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Annual Shared Services and BPO Conference 2013 The art of the possible for shared services how to streamline your local finance organisation Denes Lang & Vazul Toth

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Annual Shared Services and BPO Conference 2013

The art of the possible for shared

services – how to streamline your local

finance organisation

Denes Lang & Vazul Toth

DIAGEO AND

GLOBAL SHARED SERVICES

The art of the possible for shared services – how to streamline your local finance organization

DIAGEO IS THE WORLD’S LEADING PREMIUM DRINKS COMPANY

Source: Impact data

A truly global company, with net sales of £11,433 million in 2013 and 7 out of the top 20

brands. Trading in over 180 markets, with over 28,000 people in around 80 countries

No.1

Vodka &

No.1 Premium spirit

by volume

No.1

Scotch Whisky

No.1 Premium

brand

No.1

Liqueur No.1

Stout

No.1

Imported Gin in

the US

No.1

Canadian

Whisky

GETTING STRONGER: INCREASING PRESENCE IN THE

FASTEST GROWING MARKETS

Now almost 40% of our net sales

Organic performance in emerging markets

Net sales growth

Operating profit growth

Diageo announced results for the year ended 30 June, 2013

The results for this half show that we are on track and that our strategy is making our

business stronger. The key measures of performance are strong: 9% operating profit

growth, 9% eps growth and stronger cash flow

DIAGEO’S STRATEGY

GDBS supports the Diageo strategy in a number of key ways:

Standardised systems and processes to provide accuracy, efficiency and powerful business

analytics and insights

Support of M&A activity, enabling fast integration with minimal business disruption

Empower all employees with the technology tools and support to do their jobs

Our strengths

Leading brands combining heritage

and innovation

Route to market advantage

through scale

Global balance across

developed and emerging markets

Drive sustainable and

responsible performance…

Our industry leading capabilities:

• Marketing

• Sales

• Supply

• Management

Our flexible operating model

• Agility and scale

Our financial discipline

…To deliver our

medium term goals

Faster organic net sales growth

• 6% CAGR in the

medium term

Organic operating margin

improvement

• 200 bpts by year ending

30 June, 2014

EPS growth

Double digit growth in core EPS

WE HAVE 21 MARKETS IN FIVE REGIONS

Net sales by

region, at 30

June, 2013

WHAT WE DO

Competitive advantage for

our markets through new

capabilities

Deliver efficient and

compliant services

Provide a great experience

for our employees

GDBS STRATEGY

Goal Target areas

Competitive

advantage for our

markets

1. Reduce IS costs by F15 to achieve world class IS costs

Grow our

talent/best place

to work

Controls centre of

excellence

2. Leverage shared services asset

3. Leverage assets and build new capabilities to deliver competitive

advantage for our markets

5. Safeguard our reputation, whilst achieving efficiency in our controls

agenda through world class level of automation

4. Achieve top quartile service performance (80% Employee Satisfaction) &

a more engaged GDBS work force

Efficient services,

driving YOY

productivity

BUSINESS SERVICES FOOTPRINT & SERVICE LINES

Regional Service

& Global Back

office

L

Budapest

Genpact

Bogota Genpact

Nairobi

Accenture

Manila

Global/ regional

service

XL

Regional

service

M Regional

Service

M

Genpact

Delhi

Accenture

Shanghai

Regional

service

S

Global

back office

S

Current

• PTP

• Secondary OTC (Order capture, credit, bill and collect)

• RTR General Accounting

• RTR Statutory Compliance

• Financial Controlling

• Service Management & process improvement

• New Service Development

Future

• RTR Supply Finance (Product costing, budgeting & Capex)

• BPM reporting

• Customer service & order management

• Business process analytics

• Control and CARM reporting

• Supply Chain back office

Service lines

Common back office processes supported by SAP across 87% of business and 15,000 employees

DIAGEO BUSINESS SERVICES BUDAPEST ESTABLISHED IN 2001

Our external recognitions include:

Special Recognition by Association of Women’s Career Development in Hungary 2012

Business SuperBrands 2012

SSON ’Excellence in People & Communications Award’ 2011

Aon Hewitt ‘Best Employer’ among Shared Service Centres in Hungary 2010

SSON ‘Best Mature Captive Service Centre’ Award 2010

Budapest wins 'Greenest Office in Hungary’ title 2010

Speak 2+1

languages

98%

graduate

Average

age is

31 yrs old

40% male

60%

female

730

employees

DIAGEO’S SHARED SERVICES JOURNEY

• Standard financial process

• Single technology platform

• Central repository/ controls

• First direct migrations to BPO in Africa and AP

• Migrate treasury & parts of financial planning & reporting

• Budapest operation expands

• Higher value & complex activities

• Budapest DBS manages core financial processes for most European & NA markets.

