business transformation through technology
DESCRIPTION
Business transformation through technology. U. B. Pravin Rao. High. Dell. CapitalOne. GE. Business Value Created. Walmart. SKF. AT&T. NHS. Pfizer. Low. High. Technology Maturity. Low. Source: Corporate websites, Economist, Infosys Analysis. - PowerPoint PPT PresentationTRANSCRIPT
Analyst MeetAugust 27, 2002
“Living up to the promise”
Business transformation through technology
U. B. Pravin Rao
Slide 2
Analyst MeetAugust 27, 2002
IT Is a Powerful Enabler As Well as A Driver to Unlock Business Value
Case Study
Business Value Created
Technology Driver/ Enabler
Dell
Greater Organisation flexibility
Internet based value chain collaboration
GE
Inter Enterprise Cost Rationalisation Marketplace
Capital oneInnovation (new products)
Data Warehousing and Mining
WalmartProcess flexibility
Multi tier EDI, Data Warehouse, EPOS
SKF
Increase Scope of Service Remote Sensing
AT&T
Increased Employee Productivity VPN
Pfizer
Improved Partner Productivity
Knowledge Management Tools
NHSImprove Quality of Service
Knowledge Management ToolsTechnology
Maturity
Bu
sin
ess
Va
lue
C
rea
ted
Dell
CapitalOne
NHS Pfizer
GE
AT&T
WalmartSKF
Source: Corporate websites, Economist, Infosys Analysis
Low
Low High
High
Slide 3
Analyst MeetAugust 27, 2002
Elements Focus Architecture
…and built onFundamentalsValues
Company/ Core
Open Governance
Performance-Ethic
Talent Magnet
Breadth & Depth
of Integrated
Service lines
( MeetingClients’
full service Needs )
One FirmExecution
( Global scale,single Face )
GDM
( Core Value Driver )
TrustBasedSenior
Relation-ship
( Buildingcomfort Factor )
DomainExpertise
( What clients value
the most )
TechnologyExcellence
( “In sync with the latest, at par
with thebest )
Prime & Partner-
ship
( Single point
accounta -bility while leveraging
“partnerweb” )
Go-to-market position …
Client“Transforming business through integrated technology
solutions. Absolutely, Positively!”(Emphasis on Value, Execution & Comfort
factor)
…executed throughIntegratedCapabilities
Competencies
… And Such Business transformation Through Technology is the Center of Infosys’ Go-to-Market Position Today
Analyst MeetAugust 27, 2002
“Living up to the promise”
1 – Manufacturing2 – Telco3 – Retail4 – Retail5 – Insurance
Slide 5
Analyst MeetAugust 27, 2002
Case Study # 1: Developing a Roadmap for Transformation of Supply Chain by Leveraging e-Business Technologies■ The Client■ The European subsidiary of a leading global manufacturer of food-grain and
agricultural chemicals■ The Challenge■ Need to reduce supply chain costs
■ Reduce the costs “hidden” in the extended supply chain■ Integrate business with technology to improve effectiveness of supply chain■ Benchmark against “best-of-breed” in industry
■ Need to achieve maximum impact from limited e-Business budget■ Identify Quick Wins with short payback■ Leverage latest technologies for communication and e-Business to achieve greater
integration with vendors, customers and logistics & transportation partners■ Better integration among internal systems to support and streamline supply chain
processes
■ Build internal consensus regarding future direction
Slide 6
Analyst MeetAugust 27, 2002
Define & prioritize initiatives to streamline the supply chain processes and create an implementation roadmap
• ‘As-Is’ state for key supply chain processes
• Inventory and description of identified initiatives
• Benchmarking of supply chain e-maturity against industry peers
• SCM “pain points” and value creation opportunities
• Key SCM trends & B2B focus areas
• Prioritized initiatives and Quick Wins
• High level IT architecture
• Business case analysis & payback calculations
• Phased implementation roadmap including time, cost and resource budgets
High Level IT ArchitectureHigh Level IT Architecture
Identify Quick WinsIdentify Quick Wins
Review ‘As Is’ Supply Chain and Initiatives
Review ‘As Is’ Supply Chain and Initiatives
Define eBusine
ss roadma
p
Define eBusine
ss roadma
p
Assess SCM Pain/
Opportunity Points
Assess SCM Pain/
Opportunity Points
Identify and Prioritize Initiatives
Identify and Prioritize Initiatives
Analysis SynthesisDiagnosis
