Future of global operations
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Operations to enable to better the business they serve and have moved beyond traditional cost reduction to embrace new technology, practices and talent to move beyond incremental gains. See Gianni Giacomelli, SVP, Genpact and Phil Fersht, CEO, Hfs Research explain how to do this.
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Future of global operations
- 1. The Future of (Global) Operations Presentation Title Goes Here November, 2012 Playback available on https://learnatgenpact.webex.com/learnatgenpact/lsr.php?AT=pb&SP=EC&rID=18815472&rKey=C5C9 F6BB94A25616 © 2012 Copyright Genpact. All Rights Reserved.
- 2. About Genpact ► Overview A Global Leader In Business Process Services: Process Transformation and Outsourcing, Analytics, Technology What we do We help leaders of some of the largest enterprises transform and run their processes and operations, including the very complex and industry-specific How we do it Our impact Unbiased, agile combination of process science, related technology and analytics limiting upfront costs and enhancing future adaptability We help enterprises to be more competitive by becoming more intelligent: adaptive, innovative, globally effective and connected… Right critical mass: we are large (62,000+ global staff) but our solutions appropriately flexible; our top management is directly involved in our client partnerships …by enabling tighter management of costs, risks, regulations, and growth enablement The results: US$22B* of impact for 800+ global clients *US$22B is a cumulative figure since 2006 © 2012 Copyright Genpact. All Rights Reserved. 2
- 3. Who is Genpact • GE spin-off, NYSE “G” • 60,000+ associates • Pioneer in global business process management • Initial core F&A and Financial Services ops, now includes analytics operations, IT and process design/optimization – across industries • Operations process as a science © 2012 Copyright Genpact. All Rights Reserved. 3
- 4. Keynote for this Speakers Speaker session Gianni Giacomelli Senior Vice President, Product Innovation Leader, Genpact Gianni leads the corporate organization tasked to create scalable, productized services by weaving together Genpact’s process excellence, IT solutions and analytics capabilities. His career spans 21 years across strategy and marketing, corporate business development, across three continents. He is based in New York. Phil Fersht Founder and Chief Executive Officer, HfS Research Phil founded HfS Research in early 2010 and has overseen the growth and development of the organization to become the leading analyst authority and knowledge community for global business and IT services. He is a prolific author, analyst and visionary for the global services industry, named "Analyst of the Year 2011” by the Institute of Industry Analyst Relations (IIAR). Phil is based in Boston. © 2012 Copyright Genpact. All Rights Reserved. 4
- 5. Agenda today 1. What’s at stake 2. Trends and implications A. People B. Technology C. Process 4. The way forward © 2012 Copyright Genpact. All Rights Reserved. 5
- 6. 1. What’s at stake 2. Trends and implications A. People B. Technology C. Process 4. The way forward © 2012 Copyright Genpact. All Rights Reserved.
- 7. Operations to enable better the business they serve © 2012 Copyright Genpact. All Rights Reserved. Offense Defense 7
- 8. Importance of Program Objectives Today Respondents from $3B+ Enterprises Drive process efficiency (i.e. cycle time, quality) Very Important Increase scalability and flexibility of operations Somewhat Important Reduce costs Support global growth strategy Not Important Transform processes (e.g. cross-functional process redesign, automation) Align support services with global corporate strategy Improve compliance capabilities Outsourcing Smart Governance Disruptive Technologies Today’s operations aims have moved beyond the traditional cost reduction… Drive cultural change Gain access to talent and capabilities improve access to technology 0% 20% 40% 60% 80% 100% % of Respondents Source: HfS Research and PwC 2012, N = 188 Respondents from enterprises with more than $3B in revenue 8
- 9. Q. How important are the following objectives to your team today, compared to when you first started your SSO program? Improving Analytics 32% Defining Business Outcomes Beyond Cost Reduction and … 28% Raising the Bar for Existing SLAs 28% Driving Innovation 28% Defining and Adding New In-Scope Processes 25% External Benchmarking 24% Improving Service Provider Relationships 23% Improving Industry Acumen 20% Adding Addition Volumes to Existing Services 19% Influencing Executives 14% Contract Negotiation 14% Managing Financial Business Cases 13% SLA Performance Management 12% Service Provider Selection Managing Transitions Outsourcing Smart Governance Disruptive Technologies …and require strategy - embracing new technology, practices and talent to move beyond incremental gains 11% 9% Increase in importance Source: HfS Research 2012, N = 198 Buy-side Executives 9
- 10. 1. What’s at stake 2. Trends and implications A. People B. Technology C. Process 4. The way forward © 2012 Copyright Genpact. All Rights Reserved.
