industralized enterprise business process operations
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© 2014 Copyright Genpact. All Rights Reserved.
Industrialized Enterprise Business Process OperationsGlobal transaction processing and decision support – a future-proof business model architecture to combat volatility
February 2014Gianni GiacomelliCMO, Genpactwww.genpact.com
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A Global Leader In Business Process Services: Process Transformation and Outsourcing, Analytics, Technology
About Genpact ► Overview
We help leaders of some of the largest enterprises transform and run their processes and operations, including the very complex and industry-specific
What we do
Unbiased, agile combination of process science, related technology and analytics limiting upfront costs and enhancing future adaptability
Right critical mass: we are large (62,000+ global staff) but our solutions appropriately flexible; our top management is directly involved in our client partnerships
How we do it Our impact
We help enterprises to bemore competitive by becoming more intelligent: adaptive, innovative, globally effective and connected…
…by enabling tighter management of costs, risks, regulations, and growth enablement
The results: US$22B* of impact for 800+ global clients
*US$22B is a cumulative figure since 2006
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The Challenge
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Countering volatility with mature enterprise operationsVolatility requires agility of cost and decision-making
• Maintaining cost structure (G&A, COGS) and asset intensity in line
• Faster data-driven decisions and related, granular execution (e.g. budgets, S&OP, customer interaction in both developed and developing markets)
But existing business process operations were built in less-volatile times, optimized for scale, and struggle with current requirements
• Rigid cost structure
• Little innovation aimed at supporting effective value chain decision making and execution
The rapid rise of Global Business Services (GBS) hints at viable enterprise operation strategies
• Industrialization of services: specialized and advanced process, people and technology practices
• Decouple and scale operations, yet run end-to-end extended enterprises
• Reduce and variabilize cost, increasing business effectiveness
• More tasks and processes being in-scope
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Unprecedented volatility is a challenge and an opportunity – Operations have a strategic role in both
Need to attack
A shift in the “art of possible” will change operations
• Developing markets largest new demand – but tricky to serve
• “Granularity of growth” – micro verticals in developed markets
• Explosion in structured and unstructured data: analytics savvy players compete better
• IT in a flux - ERP, and BI/DW have not always delivered ROI, cloud offers promise but practices still evolving
• Collaboration technology and practices inflecting right now
• Scientific understanding of GBS operating models and process performance (cost, risk, quality) to serve key functions (finance, supply chain, run-the-bank, sales & marketing)
Operations were designed for scale and cost – in today’s volatile environment, enabling the enterprise requires a new operations strategy and robust execution
Need to defend• Volatility of demand and supply (talent, capital, materials etc.)
• Regulations burden increasing (finance, environment)
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Why volatility and surges are here to stay Demand-side problems vicious cycle – consumer products example
• Global population expected to reach 8 billion by 2030, accompanied by a huge increase in the emerging middle class in economies like China and India
• More people with more disposable income demand more energy, food, raw materials and consumer goods, driving prices up
Emerging Global Middle Class
• Growth in energy demand is expected to be 60% higher by 2030
• Roughly two times more than the rate of population growth
• Supply is not keeping pace
Energy
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Why volatility and surges are here to stay Demand-side problems vicious cycle – consumer products example
• Higher fossil fuel incent diversion of crops to use for gas additives and bio-fuels
• E.g. corn for ethanol, soybeans for biodiesel - further increasing pricing for such commodities.
Alternative Fuels
• More people can afford to eat more, leading to higher long-term food and feedstock prices
• Higher prices for grains, seeds, animal feed-stocks and other commodities lead to higher prices in staples like bread, milk, eggs, oils, flour, meats, poultry etc.
Food
• Increased global demand for consumer packaged goods drives higher demand and prices for their commodity and raw material inputs
• Higher fuel prices, and related higher transportation and distribution costs
Consumer Goods
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The Solutions
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Industrialized operations use specialized and advanced process, people and technology practices
Superior metrics
management
Targeted org
design and HR practic
es
Focused Technology
Analytics
driven proces
ses
Effectiveness
Efficiency
Cost
Op
tim
izat
ion
Labor
Scale
9
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Industrialized operations use specialized and advanced process, people and technology practices
Metrics management(1)
Effectiveness
Efficiency
Cost
Technology(2) Org design and HR practices
Analytical process science
Scale
Labor
Optimization
(1) cost structure, performance(2) ERP wrappers and config, BI and big data, workflow, collaboration, social, mobile
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Industrialized operations as extended enterprise
Corporate
Res
ultsSt
rate
gic
guid
ance
Service Requirements
Performance Contracts
Service• Rules-based processes common
across business units
• Significant process transaction volumes
• Remote interaction with rest of business
• Common systems infrastructure
• Processes requiring deep expertise in specific functional disciplines
• Highly advisory in nature, may require frequent face to face
Run processes efficiently, drive best practices and valueProvide corporate governance
and strategic guidance, establish policies
• Services that require on-site presence or that directly impact the end customer experience
Business Business Partner
SIMPLIFIED
GBS
Source: Genpact experience
Internal Partner
Input
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Operating models and industrialized operations
GBS
OUTSOURCED
REGION 1
REGION 2
RETAINED
Other management Operations
IN-HOUSE FINANCE FUNCTION
IN-HOUSE SUPPLY CHAIN FUNCTION
CAPTIVE OUTSOURCED
INDUSTRIALIZED OPERATION
TARGET OPERATING MODEL
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Operating model choice depends on the objectives and the additional impact of key levers
Lev
ers
Business partner
Corp central
Co
st
ben
efit
sP
roce
ss
effe
ctiv
en.