The Approach
Slide 7
Analyst MeetAugust 27, 2002
Implement prioritized initiatives and build supporting architecture in phases
Production Scheduling
B2B with Suppliers
Finished Goods Movement
B2B with Transporters
Enterprise Application Integration
B2B
Suppliers
Order to cash
ClientSupplyDemand
Transport Planner
Transport Plan
Client
B2B
Transporters
Order to cash
Applications
EAI
ExtranetTerritory Forecast& Plan
Production Scheduling Application
Production Plan
Demand
Salesman
Applications identified
eSupply Chain Within the Organization
• Reduce supply chain costs• Attain supply chain excellence
eSupply Chain With Business Partners
• Lay the foundations of future growth
The Response
Slide 8
Analyst MeetAugust 27, 2002
Resulting in Over $ 2.5 M of annual benefits for $ 3.4 M of one-time investments
NPV 12.50%3 Year 1123.25 Year 4024.1Payback Period 2.2
NPV
NPV
(Discount factor)Projected Cashflows
1196
3390 2864277326812536
629629629629
0
1000
2000
3000
4000
2001 2002 2003 2004 2005
Year
Valu
e i
n '000 U
S$
Payback in 15 months
Investments
Savings
Annual benefits of over $2.5
Million
The Benefits
Client Testimonial – CIO “We has a long history of working with large traditional consulting firms. However, the way Infosys worked collaboratively with our people and crafted a unique solution on business and technology aspects appealed to the Leadership Team.The benefits delivered by Infosys were very tangible.”
Slide 9
Analyst MeetAugust 27, 2002
Case Study # 2 : A large Telco spent $300-400M1 more annually due to poor IT effectiveness compared to best-in-class organizations
High Level Approach■ Based on the data available and
stakeholder interviews, Telco was assessed between Levels 1 and 2 on the CMM Maturity scale
■ Telco IT effectiveness was conservatively equated to “Average in Class” on the Capers-Jones productivity benchmarks scale
■ Capers-Jones Productivity benchmarks for the “Best in Class” were used to arrive at the extra spend ( based on current IT Delivery & Maintenance Budget2 )
1 Does not include Operations, Infrastructure, Internal IT staff costs
2 Current IT Delivery & Maintenance Budget excluding spend on Redundant applications $891 M
•Development
•$0
•$100
•$200
•$300
•$400
•$500
•$600
•$700
•$800
•$900
•$1,000
Telco •Best
• Mil
lio
n A
UD
•Maintenance
• These estimates of expected overspend are based on IT Effectiveness and not on any unit cost differentials
Slide 10
Analyst MeetAugust 27, 2002
… And faced the risk of being caught in a vicious circle of poor IT effectiveness due to continued business pressures
Likely Telco response
Implication: Lower IT Effectiveness
• Lesser money to invest in application rationalization
• Lower investment in crucial infrastructure projects (without immediate benefits)
• Cutting back existing implementation plans will have cascading effect on IT efficiency
• Compromise on lifecycle activities that will reduce delivery reliability
• Lesser money to invest in application rationalization
• Lower investment in crucial infrastructure projects (without immediate benefits)
• Cutting back existing implementation plans will have cascading effect on IT efficiency
• Compromise on lifecycle activities that will reduce delivery reliability
Cut in discretionary IT Expenditure
Cut in discretionary IT Expenditure
Reduction in investment
spend
Reduction in investment
spend
Arbitrary cuts in budgeted
expenditure
Arbitrary cuts in budgeted
expenditure
Slide 11
Analyst MeetAugust 27, 2002
We proposed a 3 - phased transformation program that would help Telco launch, consolidate and sustain improvements in IT effectiveness
12 Weeks Medium Term (6 - 12 Months) Long Term (1 Year +)
• Create Inventory• Migration plan
• Partial Migration to a lower cost base• Decommissioning completed• Consolidation of applications kicked
off
• Clear migration roadmap for the entire Telco portfolio
• Rationalized portfolio
• Process Definitions for some Project types
• Run Pilots
• Rollout to all of IS• Process definitions for all project
types• Estimation Model definition
• Rollout across Telco• Automated process management• Formal capability assessment
• Define Metrics, Skeletal Org Structure, Governance Mechanisms, KPIs
