target operating model - v070809
TRANSCRIPT
Deloitte Consulting LLP
July 2009
Target Operating Model (TOM)Discussion Document
Contents
Introduction and Background 3
Deloitte’s Point-of-View and Market Intelligence 4
Our Approach and Methodology 13
Project Timeline and Resources 16
- 3 -
Meeting Objectives
Gain consensus on project objectives and goals
Share our perspective on developing and institutionalizing operating models and key success factors
Describe the proposed approach to develop and implement a new operating model
Provide an overview of how Deloitte’s methods can be used to accelerate the project
Discuss next steps to initiate the project
- 4 -
Background – GIFT and TOM
The Target Operating Model (TOM) project is a key component of AIU Holding’s Finance General Insurance Finance Transformation (GIFT) Program Guardian and will be targeted towards increasing capabilities and decreasing costs.
GIFT Program Imperatives
Increase Transparency – Significantly improve walk-back capabilities from financial reports to source transactions
Greater Standardization of Technology - Create a common financial language and technology platform
Improve Information - Improve quality and timeliness of information available to stakeholders
Standardize Processes - Standardize accounting processes, rules, and controls
Leverage Operating Model - Leverage shared services and centers of excellences
TOM Project Objectives
Develop baseline – Develop single source of truth “current state footprint” to support proactive future workforce planning
Define future state operating model – Develop future state Operating Model which meets the goals of capability improvement and cost savings
Achieve business benefits – Demonstrate measurable business value and success; realize benefits through the rationalization of headcount, locations, process and labor arbitrage
Create business and employee buy-in – Gain leadership alignment around the Operating Model design, benefits and roadmap; gain employee buy-in to the new ways of working, roles and responsibilities and governance
Implement future state design– Implement the future state operating model via a standard systematic and repeatable methodology
- 5 -
Background – AIUH Finance Organization Design Project
Since the TOM project was originally scoped, in support of project ATLAS, a Finance Organization design initiative has been started to conduct current state analysis, evaluate organization design options and define key function activities. Goals of this initiative include:
Identify core responsibilities of AIUH Finance (i.e., which functions should exist at the AIUH level)
Conduct current state analysis to determine which functions exist within Domestic Insurance and Finance Insurance
Define governance and control model for AIUH functions
Develop recommendations for sub-functions that should reside with AIUH vs. Business segments
Support Function Leads in developing detailed organizational models and check against high level cost baseline
While the scope of the two initiatives might appear to overlap, we believe that both initiatives are complimentary and key in achieving the organization’s goals as related to the future state operating model ,and the two initiatives in conjunction can answer the following key questions:
How can Finance most effectively support / interact with the rest of the organization ?
What is the optimal global Finance organization / operating model (Local vs. COE vs. Shared Services)?
How will current on-going initiatives impact and optimally be integrated with the future Finance service delivery model?
What capabilities are needed to support the future Finance operating model?
SHOW APPROACH HERE?
- 6 -
Initiatives are underway that will demand significant time and attention of leadership and key knowledge resources
GIFT Program will …
ATLAS will…
Separation will…
Reinsurance will…
Global Claims Initiative
The broader landscape of in-flight and planned initiatives across the enterprise will both be impactful to and impacted by TOM
2010 2011 2012 2013 2014
AIU Holdings Separation (IPO)
GIFT Release 1:
CFP for CI
GIFT Release 3:
CFP / CD (EUR)
ATLAS - Investments
Finance Organizational
Model
ATLAS – Treasury
Reinsurance – Release 1
ATLAS - Other
GIFT Release 2:
CFP / CD (UK)
OneClaim (UK) – Auto
GIFT Release 4:
CFP / CD (JAP)
Reinsurance – Release 2
- 7 -
The project goals for TOM include the following:
Design and implement the appropriate operating model which best meet the requirements, state of readiness and maturity of both AIU and CI’s finance functions
Identify key functions and/or processes for redesign to conform with the new organization model (e.g., CoE’s, Shared Services) and enabling technology infrastructure
Identify and realize business benefits through cost optimization, capabilities development and controls management
Identify opportunities for outsourcing across the finance organization, including Finance IT, business processes, and functions
Align TOM to overall corporate strategies, organizational vision, and impactful initiatives as necessary, as they affect the design and implementation of the program
The objective of the Target Operating Model (TOM) project is to design a world-class Finance organization for AIU Holdings
Now overlapping with slide 4 – Just a few deltas that we maybe can incorporate into the earlier slide
Deloitte’s Point-of-View and Market Intelligence
- 9 -
Deloitte is uniquely qualified to assist AIU Holdings with this TOM effort
Deloitte received the highest rating of “Strong” across all Finance Management Core Capabilities, across categories of “CFO Vision & Strategy”, “Finance Organization”, “F&A Processes”, “F&A Technology”, “Execution”, and “Value Enhancement”
Deloitte is a leader for global shared services combining process, technical knowledge, change management capabilities, understanding of technology, and insight on labor and tax issues
Deloitte is the only provider rated strongest in 14 of 16 FT core categories and assessed as having advanced depth and breadth of capabilities
Deloitte has an advantage in meeting the needs for clients to engage a tax strategy advisor as they consider global business integration strategies
Key Highlights
*Source: Kennedy; Finance Management Consulting Marketplace 2009-2012; © BNA Subsidiaries, LLC; reproduced under license.
