©In

ter

IKEA

Syste

ms

B.V

.2013

Presentation Shared Services at IKEAPwC's CXO conference, Copenhagen 15th of April.

1

• Background• IKEA in a nutshell• Looking back• Re do• Where are we now?• Road ahead

STORY LINE

2Finance Managers Meeting 19 March 2015

• 96-04 HR/Development Manager ITT Flygt

• 05-07 HR Director Kährs

• 07-09 HR Director Gunnebo Industries

• 09-12 HR Operations Manager IKEA Sweden

• 12- Business Navigator Global Shared Services (Identify and evaluate business opportunities)

Me + Shared Services

• >80 000 suppliers/Indirect material

• 500 co-workers (Shanghai/Poznan)

• 217 000 Travel & Expense Claims

• Addressed spend handled over BEUR 3

• 25 served countries

• 70 000 co-workers paid from GSS

Me/Karl-Johan Kallenberg

Global Shared Services

Go-live:

• SSC Poznan in 2011

• SSC Shanghai in 2009

Go-live & scope

STARTING UP

Scope:

• HR

Payroll

Personnel Administration

• Finance:

P2P Handling Indirect Invoices

Post Travel Expense Claims handling

4Finance Managers Meeting 19 March 2015

Global Shared ServicesActing Leif Johansson

GSS Business NavigationKarl-Johan Kallenberg

GSS Operations& SSC PoznanJon Parton

Organization Shared Services

GSS organizationHow we organize us

Our roleto create outstanding value in terms of cost and quality, to create capacity for growth, and to add administrative competence to IKEA

IKEA in a nutshell

The IKEA vision

“To create a better everyday life for the many people.”

The IKEA vision

Our business idea

“To offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”

designDemocratic

Low price

Inter IKEA Group 1 800 co-workers

IKEA Group147 000 co-workers

IKANO Group3 500 co-workers

"I decided that the stock market was not an option for IKEA. I knew that only a long–term perspective could secure our growth plans."

Ingvar Kamprad, Senior Advisor & Founder

Kamprad founded three independent company groups with different owners

Operations in 42 markets

59%of production takes

place in Europe

1.5Billion visits to

IKEA.com

315IKEA Group stores

located in 27

countries*

*We had 315 stores in 27 markets as of August 31, 2014

716Million store visits

1002Home furnishing

suppliers in 51 countries

NORTH

AMERICAStores

IKEA Industry

production unit

51

1

EUROPEStores

IKEA Industry

production

units

222

36

RUSSIAStores

IKEA Industry

production

units

14

5

ASIAStores

IKEA Industry

production

units

23

2

5

AUSTRALIAStores

• Net income €3.3 billion

• Total tax more than €1.5 billion

• Invested €1.7 billion in our business

“Our guiding principles, like earning money before we spend it, give us financial strength and the unique opportunity to take a long-term perspective and make investments using our own resources.”

Alistair Davidson, CFO

Profits give us resources to grow

Other facts & figures - Today

OUR CO-WORKERS

SSC POZ

• Average age 30

• Women/men 79%/21%

• Foreigners 40

• Nationalities 16

• Languages 21

• Interns 11

SSC SHA

• Average age 28

• Women/men 86%/14%

• Foreigners5

• Nationalities 5

• Languages10

• Interns31

13Finance Managers Meeting 19 March 2015

LOOKINGBACK

14Finance Managers Meeting 19 March 2015

©In

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IKEA

Syste

ms

B.V

.2015

Initial organizational set up

Business Services

Multiple functions across the business

Innovation/partner

Cross processes efficiency

Market prices

Ownership of systems

Process owner

Strategic value

High integration

16

Learnings

–Ownership and management support

–Why? Lack of buy-in/resistance

–No baseline

–Involvement local units (Shadow staff )

–Time lag in implementation (Transition approach)

–Not standardized and harmonized IT, processes and policies

–Pricing of services/visibility of costs

–Financing of build up

–One size fits all

–Organization in place/Green field

©In

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IKEA

Syste

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B.V

.2015

FROM BUSINESS SERVICESTO SHARED SERVICES

Business Services

Multiple functions across the business

Innovation/partner

Cross processes efficiency

Market prices

Ownership of systems

Process owner

Strategic value

High integration

Shared Services

Two functions in scope

Transactional tasks

Cost savings

Cost plus

User

Doer

Tactical value

Low integration

Country Councils

Purpose

Secure efficiency and quality of services. Another

purpose is to secure that any issues and

problems are addressed and taken care of on an

operational level.

