Demand Organisation 2010

1. How to design your Demand organisation?March 2010

2. A significant proportion of an organisation’s value is created by outsourced processes and should get the right management attention Value leakage during operationsIncrease in outsourcing initiatives - more organisations focus on their coreShift from outsourcing standard operational activities towards outsourcing complex (complete) processesAgility and time-to-market are more important drivers in today’s volatile and rapidly transforming global marketRole of the supplier is increasingIntroductionDirectly after the outsourcing deal is settled, the expectations are met,…however after 3 years the benefits of outsourcing decrease and value leakage is increasing:Dissatisfied internal clients on delivered servicesPerceived loss of qualityUnsustainable contract termsLack of control or coordinationBattle for talent and retaining knowledgeMeasures to make changes in control and governance often fall shortConventional 1-on-1 customer-supplier relationNetwork of internal and external demand-supply relations… delivering sustainable value of an outsourcing decision can only be achieved by effective alignment of business needs with the capabilities of the service providers

3. The way companies monitor, control and manage their sourced process(es) should adapt/match the developments in demand and supplyThe demand organisation enables an effective alignment of demand and supply and ensures the potential value of the sourced process is deliveredDefinitionDemand organisation is the intermediary between the core business processes and the supporting processes

4. Demand organisation is typically established when supporting processes are delegated to a separate business unit (e.g. shared service centre) or third party (outsourcing).

5. In the demand organisation activities are executed to manage the supply side (internal/external suppliers) as well as the demand side (business).Shared support organisation or external suppliersBusinessIntermediaryBusiness unitIT processDemand organisationBusiness unitFinance processBusiness unitProcurement processSupply management(external SLA’s)Demand management(internal SLA’s)Business unit... processA good structured Demand Organisation guarantees the right level of service, quality and costs in accordance with business requirements by maximising the benefits and minimising the risks.

6. Market trends stress the importance of the demand organisation as the engine of managing sourced processesTrends and issues Trends in Outsourcing, SSC and Demand organisationIdentified trends in the marketOutsourcing & SSCThe Dutch outsourcing market has grown by 17% since 2005. 51% of subcontractors expect to grow in the future [Source: Morgan chambers, 2007]

7. More companies consider SSC and BPO for their support activities [Source: Capgemini, 2009]

8. The combination of different sourcing options (Hybrid; SSC and BPO) will increase in the coming years

9. Most important reason for companies to outsource is to reduce cost, penetration of new markets, reduce cycle times, increase customer service, access to innovation and reduce logistics cost

10. Research has proven that directly after the outsourcing deal is settled, the expectations are met. However, after 3 years the benefits of outsourcing decrease [Source: Capgemini, 2007]Demand OrganisationManagement and the structure of decision making from the customer side are not captured by 50%+ of Dutch companies that outsource [Source: research community Digital Boardroom, 2005]

11. About 60% of all customer organisations is in a insufficient extent satisfied on their suppliers

12. Directing or professionalising their demand organisation is mentioned by 80% of companies to be most important element for improvement. For 53% of the organisations it has real priority

13. The mean score that organisations give their demand organisation is a 6 on a scale from 0 to10 [Source: Morgan Chambers, 2008]

14. Organisations interpret the demand organisation differently, leading to large differences in the design[Source: Capgemini, 2009]Business process outsourcing3Shared service Centre2Cost savingsInternal provision ofservice 1Degree of maturity

15. Companies encounter the following issues when the demand organisation is operationalTrends and issuesIssues regarding the demand organisationOnce a sourcing deal is signed, many organisations falsely believe that their work is done

16. A major cause of sourcing dissatisfaction and failure is the assumption that a few people acting just as ‘liaison officers’ can manage complex sourcing relations

17. Organisations experience a lack of control and insufficient coordination of suppliers

18. Insufficient control on SLA, resulting in bilateral disappointments on contracts/ dissatisfied customers.

19. Expectations keep on changing, the contract does not

20. Continuous discussions about the quality and timeliness of the service

21. The success in sourcing is determined by the people and the organisation, not the technology

22. The gap between internal client satisfaction and the service levels in the SLA needs to be managed carefully

23. Very often a lack of a professional portfolio management leads to a ‘cheap’ contract and very expensive add-on work

24. Direct management of outsourced processes is not possible anymore

25. Most companies have to professionalise their own organisation for governing the relationship to achieve the best from their outsourcersdemand for specialised servicessupply of highly standardised servicesThe demand organisation has to balance demand and supply

26. When designing and implementing a valuable demand organisation you have to consider the following success factorsSuccess factorsStrategySourcing strategy needs to be aligned with corporate strategy and purchasing strategies.

27. Demand organisation and strategy has to be established, before (out)sourcing takes place

28. Bilateral strategy: customer focus as well as maximising synergiesSourcing strategyGovernanceA certain level of maturity (formality/structure)

29. Clear line of authority and responsibility

30. Consistent, understandable policies and standards that are embedded in operating processes

31. Exchange of information from suppliers as well as business units.

32. Proactive decision making on how to manage the demand organisation and service providersProcessrequirementsGovernanceProcessesStandardised processes which are compliant with policies and regulations

33. Transparency in processes on demand and supply management.

34. Manage expectations of the user-organisation in a structural way

35. Clear split and handing over between the in-house processes and the outsourced processesDemand organisation designPerformancemanagementSLAsTechnology /IT strategyPerformanceSteer on quality delivery, targets and realised service levels

36. Alignment of KPIs and objectives with corporate targets

37. Clear and common understanding of specifications,

38. Periodical evaluation of contracts, SLA’s, and performance

39. Quality of internal underpinning contracts (services, volumes, price)People &OrganisationTechnology / ITSystems need to be aligned with the external party (or vice versa)