Deloitte’s Finance Transformation offering has been recognized as the market leader by Kennedy Information’s evaluation of the FT market and competitive landscape.
- 10 -
From our experiences with AIG and in industry, we understand both the key success factors and challenges in the design and execution of TOM
Cultural
Competing Priorities
Alignment with Other Strategic
Initiatives
Decision Making
Inability to Execute Strategy
Complexity and Speed of Change
Unclear Scope and Objectives
- 11 -
Decentralized Semi-Autonomous Balanced Centralized
Owens Illinois
Procter & Gamble
Campbell
Pepsi
S.C Johnson
General Mills
Land O’Lakes
Sara Lee
Limited
NikeGap
Hanes Brands
Levi Strauss
Merck
Shell
CargillAetna
Wells FargoAgilent
HPNissan NA
IBM Ford
GM RaytheonTextron
GEHoneywell
Cardinal HealthJ&J
PfizerBMS
DuPontAir Products
Rohm & Haas
Mars, Inc
Consumer Business
Consumer Packaged
Goods
Other Fortune 500
Other Manufacturing
Pharmaceuticals
Process Manufacturing
Verizon
Time Warner CableComcast
AT&T Rogers CommunicationsMSO and Communications
T-Mobile
Many Fortune 500 Companies Have Moved Or Are Moving To A Balanced And Centralized Finance Delivery Models To Gain Synergies
We have assisted many clients in redesigning their operating models, and are seeing a trend towards a more centralized F&A Organization
- 12 -
Insurance companies have some unique learnings to gain from their operating model redesign efforts
Independent Business
Unit
Centralized CFO
Insurance Company #1:
Finance is decentralized by line of business - each business unit
submits its own 10K filing
Insurance Company #2 & #3:
Financial reporting activities centralized at corporate level but remaining functions decentralized
Finance Company #1:
An Independent product line BU Org structure with a strong focus on outsourced shared services
Finance Company #2:
An Independent product line BU Org structure with a strong focus on outsourced shared services
Insurance Company #4:
Strong control over external reporting functions and other key
functions centralized
Finance Company #3:
Historically, an Independent product line BU Org structure,
evolving into a centralized finance function
Within the Financial Service Industry, varying organization structures exists. Examples of decentralized, centralized and hybrid models exists across leading insurance and finance companies.
Both Finance Company #1 and Insurance Company #1 are moving towards more centralized models:
Finance Company #1: A finance transformation initiative underway, to move transaction activities offshore and allow onshore resources to focus more advisory activities
Insurance Company #1: While the current structure provides the opportunity to produce results quickly, there are multiple redundancies and less consistency across the organization. As a result, the company is considering moving to a more centralized operating model
Finance Company #4:
Centralized organization with strong CFO control over financial
and regulatory reporting
Controllership Carve-out
- 13 -
We have also seen a growth in F&A outsourcing activity
Key:
Requisition Materials
Purchasing / Procurement
Order Entry
Benefits Admin. / Accounting
Inquiry HandlingRegulatory Reporting
Rating Agency Relations
Premium Accounting (Ins)
Re-insurance Accounting (Ins)
Investment Accounting/
Securities Pricing (FS)
Daily P&L / Mark to Market /Middle
Office
Procurement. Card Admin
Treasury / Trust Management
Investor Relations
General Leger
AccountingConsolidations
Monthly / Quarterly Close
Financial Reconciliation
BillingLegal Entity Reporting
Statutory Reporting
Fixed Asset Accounting
Tax Planning / Accounting
Payment Processing
Accounts Payable Cash Application Collections
T&E
Accounting / Reimbursement
Bank Reconciliation
Transaction Processing External Reporting
Source to SettleAccounting to Reporting (General Accounting) Order to Cash
Strategic Planning
Budgeting & Financial Planning
ForecastingAccounting / Tax
PolicyInternal Audit Financial Analysis
Internal Consulting
Finance Function Management
Human Performance Management
Training & Development
Business Liaison
Expense / Revenue
Allocations
Performance Measurements
Multi-Dimensional Reporting
Profit Center / Customer / Producer
Profitability
Acquisitions & Divestitures
Risk Management (CM)
Actuarial Analysis / Reserving (Ins)
Real Estate Mgmt.