Roles and responsibilities

• Representing the interests in the country

• Risk management

• Resolving customer service issues, and follow-up quality and price of service delivery

• Providing proposal of improvements, gathering future needs and adaptation of services,

• Ensuring there is sufficient and appropriate resources, quality of service levels, lead times, etc.

• Ensuring that expectations of services are consistent with agreed service levels

• Ensuring compliance with local law and regulations, including IKEA policies

• Escalate issues when needed.

Shared Services Finance/ HR

Operations CouncilsPurpose

Provide direction on how to implement and

use shared services and how to plan and

utilize recourses in the best way for IKEA.

Roles and responsibilities

• Reviewing, validating and identifying opportunities to extend the scope within functional frame (Finance/ HR)

• Securing business readiness for implementation

• Identify and manage strategic risks within the functional scope;

• Provide advice and make recommendations regarding the Services Scope

• Act on reviews and escalations from the Country Councils and process councils

• Escalate issues when needed.

Shared Services Steering Committee

Purpose

To provide strategic directions and monitor the

performance of Group Shared Services (GSS)

Deliveries across IKEA Group.

Roles and responsibilities

• Providing leadership across the IKEA Group during the implementation and ongoing operation of the Shared Services in each country

• Identifying opportunities to extend the scope of Shared Services

• Securing that local countries’ management are ready together with their local organization for implementation and future cooperation with Group Shared Services

• Identifying and managing strategic risks

• Reviewing and validating the performance of Group Shared Services, investments, development projects, budget and forecast deviations.

80% of issues typically resolved at this stage 98% of issues typically resolved at this stage Only a few exceptions

Governance structure

STEERING OUR OPERATIONS

18Finance Managers Meeting 19 March 2015

WHERE ARE WE

NOW

20Finance Managers Meeting 19 March 2015

Best valueFY18-20

Business excellenceFY15-17

Basics in place

FY12-14

Build upFY08-11

How we do developStage model

We are here

• Payment processing

– For SSC POZ from March 2015

• Business Support – from FY16

Finance Services:

• Accounts Payable (AP) – not full scope

(exception PL & CN – full scope)

• Vendor Master Data (VMD)

• Travel Expense Processing (TEC)

• Bank transfers (for CN & PL only)

• Bank statements (for CN & PL only)

• Sales reconciliation (for CN & PL only)

• Fresco (SHA only)

• Compass (SHA only)

HR Services:

• Personal administration

• Payroll

• HR Systems Support

GSS SCOPE

• Single Point of Contact - 1st and 2nd level

• Recruitment services (SSC SHA)

22Finance Managers Meeting 19 March 2015

Increase/Review the scope

Finance

Accounts Payable

Travel expense

Vendor master data

General ledger accounting

Sales reconcilation

Reporting

Accounts receivables

Reconciliation Intercompany /Bank

Payment service

Finance system support

Human Resources

Payroll

PA

GV support

HR system support

Reports

Recruitment service

Time Keeping

Mobility

Compensation and benefit adm

Training adm

Pension and savings adm

Exit administration

Administration support

OthersPossible services

Not in scope today

Purchase order adm

Compliance administration

Scanning and verification

Customer service

Property/tenent adm

Risk assesment and ensurance

Travel administration

Service delivered

Partially delivered

Proposedto be in scope

Not delivered

ScopeScope and value proposition

ROAD AHEAD

24Finance Managers Meeting 19 March 2015

Stage Build up Basics in place Business excellence

Best value

Geograpichal scope Local unit Regional Regional Global

Degree ofautomation

Limited Limited Medium Maximum

Degree of value add Transactional Transactional Transactional Transactional + Advisory

Functional scope One 2 Functions 2-3 Functions Multi Function

Degree of integration Little sharing Medium sharing Sharing of infrastructure

Full integration

Governance Function Function Multifunction Multifunction

Continiousimprovements

Ad hoc Ad hoc Toolkit in place Integrated in daily operation

Process ownership Informal Informal In place E2E

Service management Ad hoc Ad hoc In place Consistent

Client interaction Scattered Scattered Mixed Overall interfaces

Systems Multiple Many Less One ERP

Sourcing Adhoc Adhoc Consolidated Strategic

People development Countryspecific

Country Specific Functional specific

Global SSC curricilum

Locations Multiple Many Less Global with local touch

Next steps

TO TAKE HOME

The why, dont underestimate cultural impact

Proven solutions

Management

Support

Start small

dream big

26Finance Managers Meeting 19 March 2015

15-Apr-15 Finance BSC 27

Home is the most important place in the world

28

THANK YOU!

Group Shared Services 28Group Shared Services