TRANSFORM Run
IntelligentOperationsDesign INSIGHTS
volume 1 | JUNE 2015
Analytics vs. client Genpact and MIT shape Harnessing
fraud the art of the possible technology effectively
page 36 page 40 Research highlights levers for advanced
operating models
page 16
Diversity in global
operations
page 42
GENERATING
COST REDUCTION,
MARGIN
IMPROVEMENT,
CASH FLOW
ENHANCEMENT,
SIMPLIFICATION,
STANDARDIZATION,
REVENUE GROWTH,
CUSTOMER
SATISFACTION,
GEOGRAPHY
EXPANSION, M&A
RESTRUCTURING,
COMPLIANCE,
TALENT AND
TECHNOLOGY
IMPACT We help transform and run business processes
and operations. We Generate Impact.
FROM THE PUBLISHER’S DESK
Intelligent Operations
The secret weapon of market disruptors
Much of today’s
conversation of some of the best examples of operating models so that they closely
regarding new social, incumbents fighting back. Banks can align with measurable business goals.
mobile, analytics and now engage clients at scale through This is the objective of our work at
collaboration (SMAC) technologies multi-channel models enabled by Genpact, the inspiration behind this
is misleading. Technology is technology and related data-driven magazine and the mission of our
not the issue: The issue is the insight. Pharmaceutical companies Research Institute (http://www.
ability of businesses to reimagine can improve patient interactions genpact.com/home/resources):
processes through its use. Some during the initial phases of product Sharing today’s art of the possible so
recent enterprises have recognized launches. Industrial manufacturers our readers can leverage intelligent
this and have used technology to can optimize the effectiveness of operations and make their enterprises
upend entire industries. PayPal has their assets and capture more value more competitive.
disrupted banking by encroaching from their clients by deploying cost-
on the industry’s bread-and-butter— effective services based on more GIANNI GIACOMELLI
payments. The Amazon juggernaut insightful data. Finance departments
has moved seamlessly from books to can manage credit risk globally in real Chief Marketing Officer and Chair,
merchandise. And a major revolution time. Many more examples of this Genpact Research Institute
in public transport is underway at the responsive adaptation are described Genpact
hands of Uber. in this, our premiere issue.
These are archetypal examples of Our frames of reference must,
intelligent operations—organizations however, change. Practices
that are able to sense, act and learn developing in one industry can
from the outcome of their actions cross-pollinate with those in others,
at scale. Doing so has allowed them even as the divide between front and
to out-compete incumbents whose back office loses its significance.
operations are stuck in old, slower The sensing, acting and learning
decision-making and improvement triggered by every client interaction
cycles. The technologies these is now cutting across enterprises
successful disruptors employ in unprecedented ways. And while
matured almost at the same time strategy, corporate finance, product
in mid-2013 and their combined design and creative marketing remain
momentum is now formidable. vitally important, they must learn
But when we look past the hype, to synergize with technology-driven
it becomes apparent that they operations if they are to truly harness
leveraged intelligent operations, not the power of new technology.
just technology. Disruptors know this very well.
Significantly, the playing field doesn’t The key to fulfilling the promise
naturally favor disruptors. Think of technology is to focus on the
processes that power advanced
June 2015, Volume 1 Number 1
The contents of Intelligent Operations are covered by copyright and all rights are reserved. No material in this publication may be
reproduced in any form without permission.
In this issue
06 20
FROM THE FRONTLINE 13 Overcoming resistance to change
06 Technology that works How to drive analytics and technology change
in operations
A former Unilever executive on where technology
transformation gets tricky MAKING OPERATIONS INTELLIGENT
08 Reimagining order-to-cash 16 Harnessing technology effectively
How Schneider Electric's Nick Dadswell leveraged Working the levers that transform
technologies for his company's operations operating models
THE MACRO VIEW 18 Advanced financial planning and analysis
09 The right time to transform CFOs as data-driven strategists and their need for
better operations
An intelligence tool for the new normal
20 After-market billions
10 A nine-industry overview
The profitable impact of intelligent service operations
Can a relatively stable period pave the way
for advancements? 22 The case for advanced operating models
Rudimentary approaches are damaging strategy
Intelligent Operations is published by Genpact Research Institute, a unit of business process services provider Genpact.
Genpact designs, transforms, and runs intelligent business operations, generating impact for hundreds of clients including more than one-fourth of the Fortune Global 500.
www.genpact.com
Publisher Editor Consulting editor Contributing editor
Gianni Giacomelli Amrita Thapar Robert Barclay Prashant Shukla
42
28
28 In focus: The era of intelligent operations 38 Insurers as disruptors
INDUSTRY ROUNDUP Business process as a service helps insurers compete through
speed and scalability
32 Investment banking's new paradigm
39 Here comes the sun
Shaking up traditional operations
Expanding leasing operations while reducing capital expenditure
34 Technology in sourcing isn't just about IT
INNOVATION
Driving the enterprise-wide impact of eSourcing
40 Genpact and MIT crowdsource the art of the possible
36 Analytics vs. client fraud
You do WHAT with THAT?
Businesses with millions of transactions per day
have hope TALENT CHALLENGE
42 Diversity in global operations: priceless
How a range of viewpoints enriches the business ecosystem
To advertise, contribute or receive a copy, email [email protected].
Associate editors Production manager Cover design Design
Stephane Cote, Rosa Harris, Kenneth Waldie Kavita Yadav The Delve Group Timeus Interactive
FROM THE FRONTLINE
Technology that works
Pascal Visee, former chief enterprise support officer at Unilever and currently
an independent advisor, talked to Intelligent Operations about the small and
big challenges of new technology
PASCAL VISEE would be very wise to leverage ““ My view is that
them to maximum extent. Now park companies have
Executive advisor, former Unilever that for a second and reflect on the under-invested for
Chief Enterprise Support Officer general state of operations in most many, many years
multinationals. My view is that and the state of
In your view, Pascal, are companies have under-invested for operations generally
enterprises leveraging emerging many, many years and the state of is quite poor, partly
technology effectively in their operations generally is quite poor, because operations
operations? partly because operations have been have been managed
managed in functional silos. It’s in functional silos.
The technology that has come onto It’s appalling to
the market over the last few years appalling to realize that in a world realize that in a
is almost mind-boggling in terms of world where we
stability and response times, as well where we put vehicles on Mars and put vehicles on
as innovations such as software as a Mars, the number
service (SaaS), mobile applications where we can buy Google Glass in of mistakes made
and social networks. All of these have the shop next door, the number of on a daily basis in
great business value and companies mistakes made on a daily basis in both back and front
both back and front office is still office is still as high
06 as high as it is. So there’s a huge as it is
opportunity for businesses to invest
strategically in these technologies interconnected business operations
to improve the performance of and reduce costs at the same time.
Intelligent Operations June 2015
FROM THE FRONTLINE
Why are technology investments a “ Most of the money “ programs’: the one bank program, or
strategic priority now? spent on technology the one oil company program and so
is spent at the local on. I think multinational companies
There are two key reasons why and regional levels realized they were not really one
investing today is strategic rather and sometimes but they were a different company
than tactical. First, by investing only 20 per cent is almost in every geography. Now if
in these types of technologies, spent against a truly we look back we have to admit that
companies will finally be able to take global agenda. most of these programs failed. They
complexity out of the business to That will need to at best created a facade of being
enable better internal collaboration be reversed one company, while underneath
and—even more importantly— the differences stayed. But over
collaborate with the customer. So business operations? the last two or three years with
there will be a big impact internally new collaboration technologies we
as well as externally. Second, I think I sometimes have to smile when are increasingly able to scale up
multinational companies really I hear about big data programs operations while remaining locally
have no choice but to invest now. and pilots within multinational relevant. So I think the dream of
Otherwise they will be overtaken companies. Not because I dismiss becoming one can become reality
either by internet-based companies the whole trend of big data. I think with new technology that’s coming
or by start-up companies from it’s crucially important and it creates into the market.
emerging markets, with no legacy a vast number of opportunities for
and heritage. So multinationals had almost every multinational company. Earlier, you talked about
better act now because otherwise The smile is because I know many operations taking place in
they will be out-competed. companies have not yet sorted their functional silos. How can the
small data. And by small data I intelligent enterprise break
What are the challenges of mean the master data, the supplier those down?
implementing an operations records, the raw-material records,
technology agenda? the employee records. I see the same Most multinationals lack a really
thing when it comes to analytics and integrated view of the performance
A large number of new technologies reporting. Many people talk about of their operations. Why? Because
have come onto the market for analytics when they’ve got a very operations are managed in
companies to exploit. Once people in scattered reporting landscape. So my functional silos that have multiple
the C-suite get it and understand it recommendation would be: Yes, do responsibilities, including strategy,
and want it, quite often their reaction your pilots in big data and analytics, functional expertise and operations.
is “what does it cost?” and that’s but at the same time start sorting out The average C-suite leader will give
a fundamental mistake. This is not your master data and your reporting. more time to strategy and expertise
about throwing money at technology. than to operations. As a result, every
Yes, the technology is important but Can strategic technology function has its own performance
it must be process and business- investments help companies management system. That would
led and it must be embedded in an to align their operations across not be a problem if processes were
overall transformation program. And business lines? limited to single functions but nearly
it’s equally important not to spend it every process crosses functional
in functional silos. But I know from A number of years ago there was borderlines. So in my view there
experience in many companies, even a whole wave of so-called ‘one is only one option: Industrialize
in IT, most of the money is spent operations end-to-end with a single
at the local and regional levels and performance system that you roll out
sometimes only 20 per cent is spent globally with aligned KPIs. That will
against a truly global agenda. That create maximum transparency and
will need to be reversed. internal competition, driving both
operational and cost performance. IO
What role do big data
and analytics play in the Watch more at
transformation improvement of YouTube/GenpactLtd.