Project Management
Business Decision Support Finance ManagementPlanning Control
Management Reporting Specialized Expertise
Not Typically
Outsourced
Less Commonly Outsourced
Most commonly
Outsourced
KeySource: Deloitte Research, IDC
F&A Sourcing Scope
F&A continues to grow because of the breadth of business processes that are sourcing candidates; the F&A business outsourcing market size has grown to approximately $32 billion
AP, AR, and GA appear in more than 80 percent of right sourcing strategies, and more than 70 percent have an offshore component
Mainland Europe is currently adopting services as quickly as North America and the U.K.
Approximately 85 percent of Sourcing contracts have 5- to 10-year terms (the average is 6.8 years)
Our Approach and Methodology
- 15 -
Deloitte has experience in implementing Target Operating Models, and can leverage methodologies and toolsets that encompass people, process and technology
A proven toolkit of established TOM accelerators and tools: Deloitte has a significant knowledge base that will be invaluable for
this project. This includes best practice operating models, process models/processes, organization designs and governance
frameworks as well as numerous examples of these from recent client experiences. We also have a suite of tools and methods that
our teams use to ensure consistent quality outcomes on our engagements and often enable us to accelerate project timelines. The
table below outlines some of our key materials and tools which are relevant to this engagement.
Deloitte’s Cultural DNA assessment
\
Provides a “hard” and tangible way to understand the “soft” and complex issue
of culture. It is a rigorous and statistically valid tool which provides insights into behaviors, behavioral
drivers and barriers for change.
Process Design
Deloitte’s process design approach includes a number of tools to support specific parts of the design process.
These include:
RACI modelling for establishing clarity around roles, responsibilities and
interfaces.
Governance structure design.
Capability mapping tools.
Leadership
Mission, Vision, Values
Physical Work Environment
Programmes, Policies, Processes, Practices
Brand Promise
Business Strategy and Structure
People Profile, Assumptions and Behaviours
Leadership
Mission, Vision, Values
Physical Work Environment
Programmes, Policies, Processes, Practices
Brand Promise
Business Strategy and Structure
People Profile, Assumptions and Behaviours
Target Operating Model Design
Deloitte’s Target Operating methodology provides an end-to-end view of the
required target functions and capabilities of an IT Organization.
Organisation Design
Deloitte has an established business design group that specializes in the
detailed design and implementation of organizational structures
Our approach goes significantly beyond ‘wiring diagrams’ and job mapping. We
adopt a hypothesis driven approach that defines the capabilities required to deliver against strategic objectives.
Rapid IT Service Diagnostic tool
Deloitte’s diagnostic tool is an ITIL version 3 aligned assessment tool which
provides a structured and comprehensive approach to quickly
understanding current state maturity across the entire IT process, control,
organizational, and supporting technology spectrum.
Maturity Stages by Process
0
1
2
3
4
5Strategy Generation
Financial ManagementService Portfolio Management
Demand Management
Service Catalogue Management
Service Level Management
Capacity Management
Availability Management
IT Service Continuity Management
Information Security Management
Supplier Management
Transition Planning & Support
Change Management
Service Asset & Config MgmtRelease & Deployment Mgmt
Service Validation & TestingEvaluation
Knowledge Management
Service Desk
Incident Management
Event Management
Request Fulfilment
Problem Management
Access Management
Technical Management
IT Operations Management
Applications Management
7 Step Improvement Process
Service ReportingService Measurement
Key:Maturity Stage Score by Process AreaDesired State
The following provides summary descriptions for the measured maturity stages.
Level 1 – ChaoticProcesses and roles are not defined. Activities in this area are largely unstructured and uncoordinated.
Level 2 – ReactiveBasic processes are defined and followed to some extent. Processes can often be bypassed and there is a lack of ownership. Activities are largely reactive and inefficient in nature.
