vantage consulting

8/13/2019 Vantage Consulting

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American Express:Becoming the Worlds Premiere Service Provider

Chris Campbell

Jonny Silberman

Jenny Tu

Arthur Chen


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2ImplicationsOverview Globalizing HR Enhancing IT

Presentation Agenda

Global HR Customizing & Implementing Relationship Care Programs

Annual Employee Maintenance Training

IT Support

Entering Cloud

Enhance Social Media Presence

ImplicationsFinance

Implementation

Overview

Market Positioning

Competitive Advantages & Core Competencies

Objectives & Strategies


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AMEX is a Luxury Credit Card


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Identifying Key Issues

CurrentConstraints

Large, PowerfulCompetitors

New SubstitutesEntering the

Market (via NewTechnologies)

Aims for Future

Remain the

premiere card forHigh Net Worth

Individuals

Maintain Brandingof Delivering

Superior CustomerService

Key Issues

How can Relationship Care be

applied globally?

Core Competency

How does AMEX leverage newtechnologies to further connect with

its clients?


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Leveraging on Unique Resources

CurrentConstraints

Large, PowerfulCompetitors

New SubstitutesEntering the

Market (via NewTechnologies)

Aims for Future

Remain the

premiere card forHigh Net Worth

Individuals

Maintain Brandingof Delivering

Superior CustomerService

Competitive Advantage

Continual strategic investment in HR & ITinfrastructure to maintain market

position

Core Competency

AMEX is viewed as a high quality creditcard service provider for

the affluent


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Strategy Overview

Globalizing HR

CustomizingRelationship Care

Maintainemployeetraining

Social MediaIntegration

Cloud Computing

Enhancing IT


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10

Globalizing HR




Cloud Computing

Enhancing IT


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Relationship Care Made a Positive Impact

EmployeeEmpowerment

Allow employees to makepersonalized decisions to connectbetter with customers

provide a better service moreefficiently

EmployeeDevelopment

Provides performance basedpromotion and incentivesprograms

Recognition is given to highachieving employees

LowerAttrition

Defying industry norms,employee turnover has decreasedby half as a result of valuing ouremployees

American Express is able to havea much lower industry norm

Benefit Description

ImprovedTraining &

Hiring

EmployeeDecision Power

Over Policies

Leverage NewTechnology


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Relationship Care Needs to be International

Slowing growth (6%) vs emergingmarkets (23-24%)

Credit Card Transaction Volumes arestabilizing in North America which iscurrently 87% of AMEX Revenues

Push Out of US

6%

8%

23%24%

9%

North America Western

Europe

Asia Pacific Latin America Middle East &

Africa

2005 - 2010 Credit Card Payment CAGR

Pullinto International Markets

7%7%

13%

7%

6%

North America Western

Europe

Asia Pacific Latin America Middle East &

Africa

2011 - 2015 HNWI CAGR

The highest area of projected growth

in High Net Worth Individuals is in theAsia Pacific

Since this is American Expresss targetmarket, AMEX needs to establish itscustomer service there

Source: Merrill Lynch Wealth ManagementSource: Euromonitor


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Implementing Relationship Care Globally

Why

How

Relationship Care has created positive financial impacts as well as better

customer loyalty and retention

Seek to replicate success in growing international market places

Apply Relationship Care model to international countries

customize employee training programs to fit distinct culture and products

Survey (6 employeevalue metrics) toevaluate culture-specific employee

preferences

Analyze survey resultsfor initial program.Structure specificproject to tailor

country preferences

Implement initialproject. Constantlysurvey employee

happiness and RTFratio


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Applying in the Context of India

1. Payment forPerformance

75% Maintain current operations

2. Flexibility inSchedule

42%Bring in MSA Technology to allow

Scheduling Flexibility

3. Office Policies 35%Allow more independence in conducting

personal responsibilities

4. CareerDevelopment

35%Create potential paths to ascension within

company

5. Recognition 53% Implement location specific rewardsprograms for high achieving employees

6. Environment 43%Conduct internal research to identify

points of contention and then adjust them

Employee Metric % Satisfied Resulting HR Strategy Structure

Source: Asian Academy of Management Journal


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Maintaining Up-To-Date Training

Why

How

Employees need constant up-to-date training to keep up with changingproducts, cultural sensitivities, and consumer preferences.

