Captive centre
Outsourcing – Offshore
InSourcing
Negotiation & Contracting
Transition
Transformation
Change Management
Project Management
Interim Management
Diagnostic and Benchmark
Renegotiation Support
Contract Review
Performance & Satisfaction
Measurement
© 2012 KPMG AB, a Swedish limited liability company 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.
Strategy
How would you like to transform your business by taking advantage of sourcing and governance?
Do you know why to do what?
• Sourcing conversations usually starts with IT. The problem is, it often ends there, too.
• Sourcing is a major game changer.
© 2012 KPMG AB, a Swedish limited liability company 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.
Strategy | Methodology
Service towers and preferred delivery options
+
Service tower Preferred delivery option
Risks and attention points
A: Housing + Hosting
Outsourcing Feasibility in terms of changing the organization
C: Work placeservices
Outsourcing Impact for every country has to be detailed
D: Specific Business Applications: SAP
Share service Center
Preferred location has to be determined
E: Specific Business Applications: SAAS
No changes Complex demand / supply organization
…
Sourcing objectives
■ Maximize financial flexibility■ Reduction of operational IT focus and increase focus
on actual ICT demand
■ Get access to more innovative and more advanced
service concepts
D1 D2 D3
T1 1 3 2
T2 2 3 1
T3 3 2 1
D1 D2 D3
T1 1 3 2
T2 2 3 1
T3 3 2 1
D1 D2 D3
T1 1 3 2
T2 2 3 1
T3 3 2 1
2
Preferred sourcing model
Define baseline
Detail strategy
- Selection approach- Governance and
retained organisation- Impact & risks- Business Case
Implementation plan
Sourcing strategy
Reasons■ Business focus
(core / non core)■ Improve quality
■ Actual sourcing
experiences■ Standardize
service delivery
■ Increase
financial flexibility
■ Cost reduction
■ …
Results■ Baseline (financial
and operational)■ Market insight
■ Sourcing model
(scope, service towers and delivery
options)
■ Vendor model
■ Governance impact■ Implementation plan
■ Business case
Input for:■ Selection process
■ Detailed Shared
Services implementation plan
■ Transition /
Transformation plan
■ Benefits monitoring
© 2012 KPMG AB, a Swedish limited liability company 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.
Too Late to Wait Organization
• How does a successful retained organization look like?
• How big organization is needed to execute necessary governance?
• How do I transform my retained IT organization to effectively support a modern sourcing landscape?
© 2012 KPMG AB, a Swedish limited liability company 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.
Organization | Methodology PH
ASE
As-is Analysis & Strategy
High level Organisation & Process Design
Preparation of Implementation
STEP
S
Detailed Organisation & Continued Process Design
Mapping current situation on Demand Supply Model EQ
Strategy definition for business case and new organisation
Design principles
Develop to-be organisation based on role clustering
Select relevant process chains
High level process design
Define products and RACI mapping per product/roles
Role-functionmapping: functiondescriptions
High level processdesign for remainingprocesses
Define final organisation including functions
Benchmark database input
1
2
3
4
5
6
8
9
10
11
A B DC
Go/no go decision
Define organisationincl functions and sizing
7
Implementationplan
12
© 2012 KPMG AB, a Swedish limited liability company 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.
Organization | Example
Beställarorganisation
Extern IT-leverans
Affärsenhet/Avdelning
Central Governance
Decentral Governance
IT-leverans Verksamhet Demand & Supply Management
Affärsenhet/Avdelning
Decentral Governance
Intern IT-leverans
© 2012 KPMG AB, a Swedish limited liability company 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.
Organization | Benchmarking
€ X miljoner
Total IT - utgift € Y miljoner
B %
A %
Utgifter för Demand Mgt + Supply Mgt som % av total IT - utgift
1
2
3
© 2012 KPMG AB, a Swedish limited liability company 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.
Organization | Benchmarking
Demand Management IT Delivery Business Supply
Management
Strategiskt
Taktiskt
Operativt
Alla roller inom Demand och Supply Management
X - Y % Taktiskt och operativt supply management
Cirka Z %
© 2012 KPMG AB, a Swedish limited liability company 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.
Management Control
Operational Control
Change & Innovation
Business Governance
Strategic Planning
Annual planning cycle
Portfolio management & architecture
Strategy & policies
Operations & operational control
Support
Requirements, project & change management
Release, test & transition management
Service level management
Contracts & service agreements
Project portfolio management
Organisation development & human resource management
Security, compliancy & quality management
Finance
Stra
tegi
c Ta
ctic
al
Ope
ra-
tiona
l
Organization | Example Processes
IT-leverans Verksamhet Demand Management
Supply Management
© 2012 KPMG AB, a Swedish limited liability company 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.
Benchmarking
Do you really gain the full value?
■ Price ■ SLA ■ Satisfaction ■ Performance
How do you understand if your current delivery gives you enough competitive advantage?