Level 3 – ProactiveProcesses are agreed, well documented, communicated and enforced. Roles are defined and individuals are suitably trained. Supporting technology is used to help deliver process objectives. Service Levels are in place and agreed
Level 4 – Service DrivenProcesses have clear end-to-end service oriented targets associated to them, and efforts are made to continually improve. Advanced technologies are used to assist.
Level 5 – Value DrivenProcesses are highly mature and very well integrated into the Business requirements. The Business and IT work together to improve.
Maturity Stage SummaryMaturity Stage by I TIL v3 Process Area
Vision & Mission
Target Operating Model Principles
Functional Target Operating ModelFunctional Operating Model
Organisation
Process
Governance & Performance Reporting
Vision and objectives of the TOM, e.g.:• Business goals. IT strategy aims such as cost
reduction, risk reduction, greater agility • Sourcing options, strategic sourcing, single source,
multi-vendor etc.
Definition of Governance:• Governance forums
responsibilities, escalation• Reporting requirements• IT metrics & targets• Balanced scorecard
Definition of the retained IT org:• Level 1 Roles descriptions• Level 2 Role responsibilities, skills &
capabilities• Performance Measures & Targets
Definition of the high-level principles e.g.: • Multi-supplier/Service Integrator model • TOM design principles• Lean management & control • ITIL-aligned processes etc
Definition of functional TOM:• Design of future state functional
groups in TOM• Description of functions and key
responsibilities
Definition of processes e.g.:• Level 1 to 3 process design• RACI responsibility matrix• Process metrics & targets
Op
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ate
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en
efi
t
Deloitte IT Skills Framework
Deloitte’s Skills Framework tool assesses the skills capabilities in an organization,
and aligns this to the organization’s needs.
We can also draw on a best practice framework called Skills Framework for
the Information Age (SFIA).
©2007 Deloitte MCS Limited. Private and Confidential.
Ogier I T Skills Assessment – Overall View
Observations
The IT skills assessment identifies those areas where training could be provided as well as areas where staff possess skills which are not being used.
The skills assessment uses a standard list of applications from the Deloitte database. This represents a wide-ranging skill set of preferred skills.
The main skill set is centred around Infrastructure Applications and Ogier known applications (those named on Ogier’s Application Matrix).
However, there are several areas of skills where staff possess skills that they are not using. These are mainly around Infrastructure, Development and Desktop Tools, as well as some Ogier known apps.
In some areas such as Security, there are no experts – but there are staff who have skills in that area and are not using them.
In some areas such as Voice Services, Requirements Gathering and Data Warehousing there are only basic skills with no Experts or Advanced level staff.
Further detailed information can be found in the Skills Matrix. This contains a detailed breakdown of skills, graphs of skill levels and an overview of skill clusters.
Review skills matrix and identify areas where further training is needed. Each high level category (left) is broken down into specific applications. Resources should centre on Ogier known applications as these are the apps Ogier identified as necessary to the Business. There are also ‘Ogier added apps’ which are those applications identified by staff as being part of their everyday skillset.
For areas where further training or recruitment has been identified, the skills matrix has also highlighted any staff who have skills in an area where they are not using them in their job role. This may fill adevelopment need for Ogier in terms of utilising an existing skillset.
Key Recommendations
Background
The skills available to the IT departments are diverse. These are mainly centred around Infrastructure and Ogier known applications (those named on Ogier’s Application Matrix). However there are also many skills available which are not being used.
AMBER
0
50
100
150
200
250
300
350
400
450
500
Bu
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Da
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Infr
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Og
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Og
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Not Used
Expert
Advanced
Intermediate
Beginner
Ogier IT function and Application Support Team (AST) were presented with a skills assessment matrix to complete. This consisted of an industry standard list of application skills plus the option to add in additional skills, which were then incorporated into the overall results. Staff were asked to rate themselves according to their skills in each area i.e. Not Used, Beginner, Intermediate, Advanced and Expert and results collated and charted across overall skills areas. The results are available in their entirety via the completed Skills Matrix.
