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Note: (*) = Winning companies are those that managed to obtain better results –as measured by the ROIC– than those of their industry peers during
the 6 years following the 1990-91 recession.
Source: Accenture’s analysis.
They act decisively as soon as problems start to appear in the horizon (ie. Leading
indicators), investing in new capabilities to strengthen business operating models
They set priorities based on detailed knowledge of how the company creates value (eg.
products, customer segments, key processes, technology, people, finance)
They leverage IT to support key value drivers (value drivers, which are known and
understood).
They work together with customers and stakeholders in order to align their value
propositions to changing environments
“In the cost-cutting discussions we're having right now - and there are many
- I remind my team that the next generation of technology and services will
be born out of decisions we make at this unique moment in time”
Anne Muclahy, CEO Xerox, April 2009
Accenture Research
• While companies are slowly improving implementation performance, few claim
success at capturing the full business value targeted by their systems investments
• There is significant value in increasing the confidence that technology investments will
result in targeted benefits – translating into shareholder returns
• Many companies are looking for real business transformation, not just technology
implementation, to drive business performance
• Further, many companies are ILLUSTRATIVE BENEFITS PROFILES FOR SYSTEMS INTEGRATION
looking to develop truly “innovative”
solutions that create competitive Accelerated value
advantage and differentiated creation with quick wins
capabilities Business
Performance Go-Live High performance
Incre
ase
implementation
• The ability to capture business Total
Bene
benefits (cost/revenue) in Traditional systems
fit/
Value
advance of end-state technology benefit curve
is increasingly important,
Accelerate
particularly in the current Realization of
economic situation benefits/ value
Time
TACTICAL
Standard
Company 90% Process
Strategy
Capability
Innovative
Procure to Pay
Cost Reduction
Process
Benefit
Capability
Value Source
$$$,$$$
Target Opportunity
Case Demand aggregation, volume discount, retail management, earnings capture, contract management, and
sourcing alternatives
Compliance with contracts; reduced off contract spend
Develop a supply strategy through analysis of current global spend, future demand, supplier, performance, risk,
target costing and real time changes
Key Assumptions
Transformation
& Quick Win
Opportunities
Strategic Market Domination
Establish cross-category portfolio of global dominant brands within high growth/ value markets
Performance
Differentiated, & Distribution Deep cross market Operations
consumer insight & Tailored service regulatory Rigorous cost/
technology-driven and distribution understanding WCAP mgmt &
brands, under approach to ensure driving product imbedded
continual renewal strategy and
Research
availability performance mgmt
positioning culture
Program
Governance
Defined roles,
responsibilities & decision
rights to manage the
healthy tension
Compliance
and Quality
Project Executive
SAP Delivery Leads
Contract / Finance
Sponsorship
NA Management
Service
EMEA
Management
LA Program Managers
Value
ASIA
O
PMO Realization
Transition Services
Lead
Support Services
-
Benefits
Tracking
Transformation Strategy & Timing of
Road Map Process Capabilities
VALUE REALIZATION
PROCESS STRATEGY Track process and technology design and implementation decisions back to
Develop holistic process deployment strategy and business case; put in place process metrics; build process
strategy; Assess Current Process governance
Performance & Gaps; Identify
Transformation Opportunities; Link to PROCESS TRANSFORMATION & INNOVATION
the SI Business Case Implement high-value strategic process Improvement projects; Accelerated
benefits in advance of end-state technology;
Operatio Settle
ns Express Busin Mea Best
busin
strategy ess sur practices
ess
adopt e Tools
Accenture target
s
ion pro
gre
ss
Repository e
roadmap
s
oy ort dit taliz
e
Solutions Methodology
High Spot
1 weeks 2 weeks 3 weeks 2 week
1
Actions Identification Case and Actio n Plan
Review
High Performance Enterprise
Business Performance Mastery
Framework Management Assessment
High
Target S etting B usiness S trateg y M onitor
R efin e C o rp o rate
D eterm in e K ey
(EPM) Tool
D eterm in e K ey V isio n &
M easu res o f
V alu e D rivers S trateg ic
S u ccess
O b jectives
D evelo p Actio n
P o rtfo lio V alu e P lan s, R e-allo cate
Performance
Assessm en t R eso u rces an d
E nablers U p d ate F o recast
In cen tives an d S tan d ard ized
R ew ard s P ro cesses
S et T arg ets fo r R eview P erfo rm an ce
K ey M easu res o f In teg rated IT w ith E xecu tive
Acco u n tab ility A rch itectu re M anag em en t
D evelo p P lan s
O perate
Allo cate
D ata S tru ctu res &
C o n tro ls
R eview ,
M o n ito r K ey
M easu res o f
B u sin ess
P erfo rm an ce
SC
R eso u rces (all C h allen g e &
to Ach ieve
categ o ries) to F in alize P lan s &
T arg ets
Ach ieve P lan s F o recasts
What other approaches or tools have you seen used that would
enhance value realization?
