csfb product control process reengineering rfp
DESCRIPTION
\\SNYC14210\JFLAUM$\FAODev_IBit_Organization\Cash Securities - Potential Projects to Defer.ppt - Feb 25 2002 - 12:53 / 0. CONFIDENTIAL. CSFB Product Control Process Reengineering RFP. Proposal March 4 th , 2005. 25 Broadway New York, NY 10004 212 618 4000. March 4, 2005 CONFIDENTIAL - PowerPoint PPT PresentationTRANSCRIPT
CSFB Product Control Process Reengineering RFP
Proposal
March 4th, 2005
25 BroadwayNew York, NY 10004212 618 4000
March 4, 2005CONFIDENTIAL
Ms. XYZ
New York, Dear Ms xyzy:
Thank you for the opportunity to propose on CSFB’s Product Control Process Reengineering RFP. The attached document outlines our understanding of the project requirements and our approach, as well as the project team resources and professional arrangements. We understand the importance of this initiative to CSFB through our work with ISIS and other functions, and believe that Deloitte is uniquely qualified to assist.
We look forward to discussing our response with you further and to working with you on this critical initiative. If you have any questions or would like to discuss this proposal further please do not hesitate to contact the undersigned. We would welcome an opportunity to arrange for a meeting with members of the proposed team upon your request.
The undersigned, being persons duly authorized to represent the Supplier, states that this Request for Proposal has been read and understood, and that the Supplier agrees to be bound by the terms and conditions contained within this RFP and proposal.
The individuals whose signatures follow represent and certify that they have the authority to represent and act on the behalf of Deloitte Consulting LLP, 25 Broadway, New York, NY 10004 “Company”. They recognize for themselves and for Company that the information contained therein the RFP, including Appendices, is CONFIDENTIAL and was released to Company to enable a response to the RFP. Company shall not disclose such RFP information – or the fact that Company has been asked to submit a proposal – to a third party for any reason. Without limiting the foregoing, Company is not authorized, without CSFB’s prior written consent, to publicize the fact that they are a potential Supplier to CSFB for PC Business Process Reengineering. The individuals recognize for themselves and for Company that at the request of CSFB, the RFP and any copies thereof, either hard copy or electronic copy, shall immediately be returned to CSFB. The individual also represents and certifies that the Proposal, including cost structures, was developed independently and with no collaboration of any other provider of firms and with no purpose of restricting competition. The RFP to which this Proposal relates has been read and its requested terms, except as indicated herein this Proposal, will be accepted should Deloitte Consulting LLP be selected as the provider of such Services to Credit Suisse First Boston LLC. Company certifies that such Proposal shall remain in effect for 90 days from Proposal due date.
Kindest regards,
Adam Broun Ken LandisPrincipal Principal
CSFB has initiated an assessment to identify opportunities to maximize the operational efficiency of the Product Control area. This initiative is critical to achieve cost and resource efficiencies, increase capacity and manage risk more effectively for the firm.
Based on preliminary assessments, it is CSFB’s opinion that a significant opportunity exists to rationalize Product Control processes, resulting not only in cost savings from reduced headcount, the simplification of processes, and the retirement of outdated or redundant applications, but also in “best practice” business processes, which will facilitate new business initiatives, improve internal client service, and create a more rigorous control environment.
CSFB plans to engage a partner to assist and collaborate on this reengineering assessment. The critical aspects in conducting the assessment are to determine the current business process flows, document key processes, identify opportunities to reengineer processes and recommend a migration plan to capture those opportunities. In addition during this phase, the team will identify minimum levels of acceptable efficiency and control with the aim of providing a potential “menu” of reengineering alternatives.
This document details Deloitte’s response to your request for proposal. Our proposed approach and assessment framework targets your specific needs and incorporates relevant insights from our experience in capital markets, accounting and regulatory advisory and large scale reengineering efforts:
Significant experience working with leading investment banks addressing complex business, operational, and technology challenges and opportunities
Recognized advisory and implementation experience as a strategic partner on a number of prominent reengineering efforts In-depth product knowledge to accelerate and drive a targeted and realistic assessment aligned with your strategic goals Access to relevant industry benchmarks on product and process costs Ability to apply best of breed tools and processes (i.e, lean, six sigma, etc) Experience in developing innovative solutions that can simultaneously deliver operational efficiency and provide for a
sustainable growth platform Combined expertise in accounting, control, risk and regulatory policies, practices and standards
- 4 -
Table Of Contents
I. Executive Summary
II. Introduction & Marketplace Perspectives
III. Our Approach
IV. “Test Driving” the Approach
V. Team Structure, Profiles & Fees
VI. Qualifications & References
VII. Available Tools
VIII. Appendices
IX. Required attachments:
Supplier_Assessment_Questionnaire.doc
CSFB_Master_Agreement.doc
I. Executive Summary
- 6 -
Executive Summary
Based on our industry experience and knowledge of CSFB we believe there is an opportunity to reduce the Product Control run rate by approximately 5%-12% per annum ($9-$21MM), within the scope defined, by reengineering the primary functions within the department. Significant additional savings might be possible with end-to-end changes in the operating and technology model across the trade cycle
To identify and achieve these benefits we will examine and utilize the following levers:- Policy/control adjustments- Redesigning processes- People effectiveness- Organization re-design- Selected system/technology enhancements
Reengineering can deliver the additional benefits of enhanced control, risk management and the ability to support increased trade volumes and new products – a critical consideration for support of CSFB’s business strategy
To extend this analysis across all products/functions and develop the business case, implementation roadmap and migration plan we propose a twelve week diagnostic with product aligned workstreams
The diagnostic would be conducted by a dedicated Deloitte team with extensive Product Control and reengineering experience. This team would be split between London and New York and supported by a number of product and subject matter specialists with deep product accounting experience
The middle office cost driver and process mapping work conducted within the ISIS transparency initiative would be the starting point of our analysis, along with other pre-existing documentation and analysis (e.g., Sarbanes-Oxley process documentation)
We measure our success on this engagement by CSFB’s success: in identifying measurable, sustainable 2006 cost savings without compromising risk or client service
II. Introduction & Marketplace Perspectives
- 8 -
The Product Control Function Faces A Number Of Emerging Environmental Challenges…
New business models Integrated approaches to
client coverage Greater complexity of
products
Client
“PC costs are often
driven by the # of
product types
traded, complexity
of products, # of
legal entities and
the # of
regulations” 2
War for talent Rising salaries
People
“Higher salary expectations for middle office staff - can expect to earn up to 30% more than a year ago” 1
Increased regulatory and legislative scrutiny
Increased demands on risk management
Control
“In the future, regulatory trends indicate that Product Control is likely to be split decisively
between the Front Office and imposed controls, typically those undertaken
within risk mgmt” 2
Lower margins Street expectations
Cost
“Product Control performs better where the business realizes that it is a significant, unavoidable fixed cost for operating a business line rather than something that can be skimped on early on” 2
Focus on Smartsourcing Move from silo to
commodity processing
Execution
“Outsourcing and
offshoring are
also
expected to take
their toll (across
the Middle
Office)” 1
1 eFinancial News , S. Butcher, 27 Jan 052 Balance Sheet, M Mainelli Vol 12 2004
- 9 -
…As Well As Gaps Versus Peers
ILLUSTRATIVE
Co
ntr
ol
Co
stE
xecu
tio
nP
eop
le
Dimensions Industry Observations Industry Direction
Client Aligned Functional AlignedMatched Integration Product Control is client versus functionally aligned Works closely with Finance as well as Trading
Organization StructureC
lien
t
Possible End State?
Deployment
High % Deployed
No DeploymentMedium % Deployed Moved to low cost locations where risk levels permit Highest quality personnel in highest value added activities ?
Performance Measures
Defined/Tracked
Not Defined/TrackedPartially Defined/Tracked Continuous improvement of the Product Control function Measures performance with KPIs and stringent quality
measures?
Globally StandardizedSystem
Highly Customized &
Fragmented
Centralized
Technology Moving towards global Product Control systems that produce
P&Ls in a more standardized manner Single source/Operating Data Store for all data
?
Relative Cost
Low HighMedium Minimized cost level Allows business expansion without increasing risk Relative peer cost performance graded against MIB analysis
?
Risk Standards
Dynamic/Forward Looking Standard ProceduresNeutral Comprehensive risk management standards Proprietary, customized tools and techniques Continually evolving control and measurement processes
?
Functions
Full Suite Limited ServicesMiddle Office Financial Control is a key function (risk management, G/L maintenance & reporting)
Product Control includes data integrity, traders’ P&L and some Middle Office (counterparty, confirmations)
?
- 10 -
Internal Needs To Deliver The Firm’s Overall Strategy Are Changing
2002 – 2004 Focus Areas
“Staying Out of Trouble & Generating Revenue”
2005 Strategy
“Win Where We Choose To Compete By Delivering A More Focused Franchise”
Demands On Product Control
Revenue GenerationProfitability /
Focus on High Margin Products Provide lowest cost, scalable support Increase capacity/handle complexity
Cli
ent
IndustryMandates
Client Alignment/Segmentation
Improve internal client alignment Ensure accuracy of underlying data
Co
ntr
ol Staying Out of Trouble
Structural Changes
Disciplined Risk Taking
ContinuousImprovement
Handle additional complexity/volume without diminishing control
Focus on continuous process improvement to extract efficiency
Cost Reduction
ROI
Co
st Prioritize IT/investment spend for best return
Getting It DoneImproved Execution Through Alignment, Accountability &
Performance Metrics
Deliver LocallyExecute Globally – Group
Synergies Through IntegrationExe
cuti
on Provide transparency of costs
Implement measurable metrics
Identify and support Group synergies
People ManagementEnhanced Ownership Culture –
Incentives Alignment
Peo
ple Release staff to focus on change
management initiatives
- 11 -
Product Control Needs To Change To Deliver The Firm’s Evolving Strategy While Simultaneously Supporting Growth And Efficiency Initiatives
Product Control must absorb increased volume and additional complexity…
…while reducing cost without compromising risk or degrading control
ABS Build out Equity Prop
capabilities within cross divisional prop group
Build out Prime Services Cash Equities – Plan ’06 CDO CMBS Commodities Build Out Credit Derivatives Desk-based Positioning Derivatives – Plan ’06 Emerging Markets Equity Syndication Desk FID Strategic Book GFX Growth in Asia, Japan and
Australia High Yield Insurance Structuring Interest Rate Products Rebuild Derivatives
Residential Mortgages Vertical Integration Strategy
Tax Structuring
ABS Build out Equity Prop
capabilities within cross divisional prop group
Build out Prime Services Cash Equities – Plan ’06 CDO CMBS Commodities Build Out Credit Derivatives Desk-based Positioning Derivatives – Plan ’06 Emerging Markets Equity Syndication Desk FID Strategic Book GFX Growth in Asia, Japan and
Australia High Yield Insurance Structuring Interest Rate Products Rebuild Derivatives
Residential Mortgages Vertical Integration Strategy
Tax Structuring
Capture Derivatives Productivity
Establish Integration Derivatives Structuring
Finance Control Efficiency Improvement
GAD Transparency ISIS MO & Coverage Model ISIS Tactical Efficiency
Capture ISIS Transparency Mortgage Change Program New Capital Markets
Structure Product Control Improvement Unified FID/Equity
Proprietary Group Vertical Integration of FIG
Capture Derivatives Productivity
Establish Integration Derivatives Structuring
Finance Control Efficiency Improvement
GAD Transparency ISIS MO & Coverage Model ISIS Tactical Efficiency
Capture ISIS Transparency Mortgage Change Program New Capital Markets
Structure Product Control Improvement Unified FID/Equity
Proprietary Group Vertical Integration of FIG
Supporting Growth
Alignment of Equity Research/Sector Focus
Cash Equities Execution Platform
Client Segmentation – Europe
Client Segmentation - US European Secondary
Credit Trading Extend Trading
Analyst Function FID Syndication Desk Global Top Account
Strategy Increase integration of FID
Business Lines Migrate HOLT small-cap
coverage to sectors Options – Automated
Market Making
Alignment of Equity Research/Sector Focus
Cash Equities Execution Platform
Client Segmentation – Europe
Client Segmentation - US European Secondary
Credit Trading Extend Trading
Analyst Function FID Syndication Desk Global Top Account
Strategy Increase integration of FID
Business Lines Migrate HOLT small-cap
coverage to sectors Options – Automated
Market Making
Cross-CSG Synergies Data Centers Finance Deployment GTI Transparency IPO7 & AD07 Efficiency
Programs ISIS Singapore Migration IT Phase 2 Deployment IT Tactical Cost Reduction Non-IT Purchasing Spend Phase 1 Deployment
(ISIS & IT)
Cross-CSG Synergies Data Centers Finance Deployment GTI Transparency IPO7 & AD07 Efficiency
Programs ISIS Singapore Migration IT Phase 2 Deployment IT Tactical Cost Reduction Non-IT Purchasing Spend Phase 1 Deployment
(ISIS & IT)
Reducing Cost/Increasing Efficiency
Higher PC Impact Lower PC Impact Higher PC Impact Lower PC Impact
- 12 -
To Address The External & Internal Challenges Facing the Product Control Function, CSFB Has Launched A Number Of Initiatives Over The Past Three Years
End StateTimeframe
2002 2003 2004 2005 2006
Current & Past PC Initiatives (Highlights)
To be determinedProduct ControlReengineering
Initiative #1
Reengineer processing of repo instruments globally with the goal of providing STPRepo Reeng.