40. Advanced web-enabled requisitioning and management tools

41. Integrated portals supporting reports on performance and communicationPeople and organisationAlignment organisation with the operating processes

42. Flexibility and ability to absorb environmental changes

43. Clear defined operating model (processes, roles, communication)

44. Choice centralisation/decentralisation, number of SLA’s/ customers reflect size and place organisation

45. Steering on competences within demand organisationAn effective demand organisation consists of the following 7 building blocksBuilding blocksDemand organisationOrganisation & GovernanceVision / strategyPerformance managementProcess, activities and roles (RACI)Demand managementSupply managementHuman resourcemanagementTechnology / ITFinancialmanagementInfrastructure/enablersbuilding blocksBusinessExternal / internal suppliers

46. Implementing the 7 building blocks enables your company to realise more value out of your sourced processesBuilding blocks

47. A sustainable demand organisation is interwoven with your sourcing strategy and should continuously go through a closed loop processAnalysis and DefinitionDelivery or OperationsScenario Planning and Business CaseTransition or MigrationSelection and PreparationApproachSourcing strategy1 creates a vision on the right mix on

48. Ownership: In house or Outsourced

49. Location: Onshore or Offshore

50. Management required: Light or Tight

51. Sourcing strategy sets the scope of the demand organisation

52. Design of the demand organisation for multiple scenarios

53. High level of organisation and governance

54. Processes

55. Set up the business case on the demand organisation design

56. Evaluate regularly on multiple organisation levels:

57. Performance service providers

58. Client satisfaction (business)

59. Alignment of the demand organisation to changing environment

60. List requirements and set up SLAs - demand and supply side

61. Detail way of working (organisation and processes)

62. In house: input for business process redesign (e.g. set up SSC)

63. Outsourcing: input for selection process and process improvement

64. Plan transition or migration

65. Finalise way of working (organisation and processes)

66. Finalise SLAs and KPIs

67. Transfer critical knowledge

68. Train employees and/or recruit new employeesAfter the implementation you need to regularly evaluate the demand organisation whether the current design is still successfulAnalysis and DefinitionDelivery or OperationsScenario Planning and Business CaseTransition or MigrationSelection and PreparationApproach

69. Why Capgemini?Why Capgemini?Business Transformation Capabilities – Based on our unique multidimensional Business Transformation ® framework Capgemini supports leading companies on their journey towards measurable and sustainable competitive advantages. We are focused and committed on delivering transformationRightshore™ BPO – Our Rightshore model will provide flexibility and scalability based on the right process at the right location within the Capgemini global delivery network. We leverage European and US onshore expertise for planning, consulting and strategy roles while leveraging offshore expertise for execution and administrative rolesThe Results We Achieve – Capgemini works in a strictly results-oriented way, focusing on sustainable improvements and less on academic concepts. Capgemini supports transformations until the expected results are deliveredCapgemini way of working - Collaborative Business Experience. A key strength in our working style is that we do work WITH our clients. Capgemini believes this joint working to be essential in effecting sustainable change in an organisationThought leadership – Capgemini has a clear vision about the evolvement of service management. We provided and implemented this vision in the aftermarket of several clients helping them to become market leaderCapgemini’s Global Sourcing of Services (GSS) cube ©“Point of view on Sourcing Strategy”“Outsourcing strategy survey 2009-2010”Capgemini has the people, culture and experience to deliver high quality results and solutions that work

70. Capgemini has broad experience in all aspects of Demand organisationWhy Capgemini?Business challenge3 casesChosen solutionby companyApproach and resultsNeed to professionalise the organisation and to reduce costsPhase 1: The feasibility study - Business Case; Survey of the processes and ICT in place, and the ICT incl. it's bottlenecks; Vision on the future processes and ICT; Headlines of an implementation plan; Project charters for the planning in details; Migration script; Plan for change management.

71. Phase 2: Describing the future processes and operating procedures incl. pilot - design of ICT, Processes, Personnel and Organization; and, Migration preparation

72. Phase 3: Migration - the financial administrations pass to the support centreCentralise accounting processesImplement SAP Shared Services Centres and achieve cost savingsConsolidate IT processes into global SAP Shared Service Centres

73. Used extensive global experience in establishing shared service establishment, process re-engineering and SAP implementation to effect an ideal solution for the client

74. Consolidated parallel IT systems that were costly to operate and maintain

75. Incorporated SAP methodology and leveraged experience from prior SAP implementations to design, develop and implement global SAP solution.Shared Services CentresImperative for improvement in business support processes – both cost and serviceProvide information technology, call centre, billing, human resources, supply chain, accounts payable, and finance and accounting services

76. Develop and implement new business processes and rationalize existing services in order to enhance operational efficiencies and leverage new technologies

77. Minimise business disruption and achieve significant reduction in cost of provision of these servicesBPO

78. R. (Robin) AdriaansSenior ConsultantM. (Marjolein) DijkshoornConsultantCapgemini Nederland B.V.Papendorpseweg 100, P.O. Box 2575, 3500 GN Utrecht - The NetherlandsT. +31 30 689 4062F. +31 30 689 55 60Mob. +31 615 030 344 Robin.Adriaans@capgemini.comwww.nl.capgemini.comCapgemini Nederland B.V.Papendorpseweg 100, P.O. Box 2575, 3500 GN Utrecht - The NetherlandsT. +31 30 689 5594F. +31 30 689 55 60Mob. +31 615 031 022 Marjolein.Dijkshoorn@capgemini.comwww.nl.capgemini.com

Demand Organisation 2010

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