- 11. US example – the great shift impacts Ops 200,000 data scientists gap per year 300,000 office support 2020 excess Source: McKinsey Global Institute © 2012 Copyright Genpact. All Rights Reserved. 11
- 12. 60% expect non-mainstream* work to become norm The traditional office and staffing model is under pressure * Work from home, part time, performed by partners © 2012 Copyright Genpact. All Rights Reserved. 12
- 13. Train, manage, motivate and retain Span of management control Utilization of facilities vs. vicinity Intense travel Young employees Capacity balancing Sudden changes and need for speed Compliance and control © 2012 Copyright Genpact. All Rights Reserved. 13
- 14. Q. How difficult or easy has it been to attract and source talent for your team to perform the following activities? The Same as Other Positions More Difficult ! Outsourcing Smart Governance Disruptive Technologies Operations also struggle with leadership, not just delivery staff, to drive the future agenda Source: HfS Research 2012, N = 192 Buy-side Executives and 155 Sell-side Executives © 2012 Copyright Genpact. All Rights Reserved. 14 14
- 15. 1. What’s at stake 2. Trends and implications A. People B. Technology C. Process 4. The way forward © 2012 Copyright Genpact. All Rights Reserved.
- 16. Extinction? Planner Mail Fax Green-screen ERP © 2012 Copyright Genpact. All Rights Reserved. 16
- 17. Do we understand inflections brought by… Smart devices Mobile broadband VoIP Accurate language translation © 2012 Copyright Genpact. All Rights Reserved. 17
- 18. Social technology lays the foundation of radically richer collaboration Source: Genpact, McKinsey © 2012 Copyright Genpact. All Rights Reserved. 18
- 19. Bandwidth (last 10 years) 2.5 years, cost -50% 40 years 10 years Penetration 4G 7 years 3G (US) © 2012 Copyright Genpact. All Rights Reserved. 19
- 20. 1.5 years pixels 2X better 82’ screens Or 1’…your eye Fold, wear it Walls as keyboards Remote everything © 2012 Copyright Genpact. All Rights Reserved. 20
- 21. Your office… …your (Microsoft) Office… …everyone’s office? © 2012 Copyright Genpact. All Rights Reserved. 21
- 22. POLL Where do you think new collaboration technology and practices will have the most immediate effect? 1. Traditional offshore captives/BPO collaborating with onshore retained org 2. Traditional onshore regional centers collaborating with retained org 3. Work-from-home collaborating with office based org 4. Collaboration for new services e.g. analytics, FP&A, AML in captive/BPO 22
- 23. 1. What’s at stake 2. Trends and implications A. People B. Technology C. Process 4. The way forward © 2012 Copyright Genpact. All Rights Reserved.
- 24. Economic tension Talent imbalances Technology eliminates distance © 2012 Copyright Genpact. All Rights Reserved. 24
- 25. The future of process is shared 90% of F&A organizations 50% of back or middle office organizations 1000s of miles average distance © 2012 Copyright Genpact. All Rights Reserved.
- 26. You can’t beat scale…and its corollaries Ratio of FTEs per 1000 employees served “Cost per unit” Scale 10X scale can cut 50% of 5 cost-per-unit-of-work R2 = .90 4 Optimization 3 Standardization to scale explains variance 2 1 Cost arbitrage 0 100 1,000 10,000 100,000 Company size Employees, log scale * Benefits Admin Source: SAP ASUG 2007, Genpact analysis © 2012 Copyright Genpact. All Rights Reserved. Cost per hour can be 70% less for same skills globally, and to some extent regionally
- 27. Operations “production cost” can benefit from change ROUNDED/ESTIMATE Cost of delivery / FTE / year by process type Rule based Knowledge Basic data GBS Impact Early Mature Direct FTE Associate comp. Bench 97 83 Direct supervision* Direct support Transport, cafeteria Infra Recruitment, training Rentals Other infra OPEX G&A IT Depreciation IT, software mainten. Telecom G&A - personnel Non-recoverable travel, staff welfare, meetings Source: McKinsey, Genpact analysis © 2012 Copyright Genpact. All Rights Reserved. 27
- 28. GBS levers impact key drivers of effectiveness EXAMPLE Time to report 17 30 4 Minimum Median Max Impact of key GBS economic levers Process optimization Practice type Technology redesign Standardization and pooling Sharing best practices Scale Labor arbitrage • Automated interface process within ERP system • Automated tool for inter-company transactions • Use of automated tick & tie/ reconciliation tool • • • • Global common chart of accounts Standard policies/operating framework Standardization & rationalization of IT systems Synchronize edit checks between subsidiary and parent books for better first pass yield • Standard policies/operating framework • • • • • Recs prioritization Documented reconciliation policy in place Reconciliation dashboards published regularly Standard policies/operating framework Analysis of repetitive open items to reduce inflow High impact Source: Genpact experience © 2012 Copyright Genpact. All Rights Reserved. No impact 28
- 29. 1. What’s at stake 2. Trends and implications A. People B. Technology C. Process 4. The way forward © 2012 Copyright Genpact. All Rights Reserved.