Implement Opera data store for all CSFBi trades and positionsOpera for CSFBi
Migrate UK Equity business to a new entity providing greater capital management flexibility
Entity 320 Elimination
OTC Trade Capture (DOMAN/DTD)
Migrate OTC trade population to DTD/DOMAN infrastructure to increase transaction volumes
Rationalize P&L/FOBO system through rollout of FIREPL and FIRE to selected areas of FID
FID Europe FOBO & P&L Rationalization
Ensure FAS 133 compliance by developing HAGAR to replace existing tactical applications
FAS133
Replace current FO P&L and risk management spreadsheets with a scalable risk management system
Panorama IRP – OTC Risk Mgmt System
Roll out of BB technology to mitigate control and Op risk for Flow Credit spreadsheets
BB Template Flow Credit Derivatives
Provide a consistent and validated approach for generating P&L/Risk measurement within Equities
Hydra – OTC Equities Risk Mgmt System
……
The reengineering initiative must understand
the implications of the current book of work
April 1st , 2005 Solution design and sequencing will build on and complement these initiatives
New & Forthcoming Initiatives
- 13 -
Our Experience Suggests 5%-12% Savings Are Achievable Through Policy, Process And Organizational Improvements That Are Not Dependent On Fundamental Technology Change
1 Savings are estimated as a percentage of spend (CSFB Global 2005 Budget - $175MM). Savings opportunities are interconnected and overlap, therefore totals are not additive
30%0%
Policy/Control Adjustments
Redesigning Processes
People Effectiveness
Organizational Redesign
System/Technology Enhancements
Indicative Total
0% 30%
0% 30%
0% 30%
0% 30%
0% 40%
Lower Bound Upper Bound
Remove non-Product Control tasks from the Product Control domain
Require FO to stop writing manual tickets
Eliminate redundant/duplicate MO functions
Automate workflow
Straight-Through-Processing (STP)
De-layer product support structure
Deployment
Re-align core MO functions to business architecture
Centralize product support services
Interface development to downstream applications
Use of Single-Source of data
Use of operational data store for cross-product data
Potential Initiatives
Improve FTE allocation across product groups
Increase spans of control
‘Tactical’ process and workflow improvements without significant technological change
Technology platform rebuild intermixed with wholesale reengineering
Range of Cost Savings1Levers
5%3%
18%14%
15%9%
5%2%
16%12%
9%5%
7%3%
19%13%
3%
30%20%
12%5%
25% 40%
1%
Lower Bound – Savings through process, policy and organizational changes without fundamental system enhancements
Upper Bound – Transformational changes that have wide-reaching implications for technology and groups external to Product Control
$21MM$9MM
$70MM$44MM
- 14 -
This Effort Will Improve The Way Business Is Conducted Within Product Control And Result In Benefits For Your Key Internal Clients And Partners
Technology
Internal Audit
Treasury
Tax
OperationalRisk Mgmt
Product Control
SalesProduct Control,
Operations & Technology
Trading FinanceTradingLegal &
Compliance
Better balance sheet management
Operational Data Store Streamlined MIS Better applications/system
reliability Reduced cost/heightened
efficiency Decreased maintenance of
multiple applications
Improved client service/delivery
Increased transparency in sales commissions and client revenues
More precise and timely risk assessment
Accurate product/ business P & L
Enhanced forecasting ability
Clients/Users of PC Data & Reports
Legend
InvestmentBanking
Enhanced financial control Compliance with
regulatory requirements Improved accuracy of
financial statements
Improved trade information More timely settlement and
clearing Reduced errors and trade
breaks
Strengthened compliance
Improved data quality
Credit Risk Management, HR,
Corporate Services
Accurate risk exposure
Improved risk position awareness/ mgmt of enterprise risk
We have worked with many institutions to deliver programs which yield ancillary benefits across the organization, as well as identify and manage the risks that come with executing a large-scale transformation of this nature
Suppliers/Inputs To PC
Operations
Finance
III. Our Approach
- 16 -
Our approach is designed to generate an implementable, fact-based set of tested reengineering opportunities, with the implications and trade-offs for Product Control and other functions clearly understood and discussed
ExamineBuild the Baseline
‘Unwind’ and AssessExplore and Validate Opportunities
Recommend
Build a Roadmap and Prepare for Implementation
The first weeks involve collaborative data gathering to build on our existing CSFB
fact base1 for future decisions and to enroll a broad set of CSFB team
members whose assistance and buy-in for implementation will be critical
During this period, the broadest set of possible reengineering opportunities are examined across all products to test and
refine them, and to clearly understand the range of options and tradeoffs
available to Product Control
In this phase, we assemble the selected opportunities, identify the resources for implementation and create the detailed plans needed to enable rapid transition to execution and delivery of savings.
This period also provides time for additional communication and buy-in
both internally and externally
3-4 weeks 5 weeks 3 weeks
Stage 1 Identify
Stage 2 Implement
Go/No Go Decision
Stage 1 Disaggregates Your Current Processes, Identifies Inefficiencies And Designs A Customized Solution To Fix The Gaps
1See appendix
- 17 -
Building An Accurate Baseline Is Critical To Locking Down Project Scope And Ensuring Credibility Of Analysis
Stage 1 Stage 2
Go/No Go Decision
Strong CSFB team involvement from all in-scope areas will help ensure ownership of process and savings, as well as put any concerns on the table early
Deloitte will leverage existing internal organizational and CSFB Product Control financial knowledge to accelerate data collection. Senior sign-off on the baseline will help focus efforts on solutions later
Week 1 Week 2 Week 3 Week 4
Examine
Confirm What’s ‘In and Out’
Build The Baseline For Comparison
Factor In Other Key Information (internal, benchmarks, etc.)
Mobilize project team
Identify and confirm key stakeholders
Hold working sessions (PC functional reps) to confirm initial scope of the project, e.g. functions/staff to be reviewed
Identify “big rules” to guide/filter future opportunities (e.g., 1 person per process for commoditized products, ‘4 eyes’ principle, dedicated structured products group)
Gather other organizational information as needed (e.g., ongoing initiatives, project updates)
Gather external benchmark data on functions, processes and roles to enable gap analysis and quantification of opportunities
FID/Equities – Cash (NY)
FID/Equities – Cash (LN)
FID/Equities – Derivatives (LN)
Structured Products (NY)
Conduct interviews with managers at various levels of the organization to better understand the organization, its functions and processes and begin pin-pointing issues
Collaborative effort with a joint CSFB/Deloitte team: will obtain the ‘coal-face’ view of the
processes, escalate latent opportunities and enable the team to aggregate and synthesize
common themes for broader applicability
Conduct One-on-One Process/Workflow Reviews
Update financial data by function (e.g., cost center, product, location)
Update headcount data (e.g., staff details – grades/location/salaries by function)
Facilitate sessions with key personnel
Review organizational charts
List of open requisitions by function
Collect quality metrics by product (e.g., cycle times, error rates, adjudication time)
Create system topography charts
Map baseline (e.g., by cost center, product, location)
Verify and validate baseline with key stakeholders
Preparation
Deliverable
Working Meeting/Decision Point
Senior Management Progress Report
- 18 -
A Methodical, Iterative Assessment Of The Current State Will Generate The Set of Possible Opportunities
Week 4 Week 5 Week 6 Week 7 Week 8
Full spectrum of opportunities ranging from ‘Quick Hits,’ near-term requiring minimal investment/change and to longer term requiring more significant change or investment
“Unwind” and Assess
Stage 1 Stage 2
Go/No Go Decision
Disaggregate Processes And Workflows Into Core Components
Trace and analyze workflows through each process and key controls
Identify and refine the underlying drivers of work and complexity and assess the ability to influence workflow (e.g., policy changes to drive down iterative review processes; IT ‘quick hits’ to affect complexity)
Validate mapping and drivers with process owners
Compare performance and contrast processes to industry practices
Identify ‘Pain Points’ - sources of inefficiencies, redundancies, extraneous work across functional lines, and control weaknesses (e.g., cross functionally by product, FTEs, and activities)
Test Alternatives And Generate Points Of View
Generate top-down and bottom-up savings hypotheses (top-down for areas of greatest relevance, bottom-up for clear breaks and consistencies, control faults, and other transgressions)
Test opportunities with key process owners and management; refine set
Build a more in depth aggregation and quantification of potential benefits, economics, and opportunity costs/tradeoffs (e.g., risk, control, interdependencies etc.)
Develop and document an interim list of program improvement opportunities including ‘Quick Hits’. Examples could include:
Identification of common data sources to integrate risk incident reporting across silos and enhance hedge accounting processes
Develop a standard method for the implementation of GL/Financial Balance Sheet controls from both a financial and US GAAP perspective
Validate Recommendations
Transform aggregated set of activities into “strawman” future state
Review “strawman” structure with Functional representatives, validate assumptions and obtain feedback
Create model of “final” future state and high-level recommendations
Communicate findings to Steering Committee and external stakeholders (e.g., EXB, Finance)
Preliminary AssessmentInitial reengineering set, first-cut priorities to share with stakeholders
High-Level ‘Future State’ Functional Model
Iterative process promotes buy-in among the functional managers related to the initiatives and mitigates resistance to
proposed changes
“As-Is” Process MapsWith regional variances, handoffs, high-level systems mappings etc.
