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How to design your Demand organisation? March 2010
A significant proportion of an organisation’s value is created by outsourced processes and should get the right management attention  Value leakage during operations Increase in outsourcing initiatives - more organisations focus on their core Shift from outsourcing standard operational activities towards outsourcing complex (complete) processes Agility and time-to-market are more important drivers in today’s volatile and rapidly transforming global market Role of the supplier is increasing Introduction Directly 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 services Perceived loss of quality Unsustainable contract terms Lack of control or coordination Battle for talent and retaining knowledge Measures to make changes in control and governance often fall short Conventional 1-on-1 customer-supplier relation Network of internal and external demand-supply relations ,[object Object]
The way companies monitor, control and manage their sourced process(es) should adapt/match the developments in demand and supply,[object Object]
Demand organisation is typically established when supporting processes are delegated to a separate business unit (e.g. shared service centre) or third party (outsourcing).
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 suppliers Business Intermediary Business unit IT process Demand organisation Business unit Finance process Business unit Procurement process Supply  management (external SLA’s) Demand  management (internal SLA’s) Business unit ... process A 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.
Market trends stress the importance of the demand organisation as the engine of managing sourced processes Trends and issues          Trends in Outsourcing, SSC and Demand organisation Identified trends in the market Outsourcing & SSC ,[object Object]
More companies consider SSC and BPO for their support activities [Source: Capgemini, 2009]
The combination of different sourcing options (Hybrid; SSC and BPO) will increase in the coming years
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
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 Organisation ,[object Object]
About 60% of all customer organisations is in a insufficient extent satisfied on their suppliers
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
The mean score that organisations give their demand organisation is a 6 on a scale from 0 to10 [Source: Morgan Chambers, 2008]

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Point of View on Demand Organisation Development

  • 1. How to design your Demand organisation? March 2010
  • 2.
  • 3.
  • 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 suppliers Business Intermediary Business unit IT process Demand organisation Business unit Finance process Business unit Procurement process Supply management (external SLA’s) Demand management (internal SLA’s) Business unit ... process A 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.
  • 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.
  • 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 outsourcing 3 Shared service Centre 2 Cost savings Internal provision ofservice 1 Degree of maturity
  • 15.
  • 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 services supply of highly standardised services The demand organisation has to balance demand and supply
  • 26.
  • 27. Demand organisation and strategy has to be established, before (out)sourcing takes place
  • 28.
  • 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.
  • 33. Transparency in processes on demand and supply management.
  • 34. Manage expectations of the user-organisation in a structural way
  • 35.
  • 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.
  • 40. Advanced web-enabled requisitioning and management tools
  • 41.
  • 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.
  • 46. Implementing the 7 building blocks enables your company to realise more value out of your sourced processes Building blocks
  • 47.
  • 48. Ownership: In house or Outsourced
  • 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
  • 55. Set up the business case on the demand organisation design
  • 56. Evaluate regularly on multiple organisation levels:
  • 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)
  • 68.
  • 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 transformation Rightshore™ 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 roles The 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 delivered Capgemini 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 organisation Thought 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 leader Capgemini’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.
  • 71. Phase 2: Describing the future processes and operating procedures incl. pilot - design of ICT, Processes, Personnel and Organization; and, Migration preparation
  • 72.
  • 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.
  • 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) Adriaans Senior Consultant M. (Marjolein) Dijkshoorn Consultant Capgemini Nederland B.V. Papendorpseweg 100, P.O. Box 2575, 3500 GN Utrecht - The Netherlands T. +31 30 689 4062 F. +31 30 689 55 60 Mob. +31 615 030 344 Robin.Adriaans@capgemini.comwww.nl.capgemini.com Capgemini Nederland B.V. Papendorpseweg 100, P.O. Box 2575, 3500 GN Utrecht - The Netherlands T. +31 30 689 5594 F. +31 30 689 55 60 Mob. +31 615 031 022 Marjolein.Dijkshoorn@capgemini.comwww.nl.capgemini.com