Mangers evaluate CCP performance in annual reviewsManagers may suggest additional training depending on CCPs needsCCPs are required to take one new class and review a class annually

Required Annually:

1.Manager Review

2.One New Class

3.One Review Class

Objectives:

1.Current Conversation

Points

2.Never Offend

Potential Classes

True CustomerConcerns

New Technologies

Current Topics

Religious Neutrality


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Globalizing HR




Cloud Computing

Enhancing IT


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Social Media Focus

Objective Ensure AMEX customer experiences are as robust online as they areoffline, everywhere in the world

Integrating Call Centers with Social media

Recommend a Friend Program via FacebookHow

33% of customers contact a company through their website

20% of customers contact a company through email

Younger customers are online more, especially the MillennialGeneration

Why


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American Express Calls the Client

Current Wait-Time to Speak with an

American Express Representative:

12 Minutes 40 Seconds

Call Us 24/7 at

1-800-528-4800 Call Us Directly

Estimated Wait Time at CallCenter

Well Call You Back at a

convenient time!

No Talking to an AutomatedMachine

No Waiting


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Recommend-a-Friend on Social Media

Justification for Recommend-a-Friend

Relationship Care Program is measured using the companywide metric of Recommend-a-Friend

85% of Costumer Care Professionals performance is basedon the Recommend-a-Friend Metric

However, there is no actual implementation of aRecommend-a-Friend Program through Social Media


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Directly transfers customerservice objectives into increased

revenue

Recommend-a-Friend on Social Media


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Enterprises can seamlesslyscale their services to meetseasonal client demand

Cloud computing can provide analmost immediate access to

hardware resources

Cloud computing can lower IT

barriers to innovation andincrease interoperability

between disjoint technologies

Pay-per-use billing dramaticallyreduces upfront costs

Strong Drivers Present for Cloud Computing

Lower upfrontIT costs

Easier toscale-out

Faster time tomarket

Creation of newvalue drivers

Source: McKinsey


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Cost Suppression Derived from Cloud Computing

65

164

45

52

131

257

20

87

673

53

40

1

116

63

115

45

52

107

257

8

87

505

53

40

1

116

Application Support

Architecture

Business Analysis

Client Services

DB Admin

Desk Top SupportFacilities

Help Desk

IT Administrator

Management

Quality Assurance

Real Estate

Telecommunication

Total starting FTE Total FTEs after migration

Full Time Employees (FTEs) by role group

Approx 10-15% of headcount canbe reduced by migrating capacityover to cloud servers

Labor reduction stems fromfacilities and IT Administrator

1704

1448

Total Starting FTEs Total FTEs aftermigration

Total FTEs

Source: McKinsey

-15%


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Executing in 3 Simple Steps

1) Select right partner 2) Staggered migration 3) Synchronize globally

Select based on screeningcriteria

Partners: Google, Zoho, &Windows Azure

Plan migration phases andcontingencies

Launch pilot program withoff-site support

Link up with global officesEnsure technical support24/7

AMEXs private cloud


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Positive Impacts of Cloud Computing

Achieve

Efficiency &

Scalability

Scaled up/down dynamically, and immediately, whichdifferentiates from traditional hosting service providers.Paves way for easier integration with future acquisitiontargets

Achieve greater utilization rate as data servers are pooled

Cost Savings

Required to incur upfront capital costs and perform hands-on

management (private pool),

However, annual maintenance costs are lower due to

aggregated location and reduced equipment

Accessible

Globally

Architectual specifics are abstracted from the buyer

They run in multi-tenancy mode with multiple users

accessing in infrastructure simultaneously

Underlying hardware can be anywhere geographically

Benefits Description


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Contributing to the Bottom Line

18,208

1,687

3,194

456

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

2009 2011F 2013F 2015FStatus Quo RC Global Recommend Cloud Computing

Adjusted OperatingProfit (US$M)

Value

Initial Capital Outlay (US$800 M)

WACC 14%

4-yr NPV US$407 M

IRR 40%Payback Period 2 years

Cloud Computing Capital Budgeting

Strategy yields positive NPV & 7.0% CAGR to adjusted operating profits


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Implementing Growth

Globalization of HR

Analyze Survey Results

Take Employee Survey

Planning Relationship Cost Globally

Technological Developments

Adoption of Cloud Computing

First Year of Relationship Care

Reevaluate Annually

Facebook EnhancementsDevelopments

Launch FacebookEnhancements


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Ultimately, AMEX will

How can Relationship Care beapplied globally?