Deliverable
Working Meeting/Decision Point
Senior Management Progress Report
- 19 -
Finally, A Detailed Roadmap Will Provide Management With The Guidance Necessary To Execute Effectively Against Plans
Week 8 Week 9 Week 10 Week 11 Week 12
Outline Implementation “Waves” And Sequence
Develop Implementation/Migration Plan
Work with CSFB to prioritize ‘waves’ of implementation
Assess and document implications for internal and external user groups (e.g., organizational, technology, procedural, control, reporting, regulatory, trade life cycle)
Develop high-level Migration Plan to execute on the recommended and prioritized process improvement opportunities
Develop detailed Implementation Master Plan with dependencies
Identify initiative ownership, define roles and responsibilities of resources
Develop metrics and benefits tracking approach; identify supporting tools
Work with management team to ensure buy-in
Develop organizational readiness plans
Syndicate and adjust plans with external stakeholders
Detailed planning, continued organizational commitment, and regular communication and follow-up are crucial to realize the full benefits of the implementation planning process
Validate key business case inputs and assumptions with functional representatives/process owners
Build business case (financial and non-financial) for priority initiatives
Create tracking and reporting infrastructure for progress and achievements
Develop Supporting Business CasesBusiness Cases
High-level Migration Plan
Implementation Waves
Implementation Plan
Recommend
Performance Metrics
Strategic planning stage to ensure all aspects of the process are considered from Front Office to IT
Connect business case benefits to other parts of the organization
Stage 1 Stage 2
Go/No Go Decision
Deliverable
Working Meeting/Decision Point
Senior Management Progress Report
- 20 -
If A Go Decision Is Reached, Activities Transition To Execution Of “Quick Wins” And Detailed Design For High Priority Projects
NOTE: ILLUSTRATIVE NOT WITHIN SCOPE OF THIS RESPONSE
Stage 1 Stage 2
Go/No Go Decision
Implement
First 3 months Wave 2 Wave 3
Manage Program, Facilitate Change, Track Outcomes
Continue “waved” implementation approach:
For broad process improvements (e.g., structured trade review consolidation), pilot in select platforms/geographies
Transfer knowledge across BUs, platforms, and geographies
Periodically re-evaluate plan and re-sequence to maximize value
Next 3 months
Detailed Designs For ‘Quick Wins’
Begin Roll-out of ‘Quick Wins’
Begin Conceptual Designs For Priority Projects
Detailed Designs For Priority Projects
Begin Pilot/Rollout Wave 1
Teams focused on a small number of high priority initiatives across BUs/platforms
Detailed Design
Conceptual Design
Detailed Design
Develop detailed plans
Develop functional design document
Design End-State business architecture
Syndicate with stakeholders
Reconfirm business requirements
Develop functional specifications and design documents
Develop rollout plans
Design Wave 2 Pilot/Rollout Wave 2
Design Wave 3
Execute against plans
Establish program management office
Implement progress tracking system
Develop and implement reporting tools and metrics
Develop functional specifications and designs documents
Develop rollout plans
Execute against plans
Execute against plans
Pilot/Rollout Wave 3
Develop functional specifications and designs documents
Develop rollout plans
Execute against plans
Deliverable
Working Meeting/Decision Point
Senior Management Progress Report
IV. “Test Driving” The Approach
- 22 -
Build the financial business
case
Figure out top down
opportunities
Our Approach Is Best Demonstrated By Working Through An Example
Today: Apr 4, 2005Monday
Kick off the project
Today: April 25, 2005 Monday
Work with team to
finalize the baseline
Today: May 9, 2005 Monday
Today: May 27, 2005 Friday
Meet with team to
prioritize and sequence
opportunities
Today: June 17, 2005 Friday
Project Day 1 Project Day 67Project Day 56Project Day 35Project Day 21
Today: May 16, 2005 Monday
Work with team to build
bottom up initiatives
Project Day 42
ExamineBuild the Baseline
‘Unwind’ and AssessExplore and Validate Opportunities
RecommendBuild a Roadmap and Prepare for
Implementation
The first weeks involve collaborative data gathering to build on our existing CSFB
fact base1 for future decisions and to enroll a broad set of CSFB team
members whose assistance and buy-in for implementation will be critical
During this period, the broadest set of possible reengineering opportunities are examined across all products to test and
refine them, and to clearly understand the range of options and tradeoffs
available to Product Control
In this phase, we assemble the selected opportunities, identify the resources for implementation and create the detailed plans needed to enable rapid transition to execution and delivery of savings.
This period also provides time for additional communication and buy-in
both internally and externally
3-4 weeks 5 weeks 3 weeks
1See appendix
- 23 -
Day 21: Derivatives Baseline Completed With Areas Warranting Further Scrutiny Identified
Today: April 25, 2005 Monday
Day 21: Finalize the
baseline
US Credit Derivatives & IRP: D.49HX2A
Location: London
Owner: Ahmed Kubba
Headcount: 38
UK Credit Derivatives: D.20H
Location: London
Owner: Ahmed Kubba
Headcount: 38
Day 21: April 25th
Day 21: April 25th
The data collection effort will be significantly
streamlined by leveraging existing data
UK IRP: D.59H/D.80H
Location: London
Owner: Ahmed Kubba
Headcount: 38
Data IntegrityEnrichments
& Adjustments
Size
Vol. Sensitivity (%)
Risk Profile
Control Procedures
Business Constraints
Tech enabled
External Interaction
ValidationManagement &
Change
Tra
inin
g &
Dev
elop
men
t
Pro
ject
s
MIS
Rep
ortin
g
Day 21: April 25th
FO
BO
s
Oth
er R
ecs
Str
uctu
red
Tra
de R
evie
ws
3.3
71
X
X
X
X
X
2.9
82
X
X
X
X
X
8.6
98
X
X
X
X
X
Pro
visi
on &
Val
uatio
ns
GA
AP
Adj
ustm
ents
5.9
72
X
X
X
X
X
1.8
74
X
X
X
X
X
P&
L V
alid
atio
n
Pric
e T
estin
g
Acc
ount
Ow
ners
ip
Mod
el V
alid
atio
n
2.2
78
X
X
X
X
X
1.6
90
X
X
X
X
X
0.6
61
X
X
X
X
X
0.2
100
X
X
X
X
XM
anag
emen
t
2.3
80
X
X
X
X
X
0.5
80
X
X
X
X
X
1.4
76
X
X
X
X
X
2.3
80
X
X
X
X
X
Financial Analysis & Reporting
P&
L A
naly
sis
3.0
80
X
X
X
X
X
Create Trial Balance
Cre
ate
Tria
l Bal
ance
0.9
78
X
X
X
X
X
Dat
a C
olle
ctio
n
0.7
63
X
X
X
X
X
Day 1: April 4thDerivatives PC Data Elements
BottlenecksOrg
ChartsFinancial
Headcount
Controls MetricsProcess
MapsTech
D.59H CTRS FID IRP ExoticsAhmed Kubba
D.80H CTRS FID IRP VanillaAhmed Kubba
D.20H CTRS FID EuropeAmin Bilal
D.49HX2A NY FID Prod Ctrl IRPSui-Pak Ho
ExternalInteraction
A value stream map will identify bottlenecks and control breaks as well as identifying opportunities for improvement
Front Office/Back Office Reconciliation
Cash Reconciliation
I/C Reconcilliation
Handoffs – 1Controls – 3
Complexity - xProcessing Time – 10 mins
Set Up Time – x minsQueue Time
Handoffs – 1Controls – 0
Complexity - xProcessing Time – 7 mins
Set Up Time – x minsQueue Time – x hours
Handoffs – 1Controls – 0
Complexity - xProcessing Time –5 mins
Set Up Time – x minsQueue Time – x hours
Handoffs – 0Controls – 2
Complexity - xProcessing Time –18 mins
Set Up Time – x minsQueue Time – x hours
Criteria: Deal size% exception: 20%
Handoffs – 0Controls – 2
Complexity - xProcessing Time –18 mins
Set Up Time – x minsQueue Time – x hours
Front Office/Back Office Reconciliation
Cash Reconciliation
I/C Reconciliation
Handoffs – 1Controls – 3
Processing Time – 10 mins
Queue Time – x hours
Handoffs – 1Controls – 0
Processing Time – 7 mins
Handoffs – 1Controls – 0
Processing Time –5 mins
Price TestingPrice Testing
Handoffs – 0Controls – 2
Processing Time –18 mins
Structured Trade Review (Exception)Criteria: Deal size% exception: 20%
Handoffs – 0Controls – 2
Processing Time –18 mins
Opportunity identification from both a process/control and cost perspective will have been driven out across the products
Detailed product specific
baselines will be created to
determine pain points and major
areas of focus
1
2
3
Price TestingStructured Trade Reviews (Exception)
ILLUSTRATIVE
- 24 -
The cost of structured trade reviews should be able to be reduced by:
1)Reducing the cycle time
2)Reducing the complexity associated with the STR
Derivatives
Data Integrit yEnrichments
& Adjustments
Size
Vol. Sensitivity (%)
Risk Profile
Control Procedures
Business Constraints
Tech enabled
External Interaction
Validation Management & Change
Tra
inin
g &
De
ve
lop
me
nt
Pro
jec
ts
MIS
Re
po
rtin
g
FO
BO
s
Oth
er
Re
cs
Str
uc
ture
d T
rad
e R
ev
iew
s
21
74
X
X
X
X
X
19
80
X
X
X
X
X
25
92
X
X
X
X
X
Pro
vis
ion
& V
alu
ati
on
s
GA
AP
Ad
jus
tme
nts
10
66
X
X
X
X
X
5
79
X
X
X
X
X
P&
L V
alid
ati
on
Pri
ce
Te
sti
ng
Ac
co
un
t O
wn
ers
ip
Mo
de
l V
alid
ati
on
13
56
X
X
X
X
X
13
56
X
X
X
X
X
5
75
X
X
X
X
X
1
100
X
X
X
X
X
Ma
na
ge
me
nt
10
49
X
X
X
X
X
1
65
X
X
X
X
X
16
69
X
X
X
X
X
9
42
X
X
X
X
X
Financial Analysis & Reporting
P&
L A
na
lys
is
16
60
X
X
X
X
X
Create Trial Balance
Cre
ate
Tri
al
Ba
lan
ce
1
78
X
X
X
X
X
Da
ta C
olle
cti
on
1
63
X
X
X
X
X
Derivatives
Data Integrit yEnrichments
& Adjustments
Size
Vol. Sensitivity (%)
Risk Profile
Control Procedures
Business Constraints
Tech enabled
External Interaction
Validation Management & Change
Tra
inin
g &
De
ve
lop
me
nt
Pro
jec
ts
MIS
Re
po
rtin
g
FO
BO
s
Oth
er
Re
cs
Str
uc
ture
d T
rad
e R
ev
iew
s
21
74
X
X
X
X
X
21
74
X
X
X
X
X
19
80
X
X
X
X
X
19
80
X
X
X
X
X
25
92
X
X
X
X
X
25
92
X
X
X
X
X
Pro
vis
ion
& V
alu
ati
on
s
GA
AP
Ad
jus
tme
nts
10
66
X
X
X
X
X
5
79
X
X
X
X
X
5
79
X
X
X
X
X
P&
L V
alid
ati
on
Pri
ce
Te
sti
ng
Ac
co
un
t O
wn
ers
ip
Mo
de
l V
alid
ati
on
P&
L V
alid
ati
on
Pri
ce
Te
sti
ng
Ac
co
un
t O
wn
ers
ip
Mo
de
l V
alid
ati
on
13
56
X
X
X
X
X
13
56
X
X
X
X
X
13
56
X
X
X
X
X
5
75
X
X
X
X
X
1
100
X
X
X
X
X
1
100
X
X
X
X
X
Ma
na
ge
me
nt
10
49
X
X
X
X
X
1
65
X
X
X
X
X
1
65
X
X
X
X
X
16
69
X
X
X
X
X
16
69
X
X
X
X
X
9
42
X
X
X
X
X
9
42
X
X
X
X
X
Financial Analysis & Reporting
P&
L A
na
lys
is
16
60
X
X
X
X
X
16
60
X
X
X
X
X
Create Trial Balance
Cre
ate
Tri
al
Ba
lan
ce
1
78
X
X
X
X
X
1
78
X
X
X
X
X
Da
ta C
olle
cti
on
1
63
X
X
X
X
X
1
63
X
X
X
X
X
Decrease Workflow Cycle Time Decrease Complexity of Review Process
Process
Organizational Structure
People
Risk/Policies/ Procedures
Technology
Control Policies
Service Policies
Quick Wins/BoW Modification
Large Scale
Redesigning/ Reengineering
Elimination of Low Value Added Activities
Relocation
Functional Consolidation
Utilization
Span of Control
Resource Mix
Limited impact
Standardize FO adjudication procedures
Streamline back through front office interface applications
Operational Data Store will enable high integrity data extraction
Reduced number of breaks will reduce complexity and time spent on reconciliations
Restructure the STR work flow process
Limited impact
Consolidate like STR activities
Reallocation of specialists’ time to proportional focus areas
Limited impact
Reduce errors by better matching resource skill levels to value added activities
Today: May 9, 2005 Monday
Day 35: Top Down
Opportunities
Structured trade reviews have the highest sub process headcount allocation and one of the highest variable % across derivatives warranting further investigation
Hypothesis
Increase risk filters and customize risk thresholds for individual derivative products
Modify FO operating procedures to reduce the number of breaks
Align technology processing to workflow management
Implement single source of data to reduce the number of breaks
Redesign data capture to reduce the number of breaks
Limit number of ad hoc/redundant reports
Limited impact
Limited impact
Limited impact
Limited impact
Limited impact
Potential Impact Hypothesis
Potential Impact
4
5
Key hypothesis warranting further investigation
Day 35: Hypotheses Developed To Reduce The Cost Of Structured Trade Reviews Within Derivatives
Using a top-down approach, the baseline is unwound around the primary cost reduction levers to identify areas with the biggest “bang-for-the-buck”
ILLUSTRATIVE
- 25 -
Key STR hypotheses developed from a derivatives perspective are applied against Interest Rate products to develop specific opportunities
Day 42: Opportunities For Interest Rate Derivatives Have Been Outlined
Today: May 16, 2005 Monday
Day 42: Build Bottom
Up Initiatives
STRs within Interest Rate Derivatives8.8 FTEs96% Variable>100 per month
Decrease Complexity of Review Process
Reconciliation/ Booking Review(50%)
Valuation Model Review & Accounting
(50%)
Dis
aggr
egat
e S
TR
Pro
cess
Decrease Workflow Cycle Time
Hypothesis 1Risk filter
Hypothesis 2Modify FO procedures
Hypothesis 3 Tech modifications
Hypothesis 1Redesign STR
workflow
Hypothesis 2Consolidate STR
activities
Hypothesis 3 Align resource
mix
Opportunity N/A
Standardize spread-sheets, adjudication process. Book trades on server/no manual tickets
Expedite Panorama rollout enforcing FO migration from spreadsheets
Implement STR tracking process
Consolidate IRP STR rec/booking review with other products subject to STRs
Utilize low cost labor to conduct recs/ booking reviews
Impact N/A5% - 15% reduction of STR cycle time due to fewer breaks
10% - 30% reduction of STR cycle time due to fewer breaks
Reduce STR processing time; increased capacity
Centralized function reduces overlapping FTEs
Cost per FTE reduction
Additional Considerations
N/ACost of change management
Scarce technology resources
Scarce technology resources
Additional handoff created
Must maintain quality control
Control & Risk Considerations
N/AReduced operational risk
Reduced control cycles
Revisit key control checkpoints
Heavy reliance on key personnel
Increased operational risk
Opportunity
Adjusting risk filters will drive down cycle times for vanilla IRPs
N/A N/AImplement STR tracking processing
Limited consolidation opportunities due to required product specific knowledge
Utilize higher cost labor to conduct value add activities
Impact2% - 10% reduction of STR cycle time
N/A N/AFacilitate enhanced interactions with the VRG
N/ATargeted use of high cost labor
Enhanced morale
Additional Considerations
Risk expertise required to ensure control adequacy
N/A N/A Technology options N/A N/A
Control & Risk Considerations
Increase risk filter checks
N/A N/A Increase controls N/AIncreased operational risk
Applying the top-down hypothesis from a bottom up perspective identifies the practical implications of a change
Bottom-up initiatives need to be aggregated across products, geographies, and entities. Validating and assessing the impact of the aggregated opportunities will facilitate the sequence of implementation
6
7
ILLUSTRATIVE
- 26 -
Successful Execution In Stage Two Of The Reengineering Initiative Will Be Predicated On The Foundation Built In Stage One
Strategy The overall business strategy must drive the areas of focus for this initiative so that
reengineering enables the development of a ‘clean’ platform to support the aggressive business growth that CSFB plans
Financial
Short-term and long-term savings targets must be clearly defined Clear performance metrics to track progress are required Stick to the overall plan; adjustments (e.g., milestone slippage) will impact the
business case
Operational Execution
Waves must be planned in short, manageable intervals Resources must be committed flexibly so they can ‘shrink’ or ‘grow’ depending on the
requirements of the task Global variations must be understood and accommodated Technology implications must be addressed and managed (e.g., prioritization of the IT
Book of Work)
Stakeholders
Customer impacts must be understood Success is predicated on key managers buying into and actively championing
outcomes More comprehensive reengineering requires a multi-disciplinary approach in which
FO, Product Control, Operations, IT and Financial Control act as an integrated, cohesive team
Risk Management
Timing and composition of waves should be determined by the need to balance speed, cost savings and risk
Demands of regulatory, tax and legal requirements must be factored in All moving parts of the plan must be synchronized before finalizing implementation
plans
V. Team Structure, Profiles and Fees
- 28 -
Proposed Team Structure
FID/Equity Cash & Derivatives/Structured Products (D)
NY LondonNY Team (3-4 CSFB)
1 Manager (D)1 Sr. Consultant (D)
1 Analyst (D)
London Team (3-4 CSFB)1 Manager (D)
1 Sr. Consultant (D)1 Consultant (D)
Product Specialists
Project Oversight – ‘Setting Direction’
Execution Team – ‘Getting It Done’
Functional Specialists
Audit, Tax, Regulatory, Risk, Quantitative, Reengineering & Valuation (D)
Make key decisions, sign-off on major deliverables and act on recommendations
Identify and assign appropriate resources to the assessment
Deloitte’s cross-functional support to be leveraged as needed – from reengineering ‘heavy lifting’ Adam) to deep product control expertise (Lisa) to audit/risk advisory (Sal) to day-to-day CSFB navigation acceleration (Liz)
Meet objectives within timing and scope outlined by the
Project Leadership
Manage day-to-day activities – project communication, analysis
and deliverable development
Develop recommendations and drive issue resolution
Resources with deep knowledge of a particular product area
Work hand-in-hand with core team during interviews, workshops and to
formulate and test opportunities Provide additional deep
expertise on specific issues and questions as needed
Own the overall financial and process models
Drive consistency of approach across products and regions
Aggregate and prioritize opportunities
Governance Committee
Global Project Manager(s)
D – Deloitte
TBD – Primarily PC representatives
- 29 -
Fees, Expenses, Deloitte’s Team And Diversity
This project will be led by Deloitte Consulting LLP, with assistance from Deloitte & Touche and affiliated entities as needed to bring the right resources, expertise and experience to this effort
We estimate our fees for this project to be xxMM. A breakdown of our levels and daily rates is on the following page We are committed to continuing our relationship with CSFB. We believe our pricing reflects the market value of our
services, and would be pleased to discuss this pricing proposal with you
Fees
Deloitte’s Team
Oversight for Deloitte’s team will be by Adam Broun, Ken Landis, Liz Healy, Lisa Choi & Sal Davide leveraging relevant expertise as needed throughout the process
Shahzad Shah and Nick Blake will form the on-site, day-to-day leadership in New York. We have proposed a team split between New York and London, aligned with CSFB’s resources and products
The remainder of our team will be assembled before commencement of the work and will bring a blend of analytical, process mapping and reengineering skills, along with in-depth product knowledge for each of CSFB’s businesses and subject matter expertise on matters such as regulatory requirements, valuations and operational risk.
We have based our team structure on our understanding of the RFP and other provided information. We are happy to discuss alternate team structures and how to make them effective
Diversity We are pleased to present a team that reflects the diversity of our Firm The Supplier Questionnaire describes our commitment to diversity and inclusion in greater detail
Expenses We will make every effort to minimize expenses, and believe they will not exceed 15% of our fees unless extensive
international travel is required. Please note that the teams working in London and New York will be staffed by practitioners from those countries. Actual expenses will be charged as incurred
- 30 -
Engagement Fee Summary
As requested in the RFP, outlined are the rates used to calculate our pricing estimate. In recognition of our relationship with CSFB, these rates continue to reflect a significant discount from our standard rates. Our rates are based on a 10-hour day; our custom is considerably greater.
Our estimate includes leadership and oversight from our partners and principals. We generally dedicate time over and above that estimate at no additional cost in order to provide the quality of service that CSFB has come to expect from Deloitte.
Level Daily Rate ($)
Partner / Principal
Senior Manager
Manager
Senior Consultant
Analyst
Partner/Principal
Senior Manager
Manager
Senior Consultant
Consultant
New
Yor
k Lo
ndon
VI. Qualifications & References
- 32 -
We Have Significant Experience In Defining And Implementing Programs At CSFB
Records RetentionAssisted with the management, structuring, and execution of CSFB’s IT Record Retention Strategy
ISIS Business Reviews
Conducted a review of the IT and ISIS organizations that included mid-year performance to budget, ‘deep dive’ analysis of the project portfolio and detailed org and work driver analysis
ISIS Transparency
Developed comprehensive transparency reports detailing progress towards goals, costs, headcount, project and work driver information to the Front Office
Trade Services Developed business requirements and transaction walk-throughs for Trade Services
Middle Office Cost Driver Analysis
Performed an in-depth cost driver analysis of the Middle Office organization in the Americas and Europe
Business Continuity Planning Operating
Model
Developed a global operating model for BCP that defined roles and responsibilities and established governance
Plan ’06 Impact Assessment
Performed a comprehensive impact assessment of the Front Office Plan ’06 initiatives on the resources and costs of the IT, PC and Ops organizations
Product Control Strategic Plan
Assisted with the development of the Product Control Strategic Plan and book of work for 2004
Basel IIPerformed an in-depth assessment of the completeness of the implementation requirements and technology solution for Basel II reporting
Data Center Strategy & Implementation
Developed a global data center strategy focusing on BCP, DR and recent regulatory environments. Also assisted in setting up the PMO for the implementation
Mortgage Change Program
Established a program management office to monitor and track the execution of the Mortgage Change Program
IT StrategyDeveloped the structure, vision and the processes required to support the launch of CSFB’s IT organization
HR COOAssisted the COO of HR in establishing a program management office and in baselining strategic initiatives
Infrastructure StrategyDeveloped a global Infrastructure strategy for the newly appointed CTO
Sample Recent Engagements
IT Deployment
In support of the IT Deployment initiative, we conducted a resource inventory of 4,000 IT and infrastructure positions and developed detailed “wave” plans for deployments
European Support Strategy
Performed a comprehensive impact assessment of and defined initiatives to support Plan ’06 for European FA&O
Prime ServicesAnalyzed and documented daily overnight processing cycle and established service level agreements
Broker/Dealer LiteAssisted in completing regulatory application and initial SEC review. Developed technical policies and procedures
- 33 -
We Have Built A Number of Relationships Across Various Functions Based On Project Delivery At CSFB And Have Recently Worked With Multiple Managers Across Product Control During The Middle Office Work Driver Project
Blue = CSFB Project Sponsor
IT/ ISIS/ORM
ISIS
IT
ORM
Financial Control
HR
SPI/PSD
Corporate Services
CSG
FA&O - Europe
RMM
Equities
ISIS - Product Control
- 34 -
Recent Highlights Of Our Work In The Global Financial Services Sector
Other Back Office
Functions
Process Re-engineering
Banking Technology OptimizationCost Reduction
Migration Planning/
Implementation
Operational Transformation
Controlling Functions
National Commercial Bank #2
- 35 -
Qualifications – Product Control
Deloitte was engaged to conduct a review of a global investment bank’s Product Control function, operational and valuation models, and work processes for the equity derivatives business.