• Process Capability Baseline, Dashboard
• Rollout to all of IS; Launch training• Metrics-Inventory (IRM) integration• Communicate
• Rollout across Telco• Communication & Training
• Review IT budgets for next financial year
• Ensure adequate investment in infrastructure elements
• Institutionalize demand management processes
• Monitor returns and effectiveness of prior investments
Application Portfolio
Application Portfolio
Delivery Process
Delivery Process
People and Governanc
e
People and Governanc
e
Investment Planning
Investment Planning
Launch & Enable Evangelize & Consolidate Rollout & Sustain
Slide 12
Analyst MeetAugust 27, 2002
-50
50
150
250
350
3 6 12 24 36Months
Mill
ion
$
Savings Investments
The solution needs a cumulative investment of $50-80M over three years and can potentially yield annual benefits of $300-400M1 by the third year
Launch & Enable
Evangelize & Consolidate
Rollout & SustainInvestment yields positive returns within one year
1 Assuming that current annual spend will continue every year for baseline estimates
Represent self-financing investments that yield benefits within the same period
Slide 13
Analyst MeetAugust 27, 2002
Case Study # 3 : Developing a New Supply Chain Blueprint for a Leading Apparel Company
The Client■ A leading designer, marketer & distributor of premium lifestyle products
■ Four categories of products – apparel, home, furnishings & fragrances■ Brand portfolio consists of some of the world’s most widely recognized brand
names■ Net sales of USD 2.2 billion in FY 2001
The Challenge■ Need to improve inventory productivity
■ Reduce the cash to cash cycle time■ Reduce the total inventory in the pipeline
■ Need to reduce supply chain operations costs■ Reduce the transportation costs■ Reduce the manpower costs■ Reduce the inventory carrying costs
Slide 14
Analyst MeetAugust 27, 2002
The ApproachMigrate to the “To-Be” state …
Product FlowProduct Flow
Information FlowInformation Flow
SuppliersInbound Logistics Warehousing Retailers CustomerDesign
Supply Chain Execution
Design and Development
Product design and development closer to demand
Adherence to design calendar
Vendor Management
Vendor managed inventory
100% compliant vendors
Logistics
Cross dock of shipments
Leverage 3rd party / suppliers and customers logistics network
Automated and Integrated transaction systems across the supply chain and business divisions
Visibility to logistics and inventory data across the supply chain and business divisions Common pool of inventory across business divisions
Supply Chain Planning Automated forecasting and planning systems across departments – merchandize planning, sales
planning, production / capacity planning, inventory planning and allocation
Forecasting and planning by door Integrated sales and operations planning across departments
Outbound Logistics
Slide 15
Analyst MeetAugust 27, 2002
The Response … through implementing multiple initiatives …
In-Process Initiatives
Moving from FOB to LDP/DDP
Vendor Compliance
Redesigning of Corporate Calendar
Web based ASN Capture
In-Process Initiatives
Moving from FOB to LDP/DDP
Vendor Compliance
Redesigning of Corporate Calendar
Web based ASN Capture
Phase 1 Initiatives
Licensee VMI Forecasting & Planning -
Wholesale Cross-Dock – Retail VMI Stage I 3rd Party Fulfillment Key Performance Indicators Logistics and Inventory Visibility
Solution Standardizing WMS Solutions
across DCs Forecasting & Planning – Retail
Phase 1 Initiatives
Licensee VMI Forecasting & Planning -
Wholesale Cross-Dock – Retail VMI Stage I 3rd Party Fulfillment Key Performance Indicators Logistics and Inventory Visibility
Solution Standardizing WMS Solutions
across DCs Forecasting & Planning – Retail
Phase 2 / 3 Initiatives
Price Optimization Solution VMI Stage II Inventory Visibility and Order
Processing at Stores Streamlining Markdown Planning
and Execution Global Production Planning
System Transportation Optimization Tool Global QA Module KPI System Development Corporate-wide Costing System
(Product costing being evaluated to be moved to Phase 1)
Phase 2 / 3 Initiatives
Price Optimization Solution VMI Stage II Inventory Visibility and Order