© 2012 KPMG AB, a Swedish limited liability company 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.
Effektivitet – Lean, Six Sigma
Target Operating Models
Organisationsstrukturer
Addera värde till processer Vi kan öka effektivitet och addera värde till processer i enlighet med t ex Lean och Six Sigma och motsvarande.
Transparent Target Operating Model Vi designar tydliga TOM-strukturer genom hela värdekedjan för att säkerställa transparens från demand till supply.
Tydlig organisationsstruktur Vi etablerar en (“retained”) organisationsstruktur som är logisk, genomförbar och relevant med avseende på komplexitet och IT-budget.
Processmodell
Governanceutvärderingar
Rollmodell Demand&Supply
Ihopkopplade demand-supplyprocesser Vi etablerar ihopkopplade demand-supplyprocesser för att säkerställa väl fungerande processer från strategisk till taktisk nivå.
Transparens i storlek, roller och förmågor Vi benchmarkar och utvärderar roller och förmågor inom demand-supply-organisationen och levererar ett business case för möjliga förändringar.
Tydlig referensmodell för roller Vi introducerar en tydlig och väl definierad rollmodell för att analysera roller i er organisation och för att stödja er i designen av framtida organisationen.
Processdesign
Skalbara processflöden Vi designar och implementerar varje processflöde på en detaljerad nivå så att organisationens anpassas till respektive processteg.
Strategic
Tactical
Operational
Business Demand management
Supply management IT Delivery
Annual planning cycle
Portfolio management & architecture
Strategy & policies
Operations & operational control
Support
Release, test & transition management
Finance
Organization development & human resource management
Service level management
Contracts & service agreements
Project portfolio management
Requirements, project & change management
Security, compliancy & quality management
€ 25 MiO
Total IT spend
€ 75 MiO
24%
12%
Spend on Demand mgt + Supply mgt as a % of total IT spend
1
2
34
Management
Management control
Operationalcontrol
Change&innovation
Businessgovernance
Strategicplanning
Service manager
Contract manager
Vendor (portfolio) manager
Asset manager
Application/ infraconsultant
Project sourcingmanager
Release manager
Test manager
IT project manager
Service portfolio manager
IT landscape architectInformation architect
Application portfolio manager
Security & complianceofficer
Business processarchitect
Business service manager
Administrativesupport
Project portfolio manager
Functional support
Change manager
Data administrator
Data quality analyst
Information analyst
End user
Information strategyanalyst
Program manager
Key user
Business processManager
Information owner
Application owner
Quality officer
Business director
Risk & complianceofficer
Business project manager
Service desk agent
Business consultant
IT process manager
Database administrator
Application engineer
Systems engineer
Process owner
CEO IT director
Information securityofficer
Demand manager Supply manager Delivery manager
Business processdesigner
Meta data manager Test coordinator Solution test manager Solution tester
IT purchaser
Service level Manager
IT controller
Service deliverymanager
Contract deliverymanager
Service coordinator
Solution architect
Solution designer Solution engineer
Deployment manager
Business Demand management
Supply management IT Delivery
Enterprise architect
CIO
Auditor
Manager
Ansvar
Tydliga roller och ansvar Vi kopplar ihop demand-supply-organisationen, processer och roller i en sammanfattande och direkt användbar RACI-matris, vilken tydliggör ansvar för varje roll i varje process.
Activity Category Definition/Characteristics
Value adding activity Activities that directly add value Something a customer will pay for Adds form, feature or function Enables competitive advantage (increase customer satisfaction, faster delivery, reduced
price.
Business Value Added Maintenance activities and unavoidable waste Legal/Financial reporting requirements Regulatory requirements.
Non-Value Added (Waste) Activities that are unnecessary and should be eliminated and/or simplified (lean out) The seven types of Lean Waste see next slide.
Value Add Analysis In order to eliminate waste – it must be identified Categorize all activities within a process into the following
types: − Value added− Business Value added− Non-Value added (Waste)
Often times value added activities represent a small fraction of the total process
Non-Value added activities (Waste) should be eliminated immediately.
Non-Value Added (Waste)
Value adding activities
Non-value adding
Governance & Sourcing Advisory
© 2012 KPMG AB, a Swedish limited liability company 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.
Qualified Glocal Research
Key Take-Aways It is never too late to establish best practice
Inadequate governance erodes sourcing value heavily.
Learn how to realize the value of your sourcing It is essential to focus on the what and not the how. The demand and supply framework puts it together.
Ensure goal alignment with your provider There is a risk to not deliver on the “intent” of the deal.
Track and measure internal satisfaction Keeping an open dialogue and obtaining regular feedback from internal clients is key to managing expectations.
Determine your organization’s level of trust Do whatever necessary to maintain or regain trust toward your provider to avoid diminishing value.
Carl Rönnerstam Head of IT Strategy & Transformation
KPMG Advisory Sweden Management Consulting
Telephone +46 766 312 590 carl.ronnerstam@kpmg.se
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