07
Intelligent Operations June 2015
FROM THE FRONTLINE
Reimagining order-to-cash
How Schneider Electric’s Nick Dadswell leveraged technologies for his
company’s operations
NICK DADSWELL mission-critical nature of what we our credit collections standards
do for our clients. Being able to guide across the company and finding
Director of finance business all relevant actions leading to better technology solutions that enable
services at the multinational DSO, from the ones in our shared those processes in a scalable way,
Schneider Electric services to the activities happening in both geographically and in terms of
the field across portions of our order- granularity of actions. We selected
Nick, what does your to-cash (O2C) process, was the main a Systems of EngagementTM for O2C
company do? objective. Clearly, a key boundary (Genpact Akritiv) which extended
condition is client satisfaction—our the SAP system of record for both
Formerly known as Invensys, our O2C should respect that. credit management and collections.
business was recently bought The system took credit at the front
out by the large multinational How did you pinpoint what parts end and then used the same tool set
company Schneider Electric. We you had to evolve, without taking and the information it captured to
are primarily focused on energy on too much at once? impact our collection performance.
controls in everything from widgets A key design principle in this new
to nuclear power plants. This is a We know the specific metrics that technology was its intuitive usability,
fast-evolving, global business and my impact those business outcomes. We as we knew that driving adoption
organization globally manages all our have always tracked many of those— throughout the company would
transactional financial processes. for example the aging profile of client otherwise be an impossible task.
segments to drive specific actions.
Can you give us an example of A lot of that work was manual What is the business impact you
a critical business outcome you though and not scalable, which led generated?
wanted to impact by reimagining to limited granularity and timeliness
your business operations? of the insight. Additionally—the The initial expectations were
actions required couldn’t always exceeded, but that’s not all. Our
We were aiming at improvement in be triggered effectively throughout operations are indeed becoming
days’ sales outstanding (DSO) and our large enterprise, especially in more intelligent globally every day,
overall better management of our circumstances where we wanted to so we are able to learn from what
credit to our clients. This is a global act fast on issues such as emerging our global ecosystem is doing. We
environment where client credit risk risks for specific client segments are using information in the system
profiles are variable and our sales in specific geographies. We also and we can promptly identify where
processes are complex, reflecting the knew that we had complex existing there are outstanding issues. We
systems, primarily SAP, covering can publish concise and actionable
parts of that operation and that an reports for the CFOs indicating
overhaul of those wasn’t practical. which region, which country, which
customer they need to focus on.
Where did you start reimagining We learn from the alert metrics and
your operations? the resolution and we are able to
become more and more effective
We looked at our global processes over time as we accumulate data
and how they could enhance visibility and experience. IO
of key metrics and progress and
steer the effectiveness of our global
activities. This involved refining
08
Intelligent Operations June 2015
THE MACRO VIEW
The right time to transform
Global companies have experienced unprecedented volatility. The Volatility and
Adaptation Index provides leaders with the predictive intelligence they need to
help their organizations adapt
Global companies have below. Capital markets are currently Three ways to adapt
experienced unprecedented undergoing the most volatility,
volatility in recent years followed by retail and commercial In Genpact’s experience, business
and are adapting to banking. Leadership changes leaders who use insights from the
compete under new conditions. contributed the highest share VAI follow three main approaches to
These radical shifts result from of volatility events while fewer adaptation. First, lean management
several factors including profit companies reported mergers and principles can help align strategy
warnings, cost cutting, government acquisitions and deterioration of with execution to facilitate long-
regulations, M&As and leadership financial conditions compared to term adaptation. Second, lean
changes. The Genpact Volatility previous periods. management and Six Sigma practices
and Adaptation Index (VAI) tracks can also be effectively utilized for
these trends across a sample of The VAI reveals that companies tend short-term, continuous improvement
more than 800 companies in nine to respond to a volatility event within supported by insights gained from
industries. The index is a predictive three to six months as they adapt to business intelligence and other
tool providing business leaders with the new landscape. Business leaders methods. And finally, intelligent
the intelligence needed to undertake can use this information to predict operations enabled by advanced,
adaptation measures, often by moves by competitors and to identify prescriptive analytics—often
transforming business operations. ways of adapting more quickly. supported by big data—can drive
Comparative speed of adaptation rapid and large-scale change. IO
A period of relative stability is often a prime determinant of
marketplace advantage. In short,
The most recent results of this successful adaptation results from
ongoing research reveal moderate having the right knowledge in hand
volatility, both in the number of at the right time.
companies reporting volatility events
and the number of events in each The Genpact Volatility Index
company. Adaptation responses Sharp differences in trend across industries; volatility and adaptation pick up in capital
through leadership changes,
restructuring and M&A have also markets, healthcare, and manufacturing
increased, but the total volatility and
adaption index remains relatively Volatility and Adaptation Index volativity events
stable. These conditions provide adaptation responses
an opportunity for organizations to
undertake longer-term operating
adjustments. The pace and
effectiveness of this adaptation will
determine their place in the rapidly
changing competitive landscape.
Volatility and adaptation trends Acquisition Leadership Restructuring Financial Industry, OVERALL
differ sharply across industries or change condition regulatory or
geographic
Movements in the VAI for nine geographic
industries since 2013 are shown expansion change
09
Intelligent Operations June 2015
THE MACRO VIEW
A nine-industry
overview
A period of relative stability prevails, marked by sharp,
industry-specific variations
The Genpact Volatility and Timeline: February 2014 - January 2015 concentrate increasingly on M&A
Adaptation Index (VAI) is and geographical expansion. These
based on 800 large global VOLATILITY EVENTS findings point to a time of increased
companies in nine industries. stability and recovery for the sector.
The most recent update of the F financial I industry, regulatory or
index indicates that overall, these pressures geographic changes RETAIL BANKING
enterprises are in a period of relative H
stability. But volatility and adaptation ADAPTATION RESPONSES
vary considerably across industry. L
What follows are the key trends. A acquisitions or R restructuring / L leadership
geo expansions cost-cutting changes
LIFE SCIENCES
H
Life sciences # events per company F
# events per company R
Life sciences fell sharply from the A
second most volatile industry in I
2013 to fifth in 2014, with about 41 F A
per cent still showing some signs of LR
volatility and structural adjustment.
Companies are exploiting this I L H
opportunity to focus on long- L % companies impacted
term adaptation measures, with H
acquisition/expansion being the most % companies impacted
dominant driver. Most of the industry
is looking at innovative business Retail banking Commercial banking
models and emerging markets to
accelerate beyond low, single-digit Retail banking continues in first place Commercial banking is ranked third
growth rates. This is reflected in life in 2014. This is not insignificant, on the VAI in 2014 up sharply from
sciences’ M&A and geographical as the volatility levels in the sector ninth place in 2013. Volatility levels,
expansion, which accounts for 62 have dropped in terms of general however, declined consistently during
per cent of the index in 2014. Low volatility by about 65 per cent the course of the past year with a 35
incidence of deteriorated financial from even higher levels in early per cent decrease from early 2014 to
conditions and cost cutting, 2014. Still, nearly half of the retail beginning of 2015. Over 59 per cent
observed in only 13 per cent and banking firms covered by the index of commercial banking firms found
9 per cent of the organizations were impacted by one or more themselves undergoing destabilizing
respectively, indicates a period of destabilizing events, particularly events over the course of 2014,
economic recovery. Many firms also leadership changes, restructuring particularly acute financial stresses.
undertook leadership changes and and challenging financial conditions. However, those stresses lessened
restructuring, transforming their Instances of leadership churn, somewhat toward the beginning of
operations (finance functions in however, are decreasing markedly: 2015, with companies reporting such
particular) to improve cash flow, from 38 per cent of companies incidents falling from 29 per cent on
margins, revenue and brand loyalty. impacted on an average during an average in 2014 to 16 per cent. In
2014 compared to only 17 per cent addition to this decreasing volatility,
towards the beginning of 2015. In commercial M&A and geographical
addition to restructuring, many expansion are on the rise in response
retail banks are also beginning to to the reduced financial stress. More
10
Intelligent Operations June 2015
THE MACRO VIEW
firms are also beginning to undertake INSURANCE the sharp surge it witnessed during
leadership changes, with their share H the same period in 2013. M&A and
of the index increasing to 51 per cent geographic expansion have slowed,
of the index in 2014 compared to 27 # events per company impacting 19 per cent of companies
per cent in 2013. during 2014 down from 29 per cent
in 2013. The source of volatility has
# events per companyCOMMERCIAL BANKING AL H shifted to leadership churn, whose
H share in the index increased from
R 16 per cent in 2012 to 33 per cent in
LF IF 2014. This combination may indicate
R L the onset of a challenging period for
the sector.
% companies impacted
CONSUMER GOODS
A still represent a decrease of 30 per H
I cent from the beginning of 2014.
Nevertheless, 48 per cent of capital L
L H markets firms have experienced a A# events per company
% companies impacted volatility event in the past year and
many have experienced more than FR
Insurance one. Financial stress incidents have
become more widespread, affecting I H
The insurance sector has 23 per cent of firms over the course
experienced a period of relative of the year. Leadership changes—an L
stability over the last 12 months adaptation that can cause significant % companies impacted
placing it in eighth position in volatility—remain high but steady,
the index’s rankings. Only 18 per affecting about 33 per cent of firms
cent of firms have experienced a within the industry.
destabilizing event in 2014. Financial
stresses played a minimal role and CAPITAL MARKETS Healthcare
industry, regulatory or geographic H
disruptions are consistently low. The healthcare sector ranks
However, the sector is beginning # events per company L seventh on the VAI in 2014. But the
to make adaptive moves that sector experienced a sharp rise in
can themselves cause volatility. F disruptions over the course of the
Leadership churns contribution to the I last year. Although only 20 per cent
index was 32 per cent in 2014, and R of firms on average were affected by
M&A and geographical expansion volatility events during 2014, during
contributed 48 per cent. Generally A H the three months ending in January
stable conditions are likely behind 2015 this number went up
these trends and may signal a period L to 59 per cent, with leadership
of long-term strategic adaptation for % companies impacted changes and M&A being the
the industry. dominant drivers.