How does AMEX leverage new

technologies to further connectwith the customer?

Social Media as the PrimaryCustomer Touchpoint

Apply Basic Relationship Care

Model but Modified for Culturaland Social Sensitivities

Maintain Luxury Market Position

Remain Relevant and Accessible toNew Generation of Customers


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American Express:Becoming the Worlds Premiere Service Provider

Chris Campbell

Jonny Silberman

Jenny Tu

Arthur Chen


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30Globalizing HR Enhancing IT ImplicationsOverview

Slide NavigatorOverview1) Cover Slide2) Presentation Agenda3) AMEX Market Position

4) AMEX Marketing Position 2/25) Identifying Key Issues6) Leveraging on Unique Resources7) Strategy Alignment with Vision 8) Strategy Alignment with Vision 2/2

Globalizing HR11) Relationship Care Made a Positive Impact12) Relationship Care Needs to be International13) Implementing Relationship Care Globally13) Applying in the Context of India14) Maintain Up-to-Date Training

Enhancing IT17) Social Media Focus18) Spotlight Shone on IT Spending Quality19)American Express Calls the Client

20) Recommend-a-Friend on Social Media 21) Recommend-a-Friend on Social Media 2/222) Strong Drivers Present for Cloud Computing23) Cost Suppression Derived from Cloud Computing24) Executing in 3 Simple Steps25) Positive Impacts of Cloud Computing26) Contributing to the Bottom Line27) Implementing Growth28) Conclusion slide

Backup Slides31) Background32) Industry Snapshot of AMEX33) Risk Mitigation for Cloud Computing34) Cloud Computing More Expensive than Data Centers35) Screening Criteria for Private Cloud Partners36) Financials for RC Global and Recommend a Friend37) Financials for Cloud Computing and Summary38) Sensitivity Analysis: RC Global and Recommend a Friend39) Sensitivity Analysis: Cloud Computing40) US Payment Trends41) Methods of Contacting Customer Service42) Emarketer: Support for Social Media Integration43) Investing in Web 2.0 and Social Media 44) Investing in Web 2.0 and Social Media 2/2


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Industry Snapshot of AMEX


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Risk Mitigation for cloud computing

Financial Current cloud computing offerings are

not cost-effective compared to largeenterprise data centres

Technical

Security and reliability concerns willhave to be mitigated and applications re-architected

Operations

Business perceptions of increased IT

flexibility and effectiveness will have tobe properly managed

Organizational

The IT supply and demand organizationswill have to adapt to function in a cloud-centric world

Hurdles Description Our Value Proposition

Procure multiple quotations to obtaincompetitive rates from vendors

Perform cost-benefit analysis, ignoringsunk costs and factoring in costdeclination

Adopt private encrypted cloud serversfor AMEX proprietary usage

Run pilot programs and ensureemployees have hands-on experience

Migration to cloud server to span over 6months for IT department to increasefamiliarity exposure


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Financials for RC Global and Recommend


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Financials for Cloud Computing and Financials


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Sensitivity Analysis: RC Global and Recommend

Adjusted Operating Profit Margin (Strat RC Global)

31.60% 32.60% 33.60% 34.60% 35.60% 36.60% 37.60%

Increase in % ofCardholder Acq

(Strat Recommend

Friend)

4.60% 21838 19640 17442 15243 13045 10846 8647.7

5.60% 22567 20358 18149 15940 13731 11522 9312.6

6.60% 23296 21076 18856 16637 14417 12197 9977.4

7.60% 24025 21794 19564 17334 15103 12873 10642

8.60% 24754 22513 20271 18030 15789 13548 11307

9.60% 25482 23231 20979 18727 16475 14224 11972

10.60% 26211 23949 21686 19424 17162 14899 12637


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Sensitivity Analysis: Cloud Computing

Initial Capital Outlay for Cloud Computing

407-500 -600 -700 -800 -900 -1000 -1100

WACC

11% 763 673 583 493 403 313 222

12% 731 641 552 463 373 284 195

13% 700 611 523 434 346 257 169

14% 670 582 495 407 319 231 144

15% 642 555 468 381 294 207 120

16% 615 528 442 356 270 183 97

17% 589 503 418 332 247 161 76


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US Payment Trends


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Methods of Contacting Customer Service


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Investing in Web 2.0 and Social Media 1/2

b d l d /


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Investing in Web 2.0 and Social Media 2/2

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