• Extended to global network

• Hybrid captive & outsourced model

• Accenture as outsourced partner

2001 2002 2002-06 2007 2009 2011 2012

• Global Diageo Business Services is formed, merging with Global IS

• Controllership model implementation

The role and contribution from business services has increased due to strong executive

sponsorship and a need to reduce operating costs in Diageo

T&E

exception

handling

improve-

ment

VALUE DELIVERED TO GDBS DELOITTE SUPPORT ALONG THE JOURNEY

Process Improvement New Service Implementation Culture Change

Change

Management –

assessment

and planning

11/2011 11/2008

SAP

training and

implemen-

tation

PM support

05/2009

Controllership

CoE development

(Project Butterfly)

RTR Transformation

(iShape RTR)

ABC

Assessment

CCD Exception

Handling Process

Improvement

CCD Innovation

Process

Implementation

02/2012 06/2012 09/2012 12/2012 10/2012 03/2012 12/2012

T&E – Travel and Expenses RTR – Record to Report CCD – Cash Cycle Department

ABC – Activity Based Costing CoE – Centre of Excellence

CONTROLLERSHIP AS A NEW SERVICE LINE

RTR OTC PTP

Controllership

• Financaial Analysis

& Control

• OH reporting

• A&P reporting

• COGS reporting

• BS / CF reporting

• Gross Margin / TI

reporting

• Supply Finance

Statutory

Compliance

Indirect TAX

VAT

Duty

Green Tax

Statutory

reporting

• Financial

statements

• Corporate

Income

TAX

Financial Accounting

& reporting

General accounting

ICO accounting

Bank accounting

BFC reporting

Phase 2

(high-end RTR) Phase 1

(traditional

scope)

Phase 3

(controllership)

More for less – the benefits

The controllers take full ownership for

management reporting and statutory

compliance - including tax - and are

responsible for the overall control

environment

Controllership drives value by developing

deep insight of their relevant

markets/countries (through their areas of

responsibilities) and through excellent

business partnering.

Controllership will elevate current process

performance & practices to new level by:

• Improved quality of reporting -better tax

and legal compliance

• Enhanced control and compliance

• Quicker and more efficient issue

resolution

Deloitte Role

• Define new vision, governance structure

• Develop collaborative and performance focused way of working with a

motivated and committed team

• Detailed implementation approach developed including key

development areas, ways of working challenges

Background

• Significant business model change for Statutory Compliance

• Controllers take full responsibility for reporting, tax, overall control env.

• Lift and shift migration

Controllership

CoE

development

NEW SERVICE IMPLEMENTATION

Value Delivered

• Definition, vision and value proposition of the migrated function

• New organizational structure alternatives with accountabilities

• Implementation and Change Management Action Plan

DELIVERABLE SAMPLES

Risk Assessment:

Definition of CoE:

Vision of CoE:

Value Proposition of CoE:

Proposed Organizational structure of CoE:

Action Plan of developing CoE:

THE TALENT JOURNEY

Culture

Sensing to intuition

Feeling to thinking

Silo to teamwork

Efficiency to insight

Fast growth to valued experience

Delivering to owning

Structure

Local to global

Bridgeable gaps to big gaps between grades

People manager to specialists

Junior to senior

Permanent to project

Talent

Single to family

Execution to analytics, re-design, innovation

SME on top of process and technology expert

Increased mobility

Leadership

Local to multi-geographycal (team

and influence)

Functional expert to leader

Big team to small teams

Suggestion to decision making

Delivering through BPO

Stakeholder management to

business partnering

Deloitte Role • Develop Action Plan and prioritize actions

• Enhance Project Portfolio Management

process and system

• Develop Rules of Engagement

• Enhance internal communications

• Lay down team level responsibility split

(RASCI)

• Define Coaching and Mentoring approach

• Develop Career Path concept

Value Delivered • Project Portfolio Management process

• Skill gaps identified and covered with training

plan

• Accelerated professional development and

increased employee commitment

• Reduced employee turnover and related costs

• Active involvement of leadership team

improving sense of ownership

Background There were several challenges GDBS RTR faced due to the large-scale global change

initiative:

I SHAPE RTR

RTR Transformation

(iShape RTR)

• Shift from market based to process

based operations

• Standardization of core processes

• Continuously maintain operational

stability

• Achieve one-off and continuous cost

savings

• Large project portfolio and limited visibility

of human resource allocation

• Demonstrate proven capability to take on

additional support processes

SAMPLE DELIVERABLE

Action Plan:

Prioritization of actions:

Project Portfolio

Management process :

Team level responsibility split (RASCI):

Coaching and Mentoring approach:

Career Path concept:

Rules of Engagement:

Internal communication materials:

IN SUMMARY

Diageo is the world’s leading premium drinks company

Brilliant execution through our shared services and

common platform

Delivering significant efficiency for Diageo

We are empowering our markets to make informed

decisions

Through our exceptional shared services, we deliver competitive

advantage for Diageo

QUESTIONS?

© 2013 Deloitte LLP. All rights reserved

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a

legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is the United Kingdom member firm of DTTL.

This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular

circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would

be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss

occasioned to any person acting or refraining from action as a result of any material in this publication.

© 2013 Deloitte LLP. All rights reserved.

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A

3BZ, United Kingdom. Tel: +44 (0) 20 7936 3000 Fax: +44 (0) 20 7583 1198.

Annual Shared Services & BPO Conference 2013 21