Capital markets Consumer goods Leadership churn in particular
rose from impacting 21 per cent
The capital markets sector is ranked The consumer goods sector is of firms during most of the year
second on the VAI in 2014, up positioned in fourth place in 2014 to 36 per cent in the three months
sharply from sixth place in 2013. The down from third place in 2013. ending January 2015. Perhaps as a
industry is subject to substantial About half of consumer goods firms result of these leadership changes,
pressures from leadership changes, included in the index experienced a restructuring has begun to play a
systemic restructuring and disruptive event during the last year. larger role in the industry as well.
fluctuating financial conditions. Volatility levels during the course However, financial stresses have
There is some cause for optimism of the past year have risen steadily begun to ease and volatility from
since these high levels of volatility in second half of 2014 although the industry, regulatory and geography
rise is relatively modest compared to
11
Intelligent Operations June 2015
THE MACRO VIEW
changes —already low—have Manufacturing Timeline: February 2014 - January 2015
diminished still further.
The manufacturing sector was VOLATILITY EVENTS
H E A LT H CA RE not subject to the upheavals that
H characterized some other sectors F financial
during 2014, but firms still face pressures
many challenges. The sector is
ranked sixth on the VAI up from I industry, regulatory or
average 2014 values of 21. Nearly geographic changes
45 per cent of firms were affected
# events per company L by a disruptive event, although the ADAPTATION RESPONSES
F majority of those were adaptions—
I primarily leadership churn and A acquisitions or
A M&A or geographic expansion, both geo expansions
R of which have increased by small
H amounts. Financial stress, along with R restructuring /
L industry, regulatory or geographical cost-cutting
% companies impacted concerns remain a very small source
of volatility for the sector. IO
High tech L leadership
changes
The high tech sector ranks at the
bottom of the industries measured MANUFACTURING
on the VAI. On average only 20 per H
cent of high tech firms have been
affected by a disruptive event since # events per company L
February 2014, with essentially all
of them being adaptations: M&A or A
geographical expansion, leadership FR
changes or restructuring.
I
Leadership churn has seen a small L H
but significant increase, from
affecting on average 8 per cent of % companies impacted
firms during last year to 14 per cent
in the most recent three-month
period. M&A events have also seen
a modest uptick, although incidence
levels remain substantially below
nearly every other sector.
HIGH TECH
H
# events per company R For more details on the VAI,
L visit http://www.genpact.com/
H home/volatility-adaptation-index
A
FI
L
% companies impacted
12
Intelligent Operations June 2015
THE MACRO VIEW
Overcoming resistance
to change
How to drive a transformation agenda that leverages analytics and technology
in operations
As enterprises strive “Executives have “ and even harder when quantitative
to take advantage of their own way of analytical techniques seem to be
emergent technologies, doing things and pointing one way while conventional
they frequently find when you introduce wisdom points another.
themselves running up against analytical methods
seemingly insurmountable barriers into an organization, Influence from the top
to implementation. Many business you’re asking people
systems have become so mature— with years and years The key to overcoming this
and their inter-relationships so of experience to do institutional resistance, he says, is to
sophisticated—that the task of things differently foster a culture of change as a means
transforming processes can seem of driving value to clients. That
prohibitive both in terms of sunk cultural shift must flow right from
costs and human effort. This is the the top, he adds. CEOs and senior
case, for example, in attempting to leaders send signals through their
harness the power of analytics to actions and their priorities and those
optimize process management. values permeate the organization
to become deeply felt institutional
The primary challenge in values. Leaders who understand
implementing cutting-edge analytics the opportunities offered by tools
is not about math or science, says such as quantitative techniques and
Paul Burton, senior vice president of advanced analytics—who are willing
analytics and research at Genpact. to take action without yielding to
“What most organizations have is institutional conservatism—will
a cultural problem,” he maintains. reap rewards at every level of
“Executives have their own way the enterprise.
of doing things and when you
introduce analytical methods into an Burton points out that a willingness
organization, you’re asking people to implement analytics is crucial,
with years and years of experience to but it’s also only a first step. Many
do things differently.” otherwise efficient and successful
organizations suffer from a
Burton suggests that old habits, PAUL BURTON fundamental misunderstanding
ingrained processes and ‘the way about the nature of the analytics
things have always been done’ Senior vice president of analytics and process itself.
pervade even the most rigorous research at Genpact
management environment—and the “Most organizations have their
more experienced executives are, the data scientists spending the
more vulnerable they are to the traps overwhelming majority of their time
of traditional thinking. Change is hard and resources engaged in the
13
Intelligent Operations June 2015
THE MACRO VIEW
mechanical aspects of managing Engagement TM’,” says Sanjay effective engagement system such
data—gathering it, manipulating it, Srivastava, senior vice president and as this grows the technology stack
transforming it, crossing the t’s and chief digital officer at Genpact. “It’s while shrinking the people stack by
dotting the i’s,” he says. And while a layer of adaptive technology that empowering individuals to do more
these activities are important— sits on top of multiple systems of using the same underlying structures.
indeed essential—to the analytics records to provide a single unified The result is an optimized network of
process, every minute spent on interface.” Using this system, an record systems running at a greater
programming is a minute that could operator travels seamlessly from level of productivity and efficiency
be invested in the achievement of one end of the process to the than ever before.
analytical insight to help make better other, obviating the need to log in
business decisions. to multiple applications. This also But there’s a subtler benefit
avoids the potentially bottomless to employing a Systems of
Burton believes Genpact complexities of differing procedure, EngagementTM that yields an even
is developing the tools and language and geography. An greater long-term return. “It allows us
technologies that enterprises will to record touches and lets us really
need to minimize time lost on data “An effective think about the end-to-end process
management and maximize time engagement in a new way,” says Srivastava. By
gained for driving client value. system grows the noting the nature, frequency and
Process, methodology and domain technology stack position of touchpoints, a system of
expertise must all be working toward while shrinking engagement lets forward-thinking
the same goal—and operating at the the people stack enterprises exert significantly greater
highest level—to frame problems by empowering granularity of control over every
in their proper context and solve individuals to do point of the end-to-end process. It
them. Enterprises hampered by also allows them to standardize their
organizational silos can’t properly global operating model. Checks and
leverage their own expertise and the control points become consistent
results are often worse than useless. and processes becomes routine
Bad data leads to bad decisions, regardless of specific geography.
Burton stresses. And bad decisions The result? A system of records that
damage clients, stakeholders and is both simplified and amplified,
executives alike. capable of interacting with clients,
suppliers and business partners
Engaging people and more using the “ everywhere in the ecosystem. “The
same underlying
harnessing machines structures
From enterprise resource planning SANJAY SRIVASTAVA
(ERP) systems to customer contact
databases to state-of-the-art sales
automation software, most global
enterprises employ extensive
systems of records. These systems
are typically mature, structured and
above all rigid—elaborate software
infrastructure tailored to a single
specific function. However, business
processes such as order-to-cash
span multiple functions. This means
that many rigidly constructed
databases must constantly interact
with one another to accomplish even
the simplest transaction, all too often
with predictably substandard results.
“We’ve solved this problem Senior vice president and chief digital
with what we call a ‘Systems of officer at Genpact
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Intelligent Operations June 2015
THE MACRO VIEW
value is beyond productivity,” says another, is one classic example. the third-level tasks for which they“
Srivastava. “It’s in the compliance, But the science’s sophistication are best suited. But he says human
the control, the governance—in is growing day by day and the judgment might not remain an
getting standardization across development of intersystem irreplaceable commodity forever. In
globalized spaces.” interoperability—the mimicking his opinion, further innovations in
of human action—is the key to the area of artificial intelligence may
Embedding automation that evolution. eventually allow automated systems
to mimic the decision-making
Rote, menial tasks—a nagging source The three levels of business process. That would multiply the uses
of process inefficiency—are endemic process work of automation to an unknowable, but
to the business world. Recent exciting, degree.
advances in automation, however, Ghosh says most business process
are likely to have a massive impact work can be broadly categorized “ Robotic automated
on the science of business process into three different levels. “The first processes are
management. While robotics will level is the managing and positioning beginning to excel
benefit those enterprises that fully of data; the second is algorithmic [at managing and
grasp its applications, the hype analysis. Both of these activity sets positioning data
tends to run ahead of the reality: are fundamentally about working and algorithmic
Automation is not a panacea. At the with multiple systems and disparate analysis], freeing up
same time, says Shantanu Ghosh, data sets, ensuring the validity and invaluable human
Genpact’s senior vice president and the authenticity of those data,” resources
head of CFO services and consulting, he explains. “These are tasks at
it has immense potential to be the which robotic automated processes The bottom line
low-cost, high-ROI transitional model are beginning to excel, freeing up
enterprises need as they make the invaluable human resources for the Technology is not the limiting
difficult transformation to integrated, third and final level.” factor. Transformation—ideally the
streamlined digital processes. reimagining—of existing operations
The third level, says Ghosh, is the is hampered by poor change
“Robotic automation has been application of real intelligence to management and a misunderstanding
around for a long time,” says make correct decisions. For now, of what’s possible today. Practical
Ghosh. Something as basic as an there is often no substitute for choices in scoping interventions,
email rule, sending messages from human judgment, so the long-term creating a culture of analytics
a given address from one folder to goal of intelligent operations should and embracing a new class of
be to use automation to minimize technologies can go a long way to
and eventually eliminate first- and make transformation a reality. IO
second-level work. That way,
employees can concentrate on Watch the complete interviews at
YouTube/GenpactLtd
SHANTANU GHOSH
15
Senior vice president and CFO
services and consulting at Genpact
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT: COVER STORY
Harnessing technology
effectively
A groundbreaking survey shows that new technologies represent just one
lever of operating model transformation—and that their value varies from
industry to industry
Business leaders have access to Applying the levers considered lower. For example, only
an array of new technologies. 24 per cent of insurance executives
Cloud, big data, advanced Genpact analysts compared the say that technology can materially
analytics, robotics and mobility impact and applicability of radically impact operations, compared with 51
are obvious examples. Radically improved use of technology with per cent for SSC/BPO/hybrid.