Results: Assisted Product Control in scheduling, managing and completing their
annual model review Established baseline valuation model review procedures Set annual review standards
For a global investment bank, Deloitte was engaged to assist in documenting the firm's risk and pricing models to assure they met the firm's CSE readiness initiatives. Products included fixed income derivatives, MBS and equities.
Results: Completed all model documentation within 60 days and submitted to
senior management Established model standards still in use Ensured/documented that risk and pricing models were CSE ready
Global Investment BankMulti-Line Global Investment Bank - NY
For a global investment bank, Deloitte was engaged to conduct an evaluation of whether the firm should re-enter the physical and financial energy trading markets. The Project Sponsor was Global Head of Product Control and the firm’s considerations included the expansion of trading operations, risk control and product management.
Results: Created a strategy document for Product Control’s expansion Developed a business case and metrics that indicated the process was
viable Created a high level infrastructure and roadmap for conducting the new
trading activity
Global Investment Bank – NY & London
Senior Management engaged Deloitte to assist with a gap analysis of business metrics for Product Controllers. We collected source documentation across the firm and created an overall Product Control metrics inventory. The inventory was coded and placed in a database for integration into an OLAP tool that was implemented by another area in the bank. Our goal was to obtain consolidated enterprise wide reporting of key risk variables to support senior management reporting needs.
Results: Reviewed key metrics and created standardized views by metric
definition, reporting type, business, and region Benchmarked business units against business group metrics i.e. Fixed
Income, Equity, OTC Calculated metrics gaps by business unit for eventual standardization of
reporting
Global Investment Bank
Note: Due to confidentiality agreements signed with client we are not able to provide some client names on qualifications
- 36 -
Qualifications – Process Improvement & Cost Reduction
Deloitte undertook a significant cost reduction exercise for overall operations, seeking to reduce the cost base by around £175m and reduce the workforce by up to 25%. Deloitte worked closely with the client in a highly collaborative manner to rapidly identify and deliver tactical/quick win results.
Results: Savings of £177m delivered within 12 months:
IT Services £80m Procurement: £21m Support Services: £49m Customer Services: £27m
All savings externally audited – final audited result was £201M
Deloitte was engaged to redesign and improve IT and operational functions which included enabling enterprise-wide shared services, enterprise-wide management information strategies, and improved cost identification, cash management, reporting and procurement. Our work resulted in significant cost reductions.
Results: Completely reengineered the finance function including cash
management, procurement and sourcing, general accounting, cost management, and reporting and analysis
Measurable recurring annual benefits were estimated to be over 100 % of the total project cost
Deloitte was engaged to design and implement a strategic cost reduction initiative to remove 350m Yen from the cost base of the operations function. A 5 step approach to the design was used, capturing current operating model and process, base-lining and developing performance metrics. We were then engaged in iterative re-design of process and organization.
Results: Streamlined and re-engineered processes (segregating simple/complex
tasks, reducing rework and managing waste in linear processes) Introduced performance management techniques across the
organization (people, process and systems performance management) The joint client/practitioner team re-designed the operations group in just
under 12 weeks enabling the implementation team to deliver against the new operating model and processes in 14 weeks
Deloitte was engaged to redesign and improve IT and Operational functions. This included: the replacement of outdated legacy systems; elimination of duplication and unnecessary reconciliation and manual processes; and automation of information reporting.
Results: Reengineered infrastructure and processes from settlement systems to
General Ledger Consolidated functions and processes from multiple accounting streams
to one integrated system utilizing SAP enabled re-engineering Restructured the role of finance to encompass business support and
analysis rather than solely reporting of historic information
- 37 -
Qualifications – Process Improvement & Systems Implementations
Deloitte was engaged to assist senior management in the reengineering of BNP-Paribas Capital Market activities. This involved implementing a new back office system to manage derivatives in a centralized manner.
Results:
Focusing on the reengineering of Back Office processes resulted in: Integration of all derivatives products in Murex Integration of Murex Back Office into the BNP-BFI environment
(Accounting, Risk, FO systems...) Reengineering and redefining back office processes and procedures Creating a new front-to-back office organization Rollout: Defined the go live strategy and migration plan. Successfully
managed the migration into Murex G2000
Deloitte implemented a new treasury and derivatives system:
Merrill Lynch bank - Deloitte conducted a front-to-back implementation for the treasury activity products including bonds, money markets, loans, swaps, CDs, commercial paper and repos
Merrill Lynch - Deloitte provided implementation assistance for a Summit system installation to provide front-to-back office support for emerging market bond trading and foreign exchange business globally
Results:
Provided full program and project stream management
Designed business processes, developed and executed acceptance tests and implemented plan (including validation of FX module newly added by Summit for Merrill)
Set-up accounting and testing
Global US Investment Bank
As part of a strategic project, Deloitte provided assistance for selection and development of a global multi-entity derivatives trading system capable of supporting all major types of derivatives.
Results: Phase I - strategy feasibility study which considered high level business
systems architecture, detailed business case, application architecture, detailed development and migration planning, detailed functional design, business process redesign and sizing and analysis of technical options
Phase II - detailed evaluation of various risk management software packages to assess their functionality against the requirements identified in phase I. This focused on information technology issues, including leading edge analysis of the use of the Sybase database product
Phase III - provided implementation assistance, detailed design and architecture planning
Supranational Bank
Deloitte was appointed to implement a new front to back office organization plus accounting solution for treasury, fixed income and derivatives (IRD,CD) activities.
The large-scale project covered virtually all departments of the bank over an 18 month period, and involved a significant level of process re-engineering.
Results: Provided program and project stream management; defined user
requirements and enhancements to the software; designed a new target organizational structure and redefined transaction processes
Configured and integrated SUMMIT and SAP; built interfaces to the existing data warehouse and risk applications; conducted testing and user training
Note: Due to confidentiality agreements signed with client we are not able to provide some client names on qualifications
- 38 -
Deloitte was engaged to develop a complete operating model re-design for a major banking division. The new model was designed to facilitate the migration of the division to a new operating platform and several internal functions to new locations. Deloitte collaborated closely with client management to prioritize actions, make decisions and resolve major issues
Results: The Target Operating Model became the focal point of all change, in
particular the complex re-organization of processes, functional responsibilities and costs over several sites
The TOM enabled all involved to clearly understand the blueprint for the future, and for management to clearly see how the cost imperatives would be met through the re-organization
Qualifications – Operating Model Transformations
Deloitte was engaged by ABN Amro to design a global operating model to combine FX and Money Markets. Key objectives included reducing cost, enhancing transparency, driving consistency of attributable activities and adding missing mission critical capabilities. Our work helped define a global operating model and standardized set of global processes.
Results: Increased efficiency with centralized desk management and more
consistent pricing Increased central control and reduced operational risk (simplified the
current operating model, provided greater transparency for local trading activities)
Reduced cost of operational infrastructure (centralized operational systems and back office)
Provided for costs avoidance and increased flexibility to take advantage of future market opportunities
Deloitte was engaged to develop a Target Operating Model to lead re-integration of credit cards businesses into to the group in combination with lending as part of a new Consumer Finance division. Analyzed the two prevailing operating models for loans (Bank of Scotland Direct and Halifax loans) and credit cards and created a financially viable model.
Facilitated workshops with key participants so consolidation opportunities could be identified and quantified. In a validation phase, we investigated all identified opportunities. Working in teams with the client, we developed business cases and a high level implementation plan.
Results: Identified consolidation opportunities of £21m £20m in cost reduction was subsequently realized
Deloitte was engaged to set up the Umbrella PMO for the equities and fixed income Operating Model Transformation Program. Priorities included short-term focus on optimizing cost reduction and improving internal controls and a medium-term focus on service improvements (both internal and external). The Program was responsible for generating a minimum of €212 million savings by the end of 2005.
Results: Refocused equities and fixed income to create a robust, competitive and
cost-effective platform Defined mapping rules to determine interim location of functions in the
operating model Devised business architecture principles underpinning the operating
model Conducted functional mapping of the operating model including a FTE
analysis to support the design effort Repositioned the group to take advantage of future growth
Global Investment Bank
Note: Due to confidentiality agreements signed with client we are not able to provide some client names on qualifications
- 39 -
Qualifications – Bank Wide Integration/Design
Deloitte was engaged after the merger to assist in the integration of diverse business practices and technology infrastructures, including Capital Markets, and to provide PMO and resources to support integration activity.
Results:
Deloitte deployed an experienced team to assist JP Morgan Chase in various parts of the merger, focusing on: Synergies identification: prioritization of integration of high value
activities Merger risk management: identification and quantification of potential
risks PMO: managed the creation and issuance of deliverables and overall
project communication. Used PMO net to escalate key issues
The bank proposed a global re-organization of its current operating structure. Deloitte was engaged to define an operating model for each client-facing business line, support and control function. Design of the new structure included: a review and assessment of existing Arab Bank strategy; process and organization; modelling of generic best practices in operations; assessment of key business issues; and the presentation of action alternatives for further discussion.
Results: Created a high-level transition roadmap, capturing major risks and
obstacles associated with implementation of Head Office Charters Presented a newly defined mission statement to align the activities of
each business line/ function Defined and refined new regional responsibilities and intra-
organisational relationships
- 40 -
Project(s): Reengineering Front To Back & Systems Implementation
Project Role: Person.. served as the BNP Paribas project sponsor and was a member of the project’s steering committee
Clients Who Are Willing To Share Their Experiences
Managing DirectorBusiness Management – Global Markets
National Commercial Bank #1 UK,
SENIOR MANAGING DIRECTOR
Managing DirectorManaging Director
FRANCEFRANCE
Previous clients of Deloitte are available to speak to CSFB Evaluation Committee Members to provide insights into their reengineering experience
Project(s): Various Transformation Programs
Project Role: Person..t served as the project sponsor and was a member of the project’s steering committee
Project(s): Deloitte & Touche is the independent auditor
Project Role: Person.. served as the senior business unit controller for Equities
If you wish to speak to any of these references, please contact Adam Broun, +1 781 354 3231, [email protected] who will be pleased to arrange a conversation
VII. Available Tools
- 42 -
Sample Tools – Process & Initiatives Prioritization
Cause & Effect Analysis
Fishbone analysis, used to force teams to focus beyond symptoms to root causes. Provides a structure to cause identification effort, and balanced list of ideas. Utilized once the problem is identified to determine the cause.
Fishbone analysis, used to force teams to focus beyond symptoms to root causes. Provides a structure to cause identification effort, and balanced list of ideas. Utilized once the problem is identified to determine the cause.
Inappropriate Swift Frequency
Inappropriate Message Levels for Client’s
Message System Limitations
Implications of Closure Process
Why are Erroneous
Swift Statements
Sent ?
Historically, lack of procedure for
creation of & cancellation of Swift Message
ReportingLack of
ownership of Swift message
costs
Ownership of Swift costs not with CS who set up reporting
Economic climate did not require close
scrutiny of Swift costs
Reporting selected by people not aware of
costs involved
Lack of training / awareness
No specific info on the system for cost
implications of Message Reporting
EFRITS model does not include
realistic Costs for Swift
reporting in Client Profit
profile
No formalised training related to closing
customer reporting
System maintains reporting level unless specifically changed
Closing clients have no RM or group responsible for
exiting procedures
Customer’s set up with multiple Cash
Accounts and Blanket Daily Reporting to
these
Accurate DATA on Swift
reporting not available
Lack of accountability to
analyse data
Business assumed that aggregate charges
accurate and does not profile costs for different
client usage
Current Reporting limited to daily, weekly, monthly
and not necessarily focused on customer
needs
System does not flag accounts that are closing as receiving erroneous
messages
Costs owned by IS not CS (who decide appropriate reporting)
Inappropriate Swift Frequency
Inappropriate Message Levels for Client’s
Message System Limitations
Implications of Closure Process
Why are Erroneous
Swift Statements
Sent ?
