transforming cge&y - capgemini · yunleash the power of the organization to increase go to...
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Transforming CGE&Y
Paris, June 27, 2002
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Transforming CGE&Y – 27 June 2002 / 2 © 2002 Cap Gemini Ernst & Young - All rights reserved
Agenda
1. Where we are: progress but not enough
2. A new market, a new team
3. Where we want to go
4. How we get there – The LEAP ! program
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Where we are
Progress but not enough
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Transforming CGE&Y – 27 June 2002 / 4 © 2002 Cap Gemini Ernst & Young - All rights reserved
2002 Working Assumptions and RealitiesAssumptions Year-to-date reality
Expected markets rebound in 2002supported by four key factors
Prolonged recovery – analysts’ forecasts significantly reducedCustomers resume spending
Emphasis is on cost reduction and leveraging existing infrastructure
(CIO agenda)
New technology andnetwork economy still there
Modest growth but not enough to offset overall decline
Growing segments: CRM, Supply Chain, etc.
Enron fallout «clouding» opportunity
Clarification with audit isan opportunity
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Transforming CGE&Y – 27 June 2002 / 5 © 2002 Cap Gemini Ernst & Young - All rights reserved
Adjusting to reality We have made progress on … Year-to-date progress• The Go-to-market model
Redefinition of national targeted accountsRebuild transaction sales channel
• Our mix:More outsourcingSectorialAlliances focus
• Restoring orderbook• Capacity adjustment and cost
reduction
• Launch of Sogeti
Tighter focus on specific GSU accounts
Transaction sales now at 50% of mix
3 points increase in OutsourcingExpansion in Public Sector
Book-to-bill of 1.2 for P&CAdditional headcount reduction YTD of 1,000Reduction in support costs: 75 M€ every half yearProfessional Services businessnow at 5,400 people
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Transforming CGE&Y – 27 June 2002 / 6 © 2002 Cap Gemini Ernst & Young - All rights reserved
Impact of the market evolution on H1 trends
Sales Pipeline improvement, bookings growing
Stabilizing
Positive
Below target – currently at 70%
Revenue
Cash position
Utilization rate
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A new market, a new team
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Transforming CGE&Y – 27 June 2002 / 8 © 2002 Cap Gemini Ernst & Young - All rights reserved
The market:IT Services and Consulting market has changed in both volume and nature
Volume
Nature
Yesterday TodayHigh:Everyone wins
«e» everythingBack office integrationFront office automationBundled solutionsBlended pricing
Faster / better / cheaper
Low:Growth through marketshare increase
OutsourcingArchitectureEnterprise integrationChoice of bundled/unbundledSkills based/design to cost
Cheaper / better / fasterClient priorities
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Transforming CGE&Y – 27 June 2002 / 9 © 2002 Cap Gemini Ernst & Young - All rights reserved
An organization addressing the new market conditions and designed to be permanently adaptive must…
Allow for dynamic portfolio management
Maximize number of people on the market
Simplify decision making
Reinforce globality and local empowerment
Foster innovation
Support staff development and deployment
Emphasize delivery excellence
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Transforming CGE&Y – 27 June 2002 / 10 © 2002 Cap Gemini Ernst & Young - All rights reserved
Empowering a new team in a simplified organizationFavoring the emergence of new leaders
4 new Region Heads appointed on January 1st
3 new major appointments on July 1st:Northern America : Mark Hauser
UK : Paul Spence
Asia-Pacific : Paul ThorleyConsolidation of operations into 4 entities
A tighter governanceAn Executive Committee: 5 members; weekly meetingA Management Committee: 5 operations, 4 corporate functions, 2 innovation and alliances, 1 Transformation Project; monthly meeting
North America Europe Global Operating Units & A-PAC GSUs
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Where we want to go
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Transforming CGE&Y – 27 June 2002 / 12 © 2002 Cap Gemini Ernst & Young - All rights reserved
Business description: what we doCGE&Y is a leading global provider of transformation services, combining business issues expertise with leading edge technology skills to deliver real value to our clients and their markets
We deliver this value by:Optimizing core business processes
Variabilizing cost structures
Transforming the technology environment
Current business mix
Strategy
Outsourcing
63%
15%
22%
Business Solutions& Technology
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Transforming CGE&Y – 27 June 2002 / 13 © 2002 Cap Gemini Ernst & Young - All rights reserved
Vision: where we want to be
Our ambition:Leverage technology and business insights to unleash the power of our client’s organization to adapt to volatility and deliver superior value to their markets.