- 30. Q. How would you describe your satisfaction with your current role as it relates to… Satisfied Neither Satisfied or Unsatisfied Unsatisfied Career Career Compensation Intellectual Opportunities Opportunities Challenge Outside of Within Your Your Organization Organization Non-Monetary Skill Recognition Development Outsourcing Smart Governance Disruptive Technologies However, Ops leadership issue must be addressed Workload Dissatisfaction with career opportunities Ops may dissuade the top caliber needed for real transformation Source: HfS Research 2012, N = 278 Buy-side Executives and 162 Sell-side Executives 30
- 31. GBS is important and related choices can change, too Business Partner Business Corporate Service Requirements GBS Performance Contracts Provide corporate governance and strategic guidance, establish policies Source: Genpact experience © 2012 Copyright Genpact. All Rights Reserved. Internal Partner Run processes efficiently, drive best practices and value 31
- 32. Adding the missing layer in operations’ flow of work Unified collaboration environments SSC/BPO Client/Business Workflows ERP backbone © 2012 Copyright Genpact. All Rights Reserved. 32
- 33. It is about people working together naturally Team Management One-on-one, skip level, perf. review Strategy, brainstorming, designing Knowledge sharing, updates, training Query resolution, troubleshooting Coaching Governance, monitoring Compliance 33 © 2012 Copyright Genpact. All Rights Reserved.
- 34. Conclusion: a practical vision of distributed and flexible talent - with technology and practices that keep pace Knowledge worker Transaction worker FUTURE NOW LoB 1 LoB 2 LoB 1 Unified collaboration COUNTRY A GBS GBS REGION 1 COUNTRY B REGION 2 LoB 2 WFH Contractor Source: Genpact analysis © 2012 Copyright Genpact. All Rights Reserved. 34
- 36. About Genpact Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and operations, including those that are complex and industry-specific. Our mission is to help clients become more competitive by making their enterprises more intelligent through becoming more adaptive, innovative, globally effective and connected to their own clients. Genpact stands for Generating Impact – visible in tighter cost management as well as better management of risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune Global 500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and technology, which limits upfront investments and enhances future adaptability. We have global critical mass – 62,000+ employees in 24 countries with key management and corporate offices in New York City – while remaining flexible and collaborative, and a management team that drives client partnerships personally. Our history is unique – behind our single-minded passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 15 years. For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn. © 2012 Copyright Genpact. All Rights Reserved. 36
Hinweis der Redaktion
- 60,000+ associatesGE spin-off, NYSE “G”Pioneer in globalbusiness process managementInitial core F&A and Financial Services ops, now includes ops consulting, analytics operations, and IT– across industriesUnique perspective on operations process as a science thanks to our Smart Enterprise Process (SEP) framework
- At stake is the ability of operations – be they in internal LoBs, Shared Services, Operating Centers or GBS - to enable the business they serve. There is a lot more complexity,global complexity, in what we do. Operations are the place where you can do things at scale. But operations arent very good at speed of reaction, they are optimized for scale and not for flexibility. But should it be so? Certainly, the business they serve needs more…on two accountsOffense – in a two-speed growth economy, where the developing market is a tricky land grab and the developed markets show growth in hard-to-find but profitable niches, help the front lines penetrate new markets without losing control…or enable the right insight and reaction speed to conquer micro marketsDefense – accommodate more volatile business cycle by reducing cost and making it more variable – for example, in industries where the cost of raw materials is volatile, the pricing power limited, and consumer demand difficult to forecast granularly, 100s of basis point of EBITs are at stake – and billions of dollars of market valuation as well…as it has been the case in CPG in the last ten yearSustain cost effectively the impetus of new regulations – be they for capital markets, AML or Finance and Accounting – where the fines are hundreds of millions of dollars, as well as the additional costs
- Let’s not start from technology. Let’s start from something more obvious – the right amount of the right people in the right places to do the work you need – transactional, rule based, judgment based, data driven, what have you. Always been tough, and it is becoming tougherGlobal talent imbalances are growing wild - for example, the US alone will soon lack 200,000 data scientists per year. At the same time, many skills will become obsolete because of automation and increasingly economically unviable cost differentials – this is a big shiftBaby boomers are retiring – but many need and want to work on their terms. And many mothers-at-home will be even more badly needed – at work