Planning
Performance Tool usability
KPI’s KPI’s
Examples: Examples:
Forecast Accuracy Past due orders
Days of Inventory (deliveries, planned
Number of stock-
Methodology orders, stock transfer
outs orders, …)
% of Planned Orders
1 weeks 2 weeks 3 weeks 2 week converted to Production
Phase I: Phase II: Phase III: Phase IV: Orders
Mobilize and Gather As-Is Review Opportunities High Level
Information and Actions
Identification
Business Case
and Action Plan
% of Purchase
Requisitions converted to
Copyright © 2009 Accenture All Rights Reserved. Purchase Orders 17
Example: Global Transformational Program based
on High Spot Review
1 Processes efficiency assessment Quarterly measure 12 rolling month COGS divided by avg 12 rolling month inventory at net value
• Functions
2 Country key data collection 2001 COGS and 2001 average inventory, after scope adjustment
Baseline
2001 COGS
CE PS MH
115,257,000 31,186,000 20,321,000
Total
166,764,000
• No additional adjustment is needed as
the KPI is a productivity ratio
5-year NPV:
Payback period:
• Initiative owner:
• BPO:
1,0
Country efficiency assessment Inv turns
Step 2 : Collect and adjust actual
12 rolling BI
4.421 2.284 3.646
month COGS and Average 12 rolling month inventory, at the end of the quarter, after scope adjustment
3.681
Value drivers and expected improvements
• Value drivers, improvements derived and ramp-up details
Costs and phasing
• One time
- IT
- HR
Barriers
• Organisational impacts (gap with
as is...)
- Populations
5
5 Lagging KPIs
in EUR 2001 2002 2003 Sales in EUR 2001 2002 2003 Existing systems & gaps
Sales Purchasing - Training
…
Revenue: Electrical distribution - medium voltage
Major steps
2001 2002 2003 Electrical distribution - medium voltage
Logistics 2,9 - xxx Start date - xxx
Planned
• Baseline cost = (Actual COGS DIVIDED BY Baseline Inv turns)2 MULTIPLIED BY 2.075% Production Electrical distribution - low voltage
end Total
date
6 Initiative description
Administration Industrial control and automation Switch deployment timing
•Cost
Actual
of cost = Actual Inventory
capital CE MULTIPLIED PS BY 2.075% MH Total
Manufacturing 3,6 Quality CRM • … … …Facilities Markets
Risks
Baseline 593,045 317,693 99,873 1,010,611 Cost
Cost • # Employees
Sales in EUR
Residential
2001 2002 2003
- xxx
Scope & 95,427
boundaries reduction:••
Production sites Buildings
Quality 2,0 Actual 566,644 303,550 965,620 reduction: Distribution centers Industry
7
Sales outlets Key initiatives - Switch related
• …
-2-
9 Leading KPIs
Business Purpose
The ability to plan demand with accuracy is a key influencer
to the efficiency of operations. A high accuracy in planning helps
the company optimise manufacturing and supply chain costs while
providing the end-customer with the highest possible service level.