Consulting Services
Targeted capabilities mix
Outsourcing
45%
25%
30%
Technology Services
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Transforming CGE&Y – 27 June 2002 / 14 © 2002 Cap Gemini Ernst & Young - All rights reserved
We will continue…
Our strategies
Our emphasis on sectorial go-to-marketOur drive for productivity by mandating use of centers Our push in technology by launching a direct channel To maintain delivery excellence (OTACE)Our leadership position in AM
Efforts to build a corporate strategy practiceAttempting to coordinate a costly 4 dimension matrix Relying on E&Y for infrastructure and support Expecting a market recovery
We will stop…
An operating and pricing model by competencyAn adaptive portfolio of offerings and sectorial mixDecision making process to be more responsive to the market (e.g,empowered sales executives)New offers, and alliances via an Innovation CenterA leading Transformation outsourcing capability
We will build…
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How we get there
The LEAP ! program
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Transforming CGE&Y – 27 June 2002 / 16 © 2002 Cap Gemini Ernst & Young - All rights reserved
Transformation: launching the LEAP ! program
Leadership
xpansion
lignment
EA
ortfolio and Productivity managementP
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Transforming CGE&Y – 27 June 2002 / 17 © 2002 Cap Gemini Ernst & Young - All rights reserved
The Transformation Program – Key Objectives
Unleash the power of the organization to increase go to market capability and coverage through focused business models
Source: IDC - WW IT Services Industry Forecast and Analysis 2001- 2006 (© 2002)
The bundling of technology with consulting will be achieved within our sector organization
These operating models will be globally consistent
«Firms offering business services will need deep understanding ofspecific industries and will sell to business unit managers such as CEOs.
Firms offerings IT-centric expertise will need mastery of best of breed technologies and will sell to CIOs. Firms that attempt to do both willneed two unique organizations or they will end up not meeting either
needs very well.»
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Transforming CGE&Y – 27 June 2002 / 18 © 2002 Cap Gemini Ernst & Young - All rights reserved
The Transformation Program – Key Objectives (cont’d)
Reinvigorate our technology services to address the CIO agenda
• Launch of Technology Direct
Rebuild trust and morale and market orientation of staff
• New Management Teams
• Leadership Development Program
• Increased Number of Market Facing Staff
Architecture ServicesNetwork optimizationSystems Integration
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Transforming CGE&Y – 27 June 2002 / 19 © 2002 Cap Gemini Ernst & Young - All rights reserved
The LEAP ! agendaThe LEAP ! agenda will focus on actions which will deliver improvements in short and long term financial performance
• Standardize methods and use of Centers
• Simplify structure and processes
• Launch additional Sales Channels
• Shift the mixServicesProducts
Type of Financial Benefits
Leverage / pricing
Lower operating cost
Increased sales volume
Sustained revenue flow
Rate / Margin – optimization
Key Actions
• Switch to Competency based operating modelTechnology ServicesConsulting ServicesOutsourcing Services
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Transforming CGE&Y – 27 June 2002 / 20 © 2002 Cap Gemini Ernst & Young - All rights reserved
Our game plan
Managethe
Portfolio
ExpandMarketFacing
Capabilities
AlignOperatingModels/Policies
Drive Productivity and Efficiency
Reinvigorate Leadership and Culture
Focus
Retention and ManagementDevelopment
Growth andmargin
Price and Costcompetitiveness
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Transforming CGE&Y – 27 June 2002 / 21 © 2002 Cap Gemini Ernst & Young - All rights reserved
A preliminary business case shows the potential margin improvement
Operating Income increase in 2004
% of revenue
Major drivers4.4 / 5.5
1.9 / 2.5
1.8 / 2.8
1.3 / 1.8
Costs reduction
Industrialisation / delivery optimisation
Sales efficiency
-2 / -2
Staff redirected to fees generation2.4 / 2.4
Positive impacts
Price pressureNegative impacts -1 / -2 Staff measures
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Transforming CGE&Y – 27 June 2002 / 22 © 2002 Cap Gemini Ernst & Young - All rights reserved
Program Phasing
2002Q2 Q3 Q4
2003H1 H2
2004H1 H2
Phase 0 – Vision Xdone
27/6: initial comm.
X------------XX-------------------------------->
Phase 1 – Mobilization X------------X
… and quick hits
Phase 2 – Initial roll out X------------------------------------------------------>
Phase 3 – Monitoring &adjustments
X--------------------------->
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Transforming CGE&Y – 27 June 2002 / 23 © 2002 Cap Gemini Ernst & Young - All rights reserved
In summary…
The market is the market – we have made progress but more is needed
We have a new direction led by a new management team
Our new operating structure will deliver better flexibility and results
The LEAP ! program will restore profitable growth to our business and revitalize the Group
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www.cgey.com