- No wonder that a lot more will be performed in ways that aren’t mainstream today – 60% of HR executives believe that the future will see more part-time, temporary, semi-retired, offshore, or work-from-home staff. The traditional office model (everyone under the same roof, 5 days a week, 9-6, a few weeks of holiday) is under pressure to maintain efficiency and effectiveness
- Is the solution banal?Of course not. Take some examples – some of them are magnified by the current global operations trend – STAY HIGH LEVEL, PAUSE, DON’T GO INTO DETAIL – Phil what do you see from a people management and skills availability perspective?…Difficult to train, manage, motivate and retainpeople who are far awayHard to optimize span of control when part of your team is under another roofMore efficientUtilization of facilities conflicts with the need to keep people close to each otherIntense travel is required in times of transition, or for supervisors managing many sitesLet’s not forget that Young employees dislike gap between engaging technology at home, their iDevices or android, and ERP-like ones at workLosing capacityin a location cannot be readily balancedwith resources elsewhere…it isn’t few and far between - and we are more just in time than in the past…one glitch and your operations supply chain grinds to a haltIn times of sudden change or with severe exceptions, and in general when you need speed of execution, organizations struggle to cope…those many global “limbs” arentagilie as team members with tightly sequenced work produce good quality, but struggleto perform when collaboration is less strictly regimentedAnd what about compliance for all those people in different locations, those devices, those data setsDo uyou think that’s all tehre is, Phil?
- Here we can say that the key skills we saw in the “at stake” section are in scarce supply
- This is a useful practice when trying to predict the future. Let’s look at the past, and see how much of a persistency bias we have. And let’s think about the future, and decide how closely we need to follow some trends
- Some examples of inflections in enterprise technology tech used by people died fast but it didn’t seem so when you're in thereFour technologies (a mix of technology and process, really)ERP is still around, after significant legacy investment and frankly some hard-earned thorough job in connecting dots between data, people, and workflows…not dying soon, but challenged by more agile things especially on the fringes of the enterprise, e.g. smaller LoBs, legal entities, new or marginal processes – ethat is why you have SaaS, mobile based solution, or even simply email based workflows
- Conversely, let’s think about Enterprise technology we didn't have five years agoSome of them we didn’t even think they could be done…and of course, there is a cloud lining below each of them…which leads us to
- Social technologies are rampant. Because that is what humans want to do…[commentMcK slide] Facebook has made billions dematerializing friendship – can something be harder to do than that? We all remember when being in contact with friends far away was really hard. Facebook has shown that even emotions can be shared at a distance…and it is literally taking share out of completely unrelated areas… e.g. segments of the car industry because of the reducing the mileage driven by young people. And crowdsourcing enabled by technology enabled platform is tackling a range of things – from writing guidebooks chapters, to optimizing health insurance algorithms, from cataloging galaxies for NASA to translating articles, from mapping the next local business on Apple Maps to stopping the next bout of spam on that webpage. A radically new way to collaborate is coming…and by the way, it is just much more human than anything we had before
- Communications impediments are fallingDo you remember the time when calling another continent for a conf call minutes would cost the same as having dinner in a good restaurant?Data moves differently. The cost of internet bandwidth has halved every 2.5 years for the last decade. 4G is faster – and cheaper – than fixed broadband only few years back. Mobile videoconferencing is a reality – but even more importantly is the ability to access any piece of information, anywhere. Smartphones are rampantFixed line broadband is becoming much cheaper in developing economies too. Internet and the mobile version of it are ramping up as fast – are we considering the watershed implications?And this doesn’t stop with recessions
- Paper and pencil have shaped our view of technology…we have tried to replicate them. But that prevents us to really do what we always wanted to doScreen pixels are doubling performance every 1.5 years, and their cost is plummeting. Four years ago tablet’s penetration was literally zero…many young children – and senior executives - don’t remember a world without them. Steve Ballmer’s 82 inch screen may not be such an extravagance soon. And by the way – perhaps you don’t need big…you just need it close to your eye…Patents are flocking to enable digital ink, that is using foldable, paper or fabric like surfaces as a screen – you will soon be able to read that budget report while on the airport escalator without inadvertently ramming into yet another slow moving tourist. Any surface can be a keyboard – you can soon type on the wall of your meeting room. And surgeons can now be thousands of miles away from where the patient is…What can this do to OPERATIONS?