Levers to improve performance
• Improve forecasting process and level of coordination between functions
• Improve the understanding of market macro-economic trends
• Use statistical modelling to better understand demand history
All capabilities
Team members
Action leader
…
Action sponsor
… realization team
Value
Switch deployment
Identifies projectsBusiness/
to be initiative owners
Others
Production
Destinations, in EUR
ProjectIntraowners
country
Fill in Initiatives
Intra geographical zone
2001 2002 2003 No
10
n
All projects Intra operating division
descriptions
(׀ ׀
Action plan )
(Volume actual SKUi - Volume forecasted SKUi)
list description performance on scope
Target Direct contributors Steering Group
Extra operating division
- Current projects
(Volume forecasted SKUi)
- Planned projects criteria? criteria
… • … • …
i=1
Sales forecast accuracy ratio = 1 - n
SUMMARY - New projects
Calculation methodology used is MAPE (Mean absolute percentage error) • •
YEARS Projects
Volume actual SKUi is the actual weekly unit sales volume for SKUi. • •
Volume forecasted SKUi is the forecasted unit sales volume for SKUi (Rolling weekly forecast) (One month in advance).
in GBP 2003 2004 2005 2006 • 2007 2008 • list
11
n refers to the total number of SKUs considered.
252 565 5 959 255 10 055 734 12 671 251 14 641 293 15 064 400
23,9%
•
Business Unit
committee
Review, set priorities
Country/ entity
committee
Review, set priorities
Operating Division
committee
Review, set priorities
Company-wide
committee
Review, set priorities
12
Forecast vol. 27 50 27
SKU2 units } SKU2 forecast error = 19% = 1- Gross margin= 76%
increase 64 365 1 510 690 2 447 743 3 034 273 3 508 652 3 600 218 and select projects and select projects and select projects and select projects
IT cost monitoring
Actual sales vol. 22 units A'. 2
COST SAVINGS
B. Cost savings 70 867 1 656 416 3 286 195 3 559 311 3 705 340 3 794 621
ADDITIONAL COSTS (incl HR costs) Approved Approved Approved
projects projects projects
C1. Amortisation of investments (20 260) (102 967) (102 967) (82 707) 0 0 Committed
C2. Other 1 time charges (478 458) (235 342) (10 000) 0 0 0 projects
C3. Recurring expenses (25 628) (516 492) (544 416) (544 416) (544 416) (544 416)
C=C1+C2+C3 Total including HR costs (524 345) (854 801) (657 383) (627 123) (544 416) (544 416) Need higher Yes Need higher Yes Need higher Yes
committee committee committee
approval? approval? approval?
D=A'+B+C INCREMENTAL EBIT (389 114) 2 312 305 5 076 556 5 966 462 6 669 576 6 850 423
No No No
FCF (474 634) 2 212 151 5 179 523 6 049 168 6 669 576 6 850 423
6
18
Benefits growth 2% 43% 78% 89% 98% 100%
Example: Global Consumer Products Company
Integration of implementation and Process
Improvement
Implementation Timeline
SAP implementation:
Common Data &Processes
Processes design Drivers for Change:
1.Non-efficient organization (duplicated)
2.Aligned processes but with a multiple-
Roll outs country/multiple-division scope
Drivers for change:
Corporative control of
businesses
Decision-making on
National level growth vs. Process Optimisation, Harmonisation and Consolidation
Regional level growth
Rationalization of costs
Initiatives generation
and IT management
Continuous
improvement launch
Design and implementation
Implementation Scope
Functional: Geographical:
Purchase to Pay USA
(PtP) Canada
Order to Cash (OtC) UK
Human Resources FR
(HHRR) GE
Finance & Control
Strengthen the vision Focus on payback People efficiency Robust results Capitalization
• Clear deliverables • Local projects in line • Teams motivation • Deployment speed, • Up to date
• Key Performance with Plant maturity • Training and associated information
Indicators • IS aligned with reorganization benefits • Continuous
• Documents & business • Back to basics • Focus of hot topics improvement
standards • Group short term • Management • Speak with data • Innovation
• Better collaboration targets focused on implication • Benchmark
between functions & key deliverables – Objectives +
Information System Methods
Copyright © 2009 Accenture All Rights Reserved. 20