breaking down silos

© 2011 Copyright Genpact. All Rights Reserved.

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Breaking Down SilosTurning The End To End Vision Into A Reality

John Sorci, Symantec

Robert Pryor, Genpact

Conference: 15th Annual NA Shared Services Week

Orlando, FL

March 3, 2011


What is a Silo?

• Organization Silos are when individual people, departments, or companies, conduct business in a vacuum without taking into consideration the impact their actions have on the entire organization

• In an American Management Association survey - 83 % of executives said that silos existed in their companies and 97 % think they have a negative effect

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Silo is a tall cylindrical structure, usually beside a barn, in which fodder is stored

Manufacturing IT Department Recently Acquired Company

Marketing Department

Organizations need an end to end process visionTo break silos and improve business outcomes

Organizations need an end to end process visionTo break silos and improve business outcomes


An End To End Vision On Processes Can Significantly Improve Business Outcomes And Break Silos

1. Traditional View of The Process – Efficiency of a Sub-Process

2. Enterprise-wide View of the Process – Effectiveness of The True E2E Process


Strategic Imperatives In Realizing The End To End Vision4

Identify End to End process1

Align operating model2

Consolidate / Standardize3

Manage Change4


1. Identify An End To End Process And Key Business Outcomes5

Business Outcomes

TCO, Cost of processing

DSO, Cycle time

Time to Close, Compliance

Source to Pay

Order to Cash

Record to Report

Finance Sales Marketing Procurement


2. Align Operational Models To Achieve The Business Outcomes

Organization charts

Budgets and P&Ls

Traditional Operations Focus

Business Process Focus

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Example : PHARMA DEVELOPMENT TO COMMERCIALIZATION

Formed a number of small, customer-focused business units to improve the way in which the company anticipates and responds to patients’ needs, and integrated pharma development to commercialization into the business units …earlier development and manufacturing were independent functions and cost centres

Formed a number of small, customer-focused business units to improve the way in which the company anticipates and responds to patients’ needs, and integrated pharma development to commercialization into the business units …earlier development and manufacturing were independent functions and cost centres


3. Consolidation And Standardization Of Processes…Understanding silos better

Integrated several of its Healthcare business units into one main Business unit

Consolidated suppliers, distribution and manufacturing networks

Help save $300m by 2011 by cutting COGS

Consolidate front end offices -dedicated to servicing clients

Consolidate support resources –CHF400m by 2010

Consolidate operations

Annual cost savings $1.3b -$1.6b

Consolidating businesses

Reduced annual expense by ~$65m

Global F&A Consolidation with outsourcing

In Market Distribution consolidation

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McKinsey Study:• Consumer goods companies with a global shared service model has 8% less SG&A on average

• Energy companies with a global shared service would have 18% less SG&A

McKinsey Study:• Consumer goods companies with a global shared service model has 8% less SG&A on average

• Energy companies with a global shared service would have 18% less SG&A


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4. Managing Change Effectively Is Fundamental

• Change is disruptive and almost always encounters resistance

• Organizations undertaking change face a variety of challenges

• Underestimation of effort

• Organizational silos

• Unclear process ownership

• Changing nature of jobs

• Impact on your customers

• Employee resistance

• Loss of talent/attrition

• Dealing with loss of jobs

• Fear of the unknown

• “Loss of control”

• Lack of transparency

• Informal grapevine

• Unrealistic expectations

• Mistrust

PEOPLE CHALLENGES

EXECUTIONCHALLENGES

COMMUNICATION CHALLENGES

Whatever your business objective, success ultimately depends on how well you address the “people” issues—at every process step.

Whatever your business objective, success ultimately depends on how well you address the “people” issues—at every process step.


SymantecSource to Pay Process Transformation

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Symantec At a Glance

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More than 18,500 employees

Founded in 1982 IPO in 1989

Operations in more than 40 countries

99 percent of Fortune 1000companies are customers

#353 on the 2010 Fortune 500

$6.0 billion revenue in FY 2010

More than 600 global patents

More than 120 million active consumer users

110 million enterprise customers

Invest 13% annual revenue in R&D

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CFO Operating Model Changes For Driving Transformation

• Commerce LifecycleConsumer touch – Make – Sell – Serve processes

• R2R – Record to Report ( F&A )

• Q2C – Quote to Cash (Customer business order operations, Pricing & Licensing, Trade compliance and Accounts Receivable)

• S2P - Source to Pay (Strategic Sourcing, Procurement Operations, Accounts Payable, Disbursements)

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Processes are being viewed end to end to drive transformationProcesses are being viewed end to end to drive transformation


What Drove The Decision In S2P?Value Leakages & Focus on TCO Improvement

Business Impact

Symptom

Inadequate spendvisibility

Spend Management

Category Strategy

Negotiation & Contracting

Procurement Payment

Hindered actionablecategory strategy

Incomplete marketassessment

Wrong negotiation

strategy

Failure to linkprocurementto contracts

Savings leakages Manual accruals

Delayed or inaccuratereceipt transactions

Delayed payments

Inadequate negotiationleverage

Non PO invoices

Contract non-

complianceInadequate

spend

visibility

Everything was related and inter dependentEverything was related and inter dependent


Effectivenessvs.

Efficiency

We Engaged with Genpact to Improve the Overall Effectiveness of the Source to Pay Process

Best-in-class

Strategic

Proactive

Reactive

Me

Competitors

Process 1 Process 2 Process 3 OutputOutputProcess 1 Process 2 Process 3 OutputOutput

Process 1 Process 2 Process 3 OutputOutputProcess 1 Process 2 Process 3 OutputOutput

Beyond the Organizational Silos

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Genpact’s Smart Enterprise Process -SEPSM provided a holistic, very granular framework for managing the end to end process

Genpact’s Smart Enterprise Process -SEPSM provided a holistic, very granular framework for managing the end to end process

Measure Approach Benchmark Transform


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SourcingEffectiveness

Compliance OperationalEfficiency

AP Overall Opportunity

$10-14MM

$8-10MM

$5-10MM

$5-6MM*

$28-40MM

Year on Year Savings

% Spend Managed

Procurement Cost as % of Spend

Cost Per PO

PO Transaction per Buyer

Cost Per Invoice

Invoice Processed / AP FTE

3.55% 8.33%

82% 98%

0.64% 0.33%

$3 $29

2.7%

20%

0.8%

$38

4.2%

80%

4k 6k

$16 $9.6

3.2k 4.2k

Median Best-In-Class

$4$11

12k7k

20k11k

Current State Future State

0.69%

The Bigger Picture – Hidden Value In Silos Were Exposed


How Are We Driving Engagement …

• Create awareness of the change

• SymSource

• Assess desire to support the change

• Executive sponsor readiness

• Stakeholder analysis & action plans

• Provide knowledge of the change

• Web portal, Job aids, Training, Posters

• Involve Stakeholders

• Business review meetings

• Category planning

• Approval on savings

• Reinforce the success

• Spend & Savings visibility

• CXO Updates

• Reward early adopters

• Publish non-compliance (name and shame report)


Results And Learning’s After 2 Yrs……

• Results

• Sourcing Savings at $71MM

• Spend under management improved by 100% from 26% in yr 1 to 52% in yr2

• Early engagement at 67%

• Learning’s

• Executive sponsorship is key – Start early

• Patience - Stakeholder engagement will be tough to obtain but “buckle your chin strap” and continue to forge ahead

• Understand your corporate culture and implement change accordingly (mandate if possible)

www.genpact.com

John SorciVP, Global Operations

Symantec

Robert PryorEVPGenpact

[email protected]

[email protected]

Genpact and SEP are Genpact trademarks. All trademarks appearing herein belong to their respective owners..

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