Processing at Stores Streamlining Markdown Planning
and Execution Global Production Planning
System Transportation Optimization Tool Global QA Module KPI System Development Corporate-wide Costing System
(Product costing being evaluated to be moved to Phase 1)
Slide 16
Analyst MeetAugust 27, 2002
The ResultsRecurring annual benefits of $24MM for one-time investment of $25MM
Implementation Phase
Recurring Annual Benefits
One-Time Investment
Pay Back Period
Phase 1 $ 13 MM $ 11 MM 0.8 Year
Phase 2 & 3 $ 11 MM $ 14 MM 1.3 Year
TOTAL $ 24 MM $ 25 MM
Slide 17
Analyst MeetAugust 27, 2002
“Infosys’ Organizational Change Management Methodology, training and documentation ensured a successful transition”
CFO
“When I work with Infosys I don’t have to worry about them because they do not make promises that they can’t keep. They are committed to making us successful”
CIO
Flawless Execution of Oracle Financials• Replace outdated financial system and build a
foundation for future growth.- Increase flexibility & back-office efficiencies- Foundation for better controls and rules- More manageable chart of accounts- Greater reporting flexibility
• A key milestone in Client’s business transformation- Foundation for integration with Retail Inventory
and Merchandising systems
• Relying on knowledge and expertise from 10-year old relationship to minimize business impact of the program.
One Of USA’s Leading Fashion Specialty Retailer
• Over 100 years in business• 132 US Stores, located in 25 states• 23 International Boutiques, primarily
in Europe• Online presence and direct mail
catalogs
Case Study # 4 : Flawless Execution To Install Complex Financial System
Slide 18
Analyst MeetAugust 27, 2002
“Infosys’ technological expertise and excellent execution were exactly what we needed to provide our customers the convenience of self-service and online confirmation of important transactions.”
Vice President, Information Systems
USA’s leading provider of individual life insurance• Named by Fortune as the Most admired company in the world, in its category.• Providers of annuities, mutual funds, long-term care insurance, and disability income insurance.
Develop & launch an online funds transfer option
• For variable life and annuity policy holders
• Driven by business needs- 24x7 customer self-service facility- Lower reliance on customer service
call centers- Extremely aggressive timeframe- Prototype development
• Chosen based on prior experience of Infosys delivering high quality results on time and within budget
End-to-end Partnership• From design to building of the site• Delivered to extremely aggressive timeframe
Infosys originally hired in 1996- Relationship started with Y2K initiatives- Extended to all IT projects
Case Study # 5: Partner To Create Transactional Web Site
Slide 19
Analyst MeetAugust 27, 2002
In Conclusion, Infosys’ Range Of Services From “Strategy To Execution” Helps In Partnering On Such Transformation Initiatives
Build and Integrate
Institute Operational Excellence
Design for transformation
Client Needs For Business
Transformation
Consulting & IT Services
Consulting ServicesBusiness & technology alignmentArchitecture & roadmap definition
Enterprise IT SolutionsPackage and systems integrationCustom software solutions
IT Operations ManagementApplications managementIT Outsourcing & maintenance
Business Process
Management
Business Process ConsultingProcess modeling and redesignContinuous process improvement
Process Change ImplementationProcess & IT reengineering Change management
Business Process ManagementOutsourced process centersShared services
Product Strategy ConsultingArchitecture & roadmap definitionFeasibility and prototyping
Product engineeringSoftware development & integrationDevelopment & testing labs
Product Support OutsourcingProduct support centersCustom product enhancements
Technology Product
Development
Design For A Constantly Changing Business &
Technology Environment
Build Future-Proof Solutions That Enable A Continuous
Evolution Of The Enterprise
Leverage Current Investments in People & IT
Infrastructure
Analyst MeetAugust 27, 2002
“Living up to the promise”
Thank You