1

NASSCOM – BPO Strategy Summit 2009

Aligning BPO opportunities in the domestic market

June 10, 2009 - Bangalore

Rajiv PrakashDirector – Business Services & StrategyFuture Knowledge Services – Future Grouprajiv.prakash@pantaloon.com

2

Domestic services – some learnings & observations

• A different customer world – growth rates, scale, complexity, economics and ambiguity

• Sourcing drivers differ from offshoring – operating model, controls, cost model

• Not just process migration but often process creation and engineering

• No significant cost arbitrage – demonstrating value demands innovation

• No piecemeal solutions, demand for delivery of outcomes - hence technology + process + skill integration often a must

• The immense value of low legacy

• A sandbox – innovate locally, scale globally

• Need for a domestic ecosystem – need to create and support an Indian business services and platform product provider base

• Smaller and specialised partners are better

• The extra-ordinary potential of people

• Incentives for domestic services needed – significant employment creation potential

Future Group’s Consumption Business

Modern retail - still at a nascent stage in India

800 +Stores,50 +Distribution Centres

70 +cities

25,000 +vendors

30,000 +employees

3 million +articles

40 Supplychains

15 +Formats,10 Categories

FY05 FY08

6X revenue growth

4

Resultant FKS design principles

Future Knowledge Services (FKS) – created as a shared network of business and technology services for the group

Long term, sustainable low cost model

Capability to create capabilities

Group sourcing hub

Open delivery model – captive or outsource agnostic

Leverage low legacy

Architecture: Process – Technology Integration, Open source, network centric

Avoid mainstream locations –Ahmedabad hub

Provide talent the opportunity and environment to create an unique and valuable business

Costs &Capex

Controls & Compliance

ConsumerExperience &

Revenues

Scale

Vision: to create and deliver solutions that will shape the consumption sector

Retail Business’ Needs

5

FKS Organisation Profile

• Leadership: deep experience in international and India retail technology & business services and consulting – TESCO, KPMG, A S Watson, Cisco and Essar

• Organisation: 600+ members combining business services, technology services and consulting – deep domain skills

• Partnerships: SAP, Sun, Cisco, Wipro, Reflexis, JDA, Wincor, Greenplum, Newgen

• Delivery hub: Ahmedabad – over 60% of team

• Governance: Business – FKS Governance Council

• Established in 2007

6

An integrated set of capabilities with deep domain expertise built to serve end to end group requirements

• Management of programs and projects from a business, technology and change management standpoint

• Portfolio management• Program Management

• Infrastructure Management Services, Hardware procurement, deployment and maintenance, field level technology operations• Technology Infrastructure

Management

• Development of new applications, maintenance, and management of applications, package implementation, integration and testing services• Application Development

and Maintenance

• Technology solution design. Includes design of application, system, database, network and other infrastructure architecture• Technology Advisory

• Ongoing delivery of a complete business process as service with responsibility for outcomes. Integrates people, application, infrastructure and process.

• Service types include: - Transaction Processing (Payroll, F&A Services) - Contact Center : (voice helpdesk services) - Analytics and reporting: (Reporting, Research) - Audit and monitoring

• Business Services

• Assistance with design of business solutions, process and organisation, and business analysis and planning• Business Advisory

DescriptionService Line

7

This model has helped in the creation and delivery of significant business capabilities across the value chain

PLAN BUY MOVE SELL SUPPORTSERVICE

• Vendor Relationship Management Platform• Consumer Loyalty Programs• Enterprise-wide Point of Sale Replacement• SAP Platform ECC6• Warehouse Management • Store Management Platform• Data Centre and Network Optimisation • Open Source Office Applications • Business as usual

• Finance & Accounting Shared Services• Master Data Management Services• Inventory Audit Services• Space Optimisation Services• Reporting & MIS Services •Merchandise and Assortment Planning• Promotions Management • Time & Attendance Services• Payroll Management Services

Costs /Investments Controls

ConsumerExperience/ Revenues

Scale

Key FKS Retail Business Services and Technology Initiatives since 2008

Retail Business

FKS Delivery to Retail

BusinessConsulting

TechnologyDesign

ApplicationDevelopment Maintenance

Technology Infrastructure Management

Program Management

BusinessProcess Delivery

BusinessBenefitsTargeted

FKSCapabilities + + + + +

8

FKS Business Services profile

• A full business capability as a service• Integrates different capability components:

– Business solution and process design– People– Software application– Infrastructure

• Integrates different service types:– Transaction processing (Rule and decision based)– Knowledge Services– Contact management– Audit and monitoring

• Processes can be digitised or physical

FKS Business Services has the capability to deliver a complete business process as a service with accountability for outcomes

The following section showcases three such capability examples

9

Capability 1 - Finance & Accounts Shared Services

• 300 + person delivery centre in Ahmedabad serving Future Retail

• 10 + end to end Processes – Accounts Payable incl Payments, Accounts

Receivable, Reconciliations and Reporting

• 2 million + transactions annually

Stronger controls, Better compliance, Cost Reduction

• Not lift and drop but migration to a to-be, standardised process model

• Full country transition from 200+ stores, warehouses and zones in 3 months

• No workflow, physical mail-room as an interim solution

• Transition managed by ex-finance department personnel

• Talent model – local graduates, internal finance dept staff migrated to Ahmedabad,

select supervisory hires sourced nationally

• Co-location of F&A Shared Services and Technology – SAP & Development teams

• Cash management reporting and reconciliation

• Petty cash automation

• Invoice creation application on vendor collaboration platform

Scope & Scale:

Model:

Platform creation:

Benefits:

10

Capability 2 : Inventory Audit Service

• End to end delivery of physical stock-take process at the stores and warehouses

• Computation of variances vis-à-vis book stocks, reconciliation and posting • Shrinkage analytics and loss prevention advisory

Accuracy, independence, stronger controls

• Organised as 7 national hubs serving 60+ locations

• An example of technology, process, infrastructure and talent integration

• FKS designed business and technology solution, process architecture and

SOPs

• Team built through internal transfers – specialists and others

• Technology integration: Inventory Audit Application created, SAP

integration achieved, HandHeld Terminal deployed for the first time

Scope:

Model:

Benefits:

Scale: • 250 + stores, frequency - 3 times a year, night-shifts• 150+ people on rolls, 200+ FTE sourced from stores

11

Capability 3 – Master Data Management Services

• Employee, Customer, Article (Product) and Vendor masters

• Initial focus on Article (Product) Master – 3 million articles, annual creation 500,000+

articles

• Services:- Article Lifecycle Management – Creation, Maintenance & Archival- Meta-master management- Legacy article cleanup- Dimension and image capture- Merchandise Hierarchy Mgmt

Clean, consistent, complete and rich master data and lighter database

•FKS designed - Business and Technology Solution, Process architecture and SOPs – Designed as a SaaS model

•In-house designed MDM application with SAP integration – extensible across multiplecategories

•Specialised skills – for exception mgmt and other services

•Product dimension capture – a physical process

Scope & Scale:

Model:

Benefits:

12

Costs, productivity & efficiency – approach to process improvement

• Finance & Accounts Services• Centralised Promotions Control• Technology Services

Consolidate/Centralise

Standardize/ Formalise

Redesign/ Innovate

Automate

• Merchandise and Assortment Planning• Time and Attendance

• Cash Management & Reconciliation• Vendor Relationship Management• Shelf and Floor Space Optimisation

• Master Data Management• Store Management

• Customer Loyalty Programs• Open Source Platforms• Network Architecture

Innovate

Approach

Examples of initiatives in following section

13

FKS projects and services – focus on costs, controls, customer experience and scale

Benefits:Right product in the right store at the right time• Integrated and robust planning process connecting categories to concepts• Better managed inventory - effective Open-to-Buy Management• Lesser markdowns• Optimum space utilisation

Enterprise Planning

Store Management Benefits:Effective execution of policies and projects at the store with optimised resources• Granular definition and management of all store related tasks• Reduction in communication channels to the store• Avoid duplication of tasks• Simplified setting and monitoring of performance KPIs

New Point of SaleBenefitsIncreased revenue due to better customer experience• Faster checkout times • Consistency and robustness of promotions across categories• Quick and easy fraud detection• Centralised and open source architecture – reducing operating costs

- Cost - Controls- Scale - Customer

/Revenue

- Cost - Controls- Scale - Customer

/ Revenues

- Cost - Controls- Scale - Customer

/ Revenues

14

FKS projects and services – focus on costs, controls, customer experience and scale

Payroll Management & Time and Attendance

Benefits:Moving to positive attendance and better controlled payroll process• Effective controls in salary payouts• Integrated uniform attendance recording and tracking system• Centralized attendance and leave database with Employee Self Service (ESS) ‏• Increased productivity due to visibility of accurate data across zones, stores & HR

Finance & Accounts Shared Services

Benefits:Robust controls and better compliance • Strengthen controls and compliance to standard operating procedures• Improve turnaround times in processing• Increase productivity and reduce processing costs • Improve capacity and accuracy of reconciliations • Better analysis of operational and financial performance• Help business focus better on core roles

- Cost - Controls- Scale - Customer

/ Revenues

- Cost - Controls- Scale - Customer

/ Revenues

Warehouse ManagementBenefits:Better throughput of merchandise from supplier to store • Increased inventory visibility• Improved warehouse layout• Increased order fulfillment, and accuracy• Reduced operating costs

- Cost - Controls- Scale - Customer

/ Revenues

15

FKS projects and services – focus on costs, controls, customer experience and scale

BenefitsStrengthening emotional connect to the Consumer• Launched new prepaid and privilege cards to increase footfall and spending in

stores• Reduced operating costs of Green Card due to centralisation of technology• Analytics providing greater insight to customer spending

Customer Loyalty Program

Space Optimisation Services

Master Data Management Benefits:Clean data• Significant improvement in the accuracy and richness/completeness of article

master data• Reduction in redundant article data• Productivity and standardisation of article creation process• Improved consumer satisfaction at stores and better quality of MIS

Benefits:Enhance returns on space deployed in stores• Improve return from store-specific floor space investment• Ensure Space Optimization - more space to high volume & high margin products• Inventory Management - SKU and inventory rationalization based on space returns• Enhanced Customer experience - Better display of products • Improved reporting - Performance analysis by department, brand, etc on the space

allocated

- Cost - Controls- Scale - Customer

/ Revenues

- Cost - Controls- Scale - Customer

/ Revenues

- Cost - Controls- Scale - Customer

/ Revenues

16

Data Center

SONA 2.0 Complaint

Hardware

Software

Business Availability

Scale

Reduced Operational Expenses

Agility

Rapid Deployment

Security

Consolidation / Centralization / Standardization

PAN India Locations:

20% cost reduction

An innovatively architected and executed technology infrastructure provides the foundation for rapid scalability

17

NASSCOM – BPO Strategy Summit 2009

Aligning BPO opportunities in the domestic market

Rajiv PrakashDirector – Business Services & StrategyFuture Knowledge Services – Future Grouprajiv.prakash@pantaloon.com