SBU Column
Regional GSS IT Column
Global GSS IT Column
SBU CIO Column
Vendor Activities
Changes to activities not yet reviewed
Individual steps which link to other processes
Track and Manage Vendor Contracts –managed by GSS IT
R=Responsible, A=Accountable
C = Consult, I = Inform
1 Receive finalised contract after negotiation I I I - - - - - A,R - I - - - - -
A,R
I - - - - - - I - - - -
2 Receive vendor performance metrics and analysis from Service Management - - - - - - - - - - - - R - - -
A,R
I - I - - - - - - - - -
3 Discuss vendor performance between SM & VM - R - - - - - - - - - -
A,R
- - - R C - - - - - - C - - - -
4 Review performance (metrics) with vendors on a periodic basis I I I I I - - I A,R I C C I,C C C -
A,R
C - - - - - C C R R R R
5 Analyse service level credit regime and identify applicable penalties / incentives - R - - - C - C A,R - - - C C C -
A,R
C - - - - - C C - - -
6 Discuss applicable penalties and incentives C R R - C C - C A,R - - - - - - -
A,R
C - - - - - - C - - -
7 Execute penalty / incentive payment - - - - - - - A,R - - - - - - -A,R
- - - - - - - - I I I I
8 Distribute financial impact of penalties/incentives across SBU C R R - R C - - A,R - - - - - - -
A,R
C - - - - - - C - - -
9 Evaluate contract value and adjust if necessary C C - C - - - - A,R - - - - - - -
A,R
C - - - - - - C C C C C
AD
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S&
A
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M
Glo
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Deloitte Intelligent PMO
Deployment of a standard PMO often does not provide the necessary insight
to steer a program intelligently and highlight the real risks and issues ahead
of time.
Deloitte’s iPMO is designed to deliver complex technology programs ensuring
integration, Information-lead and intelligent management of programmes.
Programme SupportFinancial Control
Quality Control
Change Control
Configuration Control
Secretariat
Organisation Chart
Filing Structure
Contact List
Programme Design & Control
Stakeholder Management &
Communications
Outcome Management
PMO
Planning & Progress Reporting
Programme Support
Risk & Issue Management
Outcome ManagementBusiness Case/ Investment Appraisal
Key Performance Indicators
Metrics
Realisation plan and tracking tool
Owner/Responsibility alignment
Post programme review
Programme Design Governance Structure
Vision Design
Approach
Risk & Issue ManagementRisk Awareness
Risk and I ssues log
Escalation process
Mitigation Activity
Contingency planning
Reporting
Planning & Progress ReportingScope Management
I ntegrated plan
Dependency tracking
Resource Estimating
Reporting templates, process and schedule
Exception reporting
Stakeholder Management & CommunicationsStakeholder Mapping
Contact tracker and calendar
Communication products
& ControlStrategy Chart
Board Control
Assurance
Programme SupportFinancial Control
Quality Control
Change Control
Configuration Control
Secretariat
Organisation Chart
Filing Structure
Contact List
Programme Design & Control
Stakeholder Management &
Communications
Outcome Management
PMO
Planning & Progress Reporting
Programme Support
Risk & Issue Management
Programme Design & Control
Stakeholder Management &
Communications
Outcome Management
PMO
Planning & Progress Reporting
Programme Support
Risk & Issue Management
Outcome ManagementBusiness Case/ Investment Appraisal
Key Performance Indicators
Metrics
Realisation plan and tracking tool
Owner/Responsibility alignment
Post programme review
Programme Design Governance Structure
Vision Design
Approach
Risk & Issue ManagementRisk Awareness
Risk and I ssues log
Escalation process
Mitigation Activity
Contingency planning
Reporting
Planning & Progress ReportingScope Management
I ntegrated plan
Dependency tracking
Resource Estimating
Reporting templates, process and schedule
Exception reporting
Stakeholder Management & CommunicationsStakeholder Mapping
Contact tracker and calendar
Communication products
& ControlStrategy Chart
Board Control
Assurance
Best Practice/ Benchmarking
Deloitte research and our substantial experience of IT organizations allow us
to offer comparisons across all industries, Our practitioners are highly
skilled in implementing leading practices and technologies.
- 16 -
Approach framework
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design Implementation
Conducting an assessment across functions within the Finance organization will help identify opportunities and key activities that need to be incorporated in developing a future target operating model
Identifying and aligning the finance function behind an organizational strategy is the critical first step in developing a Target Operating Model strategy
Create a common set of service delivery design principles, and formulate a supporting future state vision. Benchmark the vision to internal and external data points.
Determine the future shape of the operation by using the previously defined design principles and strategy to create service delivery options. Analyze , prioritize and select the most viable option for subsequent implementation.
Design and completion of detailed architectures for the selected Target Operating model, e.g. detailed IT, people, process etc. architecture underlying the TOM, including a detailed business case and financial impact assessment.