improved use of technology can the other two principal operating
generate large financial impacts, but model levers: business process Evaluating technology’s impact
in many cases other levers of business re-engineering (BPR) and advanced
transformation—such as shared organizational structures (shared Because technology is seen
services and outsourcing—are more service centers/SSC, business as having relatively limited
widely applicable. process outsourcing/BPO or hybrids applicability despite big dollar
of the two). Executives’ estimates of impacts suggests that many large
A 2014 Genpact-commissioned the average dollar impact of these organizations have already adopted
survey polled nearly 1,000 executives levers vary substantially across advanced technologies, leaving
across a spectrum of industries to business functions and industries. BPR and SSC/BPO/hybrid as more
assess the potential of advanced Technology appears to offer the attractive approaches. As well,
operating models for meeting largest potential impacts in nearly the applicability of technology
strategic enterprise challenges. every case. Yet the applicability varies significantly across business
It focused on decision-makers in of each lever also differs across
finance, procurement, marketing, industries and functions. Figure 1: Technology’s
risk and operations. To illustrate these concepts, Figure financial impact and degree
1 maps the annual average US of applicability
The top enterprise challenges it dollar impact of technology against
reveals differ significantly by industry. its degree of applicability for the Financial impact is highest for finance but
For example, regulatory compliance finance, procurement, marketing
is the biggest issue in banking and life and risk functions. Finance executives technology is more widely applicable in
sciences, cost reduction and agility rate the dollar impact of technology
are priorities for consumer goods highest, but consider this lever the marketing function
executives and innovation takes less applicable than counterparts
precedence in high tech. in the other functions. By contrast, Technology Impact
technology is highly applicable to $US mm
These distinctions aren’t surprising. the marketing function but impacts
However, the data also allowed are lower. $250 Finance
Genpact to track how advanced
operating models address key Similar variations occur across Risk
enterprise challenges across different industry-specific operations. In
business processes, revealing patterns nearly every case the financial $200
of technology applicability and impacts of technology are rated
its impact on multiple industries $150 Marketing
and functions. higher than for other operating model Procurement
levers while the applicability is $100
20% 24% 28% 32% 36%
Technology Applicability
16
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT: COVER STORY
processes within each function, so The business function/processes in to understand how to couple it
accurately identifying candidates the upper right segment are those with process re-engineering and
for technology investment requires that executives say can be materially organizational redesign, then
selectivity at the function level. For affected by technology while having apply it to business processes with
example, executives point to certain multiple impacts on the most the best potential for addressing
applications, such as master data important enterprise challenges. enterprise challenges. This directs
management (MDM), as having Examples include procurement/ scarce resources to activities with
high impact on multiple business intelligence, procurement/ the greatest capacity for positive
enterprise challenges. MDM and marketing/analytics. business outcomes and reduces
The bottom left segment shows complexity by creating common
To evaluate the impact of business the opposite: functions with low ground for cross-disciplinary
functions, Genpact analysts created impact and with low technology teams. Identifying partners with the
a “Function Impact Index” that applicability. This includes several appropriate expertise can help many
weighs each according to the finance and risk processes. Two companies move decisively in an
importance of the business procurement processes—supplier risk unforgiving competitive environment. IO
challenges it addresses. A high and performance management and
index means the function addresses sourcing/category management—lie A few
the most important enterprise outside the general pattern, with very definitions
challenges, making it a better high applicability but moderate impact.
candidate for new operating models. These areas may require discretionary
Figure 2 maps the impact index judgment from experts.
for selected functions against
applicability (the proportion of Exploiting technology effectively
executives who say that technology
can have material impact on Genpact’s experience indicates that Financial impact
the function). the key to exploiting technology is
is defined as the average “positive
Figure 2: Technology applicability and impact on business impact” from radically
enterprise challenges improved use of technology
expressed in US-dollars-per-
Procurement and marketing offer a good combination of applicability and impact on year. Survey respondents in each
multiple enterprise challenges business function estimated
the amount, taking into account
Technology Applicability reduction of cost, capital required
60% MDM Binutseilnliegsesnce and improvement of cash and
Analytics revenue growth.
50% mAcauamtnopamagiaegtmnioenn/t Technology applicability
MDM MDM is defined as the percentage of a
function’s executives who stated
Stress testing Tprraoncsuarcetmioennatl that radically improved use of
technology could have “mate-
40% KYC/AML FP&A rial impact” on the function’s
business processes or support
mLooannitpoorrintfgolio SCmoaautneragcgionergym/ ent operations.
pSueprfpolriemrarniscke&
u/nodreigrwinLraiottiiaonnng M/ cuulstit-oCmhaenr neenlgmagaermkeetinntg The function impact index
Collections combines two factors for each
function: (1) The percentage of
30% P2P R2R respondents who believe that
improvement in the function will
Basel2 DcoomddplFiarnancek “materially address the chal-
iBmaspelel mentation lenge” and (2) the percentage
O2C who rate the challenge in the top
20% three for their business.
80 120 160 200
Function Impact Index Finance
Procurement Risk
Marketing
17
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
CFO +
Advanced = Data Driven Strategist
FP&A
Research Insights
More robust Financial Planning and Analysis
can help CFOs to meet their strategic
business partner role.
FP&A's increasingly strategic role Finance Executives see FP&A as a crucial lever to manage the most material
in today's environment organizational challenges.
FP&A HELPS MEET THESE TOP CHALLENGES:
Enable agility Manage risk Increase growth Reduce costs
and adaptability and scalability
Advanced operating models can *Percentages are the number of respondents selecting these top challenges.
strengthen FP&A in 3 ways
An independent survey of FP&A leaders shows that mature
organizations should focus their attention on organizational models,
technology and data accuracy*
ORGANIZATIONAL MODEL
Mature FP&A organizations leverage global or regional shared
services and outsourcing more often than their less-mature
peers - allowing them to realize economies of scale, improve
service levels, and share best practices while building
capabilities for supporting enterprise-wide strategic roles.
Immature FP&A organizations are Two-thirds of FP&A organizations have target models
twice as likely to use decentralized that include global and regional SSCs for:
organizational models
53% of immature
FP&A organizations
22% of
mature FP&A
organizations
Decision analysis Performance Planning &
& management management budgeting
reporting
*Survey conducted by an independent research firm amongst 150 finance and accounting executives from large enterprises in mature markets
Intelligent Operations June 2015
Mature FP&A organizations expect high business impact from
improved use of advanced technology and are more
aggressive at deploying it.
Who expects high impact? Where is big data a priority for FP&A?
Master data Planning Global data
management and and forecasting warehouses
governance
Immature FP&A Moderately Mature FP&A
mature FP&A
17% 29% 6% 41% 27% 46%
Very High Very High Very High
high impact high impact high impact
impact impact impact
Planning Decision analysis & Performance
& budget management reporting management
35% of 54% of 41% of 24% of 41% of
immature FP&A mature FP&A immature FP&A mature FP&A
organizations mature FP&A organizations
organizations organizations organizations
25% of
immature FP&A
organizations
Advanced organizational model and related practices are an untapped lever. They help
evolve the CFO's role into a data driven strategist with the ability to turn insights into
enterprise action. IO
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
After-market billions
How an improved control environment of accurate,
timely and granular measurements helped one major
manufacturer reap considerable rewards
Industrial manufacturers often rely to perform historical failure trend Solution: a holistic approach
on aftermarket service contracts analyses, find the root cause of
for financial success—and the repeat failures, benchmark contract The key to solving these structural
well-known world leader in aircraft profitability with peers and predict issues was in the quality of
component manufacturing featured optimal pricing for future contracts. maintenance scheduling and related
in this case study is no different. It Part of the problem turned out to costs. This data-intensive process
counts on such contracts for 40 per be that multiple shops are involved relies on accurate, granular and
cent of revenue and an even higher in repair jobs—each with its own timely measurements and insights.
share of profits. unique systems and processes Yet while advances in technology
creating complexity and the potential offer an array of opportunities—
Typically, modern pay-per-use for inaccuracy. from sourcing of sensor data to
contract pricing depends on the sophisticated predictive analytics,
accurate and timely capture of A lack of auditability for example—these tools are useless
complex historical information to if they aren’t fully leveraged. That
assess failure probability. In this case Considerable time and effort went calls for a reimagined planning and
study, the company in question was into manually scrubbing the data of maintenance process.
struggling to maintain predictable erroneous bill of materials (BOM),
earnings. Its aftermarket service mistakes in recording part numbers, The solution lay in designing and
provider had been billing equipment labor hours and contract-specific optimizing a full Data-to-Insight-to-
operators at rates fixed under expenses. Although roughly 70 per ActionSM arc. Recent advancements
long-term engine maintenance cent of these errors were visibly mean that the continuous learning
for the number of usage hours systematic and thus more easily from the feedback loop can now be
flown. Estimated revenue for each preventable, the remaining 30 crystallized into powerful analytical
period was based on initial contract per cent required judgment and tools, such as GE’s Predix™. The
planning. But actual revenue detailed follow-up with different result is more meaningful data
depended on the true parts and stakeholders across business units. leading to increased revenue and
service costs amassed during the Finally and crucially, this process cost forecasting accuracy across
same period—and these, in turn, lacked auditability, as the changes multiple scenarios.
were contingent on downtime to data could not be traced back. Of
incurred. Because revenue and profit course, revising financial audits to In this case study, a look into three
are therefore variable, the enterprise restate revenue and profits can have clusters of analytical and related
faced controllership issues such significant consequences. operational processes enabled the
as deferred balances. The CEO’s Data-to-InsightSM and Insight-to-
ability to understand the health What’s more, as is often the case, this ActionSM arcs.
of the business was constrained. manufacturer’s narrow technology-
Worse, difficulties in pricing future led efforts to automate the scrubbing Data-to-Insight-to-Action arc
contracts accurately threatened of cost data had yielded poor results.
to have a negative impact on sales Business interests and functions such Consolidate, Correct strategy
and profitability. Literally billions of as finance, procurement, operations report and targets
dollars were likely at stake. and supply chain are interdependent. EFFSETCETEIVRENESGSather
For one thing, the cost of actual But a poor understanding of how VISPIRBOILVITIYDE feedback
labor and parts during contract data was consumed by various Analyze
performance wasn’t transparent. stakeholders throughout the chain
As a result, company forecasters resulted in sub-optimal solutions Implement EXECUTE Measure
were severely limited in their ability all around. ACTIONS
Operate
20
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
Provide visibility range ways. The company began computing and analytics, asset
repairing more parts rather than management and mobile devices.
(Data-to-Insight) replacing them. It could procure
parts from cheaper sources. It The billion-dollar business impact
Real-time visibility into critical could keep spare parts at optimal
contract performance metrics— inventory levels, conduct preventive The manufacturer and its clients
billing and revenue accrued, maintenance and update benefit from lower maintenance
parts and service costs incurred, master data. costs and asset downtime reduction.
planned and unplanned downtime, The bottom line: higher revenue
for example—required timely, These and related improvements not and profitability in the multi-million-
accurate data capture. A system of only enhanced Data-to-ActionSM but dollar range from existing contracts;
sustainable master data for critical also made the analytical processes better pricing and sales due to
spare parts, such as engine modules much more efficient. Functional more reliable failure and cost
and other components, had to be experts worked alongside the forecasts; and radically superior
devised. Additionally, robust controls technology and analytics teams to controllership and auditability of
were essential to ensure timely identify the most material metrics complex, global operations. Timely
aggregation of cleaner information to drive business outcomes. It also availability of accurate information
from multiple data sources like parts helped them define the technology, across all functions and with all
MRP and repair shop ERPs. analytics, process and organizational stakeholders brings about short- and
structure that influence those long-term enhancements to the
Data redundancies and mistakes metrics. A holistic view across entire value chain.
were identified—and rules designed Data-to-Insight and Insight-to-
to prevent those mistakes were Action helped design effective Lessons for other industries
documented and rolled out globally. analytics solutions and embedded
As a result, analysts with a granular, targeted change management into Aftermarket services are a perfect
operator-level understanding of the business processes. As a result, 95 laboratory for what can happen
underlying processes performed per cent automation of manual data without integrated financial
data clean-up and follow-up on a aggregation freed up more than processes, big-data analytics and
more finite set of critical exceptions. 20 analysts to focus on insights global field operations alignment.
This accurate data was then made rather than on the manual scrubbing But this case study holds lessons
available for cost analysis. Contract of data. The upshot: materially for many other industries. If Data-
performance was regularly monitored improved operational scalability for to-Insights and Insight-to-Action
to determine discrepancies between the manufacturer and their clients. processes are reimagined with
planned and actual costs. A similar technology and analytics at their
process assessed downtime. Analysis The company also harnessed GE’s core, organizations can enhance
of service events and costs internally Predix software platform to unleash competitiveness significantly.
benchmarked the performance of industrial-scale analytics for asset Focusing the transformation on
repair shops and service procedures. and operations optimization. The the material drivers of business
core platform extracts cost from outcomes can help companies
Steer effectiveness and multiple data sources. An application achieve results faster and
execute at scale then processes this data and stores more practically.
it in a central hub after validating
(Insight-to-Action) it by applying predefined business Operations employing these
rules that evolve regularly through strategies are clearly different from
These new standard operating feedback loops. A secure interface traditional ones. Genpact calls them
procedures reduced costs in a wide allows globally located business “intelligent” because they leverage
users to manage the exception analytics as an integral component
flagged. Role-based access control of the business process. They can
and automated reports ensure better sense and react to operational
complete auditability when the conditions (such as asset usage
data changes. The process solution patterns or new field operations
reimagined around Predix lays constraints) and by learning from
the foundation for more scalable, those data sets, a continuously more
effective running of those important
extensible, customizable and secure business processes ensues. IO
data applications through distributed
21
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
The case for advanced
operating models
More sophisticated presentations can become a real cornerstone to strategy
Operations leaders often uncertainty and market volatility. The of the underlying economics and
struggle to present the same challenge exists when choosing quantifies the risk of falling short
full strategic value of among alternative organizational of financial targets. Second, they
their operating model models, such as internal shared should clarify the full value envelope,
alternatives to those they report services, BPOs, hybrid services and including costs that occur in the
to in the C-suite. This challenge is global business services. event of volatility or enterprise
common across service and support discontinuities. In both steps, the
operations, from banking processing To present their plans effectively impacts of alternative operating
to finance and accounting. Assessing and retain the attention of top structures on these drivers must be
advanced operations roles solely management, operations leaders rigorously modeled.
through the lens of baseline-cost might think about a two-step
reductions biases CEOs’ enterprise approach to building business cases. Step 1: total cost
choices. In reality, the choice of First, they should consider the total of ownership
alternatives can benefit from a cost of ownership to understand the
more sophisticated value-modeling detailed cost structure of advanced Figure 1 illustrates two sets of cost
approach that takes into account operations and map the cost drivers. levers. Very often, only the first
the financial impacts of execution This leads to an understanding lever—production input cost—is
taken fully into account. However, in
Figure 1: Two sets of cost levers Genpact’s experience, other factors
explain much of the variance in
Production Direct FTE operation cost effectiveness.
input cost Infrastructure
Overall delivery The inability to pull some of those
cost structure IT levers—whether due to scale,
G&A process optimization capabilities, or
access to cost-effective pools—can
radically alter these costs. The team
responsible for the business case
should be able to model the effects
of some of the key variables, as well
as the impacts of a failure to
optimize them.
Agent Leakage source To demonstrate why such a
productivity Inter-agent variance detailed analysis is required,
Figure 2 illustrates the magnitude
Waste / rework of the possible impact for a
benefits administration operation.
Understanding the effect of scale
is often something that small
22
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
companies struggle with unless Figure 2: Effects of scale on a benefits
they have significant experience in administration operation
transforming and sharing operations.
But even a large organization’s ‘Cost per Unit’ 5 SCALE
cost structure might behave like a R2 = 0.90 10X scale can cut 50% of
collection of small companies if the Ratio of FTEs per 1,000 employees served
requisite scale is not achieved. That 4 cost-per-unit-of-work
failure can have significant cost OPTIMIZATION
implications if the line-of-business 3
units don’t have the necessary Standardization to scale
scale or if there is limited process 2 explains variance
standardization, for example.
1 { COST ARBITRAGE
Understanding cost drivers 100
Cost per hour can be 70% less -
Building an effective model requires for same skills globally, and
integrating many such cost drivers to some extent, regionally
(see Figure 3) based on estimates
of the materiality of each lever Benefits Admin
combined with an understanding
of how they can be harnessed. For 1,000 10,000 100,000
example, some components, such
as bench levels, benefit greatly Company Size
from economies of scale or from employees, log scale
increased scope and this enables
the pooling of resources and the spreading of fixed costs. Other levers, these levers, process improvements
such as associate compensation, can still generate benefits.
respond well to global delivery.
Although they typically have greater Shared-service organizations (SSOs),
impact when combined with other business process outsourcing (BPO)
levers, even without the ability to use and modern global business service
Figure 3: Transactional processes, offshore example
TRANSACTIONAL PROCESS Potential impact of advanced ops
o shore example
process scale global scope
Associate comp improv. delivery
BenchDIRECT FTE % of cost Experience and tenure mix
Direct supervision Entry level compensation
Direct support 20-40 Proportion of temporary sta deployed
Agent attrition
Transportation, cafeteria 1-5 Average time to recruit and train
10-15 Span of control (across supervision levels)
Recruitment, training 5-10 Grade role mismatch
Support per 100 FTEs
Rentals 5-10 Grade role mismatch
Other infra Proportion of workforce availing transportation
IT maintenance 1-5 Average fill rate
Telecom Defects / no shows
G&A [ 50-60% ] Average time to recruit and train
Travel Recruiter productivity
Recruitment yield
IT INFRA 5-10 Area per seat
Seat utilization
G&A 10-15 Proportion of idle seat capacity
[ 10-20% ] Desktop maintenance cost
Number of tickets raised
1-10 Average bandwidth utilization
1-10
Number of G&A employees per 100 RGFTEs
[ 5-10% ] Approval policy and compliance
Policy for business class travel
1-10
1-10
[ 10-15% ]
HIGH NO NEGATIVE
IMPACT IMPACT IMPACT
23
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
(GBS) structures can affect these While the results are decidedly considerations are often ignored. The
cost structures with varying degrees situational, high-level estimates can following factors, in particular, are
of certainty and the business cases readily be made. Figure 4 provides often not modeled appropriately in
for alternatives must be built a simplified overview of the design business cases.
appropriately. In other words, it is choices of different organizational
necessary to account for the different models, as well as their typical ability Attribute value to uncertainty
financial risk profiles of each of to drive results.
these structures and to ensure While proper investment valuation
exceptionally robust modeling of the This example shows why practical takes uncertainty into account and
alternatives, since the risk is borne by results depend on the theoretical discounts outcomes accordingly,
the client organization. economic fundamentals of each business cases for shared services
alternative model as well as the and other operational constructs
Assessing the cost effectiveness execution excellence applied to do so rarely. This is a mistake
of different models these fundamentals. Creating these because the alternative options
organizational constructs requires carry different levels of financial
The theoretical outcomes of the significant implementation effort risk—and management needs this
various options (SSOs, BPOs and and a rigorous business case information to support its decision-
GBSs—typically with hybrid models) must take this into account when making process. The parameters
depend mainly on three things: the performing sensitivity analyses described above clearly have
size that the company’s operations for various alternatives. Yet material financial impacts, but the
can reach by itself for the relevant experience tells us that important ability of an organization’s business
functions; the firm’s ability to implementation considerations are planners to estimate them well varies
optimize processes; and the access often not modeled appropriately. significantly. This is especially true
the business has to labor pools that it when assessing risks for internal
can realistically maintain. Enterprises Modeling implementation risk shared services in that the typical
that score well on these factors budgeting and financial controls
and feel that they have little risk in Implementation issues clearly for these services often don’t act
execution are the best candidates have an important impact on the as good stabilizers of initial budget
to optimize their financial profiles outcomes of alternative operating
by retaining greater scope in-house. models. However, important overruns. That can lead to the effect
known as “burning through the
Figure 4: Simplified overview of organizational model design choices
| NON EXHAUSTIVE |
OPERATIONS COST LEVERS NECESSARY DESIGN SSC GBS KEY LEVERS
DIRECT FTE COST Associate comp Experience and tenure mix Business Impact
Bench
Direct supervision Move tenured emp.
Direct support to new projects
Transport, cafeteria
Recruitment, training Entry level compensation Low-cost locations
Agent attrition Better career paths
Span of control (across supervision levels) More standardized
processes
INFRA Rentals Seat utilization Better shift
Other infra OPEX Proportion of idle seat capacity scheduling
Depreciation
More seat sharing
IT IT, software maintenance Systems per user System sharing,
Telecom bulk licenses
G&A G&A - personnel G&A costs Shared G&A costs
Non-recoverable travel, Approval policy and compliance
sta welfare, meetings Better compliance
through
HIGH standardization
IMPACT
NO
IMPACT
24
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
money.” Poor estimates tend to result employees when the job market Consider benchmark findings
in under-investment for elements becomes more competitive?
like talent and infrastructure to keep Benchmark studies demonstrate that
short-term costs under control. The sensitivity analysis of the these cost drivers vary significantly
This, in turn, may perpetuate cost business case needs to account for between best-in-class and “median”
issues and lead to vicious circles. The the differential risks of the various organizations—and most likely,
business case for top management alternatives. A BPO provider will so do the variances of the original
should explicitly reflect the full often assume the most risk, whereas business cases. The best captives
range of possible outcomes, since a mature shared service organization can have, for example, a lower,
the expected results of internal will be able to estimate and manage fully-loaded cost per FTE than that
structures may be more “noisy” than these variables to a certain extent. of the best BPO providers. However,
those of process outsourcing where Meanwhile, a new team in a firm the median captive is roughly 40
modeling is based on experience and with little experience in internal per cent more expensive than the
more risk is borne by the provider. shared services will bear the highest median service provider. In general,
level of risk. service providers and the very best
Assess the company’s captives enjoy structural advantages.
financial risk The possibility of These include better opportunities
a miscalculation to spread fixed costs, lower costs
The possibility of a miscalculation is significant and of resource acquisitions and to
is significant and not just when not just when the give greater attention to indirect
the organization is new to such organization is new costs and process improvements.
endeavors. Moreover, the to such endeavors In addition, several unquantifiable
probability of a mistake—and the aspects can have a negative impact
severity of its consequences—varies Avoid blind spots on the business case for the worst-
widely depending on the type performing captives over longer
of organizational construct Business cases often only use time horizons. Examples include the
being considered. known costs, without seeking a opportunity cost of management
proper understanding of all the attention to remote operations;
In the case of a BPO agreement, for costs associated with the new fewer career development
example, the consequences will be organizational structure. Some opportunities for staff (leading to
less severe if the service provider such costs may be embedded— higher retention costs); and a limited
has done appropriate due diligence sometimes invisibly—in general ability to develop leading practice
and if the contract protects the buyer and administrative (G&A) or thinking. Clearly, the best in-house
from all or part of the price pressure business-line cost structures. captives are great performers and
resulting from an upward revision There is frequently little clarity the probability of reaching such
of a cost calculation. That said, regarding how those costs may performance should be accounted for
outsourcing relationships in which vary in the future, either in the in the related business case.
the cost has been underestimated heat of the transformation battle
do exist and are potential sources of or during steady-state operations. Step 2: clarify the full
instability. That’s why it’s important Similarly, there is usually inadequate value envelope
to ensure that the service provider consideration of factors that may
has enough data points to make an expose the business to pressures Today, most business cases for
accurate assessment of the cost of due to new environmental conditions shared services or BPOs are
the outsourced organization. (e.g. offshore labor markets) or constituted by efficiency and cost
when the business is affected by measures and even these are not
In the case of an in-house shared new internal ecosystem requests fully accounted for. Instead, multiple
service transformation, the (e.g. governance, service level factors should be part of a robust
benchmark data available to the agreements, customer satisfaction). analysis and their cumulative effect
modelers are typically sparse and should be brought to the attention of
not easy to relate to the new top management.
situation. For example, how should
a company model the cost of hiring Inflation
people at scale in an offshore
location? Moreover, what will the The impact of cost inflation on
actual level of attrition be for key production resources is often not
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Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
considered, although it affects Time-to-market are all situations that can expose
alternative operating models firms and individual managers to
differently. Consequently, it is a Savings related to the value of time dangerous liabilities. Again, these
source of bias when comparing represent only part of the full value scenarios are rarely quantified in
options. In particular, the cost of equation. The ability to deploy business cases.
in-house, fragmented operations support operations quickly or to
(the baseline in Figure 5), is rarely scale them up to accommodate rapid Alignment of cost structure
a steady cost. It tends to increase growth is particularly important with demand
over time, especially in the event of at certain times. This comes into
additional compliance requirements play, for example, when developing In addition to having better ramp-up
or when improved effectiveness calls markets represent growth potential capacities, advanced operational
for additional investments. Yet the or when emerging clientele segments models can typically better handle
baseline used as a comparison to require setups for different types fluctuations of demand. For instance,
alternative delivery models is often of operations. they may be able to pool resources
kept artificially flat, obfuscating an better across business lines or to
important source of savings or, at The inability of support operations implement more sophisticated
least, predictability. Outsourcing to keep pace with demand can have staffing forecasts and resourcing
contracts also typically include a variety of implications. Consider mechanisms. They also tend to
inflation-adjustment clauses that the following scenarios: Demand make workforces more fungible,
shift the risk of unforeseen cost is left unaddressed, resulting in a such as by cross-training people or
increases to the provider. These loss of revenue and EBIT. Demand by redesigning processes so that
are particularly valuable in times is addressed, but at a higher SG&A different employees can perform
of volatility or when the company cost, resulting in EBIT dilution. different parts of the jobs at hand.
doesn’t control future costs very well. Demand is addressed, but not
effectively, for example when The overall impact
The time value of money the sales force cannot develop
appropriate discount or credit Real-world comparisons between
The time needed to realize benefits policies due to the lack of timely internal SSO operations and
isn’t the same across operating and precise cost-to-serve estimates tightly run BPO operations show
models. This is especially true in from operations. Or finally, demand that cost differentials are larger
the initial phases (say over the first is addressed, but at the risk of when all of these cost drivers are
24 months), when the ability to non-compliance with local or taken into account. The comparison
access pre-existing knowledge and international regulations. These
infrastructure makes a material
difference in cost and investment Figure 5: Impact of cost inflation
curves. For example, an advanced
500-person global-delivery operation operations cost ReaCliosstitcSBtrauscetliunree
can save well in excess of $5 to $10
million per year, which translates Estimated Baseline Estimated Realistic
to around $100,000 to $200,000 Cost Structure Cost Cost
per week. If two alternative delivery Di erence
models take a significantly different Di erence
length of time to reach steady- NewofCCoosnttSintruuocutsurIemipnrPorveesmenecnet
state savings, the differential over
a period of years will be significant. time
Interestingly, the same applies to
the end-of-cycle situation, when
the company wants to evolve the
operating model and for example,
merge it with other operations or
turn it over to a service provider. The
value of time spent preparing for
these transitions is rarely accounted
for, but it can be material.
26
Intelligent Operations June 2015
MAKING OPERATIONS INTELLIGENT
between like-for-like savings is instance, the best staff will quit) and exercise may not exist in-house,
only one part of the cost envelope. it will become clear that the initial significant experience has been
The rest, which often involves even operating model choice should have accumulated in the almost two
more significant monetary impact, been different. decades since the emergence of the
is explained by some of the factors first captives and the widespread use
discussed above. The difference Finally, while a full discussion of the of process reengineering in service-
between in-house fragmented impact of choices among operating type operations. This experience is
operations and advanced operations models is outside the scope of this accessible through an ecosystem
is even more pronounced and these article, market evidence indicates of potential partners and is worth
variances should be fully accounted that an increasing number of accessing to enhance the decision-
for in a rigorous business case. advanced operations are adopting making processes of advanced
hybrid models. This suggests that operations. This approach will enable
Include hard-to-quantify items operations leaders should encourage operations leaders (as well as the
executives to test a larger number CFOs, CIOs and COOs to whom they
Inclusion of these often-overlooked of alternatives—each simulating report) to present more strategic,
cost drivers leads to significantly different delivery models for various transformative cases to their CEOs. IO
deeper analysis than is typically parts of the relevant functions.
performed. But even this does not
take full account of qualitative, Toward more robust business
but still very tangible, factors. cases and enhanced decision-
When applying these factors to an making for advanced operations
actual business case, care must be
taken to base choices on realistic Many operations teams have only
expectations rather than best- a limited ability to create robust
case scenarios. Different delivery and sophisticated business cases.
models provide different benefits As a result, decisions regarding
across parameters such as ease advanced operating models may
of setup, integration into business be either biased or stalled for the
and intellectual property provisions wrong reasons. More sophisticated
as well as compliance and control. modeling that encompasses the full
We observe significant variability value equation, including proper
in the actual achievement of those accounting for volatility and other
benefits, not just because service uncertain scenarios, is essential to
providers and in-house shared building more robust business cases.
services vary in how tightly they run
these operations, but also because While all the expertise necessary to
the scope of work delivered may not execute such a thorough planning
be appropriate or may differ from
the planned scope. For example, an Market evidence This article is an abridged version of
in-house captive may be built with indicates that an a white paper first published on
the intention of delivering high-end increasing number genpact.com, A rigorous business
and highly proprietary work and of of advanced case for advanced operating models
acquiring resources accordingly. operations are
adopting hybrid
However, it’s common for leaders models
of captive operations—while
operationally strong—to lack the
salesmanship capabilities necessary
to convince internal clients to
migrate the work for which the
captive was conceived. When this
happens, the expected financial
results will not be realized, and the
captive may be destabilized (for
27
Intelligent Operations June 2015
IN FOCUS
THE ERA OF
INTELLIGENT
OPERATIONS
A CHRONOLOGY OF THE Expansion of captives; systems-of-record
INDUSTRIALIZATION OF operations standardization initiatives.
BUSINESS PROCESSES
HOW WHAT
First captives, systems-of-records technologies emerge 2000 Communication tech Basic analytics suppo
matures – bandwidth data cleansing, descr
HOW WHAT WHO cost drops, ubiquitous analytics.
connectivity. ERP promoted
Illustrative examples of processes run Illustrative examples to enable “one company” Claims processing
through advanced operations organizations strategies, but technology (transactional).
limitations prevent full
ERPs emerge; Transactional account General Electric (GE) – GECIS. achievement of vision. More complex financ
advanced workflows. payable. Amex. including some judg
British Airways. Use of Six Sigma and based ones (e.g. AR3
Business process Basic document Lean at scale for non-
reengineering maturity. digitization work. Dun & Bradstreet. industrial business processes. 3 AR - Accounts receivable
In-house support Engineering support. Large outsourcing contracts Captives mature.
nearshore or offshore 400 signed (2000)1.
services. Payroll. Pools of labor mature
Large off-shore centers in global locations
Nascent labor pools 200 operational (2000)2. (major cities in India, China,
in major developing Hungary, Philippines).
economy cities (e.g.
Manila, Bangalore) fueled by
market liberalization in these
economies.
Technology Operations management Business Labor 1 Source IDC, disclosed contracts
practices models 2 Source Everest Group Research
Market volatility (commodities, financial crisis); emergence of 2010
large scale Business Process Outsourcing (BPO); maturation
of B2B internet; more intense scrutiny on controllership and
compliance practices.
HOW WHAT WHO
rds mature; large scale 2005 Operations new paradigm More complex analytics GE spins off and IPOs; Genpact
WHO technologies emerge: SOA4 support e.g. model – company reaches 45,000
vision does not fully materialize, testing, some predictive employees (2010).
but APIs5 start to emerge. Cloud analytics (e.g. aftermarket
based (sharing of IT infrastructure, maintenance service cost, Large outsourcing
application core code and parts fraud). 4,000 contracts signed (2010)1.
of the application data), analytics,
collaboration (portals, desk-based Complex banking processes. Large off-shore shared
audio/video conferencing), business 1,000 services centers
mobile technologies (e.g. mobile BI, BPO/SSC initial spreading
workflow); data security issues are of GBS transformation operational (2010)2.
first surfaced. emerges.
ort e.g. GE’s GECIS reaches 20,000 employees
criptive and matures into one of the very first More complex finance and
Global Business Services (GBS). procurement work.
nce
gment Large outsourcing Healthcare insurance fraud
33). 2000 contracts signed (2010)1. detection (2010).
Large off-shore shared Next generation, analytics-
600 services centers operational driven process operations
science emerge (e.g. Genpact
(2010)2. Smart Enterpricse Processes (SEPSM)
(2010).
6
Operations organizational
models mature (large-scope
BPO and other business process
services).
Pools of labor mature in new
cities and geographies (e.g.
Poland, Latin America).
4 Service Oriented Architecture
5 Application Programming Interfaces
New normal of market uncertainty and regulatory pressure; Non-linear inflection of technology, op
maturation of BPO; emergence of GBS; rapid automation; smarter and more pervasive regulation
advanced analytics, in-memory database and big data; Systems of emergence of industrialized, intelligen
EngagementTM and business process as a service emerge.
2015 HOW WH
HOW WHAT WHO Significant pools of Fron
sophisticated labor inclu
New paradigm technologies available in multiple centers ope
become mainstream; globally (including in developed
API interfaces become markets, with more flexible work Fina
industrial-strength; Internet of arrangement e.g. home, part time), supp
Things emerges; autonomics (aka able to collaborate seamlessly with
robotics, rapid automation) emerges their counterparts, enabling more Perv
(2013); master data management complex global work. and
becomes hot topic and routinely supp
intersects with advanced analytics; Analytics driven process ana
data security solutions widespread; practices morph into
data privacy issues emerge. automation engines; new insights End
inte
Pool of sophisticated labor into global operations con
in major centers (e.g. Delhi, con
Bangalore), formation of significant
labor in secondary (e.g. Lublin, BPO/SSC hybrid design and emerge from data science (e.g.
Poland) and even tertiary locations transformation end-to-end social network analytics, people
(e.g. Jaipur, India and Juarez, mature. More mature GBS have analytics); pervasive design of
Mexico), as well as nascent ‘rural added front-office work to end-to-end, front-to-back office
shoring’ and ‘impact sourcing’ in back-office. operations.
developed and underprivileged
locations e.g. Africa. Global process owner concept More significant sharing of
formalized. parts of operations across
enterprises matures; GBS scope
Rapid automation (autonomics/ expands and absorbs much complex
robotics) of slivers of process work, CoEs (Centers of Excellence),
and regional shared services work.
Crowdsourcing emerges for (e.g. data input) across Genpact reaches 70,000 on
small-scope (both low and functions. employees. New paradigm technologies aud
high complexity); sharing of parts become pervasive, ERP core
of operations across end users Increasing amount of predictive Workday drives disruption starting to erode; APIs ubiquitous; Ma
re-emerges (client onboarding in analytics (e.g. CAT modeling in in the HR services market. Internet of Things mature; master ind
financial services). insurance, PHM6 in healthcare); data management solutions mature;
some prescriptive analytics (e.g. Genpact-Markit joint Internet of Everything emerges; Adv
Analytics driven process informing front line actions) venture - HSBC/Deutsche artificial intelligence solutions (pe
practices established (e.g. work. Bank/Citi/Morgan Stanley emerge; basic data security issues wid
Genpact SEPSM covers over 20 - for institutional banking solved, but deeper security issues
process); new insight into global Pharma regulatory affairs BPO. KYC onboarding. exposed in organizations’ in-house Mu
operations emerge from data systems; data privacy solutions Exte
science (e.g. social network Client onboarding in investment IBM Watson develops. widespread. Risk-control “certified” opt
analytics, people analytics). banking – with partially shared system-of-records and Systems of mo
data across market participants. Genpact partnership with EngagementTM.
Oliver Wyman for financial Per
6 Population Health Management risk operations. ope
Wid
hig
Inte
inte
ana
thro
- an
fee
“Ev
perating and business models; 2020
ns; new risk management needs;
nt operations.
WHAT WHO
nt-to-back processes routinely Business process operations
uded in industrialized design completely absorbed
erations of integrated GBS. by shared, often centralized,
advanced operations
ancial risk management groups?
pport at scale.
Simple call centers
vasive judgment based finance operations run by Software
d accounting work (e.g. strong as a Service (SaaS)
pport of financial planning & companies?
alysis).
Convergence of technology,
d-to-end financial risk control; data, process services
egrated zero-based approach, providers?
ntinuous auditing, and 90%
ntrol automated. Major impact Emergence of specialized
data brokers?
VISIBILITY MANAGEMENT
EXECUTION Five steps to ride the Intelligent Operations wave
internal audit and external 1. Design, transform and run processes so that their output metrics
dit. closely align with measurable business goals across enterprise
silos.
aster data management
dustrialized operations. 2. Look more objectively and holistically at technology, analytics
and organizational practices - and ensure their alignment to
dvanced analytics modeling the goals.
ervasive predictive analytics,
despread predictive analytics). 3. Harness now-mature ‘Systems of EngagementTM’ that
complement ‘systems-of-record’ technologies.
ulti-channel client engagement.
tensive industrial asset 4. Treat analytics (Data-to-Insight-to-Action) as a process; embed
timization and remote insight at scale into the fabric of other enterprise processes.
onitoring.
5. Consider operations of business processes as a strategic,
rvasive trade promotions untapped resource.
erations in consumer products.
despread and sophisticated
gh tech services support.
elligent operations increasingly
egrate operations execution,
alytics, and planning
roughout the organization
nd benefit from granular
edback loops.
verything” as a service.
INDUSTRY ROUNDUP GENERATING
CAPITAL MARKETS
IMPACT
newInvesptmaernat bdanikginmg's
Shaking up traditional approaches
THE CHALLENGE A leading international OLD WAY NEW WAY
investment bank is moving away
from riskier trading activities.
BUSINESS CHALLENGE
Reduce per Reduce fixed Increase Move to Accommodate Unavailability of
transaction costs in capacity of shared, new business experts required
operations multi-asset model across
costs post-trade platform 23 countries to scale up
operations delivery due to the
niche, high-end
nature of work
To compensate for the lower margins on less risk, the bank needed to
streamline its operations.
OLD WAY A few, highly risky trades with Less risky trades with lower NEW WAY
large margins margins, processed more efficiently
Intelligent Operations June 2015
THE SOLUTION 1
The processing transformation began with a large
technology implementation to upgrade and centralize
back-office systems.
2 4 Global consolidated
back-office
Operational processes were moved to the AleoYapsn“wcovnrfuaaorioidrptkbtltvhil,upHoloiedLaotnwohdeolrnetscnttlghteiiadncrveaapeKoecmttnnsoeiobvut,sngnraenPagyjci.un”lakitnzorNeiocsetdf,ifowicne
shared platform and delivered from a ‘virtual Straight-through
captive’ center, achieving unprecedented processing
economies of scale.
600%
3
increase in
To accommodate fragmented front-office systems, a trade throughput
common process framework was developed
enabling businesses to share the consolidated
back-office across systems and asset classes.
THE IMPACT BUSINESS IMPACT DELIVERED 40%
20%
cost savings due to one-time cost savings
productivity gains achieved through virtual captive
over first three years
Delivered business process Achieved an optimized delivery Streamlined back office
optimizations through a Lean Six model unprecedented in the trade processing and
Sigma approach, achieving a investment banking industry by focused on straight through
number of productivity setting up and running a virtual processing. Productivity
improvements minimized
improvements including doubling captive that provided human intervention and
the batch operations supported, experienced technology and
operations teams working in increased the back office’s
and increasing the number of managed services mode with trade processing capability.
business users and geographies sophisticated trading platforms
IO
supported each by 33%. from an offshore location.
Intelligent Operations June 2015
INDUSTRY ROUNDUP
Technology in sourcing isn’t
just about IT
Driving the enterprise-wide impact of eSourcing
Large pharmaceutical execute its commodity sourcing Process changes
companies increasingly strategy in a repeatable and were strategically
transparent fashion, in part because implemented in
find themselves squeezed request for proposal/request for order to engage and
quote (RFx) templates and the educate stakeholders
between mounting research eSourcing knowledge base were not in eSourcing
centrally maintained. This increased performance, gaps
costs and price pressure from generic cycle times and compelled buyers to and solutions
drug manufacturers. Transforming enter information manually for every
operating models to increase bid. Another challenge was that
efficiency and reduce costs is part regional category managers were
of the solution. That encouraged a unaware of the eSourcing directive
leading pharmaceutical enterprise and its goals and did not understand
to maximize return on investment how the tool could advance their
from an ambitious new eSourcing interests. Inadequate training and
initiative. As a result, eSourcing experience with the tool’s benefits
spending increased by $2 billion, led some of them to prefer personal
cycle time per sourcing event was
reduced by nearly half and the team
involved was able to conduct 40 per
cent more events annually.
The price of low uptake
As part of a larger IT implementation,
this pharma major had deployed
an off-the-shelf eSourcing tool that
included eAuction capabilities.
The goal was to achieve bottom-
line impact through improved
compliance, more standardized
processes and better sharing of best
practices. The original initiative,
however, was not entirely successful.
The tool was more complex than
anticipated and was not perceived as
user-friendly, leading to poor uptake
and minimal spend throughout.
The cumulative result was a failure
to achieve anticipated cost savings
from improved procurement
negotiations and reduced return on
the technology investment.
The company found it difficult to
34
Intelligent Operations June 2015
INDUSTRY ROUNDUP
interactions and manual bid users in a wide variety of other Finally, process changes were
management rather than the optimal languages. The team maintains the strategically implemented in order to
combination of eSourcing and face- RFx knowledge base, manages the engage and educate stakeholders in
to-face negotiations. process of setting up and monitoring eSourcing performance, gaps
events and provides overall system and solutions.
A complete solution administration. Members of this
center of excellence also conduct Ongoing tracking
Genpact’s extensive experience rigorous post-event analysis to track of performance
with Lean Six Sigma was applied the system’s performance. against targets
to conduct Value Stream Mapping ensured that the
(VSM) of the pharma major’s Training and support project stayed
sourcing processes and identify on track
roadblocks to adoption. This led to a To promote adoption of the
three-pronged strategy that included eSourcing tool, users get the training The payoff: savings in the tens
creation of a center of excellence for and support they need to use it of millions
end-to-end eSourcing, expansion of effectively. This includes helping
training and support capacity and buyers and category managers to By institutionalizing the eSourcing
dissemination of best practices. understand and apply the tool’s process, the company achieved
Ongoing tracking of performance functionality to their work, as well much greater penetration and
against targets ensured that the as training to enable suppliers to engagement, increased the use of
project stayed on track. register and take advantage of its full eAuctions, boosted savings and
range of capabilities. Team members achieved solid bottom-line impact.
A dedicated Genpact team provides also operate help desks and resolve The business impact included nearly
comprehensive hands-on support queries from both buyers and doubling the eSourcing spend from
for approximately 85 per cent suppliers. And for complex sourcing $2.2 billion to $4.2 billion, reducing
of the company’s procurement events such as reverse auctions, cycle times by more than 47 per cent
spend across multiple divisions forward auctions, and dutch auctions, and increasing the number of events
worldwide. This includes a group in the pharma player leverages its completed by the same team over
India that handles English-language partnership with Genpact. than 4 per cent. Incremental savings
sourcing events and counterparts are estimated at between $40 million
in Romania and China that support Best practices and $60 million annually. IO
Cycle times were reduced through
the creation of category-specific RFx
templates for improvement-ready
categories like marketing, meetings
and professional services. Category
managers were encouraged to
adopt eSourcing through industry-
leading training and templates
and suppliers were provided with
much-needed documentation that
significantly reduced the number
of repeated queries. The Genpact
team also designed and maintained
alert reports and fine-tuned the
RFx configuration settings to help
users understand why certain
events were not managed through
eAuction. Every action taken by the
Genpact team was supported by a
robust system of tracking metrics
and targets that aligned eSourcing
activities with the client’s goals and
ensured continuous improvement.
35
Intelligent Operations June 2015
INDUSTRY ROUNDUP GENERATING ANALYTICS IMPACT
Tackling buyer abuse
The game-changing role of industrialized analytics
Massive and widespread buyer abuse
$ BUY $
FRAUD
1 in every 100 DOLLARS
of online revenue lost to fraud
REJECTED REJECTED
1/167 1/36 1/14 1/4
online orders U.S./Canada orders rejected international orders rejected orders routed to
lost to fraud on suspicion of fraud on suspicion of fraud manual review
Intelligent Operations June 2015
Traditional approach allows buyers to routinely abuse
existing policies
False claims of non-receipt of goods by buyers False claims of defective items Negative feedback
Seller can report to operations Operations investigates
OR REFUND
Buyer blocked Seller refunds
Solution - industrialized analytics
Analyze multiple data sources to trigger investigation and blacklisting of high risk buyers
Customer DATA PREDICTIVE
data PREPARATION ANALYSIS ENGINE
Payment Customer TO INVESTIGATION UNIT
history profile
Feedback
Transaction
history
END RESULT
Improved buyer ...increases buyer ...leading to Optimized operations e.g. Detection and
seller relationship con dence and increased sales multiple accounts not prevention of 13,000
allowed
trust... cases per year IO
Intelligent Operations June 2015
INDUSTRY ROUNDUP
Insurers as disruptors
A rapidly growing player’s operations lacked standardization and faced ever-
evolving compliance obligations. Yet it had to scale up operations.
How did the leaders do it?
Aglobal insurance company with internal IT and consolidated management and reporting
was growing at a 30 existing silos across functions and applications support.
geographies, this strategy enabled a
per cent-plus rate and scalable target model that optimized With the more robust BPaaS solution,
processes for: the company is realizing gains in
required operational operational efficiency, underwriting
• Decision support capacity, quality and productivity.
support for that growth in its global • F&A The business impact was more
• Underwriting transformation than $10 million in the first year:
operations. The firm did not want to • Regulatory reporting More than $50 million is projected
over-invest in infrastructure, favoring annually for year two and beyond. IO
flexibility over fixed costs. Other Genpact’s solution provided core
challenges: the company’s existing insurance operations across multiple
operations lacked standardization lines of business, covering processes
across units and it was facing such as:
increasing compliance obligations in
an evolving regulatory environment. • Underwriting support
• Claims processing
The solution was a full Business • Actuarial & risk management
Process as a Service (BPaaS)
strategy encompassing process support
transformation, outsourcing and IT
for all back- and mid-office functions, The BPaaS delivery also supported
with shared governance and SLA- finance and accounting, data
driven accountability. In addition
to facilitating greater alignment
38
Intelligent Operations June 2015
INDUSTRY ROUNDUP
Here comes the sun
A leading equipment firm needed to expand its global leasing operations while
reducing capital expenditure. How did the company handle it?
As the global economy operational setup, infrastructure and investments with the client to
returned to sustained comprehensive, ongoing professional support solar equipment, a rapidly
growth, the financial arm support. In addition to seamlessly emerging class of asset.
of a leading equipment servicing operations across the globe,
the Genpact partnership also offered The company’s BPaaS solution made
manufacturer had to deploy a host of other benefits: a major impact. The deployment
innovative ways to accommodate was completed within 90 days and
growing demand while keeping an • Deal booking and funding resulted in 50 per cent cost savings
eye on the firm’s bottom line. The • Billing, cash applications and over other methods. And the firm’s
company established an ambitious expansion into solar equipment
three-month timeline to accomplish collections promises to yield significant returns
two major objectives: the creation of • Customer service and lease as it prepares to face the challenges
a globally scalable end-to-end leasing of tomorrow’s global marketplace. IO
operation and the implementation terminations
of a new operating model that would • Originals and servicing platform
lower capital expenditures.
implementation
The firm found an elegant all-in-
one solution by partnering with The delivery team leveraged its
Genpact to lease a Business Process extensive experience in managing
as a Service (BPaaS) solution. The and lending operations to
BPaaS model, designed at low cost optimize the company’s policies
and with variable pricing, included and procedures and handle
the undertaking’s finance and
accounting. Genpact delivered
further value by sharing additional
IMPACT
The holistic BPaaS operating model, deployed in just 90 days,
resulted in 50% cost savings over alternative solutions. Greater speed to market
In addition, a Genpact partnership accelerated the company’s entry
into the fast-growing residential solar equipment market. 3
flexible quick and comprehensive month
operations scalable operations across deployment
deployment originations and
Genpact servicing lifecycle
engagement
unique operating global
begins model with 15 years’
operating
lending / leasing servicing operations quick and capable expansion
experience model
globally across geographies
50%
more cost
reduced capital more e cient holistic BPaaS solution e ective
expenditure F&A processes with variable cost structure
39
Intelligent Operations June 2015
INNOVATION Genpact and MIT crowdsource
the art of the possible
You do WHAT with THAT?
MIT and Genpact Research Institute work together The technologies
to identify new advanced technologies
Digital
assistants
SMART Real-time speech
MACHINES translations
SMART Rapid
CROWDS automation
SOCIAL Crowdsourcing
SENSING product info
MOBILE AND Prediction
AUGMENTED markets
USER INTERFACES
People
recommender
systems
Social
badges
Google
Glass
Virtual reality
headsets
Interactive
tabletop displays
LEGEND: TECHNOLOGY CLASSES
SMART MACHINES SMART CROWDS SOCIAL SENSING MOBILE AND AUGMENTED
USER INTERFACES
Smarter machines can assume Machines are generally good at The emergence of the Internet as a
responsibility for repetitive or difficult simple tasks,while humans are better Screens and mice are our
tasks and free people up to at activities that require creativity. platform and the availability of cheap grandparents’ technology.
undertake other activities. storage enable a proliferation of systems
that gather and store data about the world.
Intelligent Operations June 2015
The crowd thinks up unexpected applications for these technologies
APPLICATION:
Natural language conversation
for customer support
Language independent domain
driven customer service
Faster and 100% accurate
insurance claim process
Using mobile phones to collect
data in emerging markets
Predict client satisfaction scores
in B2B environments
Assembling the right team
in real time
Dynamic employee interaction data
improves post merger integration
Rapid verification for Return
Merchandise Authorizations
Simulate customer experience
environments
Visualization and modeling of
complex business processes
Join the conversation
intelligentoperations.genpact.com
Intelligent Operations June 2015
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