mcgraw hill financial | presentation outsourcing global credit and a/r functions: know how and best...

McGraw Hill Financial | Presentation

Outsourcing Global Credit and A/R Functions: Know How and Best Practices

Michelle Baker-Crail, Director of Credit and A/RIan Thompson, Credit and A/R Manager

2McGraw Hill Financial | Presentation

Who We Are

Our Companies as of November 1, 2014

Standard & Poor’s Ratings Services helps investors and market participants manage risk through credit ratings, research and analytics.

Financial professionals turn to S&P Capital IQ for high-value content across all asset classes.

Investors use the S&P 500, Dow Jones Industrial Average and thousands of other indices produced by S&P Dow Jones Indices across asset classes to measure and monitor global markets.

Traders, risk managers, analysts and industry

leaders use Platts' price assessments and insights

to enable informed decision-making across energy, petrochemical,

metals markets and agriculture markets.

Companies from more than a dozen industries

turn to J.D. Power's quality and customer satisfaction

research for actionable consumer insights to help produce better products

and services.

McGraw Hill Financial promotes sustainable global growth

by bringing transparency and independent insights to

capital, commodity and corporate markets.

Revenues for year ending 2013 were $5.14B


Who We Are-Key Dates• 1888 – Founder James H. McGraw buys the American Journal of Railway Appliances. At the same time, John

A. Hill was working as an editor at Locomotive Engineer.• 1899 – McGraw establishes The McGraw Publishing Company. John Hill later creates The Hill Publishing

Company.• 1917 – McGraw and Hill's companies merge to form the McGraw-Hill Publishing Company, Inc., with James H.

McGraw as president. • 1953 – The forerunners of Platts join McGraw-Hill. Platts goes on to become a leader in commodities

information.• 1957 – The S&P 500 is introduced.

1966 – Standard & Poor's is acquired.• 1979 – McGraw-Hill successfully rejects a hostile takeover attempt by American Express.• 1998 – Harold McGraw III, President and Chief Operating Officer, is named CEO.• 1999 – Harold McGraw III is elected Chairman of the Board.• 2004 – Standard & Poor’s acquires Capital IQ, a provider of research, data and analytics to investment

professionals.• 2005 – J.D. Power, a name trusted by companies and consumers, joins the Company.• 2011 – McGraw-Hill announces its Growth and Value Plan, which includes the creation of two companies:

McGraw Hill Financial and McGraw-Hill Education.2012 – The Company launches S&P Dow Jones Indices, the world's largest provider of financial market indices, in a joint venture with CME Group. The Company announces the sale of McGraw-Hill Education to Apollo Global.

• 2013 – Shareholders approve the Company's new name: McGraw Hill Financial. Doug Peterson becomes President and CEO on November 1, and Harold McGraw III remains serving as Chairman of the Board.


Recent Key Acquisition/Divestiture Activity

2013 - McGraw-Hill Education sale to Apollo Management Corporation

2013 – Sale of Aviation Week to Penton Publishing

2014 – Sale of McGraw-Hill Construction to Symphony Technology Group

Our Recent Larger M&A Activity


3 Major Projects - Timeline

Genpact selected as outsourcing provider

Oracle ERP installed McGraw-Hill Education sold to Apollo Group


Elephant in the Room

Is outsourcing the right thing to do?


High Level Overview of Outsourcing Process

RFP • Request for proposals from interested parties to perform outsourcing work

Decision / Contract Signing

• Award the job to one company and sign contract

Sol ID • Solution Identification• Design work and staffing plans and determine Critical Service

Levels (CSLs) and Key Metrics (KMs)

Training • Knowledge transfer from existing team to outsourced staff• On the job training (OJT) and ramp-up training for new

employees

Production Under Supervision

• Outsourcer performs tasks with heavy supervision from existing and long-term retained staff

Independent Production

• Outsourced staff performs all tasks with minimal supervision from retained staff

• Begin measurement of CSLs and KMs

Maintenance • Scheduled audit of work• Scheduled visits to outsourcing locations


Critical Steps in Outsourcing Process-Training

Expectations

• Current team members transfer knowledge to new outsourced staff

• Training would take place both at

MHF offices as well as at delivery

sites

What Happened

• Team members worked closely and effectively with new

team, despite the concern about job

loss• MHF employees were willing to travel abroad, in exchange for new experiences

and skills learned

Our Response

• Open and honest communication

about changes and potential

opportunities• Recognition of

employees throughout transition phases; offerings of travel and retention

bonuses

Training and Knowledge Transfer


Critical Steps in Outsourcing Process-Production

Production

Expectations• Ramp-up of tasks

shifting from existing staff to new

team• Retained team

begins to manage work and handle escalations and

communications to internal and

external customers

What Happened

• Existing team members began to

lose interest as their exit dates were

finalized• Heavy involvement

from the retained team was needed to

handle questions, concerns, and

escalations

Our Response

•Retained team had to embrace the

changes and work as a cohesive team

•Retained team had to work closely

and provide comprehensive

support during the cutover period


Critical Steps in Outsourcing Process-Maintenance

Maintenance

Expectations• Outsourced team

would follow SOPs and provide all

deliverables upon due dates

• Outsource provider would begin to

suggest opportunities for

improvements and best practices

What Happened

• While detailed SOPs were developed, some tasks require subjective

inputs; not all due dates were met

• Some recommendations have

been made; retained team has driven much

of the continuous improvement

Our Response

• While most processes were followed and

deliverables were met, we continue to

address any issues and misses

• Retained team members have

experience in Process Improvement and

leveraged those skills to drive change


Key Questions to be Considered Throughout an Outsource Transition…

• Which functions should be outsourced and what responsibilities need to be retained?

• Retained Organization-who will manage the outsourced processes?

• Requirements-which skills, languages, time zone coverage, communication skills, and technology are needed?

• How to integrate outsourced functions with your business units or other business partners?

• Prescriptive vs. Innovative outsourcing styles

• How to handle retention of outsourced staff in a culture of turnover?


Results and Achievements-Two years later

• Achieved savings goals

• Maintained Critical Service Levels

• Key Metrics were consistent or showed improvement from pre-outsourcing period

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly DSO YTD Trend

2012 2013 2014

Days


Key Metrics-Two Years Later

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Monthly Delinquency Trend

2012 2013 2014

Perc

enta

ge

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Cash Collection Rate- YTD Trend

2012 2013 2014

% C

ash

Colle

cted

as %

of B

egin

ning

AR


Additional Benefits Achieved

• Greater coordination and interaction with businesses

• Improved reporting and analytics

• Exposure to benchmarking across businesses and industries

• All processes documented and reviewed and improvement opportunities identified

• Introduced new tools for internal and external customers– Collections Tools:

– Dialer-collection call management and reporting– Akritiv – collection portfolio manager– Electronic Invoice and Payment Presentment (EIPP) Portal

• Streamlined processes and reduced manual efforts, all while minimizing risk


Sights from Hyderabad, India--Location of the Main Delivery Center for MHF processes

QUESTIONS?

mcgraw hill financial | presentation outsourcing global credit and a/r functions: know how and best...

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