With a target operating model design in place, a detailed implementation plan and roadmap clearly highlighting responsibilities, dependencies and sequencing of steps is needed to execute and deliver the future state operating model
Our approach is designed to help you define options and gain stakeholder consensus
- 17 -
Business specific finance
functions and processes
Shared financial
processes
Enterprise-wide finance functions and
processes
Controllership
Financial Planning & Analysis
Tax
Treasury
Required Functions
Possible Locations
of Required
Functions
Risk & Compliance
Other
Holding Company Finance
Operating CompanyFinance
Shared Services
Group
Organizational Strategy
Goals & Objectives
Activities & Deliverables
Toolsets & Accelerators
Organization Design
Balanced scorecard
Operation Model Value Chain
Voice of the Customer Surveys
Product & Service Segmentation
Objectives List: Conduct executive interviews and/or workshops to identify and confirm strategy objectives
Align Objectives: Review vision and organization structure designs from the Finance Org Model team and revise to fit with finance strategy objectives
Voice of the Customer Analysis: Conduct surveys across functions and business units to understand issues and needs regarding Customers, Products and Channels
Confirmation of the strategy, objectives and critical success factors (CSFs) developed by the Finance Org Model project
Rationalization of functions across regions
Leadership consensus and alignment
Understanding the consistency with which these have been communicated, understood & applied
Sample Output – Charter with Guiding Principles
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design Implementation
Identifying and aligning the finance function behind an organizational strategy is the critical first step in developing a Target Operating Model strategy
- 18 -
Current State Assessment
Goals & Objectives
Activities & Deliverables
Toolsets & Accelerators
Cultural DNA Assessment
Rapid IT Service Diagnostic Tool
Value chain analysis
Maturity Model
Resource/Skill/Function Database
Current State Footprint Analysis: Understand, validate and map the current organization and processes to help in developing the TOM definition
Change Management Documentation: Capture current and planned change management activities
Function Analysis: Assess performance across functions using an industry maturity model and identify deficiencies
Establish definition of current operating model and architecture (e.g., process, org, technology), including opportunities to leverage shared services and outsourcing
Identify where existing initiates on-going/planned impact TOM
Capture key FTE, Business and Financial metrics and identify duplications, costs, and system constraints
Sample Output – Functional Analysis
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design Implementation
N2Bus. UnitExternal Audit PlanningAudit
N5CorporateInternal Audit
N3Bus. UnitInternal/External Audit Support
Y1Enterprise Consolidation
N3CorporateExecuting the Corp/OC Close
N1CorporateEliminations
N1CorporateForeign Exchange Translations
Y1Shared SvcOverhead Allocations
N1Bus. UnitAccounting Procedures
N1CorporateAccounting Policies
Y5Shared SvcManage G/L (Posting JEs)
N2Bus. UnitManage G/L (Initiating JEs)
N6CorporateManage G/L (Top Side JE)
YShared SvcOC Consolidation
General
Shared ServiceFTEsLocationFunctionRole
Con
trol
lers
hip
2
Corporate
Conducting an assessment across functions within the Finance organization will help identify opportunities and key activities that need to be incorporated in developing a future target operating model
- 19 -
Goals & Objectives
Activities & Deliverables
Toolsets & Accelerators
Finance Transform Maturity Matrices
Best Practice Benchmarking
Sourcing Matrix
Key Design Principles
Confirmed Future State Vision: clearly defined operational design principles and confirm through executive workshops
Benchmarking Study: analysis of gaps in key design principles as compared to industry leading standards
Financial Model 2x2 Matrices: analysis of to-be states across all finance functions
Establish future state vision for service delivery channels (e.g., COE, shared services, regionalization, etc.)
Align to Finance Org Model initiative vision and confirm design principles for TOM
Compare vision to industry practices through benchmarking
Sample Output – 2x2
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design Implementation
Future State Vision
Create a common set of service delivery design principles, and formulate a supporting future state vision. Benchmark the vision to internal and external data points.
Expertise focus — ability to leverage
“Best practice” development
Issue/knowledge intensive
Often organized by region
Consolidated organization
Operational focus
Process intensive with standardized services
Could cover countries or region
Transaction ProcessingHigh volume, low value add
Knowledge-basedLow-volume, high-value activities
Method Of Adding Value
Re
latio
nsh
ip T
o B
usi
ne
ss
Sp
ecif
ic
( Site
, uni
t, r
egio
n)
Gen
eric
(C
om
pan
y w
ide)
Shared Services Center Of Excellence/Corp.
Aligned with a function or BU or management team
Knowledge transfer services
Decision/action Intensive
Distributed to location(s) for local service needs
Specialized services for each site
Manual or end-user Intensive
Site Support Business Partner
An operating model matrix, as shown below, can be used to illustrate the focus of Finance’s strategic choices. For example, a cost efficient transaction processor’s likely focus will be the “Shared Services” quadrant.
- 20 -
Service Delivery Analysis & Selection
Goals & Objectives
Activities & Deliverables
Toolsets & Accelerators
Prioritization Matrix
Process Rationalization
Location Feasibility Study
Shared Services / COEs / Sourcing Strategy
TOM Options: identify viable TOM options showing functions, sub-functions, location / region and use of COEs / shared services
Scorecard and Evaluation Criteria: create criteria for evaluation and prioritization of TOM options
Prioritized Options List:: facilitate workshop with key stakeholders to discuss and rank options by priority
Develop options based on previously defined vision and design principles
Analyze the opportunity and costs implications associated with each option and review with stakeholders
Make the final selection for future state TOM model
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design Implementation
Sample Output – Process Rationalization
Page 1
Maturity Lead Generation As-Is Value Stream Map
Previous claimsPolicy changes
1.0
1 IS
ru
n a
rep
ort
on
OB
sys
tem
1.0
2 IS
ch
eck
slip
s ge
ne
rate
d
1.0
3 IS
pa
ss to
po
st t
eam
1.0
4 P
ost
de
live
red
to m
atur
ity t
eam
1.0
5 M
atu
rity
tea
m r
ece
ive
s &
sto
res
che
ck
slip
1.0
6 M
atu
rity
Te
am a
cce
ss E
DM
fo
r le
gacy
d
ocu
me
nta
tion
1.0
7 M
atu
rity
Te
am c
om
pa
re c
he
ck s
lip
ag
ains
t E
DM
do
cum
en
t
1.1
0 M
atu
rity
Te
am s
ign
off
che
ck s
lip
1.1
1 M
atu
rity
Te
am s
tore
slip
s in
cu
pb
oard
1.0
8 M
atu
rity
Te
am a
men
d r
eco
rd o
n
We
bse
rie
s
1.0
9 M
atu
rity
Te
am s
tore
oth
er
in O
dd
me
nts
Tu
b
2 days 1 day2 days
(100 items per batch takes one person 1 hour to process = 50 man hours to process 5000)
1 day(2 mins per Keymaster record
amendments * c.1000 amendments)1 hour
Every 2 weeks
1 hour
Every 2 weeks
Report run on maturities in 4 months time
1.1
2 IS
ru
n r
ep
ort
on
OB
an
d p
rod
uce
XL
S
rep
ort
1.1
3 IS
pro
duce
au
thor
isa
tion
s sl
ips
1.1
4 IS
pa
ss to
ma
turi
ty t
eam
1.1
5 M
atu
rity
tea
m p
ass
to
Act
ua
rial T
eam
Page 2
Error – can
Change (c.20%)
2 days
Report run on maturities in 2 months time
Name; Address; Policy; Agency Number; Estimated Value
Slip per customer
Check passed (c.70-75%)
Error – cannot Change (5-10%)
12 3 4 5
6
2425
26
Sample size 40
Actuarial
QA Actuarial
Determine the future shape of the operation by using the previously defined design principles and strategy to create service delivery options. Analyze , prioritize and select the most viable option for subsequent implementation.
- 21 -
Design
Goals & Objectives
Activities & Deliverables
Toolsets & Accelerators
Operating Model Design
Diagnostic Process Blueprint
Business Case / Financial Model Framework
Key Metrics Measurement and Tracking Tool
Lean 6 Sigma methodology
Detailed TOM Design: create detailed organizational charts showing functional, systems and resource architecture models, including governance and accountability
Business Case: create opportunity cost and benefit analysis, including financial impact assessment
Based upon the selected service delivery option, develop the detailed IT, people, process etc. architecture underlying the selected TOM
Identify the related metrics (cost, financials etc.), create a cost / benefit analysis and create the detailed business case and funding request
Sample Output – Future TOM Design
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design Implementation
Design and completion of detailed architectures for the selected Target Operating model, e.g. detailed IT, people, process etc. architecture underlying the TOM, including a detailed business case and financial impact assessment.
CFO
Finance Exec
Head of Transaction Processing
Head of Business Partners
Head of Treasury
Head of Process Control and
Improvement
Head of Tax
Systems Analyst2 FTE
BP Exec.