- One last input - what about Microsoft’s acquisition of Skype? Clearly, the master of the enterprise desktop has figured that the next gig is not email or a better version of powerpoint – it is getting people to see and talk to each other again…
- There is lot riding towards the dematerialization of operations…matching people with work to be done irrespective from where they areLet’s now explore where this can goWhile distance is dying, many still don’t take advantage of it – No surprise…technology always takes time email penetrated fast, but heavy-user adoption took a decade…I know of senior executives in their ‘50s had their secretaries print emails out and would read back to them the answers…ten years agoWe will run into scalability issues – or worse. The changing work landscape will present dramatic opportunities for those who harness it and massive risks for those who ignore it. But technology alone is not the answer. Technology can be an invention…a great interesting new thing. But it creates real innovation when it is deployed in large scale…and that takes…adoption in enterprise processSo let’s talk about those
- Over 90% of f&a operations are run in at least a partial delivery modelMore than 50% of back and middle office processes can by now be performed – and are being performed - in shared services or operating centers organizations often very far from the business owners. This is a steadily increasing trend, and the average weighted distance (#FTEs X distance) between those stakeholders is increasing…it is 1000s of miles now
- Read the slide Impact of scale and process optimization are well documentedExample of transactional, administrative function*
- This charts shows the structure of the cost of three types of typical operations. Direct FTE costs (of which the actual production worker is only a part) is the most important – but infra, IT and G&A are relevant too. All of them are impacted by the GBS construct, and all of them, as we may see in a second, are impacted by the business process technologies that shrink, so to speak, distance
- This is not just an efficiency game. Some of the key levers of GBS – namely process optimization, scale, and cost arbitrage can impact those practices that are most correlated with business outcomes. In this example…READ SLIDE TECH
- What does this mean to (a) rule based transaction support – e.g. order-to-cash or procure to pay (b) judgment based work e.g. strategic sourcing or continuous transaction monitoring or excess payment supplier recovery (c) analytics support – be it FP&A to predict the cost of good sold in presence of fluctuation of raw materials, or inventory optimization, or equipment service contracts optimization?Phil – what do you think
- But leadership should be attracted to the fact that global operations will increase in strategic value and impact, due to the improved business practices, technology, and non-incremental transformation needs generated by the labor imbalances. In fact, the strategic operations around what is allocated to which functional entity in a shared service based architecture is the crux of many of our clients’ journeys at this point. While many already have some sort of shared service of operating centers, most of them are continuin in the journey of extension and refinement of those structures. While the guiding principles will stay the same – The allocation of work will change over time due the abilty to collaborate more richly between the related organizations, and will favor the allocation of work on the basis of the economic advantage of scale, process optimization and available skills, and cost arbitrage…and less so because of the constraints of communication
- Until not long ago, the only choice for operations processes was to rely on ERPs, related or additional workflows, and face to face interaction and so called snickerware…Given the advances in business processes and technology, we must move on to further improve efficiency and effectiveness of the work that doesn’t fully fit into those paradigms…and this is done, in my opinion, through the introduction of much more significant collaboration – not just communication – environmentsWhat is a unified collaboration environment?
- …giving them the ability to do so, even in the new conditionsHumans can learn things, but we cannot unlearn instincts, that is why apple is good...it follows the instinct of touch, see, enables immediate gratification and interaction with peopleVisual contact and presence...who's around me? How's the team Doing...peer pressure, sense of flow – a very well known pattern in organizational behavior and psychology ...people are less stressed and perform better if they feel they're together There is also a need for immediacy of available people-related info...how are things going, how are people performing, where's my personalized leaderboard – can it feel more like a game, even?contact must be rich, immediate...speed of voice lag – that is so annoying in conference calls, ability to draw something, look at the same thingAnd if im manager can I do it on the move?[CLICK] We believe that technology and business practices now allow to use all this for operations work…read slide
- We have gotten to the limit of the exercise, stretched old ways of running operations to where they could possibly go…but we still struggle with the fragmentation of the front lines, the requirements of the law, the volatility of the business and market needs…[CLICK twice] We must embrace business process design that uses the best practices in human resources to harness global talent, with a stronger, more creative technology component and a clear, scientific view of how business processes are run globallyWe believe we can help, and we would like to open a discussion with you on this fascinating, yet very practical topic, today itself