Historically, lack of procedure for
creation of & cancellation of Swift Message
ReportingLack of
ownership of Swift message
costs
Ownership of Swift costs not with CS who set up reporting
Economic climate did not require close
scrutiny of Swift costs
Reporting selected by people not aware of
costs involved
Lack of training / awareness
No specific info on the system for cost
implications of Message Reporting
EFRITS model does not include
realistic Costs for Swift
reporting in Client Profit
profile
No formalised training related to closing
customer reporting
System maintains reporting level unless specifically changed
Closing clients have no RM or group responsible for
exiting procedures
Customer’s set up with multiple Cash
Accounts and Blanket Daily Reporting to
these
Accurate DATA on Swift
reporting not available
Lack of accountability to
analyse data
Business assumed that aggregate charges
accurate and does not profile costs for different
client usage
Current Reporting limited to daily, weekly, monthly
and not necessarily focused on customer
needs
System does not flag accounts that are closing as receiving erroneous
messages
Costs owned by IS not CS (who decide appropriate reporting)
Information Space Maps
“As-Is” Information Space “To-Be” Information Space
Eng-DesignProgram Off ice
Conf iguration Management
Eng-Checking
Admin
Saf ety
Eng-Systems
Model Control
ReleaseMaterial Planning
Eng-ProductionEng-Design Chief
Process Planning
Data Management
Reproduction
Reproduction-Data Entry
Reproduction-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC
-Data Entry
-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC CADS
CODS
CODS
CODSCVS
PADR
CODSCADS
CADS
PADRCADS
PADR
TSOMACPAC
CODSCODSCODS
CODS
CADS
CADS
CADS
TSOSan Diego
Denver
Eng-DesignProgram Off ice
Conf iguration Management
Eng-Checking
Admin
Saf ety
Eng-Systems
Model Control
ReleaseMaterial Planning
Eng-ProductionEng-Design Chief
Process Planning
Data Management
Reproduction
Reproduction-Data Entry
Reproduction-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSCEng-Design
Program Off iceConf iguration Management
Eng-Checking
Admin
Saf ety
Eng-Systems
Model Control
ReleaseMaterial Planning
Eng-ProductionEng-Design Chief
Process Planning
Data Management
Reproduction
Reproduction-Data Entry
Reproduction-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC
-Data Entry
-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC
-Data Entry
-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC CADS
CODS
CODS
CODSCVS
PADR
CODSCADS
CADS
PADRCADS
PADR
TSOMACPAC
CODSCODSCODS
CODS
CADS
CADS
CADS
TSOSan Diego
Denver
Procurement
Bus-Mgt
Eng-Production
Material-Planner
Site-RepEng-Labarge
InitiatorCPE
Eng-Chief
Eng-Systems
EPDMEPDM
EPDM
EPDMPro E
Pro Interlink
EPDM
EPDM
EPDM
EPDM
EPDM
MACPACEPDM
EPDM
Eng-Design
Procurement
Bus-Mgt
Eng-Production
Material-Planner
Site-RepEng-Labarge
InitiatorCPE
Eng-Chief
Eng-Systems
EPDMEPDM
EPDM
EPDMPro E
Pro Interlink
EPDM
EPDM
EPDM
EPDM
EPDM
MACPACEPDM
EPDM
Eng-Design
“As-Is” Information Space “To-Be” Information Space
Eng-DesignProgram Off ice
Conf iguration Management
Eng-Checking
Admin
Saf ety
Eng-Systems
Model Control
ReleaseMaterial Planning
Eng-ProductionEng-Design Chief
Process Planning
Data Management
Reproduction
Reproduction-Data Entry
Reproduction-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC
-Data Entry
-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC CADS
CODS
CODS
CODSCVS
PADR
CODSCADS
CADS
PADRCADS
PADR
TSOMACPAC
CODSCODSCODS
CODS
CADS
CADS
CADS
TSOSan Diego
Denver
Eng-DesignProgram Off ice
Conf iguration Management
Eng-Checking
Admin
Saf ety
Eng-Systems
Model Control
ReleaseMaterial Planning
Eng-ProductionEng-Design Chief
Process Planning
Data Management
Reproduction
Reproduction-Data Entry
Reproduction-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSCEng-Design
Program Off iceConf iguration Management
Eng-Checking
Admin
Saf ety
Eng-Systems
Model Control
ReleaseMaterial Planning
Eng-ProductionEng-Design Chief
Process Planning
Data Management
Reproduction
Reproduction-Data Entry
Reproduction-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC
-Data Entry
-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC
-Data Entry
-Lead
Reproduction-Photographer
Reproduction-Copy
Reproduction-Distribution
CSC CADS
CODS
CODS
CODSCVS
PADR
CODSCADS
CADS
PADRCADS
PADR
TSOMACPAC
CODSCODSCODS
CODS
CADS
CADS
CADS
TSOSan Diego
Denver
Procurement
Bus-Mgt
Eng-Production
Material-Planner
Site-RepEng-Labarge
InitiatorCPE
Eng-Chief
Eng-Systems
EPDMEPDM
EPDM
EPDMPro E
Pro Interlink
EPDM
EPDM
EPDM
EPDM
EPDM
MACPACEPDM
EPDM
Eng-Design
Procurement
Bus-Mgt
Eng-Production
Material-Planner
Site-RepEng-Labarge
InitiatorCPE
Eng-Chief
Eng-Systems
EPDMEPDM
EPDM
EPDMPro E
Pro Interlink
EPDM
EPDM
EPDM
EPDM
EPDM
MACPACEPDM
EPDM
Eng-Design
Comparison of information space maps demonstrates a reduction in the complexity of the information exchange by analyzing the key components of the process under review.
Information Space Map benefits include:
• Reduction in information handoffs
• Reduction in organizations involved
• Reduction in systems used
Is a collection of Industry specific, enterprise wide process models that incorporate best practices for key business and support functions
IndustryPrint is used to:– Jump start projects by providing a starting point for
as-is and to-be modelling – Integrate industry best practices, to inform process
redesign and reveal performance improvement opportunities
Is a collection of Industry specific, enterprise wide process models that incorporate best practices for key business and support functions
IndustryPrint is used to:– Jump start projects by providing a starting point for
as-is and to-be modelling – Integrate industry best practices, to inform process
redesign and reveal performance improvement opportunities
IndustryPrint PriorITTM
Is a highly flexible tool that enables teams to define their own prioritization criteria and unique weightings to each project to profile their risk/value tradeoff and thereby facilitate sequencing
Applying the prioritization criteria to each project yields a user-friendly view of the Risk/Value relationship, rendering the low risk, “quick win” projects readily visible
Is a highly flexible tool that enables teams to define their own prioritization criteria and unique weightings to each project to profile their risk/value tradeoff and thereby facilitate sequencing
Applying the prioritization criteria to each project yields a user-friendly view of the Risk/Value relationship, rendering the low risk, “quick win” projects readily visible
Provides ability to view the impact project portfolios have on enterprise improvement levers
Provides ability to view the impact project portfolios have on enterprise improvement levers
MapITTM
- 43 -
Sample Tools – Industry Best Practice & Statistical Analysis Tools
Graphical comparison of the importance of potential root causes of problems/defects. The Pareto Principle is based on the fact that 80% of the problems are caused by 20% of the sources
Determine how problems or defects will be categorized; Gather data on frequency of problems or defects for each of those categories; Establish a scale for the y-axis to record the frequency for each category; List each category of problem or defect along the x-axis in descending order of frequency; Draw bars (columns) to show the frequency for each category of problem or defect; Categories with very small contributions may be combined as “others”
Graphical comparison of the importance of potential root causes of problems/defects. The Pareto Principle is based on the fact that 80% of the problems are caused by 20% of the sources
Determine how problems or defects will be categorized; Gather data on frequency of problems or defects for each of those categories; Establish a scale for the y-axis to record the frequency for each category; List each category of problem or defect along the x-axis in descending order of frequency; Draw bars (columns) to show the frequency for each category of problem or defect; Categories with very small contributions may be combined as “others”
Pareto Analysis
Best Practice banking operating models by product and product group, covering Front to Back Office
Used to determine functional groups and reorganization opportunities as well as control and process breaks
Best Practice banking operating models by product and product group, covering Front to Back Office
Used to determine functional groups and reorganization opportunities as well as control and process breaks
Target Operating Models
Target Operating Model
Front Office(Securities, Derivatives, Cash Products)
Enabling Technology
Client Technology
Core Operations Core Controlling
Business Control andSupport
Front Office
CFO
Target Operating Model
Front Office(Securities, Derivatives, Cash Products)
Enabling Technology
Client Technology
Core Operations Core Controlling
Business Control andSupport
Front Office
CFO
Statistical analysis of metrics collected from the business to be used for analysis:
Six Sigma Metrics: Defects (incorrect mapping); Errors (repeated mistakes);
Straight Through Processing rates; Variation within process
Lean Metrics: Cycle times; Customer service levels (for example., late
orders, delivery performance); Handoffs in critical processes; Distance information travels; Workforce skill sets; Labor content of work; Percent of employee suggestions implemented; Attrition rate of staff
Statistical analysis of metrics collected from the business to be used for analysis:
Six Sigma Metrics: Defects (incorrect mapping); Errors (repeated mistakes);
Straight Through Processing rates; Variation within process
Lean Metrics: Cycle times; Customer service levels (for example., late
orders, delivery performance); Handoffs in critical processes; Distance information travels; Workforce skill sets; Labor content of work; Percent of employee suggestions implemented; Attrition rate of staff
Minitab - Metrics Collection
% o
f Tra
des
Requ
irin
gN
o In
vest
igat
ion
100-
90-
80-
70-
60-
82 (M ean)
97 (+3 *S igma)
88 (M ean)
80 (-3*s igma)
S cat terplot of M ON TH 1, M ON T H 5 vs Day of M onth
% o
f Tra
des
Requ
irin
gN
o In
vest
igat
ion
100-
90-
80-
70-
60-
82 (M ean)
97 (+3 *S igma)
88 (M ean)
80 (-3*s igma)
S cat terplot of M ON TH 1, M ON T H 5 vs Day of M onth
% o
f Tra
des
Requ
irin
gN
o In
vest
igat
ion
100-
90-
80-
70-
60-
82 (M ean)
97 (+3 *S igma)
88 (M ean)
80 (-3*s igma)
S cat terplot of M ON TH 1, M ON T H 5 vs Day of M onth
Is a structured, experience-based Financial Impact Template & Business Case Consolidator Tool designed to assist in determining the true business value of investments
ValuePrint is used to:– Systematically identify and analyse investment costs
and benefits – Outline tangible and intangible project benefits,
tracking them against defined measures
Is a structured, experience-based Financial Impact Template & Business Case Consolidator Tool designed to assist in determining the true business value of investments
ValuePrint is used to:– Systematically identify and analyse investment costs
and benefits – Outline tangible and intangible project benefits,
tracking them against defined measures
ValuePrint
Is a knowledge management tool used to gather benchmarking information globally and focus on specific opportunities and issues confronting business
Global INSite is used to:– Obtain industry specific quantitative and qualitative
performance measurement data – Identify innovative industry best practices to improve
overall process performance
Is a knowledge management tool used to gather benchmarking information globally and focus on specific opportunities and issues confronting business
Global INSite is used to:– Obtain industry specific quantitative and qualitative
performance measurement data – Identify innovative industry best practices to improve
overall process performance
Global INSite
Deloitte ConsultingDeloitte Consulting
VIII. Appendices
A: Middle Office Work Driver Approach
B: Middle Office Work Diver Sample Output
- 45 -
Appendix A: Middle Office Work Driver Overview
Inputs Outputs Description
Interviews
Work DriverAnalysis
Fixed vs. VariableAssessment
I. PROCESS MAPS – What we do? How we do it?Processes Documented In Hyperknowledge
Documents infrastructure processes including:
- What are the major processes, sub processes and activities
- How do they do them
- Why - what they're trying to achieve
Process / ActivitySummary
III. INFRA COST DRIVERS & METRICS – What costs are fixed? What are variable?
What are the major drivers of cost?For ISIS Dashboard
FIXED VS. VARIABLE ASSESSMENTFX/MM
4.5750.1 1.17 1.8 0
2.72
30.4425
2.9435 0
0.285
0.2011.875
0.83.1
0
5
10
15
20
25
30
35
40
1_TradeProcessing
2_PositionValidation
3_Reconciliation &Control
4_SharedServices
5_Client Services 6_Project Work 7_Training &Development
8_Management &Support
Variable HC
Fixed HC
II. ACTIVITY SUMMARY – How much resource does it take to do it?
HC by activity / product
Understand the relationship between various product/functional processes and their resource consumption pattern
Identify the distribution of processing capacity and constraints
Identify and document a meaningful set of productivity measures that accurately describe Infra activities (id key measures 3-5)
Determine the drivers of time / cost within each activity for each business or division
Establish a set of metrics to track performance against
Benefits
Meets regulatory / audit requirements (e.g. Mortgages)
Available to assess / prep for deployment analysis
Leverage for reengineering assessment
Captures differences by product line / region at a more extensive level than labor allocation study
Could be used to adjust allocations to represent more accurately activities
Transparency on cost drivers by area
Identifies areas that business can influence costs
Identifies areas for investment
Identifies areas of constraint
- 46 -
Appendix A: Middle Office Work Driver Scope
Middle Office June 2004
Actual Headcount
1,252 131
377
ISIS/ORM
228
Asia
64
Regional
11
Out of Scope & Adjustments1
(SCM/Mgmt/ Other)
In-Scope
59
131 131
665
456
145
77
222
886
Asia
Europe
Americas
The “In-Scope” headcount represents 71% of the Global Middle Office June 2004 headcount and 79% of the Americas and Europe June 2004 headcount
Zero HC/Closed
70Cost Centers
509
1Adjustments includes headcount changes that occurred post June 2004
24
13
- 47 -
Appendix A: Middle Office Work Driver Scope – Cost Center SummarySub Cluster Americas Cost Center HC Sub Cluster Europe Cost Center HC
D.0P52 - CTRS NY FID1 CCnDIST DIST ASST 7 D.29H - CTRS FID GMM LON BRANCH 17
D.0N76 - CTRS NY FID LEVERAGED FINANCE (HY) 3 D.25Y - CTRS LDN FID n SPG CAT [25Y] 14
Michael Gallagher D.0P49 - CTRS NY FID IRP BOND 6 D.25H - CTRS FID IRP CSFB Europe Ltd 12
James Farrell D.0R58 - PC GLOBAL REPORTING & ANALYSIS 25 D.24H - CTRS FID Credit n Dist CSFB Eu 10
D.0P55 - NY FID LISTED DERIVATIVES 2 D.22Y - CTRS SPG EMG CSFB Europe Ltd 16
D.0N76 - CTRS NY FID LEVERAGED FINANCE (LOANS) 4 D.H5R - EMG- LONDON(CSFBi) 7
D.AJ55 - Ctrs NY FID Syndicate Acctg 4 D.24Y - CTRS Treasury CSFBi [24Y] 3
D.0K52 - CTRS NY TRES 11 D.26Y - CTRS Treasury London Branch 2
D.0P53 - CTRS NY FID MONEY MARKETS 4 D.71C - CTRS Treasury CSFB Europe Ltd 5
D.0060 - PC NY FID 1EMG LATAM-NY 3 D.AY3 - CTRS FID 1 EMG MOSCOW [AY3] 2
D.F84HX2A - NY FID CTRS EMG 6 D.82H - CTRS SPG OTC CSFBi [82H] 30
D.F87HX2A - EDCU-FP CTRS 14 D.H7Z - OTC EDCU Middle Office 9
D.0021 - Equity Middle Office 8 D.R80 - OTC Equity Finance Settlements 9
D.0A67 - CTRS NY EQUITIES 5 D.23N - CTRS EDCU CSFB Europe Ltd 8
D.0Q30 - CTRS NY EDCU (Reporting) 4 D.P8K - PC EQUITIES PRIME SERVICES EXC 5
D.0Q30 - CTRS NY EDCU (EDCU/M&A) 1 D.23Y - CTRS EDCU CSFBi [23Y] 5
D.0Q30 - CTRS NY EDCU(Index/Risk Arbitrage ; Program Trading) 4 D.F13 - CTRS Equities Cash CSFB Europe 11
D.0Q30 - CTRS NY EDCU (Prime Services) 7 D.P7K - PC EQUITIES MANAGEMENT 7
D.0Q30 - CTRS NY EDCU (Convertible Bonds) 3 D.81H - CTRS IBD London Branch [81H] 4
D.0052 - CTRS NY IBD BROKER/DEALER 19 D.F14 - CTRS IBD Europe Ltd [F14] 8
D.0N74 - CTRS NY IBD BRANCH/CORP BANKNG 7 D.59H - CTRS FID IRP Exotic CSFBi 19
DSG PC D.F49HX2A - Ny Fid Prod Ctrl Interest Rate 18 D.80H - CTRS FID IRP Vanilla CSFBi 19
Eileen Yin D.FW14X2A - NY OTC Ops (Documentation) 31 D.20H - CTRS FID Europe CSFBi [20H] 41
Tom Decker D.FW14X2A - NY OTC Ops (Settlement) 21 D.55H - Mgmt/GLC/Business Mgmt 16
Donatina Trotter D.FW14X2A - NY OTC Ops (Watson) 17 Dom Amura D.C7K - OTC Documentation 75
D.AM57 - NY OTC Middle Office 18 Steve Hunter D.W46 - OTC Settlements/CFGs 65
Tang / Marcello / Tran D.0U66 - CTRS NY FID1 CCnDIST QNT SUPP 11 Dave Watson D.61H - OTC Front Office Support Group 31
Wozencroft / Honkanen D.0639 - CTRS NY FID1 CCnDIST QNT SUPP (ABD, CDO, RMBS) 13 D.H2U - OTC Fixed Income Middle Office 17
D.0575 - Residential Mortgage Securitie 39 David Weeks D.75H - FLP Product Control 18
D.AB28 - Residential Whole Loans 61 Stewart De Carle D.E7U - FLP Middle Office 18
D.AI19 - Mortgages Reporting 3 Edel McGinley D.T1A - FLP Transaction Management 6
377 509
886
Reason HC Reason HC
1
2 2
AMERICAS REGIONAL 2 2D.0W33 - PC SCM 28 3D.AN78 - Mortgage Change Program 6D.R8K - America DCP 6 3D.0P57 - CTRS NY FID1 MGMT 7D.0D92 - Client Pricing and valuations 4D.0P58 - CTRS NY Reporting 1 D.C6G - CONTROLLERS ISTANBULD.BR27B00 - BUS UNIT CONTOL RETEN POOL 10 EUROPE REGIONAL 11D.F86HX2A - Ny Fid Prod Ctrl Quantitative 6 D.49I - CTRS LONDON US GAAP 2
AMERICAS SCM / MGMT / OTHER 68 D.55U - PC SCM 22AMERICAS POST JUNE 2004 HC ADJUSTMENT -9 D.72H - LL/Graduate Program - OTC 2
D.85T - CTRS LDN FID1MGMT PROJECTS 14D.92N - DSG Ops Management 4D.C7R - OTC Projects 6D.J1K - Europe OTC Derivs Chnge Prgmme 49D.J6A - FLP Strategic & Legacy 14D.P1T - PSESP Historic 8D.P9S - PSESP Current 9D.22H - Infrastructure mgt and admin 4D.47I - CTRS FID Management CSFB Europ 6D.67T - FLP Management & Control 5D.42T - CTRS LDN REPTG ARC [42T] 1D.44T - CTRS LDN REPTG CUST PRIC [44T] 2D.76H - CTRS LDN FID1MGMT QUANT SUPP 6
EUROPE SCM / MGMT / OTHER 154AMERICAS POST JUNE 2004 HC ADJUSTMENT 9
OUT OF SCOPE REGIONAL TOTAL 13OUT OF SCOPE SCM / MGMT / OTHER TOTAL 222
TOTAL INSCOPE
OUT OF SCOPE
D.0895419 - CTRS ZUR FID MONEY MARKETSD.A045X14 - CTRS FID 1 EMG MOSCOW
SCM / MGMT / OTHER
D.0895049 - CTRS ZUR EQUITIES/EDCUD.0895053 - CTRS ZUR IBDD.0895057 - CTRS ZUR FIDIRPD.0895418 - CTRS ZUR FID FOREIGN EXCHANGE
Equities PC
EMEA Cost Center
D.0895033 - CTRS ZUR TRES
D.0895048 - CTRS ZUR REPTGRegional
Regional
Sal Sorce / Tracey Cerone/Kim Cuozzo
Contact
FID PC
Adam Johnson
Art Leonetti
Art Leonetti
James Langan
Shaun Williams
Adrian Kemp
John Sweeny
Virgilio Montano
Bill Wiegand
Blaise Jenkins
Shane Durkin
Shane Durkin / Stephen Bailey
Rob Austin
DSG PC
IBD PC
EQUITIES PC
Mortgage Operations
Frank Malarkey
Betty Verri
Tom Camoia
IBD PCJohn Goodnough
Gregg Krieger
Siu-Pak Ho
Mortgage PC Willie Pest
Greg Florek
Stephen Axbey
IN SCOPE (AMERICAS &
EUROPE)
Americas Cost Center
Ian Herrod
Chris Peratides
Kevin Borrett
AMERICAS INSCOPE TOTAL EUROPE INSCOPE TOTAL
DSG Ops
DSG Ops
FID PC
DSG FLP
Augustine Vargetto
Contact
Charles Fitzgerald
Charles Fitzgerald
James Whale
Mike Harvard
Paul Tickle
Michael Kelly
Greg Florek
Ahmed Kubba
Amin Bilal
Gordon McDermid
Karen Newton
SCM / MGMT / OTHER
D.AK50952 - CTRS FID Mexico Broker Dealer
D.AN31953 - PC - Mexico
- 48 -
Appendix A: Middle Office Work Driver Analysis Overview
ID Division RegionCost
Center Desc
Activity Details
PC Major Function
PC Sub Process Cost Center Activity 1)
Fixed HC
3) Variable
HC
Grand Total
Cost Driver High Level Cost Driver
Group
Medium Level Cost
Driver Group
564Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Create Trial Balance
Create complete trial balance
Ensure Integrity of overnight process
0.50 0.50# Books & Reliability of FO books # Books
564Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Create Trial Balance
Create complete trial balance
Ensure Integrity of overnight process
0.00 0.00No fixed component Other
No Fixed Component
565Equities/IBD Product Control
AmericasEDCU FP CTRS
Equities Derivatives
PC
Validation & Control
Reconciliation's & resolution between FO systems and non-Settlement systems
Complete FOBO reconciliation (including booking issue resolution)
3.50 3.50# Books; # Positions; Trading Volume books # Books
565Equities/IBD Product Control
AmericasEDCU FP CTRS
Equities Derivatives
PC
Validation & Control
Reconciliation's & resolution between FO systems and non-Settlement systems
Complete FOBO reconciliation (including booking issue resolution)
0.00 0.00No fixed component Other
No Fixed Component
566Equities/IBD Product Control
AmericasEDCU FP CTRS
Equities Derivatives
PC
Create Trial Balance
Collation of data from fragmented systems to one source Post Subledger toTREX
0.50 0.50# Books; # Positions; Trading Volume books # Books
566Equities/IBD Product Control
AmericasEDCU FP CTRS
Equities Derivatives
PC
Create Trial Balance
Collation of data from fragmented systems to one source Post Subledger toTREX
0.00 0.00 No fixed component Other
No Fixed Component
567Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
P&L validationComplete P&L Validation
1.00 1.00# Books; # Positions; books # Books
567Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
P&L validationComplete P&L Validation
0.00 0.00No fixed component Other
No Fixed Component
568Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Front office & back office spreadsheet
Conduct Front office spreadsheet improvement
0.25 0.25# Books books # Books
568Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Front office & back office spreadsheet
Conduct Front office spreadsheet improvement
0.00 0.00No fixed component Other
No Fixed Component
569Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Price testingComplete Price Testing (monthly)
1.32 1.32# Positions Positions # positions
569Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Price testingComplete Price Testing (monthly)
0.33 0.33Reporting Requirements Reports
Report Development
570Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Account ownershipConduct Account ownership activities
0.25 0.25# Books books # Books
570Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Account ownershipConduct Account ownership activities
0.00 0.00No fixed component Other
No Fixed Component
571Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Model validationComplete Model Validation (2 monthly)
0.25 0.25# trades Trades # trades
571Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Model validationComplete Model Validation (2 monthly)
0.00 0.00No fixed component Other
No Fixed Component
572Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Structured Trade Reviews
Conduct Structured Trade Reviews (2 monthly)
1.80 1.80# trades Trades # trades
572Equities/IBD Product
AmericasEDCU FP CTRS
Equities Derivatives
Validation & Control
Structured Trade Reviews
Conduct Structured Trade Reviews (2 monthly)
0.20 0.20Administration Employees # Admin
573Equities/IBD Product Control
AmericasEDCU FP CTRS
Equities Derivatives
PC
Enrichments & Adjustments
Provisions & Valuation adjustments
Complete Provision/ Valuation adjustments (monthly)
0.36 0.36# Adjustments
Breaks / Exceptions # adjustments
573Equities/IBD Product Control
AmericasEDCU FP CTRS
Equities Derivatives
PC
Enrichments & Adjustments
Provisions & Valuation adjustments
Complete Provision/ Valuation adjustments (monthly)
0.04 0.04Administration Employees # Admin
Sample Database ComponentsData Views
Organizational
- Derivatives PC (Equities, FID and FLP)
- Cash PC (FID and Equities)
- IBD PC
- Structured PC
- Operations (Derivatives, Mortgages, FLP)
Regional
- Americas
- Europe
Functions / Activities (three grouping levels)
- PC Major Function: Validation & Control; Reporting; etc
- PC Sub Process: Price Testing; FOBOs; Sox; etc
- Cost Center Activity: Generate FOBO report; Acquire market prices
Cost Driver (three grouping levels)
- High: Trades; Reports; Breaks; etc
- Medium: # Reconciliations; # tickets; # positions; etc
- Detailed: Portfolio size; # FOBO Breaks, # system updates, etc
The middle office work driver database allows a variety of cuts on the data facilitating detailed analysis and comparison across the multiple views
- 49 -
Appendix B: Middle Office Activity Summary
Middle Office Activities (886 FTEs)
14 / 2%
21 / 2%
39 / 4%
70 / 8%
101 / 11%
128 / 14%
Client Services
PositionValidation
FX Hedging / P&L Remittance
Create Trial Balance
Marketing & Sales
Shared Services
FinancialAnalysis
Enrichments& Adjustments
Projects
Reporting
55 / 6%
129 / 15%Data Integrity 68%32%
30%
64%
39%
49%51%
53%
Trade Processing
81%19% 135 / 15%
21 / 2%
13 / 1%
4 / 0%
70%
80 / 9%Management
& Support59% 41%
36%
61%
47%
36%
64%
41%
59%
50%
50%
52%
48%
74%
26%
Fixed: 41%
Variable: 59%
Activity Descriptions
Data IntegrityFOBOs, structured trade reviews, BOBOs, journal entry review, other reconciliations, hedge accounting documentation, front office and back office spreadsheet control
Trade Processing
Trade capture (manual & automated), document management, trade confirmation, process conversions, cash and security management, etc
Client ServicesInquiries and support – internal & external clients, external client cash transfers & balances, maintain client relationships, etc
Position Validation
Confirm & process firm cash positions (NOSTRO), confirm & process trade positions (DEPOT), monitor asset allocation ratios
FX Hedging / P&L Remittance
FX hedging, P&L remittance
Create Trial Balance
Data collection, create trial balance (P&L)
Marketing & Sales
Counterparty valuation statements, sales credits
Management & Support
Management activities, training, administrative, BCP & risk management, etc
Shared Services
Client account maintenance, corporate actions, process mandatory & voluntary events, manage securities borrowing & lending events
Financial Analysis
Clean P&L. legal entity analysis, expense analysis, P&L analysis
Enrichments& Adjustments
Provisioning & valuation adjustments, GAAP/accounting adjustments, expense allocation, etc
Projects New business activities, Sarbanes Oxley, strategic projects, lights on projects
ReportingMIS reporting, consolidations & group reporting, regulatory reporting, control reporting, customer information delivery, ad hoc reporting, etc
Validation 55% 45%
77 / 9%
Validation Price testing, account ownership, P&L validation, non-trading data validation, model validation
- 50 -
Appendix B: Middle Office Cash Product Control Activity Summary
Cash PC Activities (209 FTEs)
2 / 1%
3 / 2%
6 / 3%
13 / 6%
28 / 13%
33 / 16%
Client Services
FX Hedging / P&L Remittance
Create Trial Balance
Marketing & Sales
Shared Services
FinancialAnalysis
Enrichments& Adjustments
Projects
Trade Processing
11 / 5%
34 / 16%Validation 43%57%
53%
67%
60%
49%51%
52%
Reporting 26%74% 38 / 18%
3 / 2%
1 / 1%
47%
19 / 9%Management
& Support65% 35%
33%
40%
48%
67%
33%
91%
9%
61%
39%
17%
83%
Fixed: 61%
Variable: 39%
Data Integrity
50% 50%
18 / 9%
4.1 FTEs are driven by Front Office requests/activities
- 1.7 FTEs conduct front office reporting with 93% of these heads being variable
- 2.4 FTEs driven by other front office activities such as sales credit calculations, P&L analysis, and WSS brokerage calculation and allocation
11.5 FTEs are currently performing FOBO reconciliations and investigating breaks
Front Office Opportunities To Influence Cost
Variable Cost Drivers
Drivers FTEs % Drivers FTEs %
1 # Trades 6.8 14% # Books 11.7 34%
2 # Projects 5.7 12% # Reconciliation Breaks 4.8 14%
3 # Reconciliation Breaks 4.6 10% # Employees 2.9 8%
4 # IPOs & Secondary Offerings 3.7 8% # Projects 2.8 8%
5 # FO Requests 3.6 8% # Trades 2.7 8%
Top 5 Variable Drivers 24.4 51% Top 5 Variable Drivers 24.9 73%
Other Variable Drivers 23.4 49% Other Variable Drivers 9.4 27%
Total Variable Drivers 47.7 49% Total Variable Drivers 34.4 31%
Total Fixed Drivers 50.7 51% Total Fixed Drivers 76.4 69%
Total Drivers 98.4 100% Total Drivers 110.7 100%
Americas Activity Drivers Europe Activity Drivers
- 51 -
Appendix B: Middle Office Derivatives Product Control Activity Summary
Derivatives PC Activities (204 FTEs)
1 / 0%
4 / 2%
6.1 / 3%
11 / 5%
18 / 9%
22 / 11%
Client Services
FX Hedging / P&L Remittance
Create Trial Balance
Marketing & Sales
Shared Services
FinancialAnalysis
Enrichments& Adjustments
Projects
Trade Processing
7 / 3%
35 / 17%Validation 59%41%
37%
49%
48%71%
29%
47%
Reporting
82%18% 68 / 33%
2 / 1%
0 / 0%
63%
16 / 8%
Management& Support
33%67%
51%
52%
53%
53%
47%
37%
63%
21%
79%
100%
Fixed: 33%
Variable: 67%
Data Integrity
37% 63%
15 / 7%
1.3 FTEs are driven by Front Office reporting requests
24.5 FTEs are conducting structured trade review activities
21.3 FTEs are currently performing FOBO reconciliations and investigating breaks
Front Office Opportunities To Influence Cost
Variable Cost Drivers
Drivers FTEs % Drivers FTEs %
1 # Books 19.7 67% # Trades 34.7 32%
2 # Projects 3.4 11% # Books 18.9 18%
3 # Trades 2.1 7% # Reconciliation Breaks 16.1 15%
4 # Positions 2.0 7% # Portfolio Positions 6.5 6%
5 # New Business Initiatives 0.9 3% # Projects 5.8 5%
Top 5 Variable Drivers 28.1 95% Top 5 Variable Drivers 82.0 76%
Other Variable Drivers 1.5 5% Other Variable Drivers 25.9 24%
Total Variable Drivers 29.6 75% Total Variable Drivers 107.8 65%
Total Fixed Drivers 9.7 25% Total Fixed Drivers 56.9 35%
Total Drivers 39.4 100% Total Drivers 164.8 100%
Americas Activity Drivers Europe Activity Drivers
- 52 -
Appendix B: Middle Office Operations Activity Summary
Operations Activities (411 FTEs)
4 / 1%
15 / 4%
17 / 4%
19 / 5%
39 / 9%
Client Services
Validation
Create Trial Balance
Shared Services
Enrichments& Adjustments
Projects
Trade Processing
16 / 4%
115 / 28%
PositionValidation
71%29%
62%
44%
39%55%
45%
26%
Reporting
83%17% 130 / 32%
2 / 1%
38%
19 / 5%
Management& Support
52%48%
56%
61%
74%
95%
5%
46%
54%
Fixed: 33%
Variable: 67%
Data Integrity
44% 56%
17 / 4%
1.1 FTEs are driven by Front Office OTC trade documentation queries
Front Office Opportunities To Influence Cost
Variable Cost Drivers
Drivers FTEs % Drivers FTEs %
1 # Trades 40.8 33% # Trades 68.3 45%
2 # Structured Transactions 32.1 26% # Unagreed Cash Flows 10.4 7%
3 # Reconciliation Breaks 7.7 6% # Open Market Issues 10.2 7%
4 # Adhoc Queries 5.6 5% # Projects 7.5 5%
5 # Clients 4.8 4% # Adhoc Queries 6.9 5%
Top 5 Variable Drivers 91.0 74% Top 5 Variable Drivers 103.3 68%
Other Variable Drivers 32.2 26% Other Variable Drivers 47.6 32%
Total Variable Drivers 123.2 65% Total Variable Drivers 150.9 68%
Total Fixed Drivers 67.1 35% Total Fixed Drivers 69.8 32%
Total Drivers 190.4 100% Total Drivers 220.7 100%
Americas Activity Drivers Europe Activity Drivers
IX. Attachment 1: Supplier Assessment Questionnaire
IX. Attachment 2: CSFB Standard Agreement
We are pleased to present our bid package for consideration. With regard to the contract terms and conditions proposed in the RFP, we are currently in the process of negotiating a Master Services Agreement ("MSA") with CSFB which terms and conditions will govern all of our services provided to CSFB. Our experience has indicated that almost without exception we have been able to reach agreement with each of our clients that has awarded us an engagement. In the vast majority of these cases, we have had some concerns over the proposed terms and conditions included in the request for proposal, however, in this case if we are awarded this engagement, we intend to negotiate in good faith with CSFB to reach an agreement on the MSA as expeditiously as possible. In this regard, we believe that the MSA as finally drafted and agreed will be appropriate for this engagement.