BP Exec.
BP Exec. Offshore
BP Exec. ESS & EBS
Treasury Assistant1 FTE
Indirect Tax Manager
Direct Tax Manager
Head of FAC
Commissions1 FTE
Management Accountant (Inv.
Perpetual)2 FTE
Management Accountant 2 FTE
Senior Transaction Processing
AR 1 FTE
Accounts Assistant (Feesharing)
Accounts Assistant (VAT)
AP 5 FTE
AP/FA 1 FTE
Direct Tax Accountant
2 FTE
Management Accountant (Offshore)
2 FTE
BP Exec. ECS2 FTE
Cash Processing1 FTE
Transactions Assistant
Corporate -General
Corporate -Aligned to Business
Region
Key
Financial Controller
Non IP UK Business Units
2 FTE
Financial accountant
2 FTE
- 22 -
Implementation
Goals & Objectives
Activities & Deliverables
Toolsets & Accelerators
Portfolio management methodology (PMM)
Program Interdependency Planning
Change Readiness Assessment
Key Industry Benchmarks
Prince 2???
Roadmap: Develop roadmap detailing activities, sequencing of steps, desired outcomes, and dependencies
KPI Documentation: Identify key performance indicators (KPIs) to track the success of the implementation
Project Management Office Charter: Agree / achieve roadmap sign off and establish project management authority
Deployment: Begin to execute on the roadmap by clearly defining short-term next steps and responsibilities
Design an implementation plan and roadmap based on TOM analysis, highlighting sequencing and dependencies
Review project portfolio for consistency & alignment
Design authority established to govern the implementation and identify milestones
Implementation work initiated
Sample Output – Implementation Plan
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design Implementation
With a target operating model design in place, a detailed implementation plan and roadmap clearly highlighting responsibilities, dependencies and sequencing of steps is needed to execute and deliver the future state operating model
Year 5Year 4Year 3Year 2Year 1 Year 5Year 4Year 3Year 2Year 1
Organisational Change
Marketing
Product Design and Manufacture
Operations and I T I nfrastructure
Risk
Payments
Shared Services
Collections and Recoveries
Sales and Service
Organisational Change
Marketing
Product Design and Manufacture
Operations and I T I nfrastructure
Risk
Payments
Shared Services
Collections and Recoveries
Sales and Service
Outsource Recoveries Recoveries outsourced to low cost provider
Implement regional salary weighting
Regional salary weighting introduced
Implement white-labelled product design and manufacture, IT and operations for non core products
Migrate processing to alternative supplier (TBC) for product design and manufacture, IT and operations for non core products
White-labelled supplier utilised for non-core products
Alternative sourcing (TBC) utilised for core product design, manufacture, operations and IT
Outsource Payments Payments outsourced to low cost provider
Outsource simple, transactional processing Simple Shared Service processing outsourced to low cost provider
Re-engineer product dev processes for core products
Product development processes optimised for core products
Re-organise functions to align with new organisational structure
I llustrative
Project Timeline and Resources
- 24 -
Project Timeline
Timeline (weeks/months)
Milestone
1 2 3 4 5 6 7 8 9 10 11 12
Organizational Strategy
Current State Assessment
Future State Vision
Service Delivery Analysis & Selection
Design
Identify and confirm strategy objectives
Align objectives to fit with finance strategy objectives
Conduct surveys to understand issues and needs regarding Customers, Products and Channels
Understand, validate and map the current organization and processes
Capture current and planned change management activities
Assess performance across functions using an industry maturity model and identify deficiencies
Confirm Future State Vision through executive workshops
Conduct benchmark analysis of gaps in key design principles as compared to industry leading standards
Analyze of to-be states across all finance functions using financial 2x2 matrices
Identify viable TOM options showing functions, sub-functions, location / region and use of COEs / shared services
Create criteria for evaluation and prioritization of TOM options
Facilitate workshop with key stakeholders to discuss and rank options by priority
Create detailed organizational charts showing functional, systems and resource architecture models, including governance and accountability
Create opportunity cost and benefit analysis, including financial impact assessment
- 25 -
Organization chart
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Line 1
Line 2
Label
Descriptive header
- 26 -
Key Success Factor / Our Experience (Sameer Shah)
General market success factors
Pitfalls to avoid given our knowledge of AIU Holdings
Potentially highlight regulatory and tax concerns (e.g., data may need to reside in Japan)
Copyright © 2008 Deloitte Development LLC. All rights reserved.