Oth
er
ben
efit
s
Sig
nific
ant
Lim
ited
Typ
ica
l b
en
efi
ts
Captive
GBS
BPO
Labor arbitrage*
Process optimization
Economies of scale
Absolute (FTE related, Infra, IT, G&A)
High-volume process
Custom, location & context dependent proc.
Standardization
IP and business integration
Compliance and control
Variability
Market entry, scalability
Ease of setup, management
SIMPLIFIED
*includes cost arbitrage, and availability of skills
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Industrialized business process operations are increasingly adopted and contribute to counter volatility
From F&A and IT, to multiple functions including decision and compliance support
Beyond traditional lift-and-shift cost focus
• Decoupling and global delivery of “industrializable” components
• Stronger process and organizational metrics linked to business outcomes
• Data-to-insight embedded into process
• Advanced use of collaboration technologies and practices
• In-house and outsourced mix continues to evolve
Benefits from
• Scale (10X = 50% less cost per transaction)
• Optimization (10-70% improvements)
• Cost arbitrage (up to -70%)
Efficiency
• Cost structure: leaner, more predictable, and easier to flex
• Better timeliness, accuracy, consistency
Effectiveness
• Finance ops (O2C, S2P, R2R) - best practices applied consistently globally, better scalability
• Sales & Marketing, supply chain data – transactional and analytics heavy lifting
• Across functions, ability to scale up and down geographies, accommodate M&A
Strong emergence of GBS model… ….enables resilience
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Significant potential still exists for industrializing operations in the Life Sciences* industry DIRECTIONAL
Manufacturing
DistributionCustomer Care
Marketing & Sales
Back-office Support
General Management
R&D
Procurement
Industrialized Enterprise OpsScope and Impact
Research support
Sourcing and procurement support
Inventory and demand forecastingProduct cost accounting
Logistics optimization
Contact center support
Sales and Marketing ops and analytics support
All G&A support
Decision and transformation support
% already industrialized % not applicable% industrialization potential
Source: Genpact Analysis, BLS *includes Pharmaceuticals and medicine manufacturers
4%1%
95%
50% 30% 20%
20% 5% 75%50% 25% 25%
10% 20% 70%
100%
30% 30% 40%
20% 15% 65%
Average # of FTEs
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Significant potential still exists for industrializing operationsIndustrial Manufacturing
DIRECTIONAL
0%
1%
1% 90%
4% 95%
60%
50% 30% 20%
25% 5% 70%30% 30% 40%
25%5% 70%
100% 0%
30% 10%
9%R&D
Procurement
Manufacturing
DistributionCustomer Care
Marketing & Sales
Back-office Support
General Management
% already industrialized % not applicable% industrialization potential
Source: McKinsey Research Institute, Genpact Analysis
Industrialized Enterprise OpsScope and Impact
Research support, engineering services
Sourcing and procurement support
Inventory and demand forecastingProduct cost accountingEngineering Services
Logistics optimization
Contact center support
Sales and Marketing ops and analytics support
All G&A support
Decision and transformation support
Average # of FTEs
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Significant potential still exists for industrializing operationsCPG* industry
DIRECTIONAL
95%
50% 30% 20%
25% 5% 70%30% 30% 40%
1%4%
25%
5% 70%
0% 100% 0%
30% 10% 60%9% 1% 90%
* includes metal products, rubber and plastics, printing and publishing
R&DProcurement
Manufacturing
Distribution
Customer CareMarketing & Sales
Back-office SupportGeneral Management
% already industrialized % business as usual% industrialization potential
Source: McKinsey Research Institute, Genpact Analysis
Average # of FTEs
CPG
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Significant potential still exists for industrializing operations in High Tech Companies* DIRECTIONAL
50% 30% 20%
25% 5% 70%30% 30% 40%
25%
5%
4%
0% 100% 0%
30% 10%
70%
9% 1% 90%
1% 95%
60%
R&D
Procurement
Manufacturing
Distribution
Customer CareMarketing & Sales
Back-office SupportGeneral Management
% already industrialized % business as usual% industrialization potential
Source: McKinsey Quarterly, Genpact Analysis
Average # of FTEs
* computers and office machinery, semiconductors and electronics
Software, Internet Services Companies
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Contact Genpact to Explore The “Art of the Possible”
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About Genpact
Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and operations, including those that are complex and industry-specific. Our mission is to help clients become more competitive by making their enterprises more intelligent through becoming more adaptive, innovative, globally effective and connected to their own clients.
Genpact stands for Generating Impact – visible in tighter cost management as well as better management of risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune Global 500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and technology, which limits upfront investments and enhances future adaptability.
We have global critical mass – 62,000+ employees in 24 countries with key management and corporate offices in New York City – while remaining flexible and collaborative, and a management team that drives client partnerships personally.
Our history is unique – behind our single-minded passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 15 years.
For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn.