Infosys BPO Future Forward - Innovate to Shape the Future

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Inside: 6 Thought PapersInnovate to Shape the FutureInfosys BPO Future ForwardDear reader,There is no doubt that to address todays business and industry challenges, we will need innovation. We will need innovation to improve existing products and services and to create new ones. To us, innovation goes beyond finding the next big thing. It is more about finding newer ways to do old, familiar things to continually improve systems and processes to drive efficiency and effectiveness.Then again, we know that innovation does not happen in a vacuum. We need partners to drive new ways of thinking and working. And this is where a seasoned Business Process Management (BPM) partner can help. By leading and delivering innovation for a stronger, more sustainable business. This to me really is innovate to shape the future. We at Infosys BPO are committed to breaking molds and shaping the future by effecting smarter processes that in turn create smarter organizations. Over time and over multiple engagements, we have accrued a wealth of data and insights on key finance and accounting (F&A) business processes. We have now come up with a unique way of using this data and insights to benchmark these processes, understand the gap areas and improve them. We are now collaborating with media and entertainment companies to bring in an innovative business model by monetizing their content with new technologies such as cloud and social media. We are also adopting an end-to-end global approach to process transformation with a view to bring in efficiencies like never before. Then, there is our unique approach to implementing mandatory SOX controls in the organization helping not just comply with regulations, but also realize true business value.I hope the collection of viewpoints in this journal encourages creative ways of working together, helping shape strategies and business models that can shape the future of enterprises.I look forward to hearing your thoughts on the perspectives in the journal. Do write in to us at infosysbpo@infosys.comBest regards,Anantha RadhakrishnanSenior Vice President and Global Head of Enterprise Services, Business Transformation and Technology Services; Executive Committee Member, Infosys BPOForeword1. The Numbers Dont Lie Measuring true business value with Infosys BPOs Finance and Accounting (F&A) benchmarksVinay Gopala Rao, Ramanjaneyulu (Ram) Dasari63. Driving Global Process Transformation with an End-to-End Approach Part 1 - The ChallengesMadhukar Tata, Rakesh Kumar, Manoj Baheti245. SOX Controls Driving Transformation of the Order-to-Cash Value ChainShyam R Rao442. Any Content, Anytime, Anywhere, Any Device Four aces in a winning strategy for media and entertainment enterprisesEdward Altman, Sathish Kasthuri, Harry Jose164. Driving Global Process Transformation with an End-to-End Approach Part 2 - The OpportunitiesMadhukar Tata, Ardhendu Banerjee346. The New Paradigm in Procurement Driving Efficiency and Effectiveness With the Right MixPaul Millett and Shubhra Agrawal54Index1- Vinay Gopala Rao, Ramanjaneyulu (Ram) DasariIn 2010, many clients in our Finance and Accounting (F&A) practice came to us with the same request, Can you tell us where our finance function stands when compared to those in our industry, or others? How do our process efficiencies stack up against those who are best-in-class?Infosys BPO was perfectly poised to answer these questions in a quantifiable manner. With 40 F&A engagements of large enterprises across industries, we had visibility into varied processes, and sometimes, even the entire F&A value chain. What followed next was an extensive benchmarking study of F&A operations, processes and functions 2,000 questions, digging into 250 RFPs, referencing benchmarks published by analysts, and thousands of man-hours of scrutiny. The result? An industry-leading repository of over 610 F&A benchmarking metrics - 155 business metrics, 35 cost metrics and 420 process metrics. A realistic way to plot the current state of F&A functions. A compass to draft a roadmap towards top-tier operational and business performance. Infosys BPOs benchmarks are as detailed as it gets: the benchmarks factor differs across industries, technologies, process designs, skillsets, process design, client dependencies. They are also normalized for constraints (e.g. legacy vs. ERP, geographies, languages). Today, many of our clients are leveraging these benchmarks to realize best-in-class operations, and most importantly: to realize business value they can actually measure. Infosys BPO has now taken these 610 metrics to the market F&A benchmarking is now available as a service offering.The Numbers Dont LieMeasuring true business value with Infosys BPOs Finance and Accounting (F&A) benchmarks8Best-in-class benchmarks:What every CFO wants, but seldom getsComprehensive, intuitive, transformative:Infosys BPOs approach to F&A benchmarkingIn the world of outsourcing and consulting, best-in-class and benchmarks are terms that are thrown around loosely. Often, such benchmarks do exist in the form of metrics published by industry analysts, and efficiency-based frameworks thats shown to clients by outsourcing providers. But some of these metrics often have shortcomings: Typically, metrics are based on a small sample size of processes and process steps Such metrics make for an apples- to- oranges comparison for example, the productivity in invoice processing of a smaller communications company is often benchmarked against that of a large manufacturing enterprise Do not provide a way to map process metrics to business metrics Do not identify the underlying reasons or rationale for current performanceInfosys BPO identified four overarching processes in Finance and Accounting (F&A) for the benchmarking study: Procure to Pay (PTP), Order to Cash (OTC), Record to Report (RTR), Financial Planning and Analysis (FP&A). Each of these processes along with each process step would be analyzed across over 40 engagements at Infosys BPO across industries Manufacturing, Financial services and Insurance; Communications, Media and Entertainment; Energy and Utilities; Healthcare; Retail, Consumer goods and Logistics.Some of the differentiators of Infosys BPOs study include:Internal and external benchmarkingThe benchmarks dont just compare process / business performance with other companies at Infosys BPO. Metrics are also compared with external benchmarks published by industry analysts. This is reflected in the fact that we have an Infosys BPO Average and External Averages to identify:For the F&A practice / Clients: A wide range of Process / Business metrics covered including quality, cost, productivity, process cycle time, straight through pass, automation, standardization, process effectiveness, efficiency, business valueA data bank which contains various analytical insights into the operations in terms of metrics, best practices, capabilities etc., compiled based on questions and discussions with CFO/Financial professionals of various companies / prospective clients. This also ensures that the board room talk resonate with what one gets to see on the operations floor For the Operations / Clients: Roll out a Benchmarking Scorecard for the operations with the improvement journey and the projects to be implemented to reach best-in-class performance; review and track this scorecard at regular intervals during business meetings with clientsIntegrate the benchmarking with Infosys Business Value Realization (BVR) Framework. Infosys has a BVR framework drawn for the clients (explained in detail in page #10) as part of continuous improvement and business value add. The output of the benchmarks exercise acts as a critical input for the Business Value Realization Framework rolled out to the clients For the Business / Clients: Provides a framework for realistic negotiation of Service Levels as it is based on live data from operationsWhat it means to different stakeholders:TopPerformerBest-in-classAverageBelow AveragePar excellence processes, on their journey to be top performersNeed to affect process improvements to achieve best-in-classUncommon, but do exist; need complete process overhaulAbove industry standards in F&Aperformance, a handful of companies When used as the basis for defining SLAs, incomplete metrics are dangerous, often setting the stage for a decline in performance The metrics cannot be used to develop a sustainable roadmap for realizing business valueAddressing all the above shortcomings was a key focus for Infosys BPO when we invested in a detailed finance and accounting (F&A) benchmarking study in 2011. We decided that our benchmarks should be detailed enough for us to tell any CFO whether their finance function was average, a laggard, or best-in-class. Another imperative we decided on from the get-go: the benchmarks shouldnt be limited to process metrics; they should also include a significant number of business metrics with a clear line of sight and correlation between continuous process improvements and business outcomes.9Overview to benchmarking methodologyBottom line and Top line opportunities:Infosys BPOs benchmarks cover process, business and cost metricsAs a result of the benchmarking study, Infosys has benchmarked over 155 business metrics, 35 cost metrics, and 420 process metrics.Stage 2Stage 1Stage 3Stage 4Data collectionBenchmarkscorecardsData analytics and benchmarking including normalization (apples-to-apples comparison) for process design, technology and other key factorsData validation with engagements / Process delivery teamsProcess metricsExamples Examples ExamplesBusiness metrics Cost metricsThese metrics are related to a process or sub process and the improvement of the metric will result only in improvement of the process. Processing accuracy Percentage of invoices / journal entries processed accurately Percentage of receipts applied without errorsTimeline adherence Number of invoices processed within timelines Percentage of entries passed within dened timelines Percentage of receipts applied within given timeProductivity Number of invoices per AP FTE Number of journal entries processed per FTE Number of receipts applied per FTE On-time payment of invoices DPO days payables outstanding Early payment discount On-time closure of books Number of days taken to close books Percentage of automated journal entries Percentage of automated intercompany reconciliations DSO days sales outstanding Percentage of past-due invoices Ageing of past-due invoices Cost per invoice processed P2P cost as a percentage of revenue Cost per T&E claim processed Cost per vendor master maintenance request Cost per journal entry Cost per GL account reconciliation Cost per bank reconciliations Cost per closing activities Cost per asset capitalized Cost per remittance processed Cost per customer invoice processed (AR) Cost for collecting each million dollar Cost per disputeThese metrics are driven through a policy or are driven by the nature of the business of the client, and impact the business of the client.This metric outputs the cost of a particular process or a transaction. 10How the benchmarks tie in to Infosys Business Value Realization (BVR) frameworkInfosys has laid down a Business Value Realization (BVR) framework which looks beyond SLAs and identifies various process and technology improvements which add value to a clients operations. Our BVR framework encourages clients to build the connect from the process metrics to the business metrics to achieve their desired results in business metrics such as reduction in DPO, improvement in working capital, reduction in cost per invoice. The BVR framework provides visibility of the various levers that enables clients to achieve their business metrics. Infosys maps these levers across various clients within Infosys using the internal benchmarks and the industry to assess the process maturity of a client engagement.Example:How a combination of initiatives can help clients reduce its cost of processing an invoice. The levers which impact this business metric are: Process harmonization and standardization Consolidation, off shoring and outsourcing Technology multipliers like automation tools Operational optimization like Six Sigma and best practices Decision accelerators like reporting Measuring and improving process metrics 215523Process impact Process eciency metrics Process eectiveness measures / Change enablers4. Facilitating faster follow up of hold cases (BP Number - BP12/2009)5. Toyota Production Line implementation (BP Number BP5/2009)1. Processing of invoices against POs without receipts and Goods Receipt matching is automated (BP Number - BP14/2009)2. OCR Engine implementation for invoice processing 3. Process Harmonization road map for 2012% Process automation - IT platforms & enabled technologies FTE productivity (p.a.)% Straight through pass% P2P Processing accuracy % of PO Invoices% OCR% EDI / E - invoicing% Integrated workows% Process standardization% O shored to low costNo. of ERPs% Process documented% Process standardizationJoint ideationInfosys Best PracticesClient Initiatives4Invoice Processing Time (Minutes)Reduce Cost per invoice% Process consolidationLevel 1 Level 2$ 0.5612K 51K74% 94%100%31D 11D8.7% 100%53% 87%34%85%86% 100%90% 100%4 298.5% 100%86% 100%99.3%23K21%67%100%90% 100%69% 98%6.7 2$ 2.86E2E cycle timeP2P BVR FrameworkLegends & NotesInfosys avg. performanceInfosys best-in-class performanceExternal benchmarks best-in-class performanceThe above is not an exhaustive list of metrics. Benchmarks are basis internal benchmarks and analysis. Benet calculations are independent and non-inclusive % of OCRShared below is a high level Business Value Realization (BVR) Framework or transformation roadmap for the procure to pay (P2P) process:11The diamonds highlighted in orange are the external benchmarks that have been referenced for these process metrics.The above BVR Framework is structured into 3 components:Objective Identifying the business objective (process impact)Metrics Determining base metrics which are driving the business objective Level 1 metrics Deriving sub-metrics that drive base metrics Level 2 metricsChange enablers Identifying the projects to improve the base metrics and sub-metrics, and hence influence or achieve the business objectiveThe cost of processing an invoice are directly impacted by FTE productivity, levels of process standardization, consolidation and offshorability. Our internal benchmarks for these transformation levers suggest that improving process metrics will reduce cost per invoice for a client.This example shows how typical PTP best practices such as PO penetration and 3-way matches impact the Level 2 process metrics such as % straight through pass and end-to-end cycle time for processing invoicing. We have observed improvements in these process metrics that impact the Level 1 metrics like overall productivity of an invoice processing analyst.One change enabler recommended is automation of processes through an OCR engine, which will make for accurate and faster processing of invoices. This will contribute to achieving the business objective, which is reducing the cost per invoice.Eective solution designfor prospective clientsEectiveoperational deliveryBusiness Value Realization (BVR)Frameworkfor clients Leverage vast amounts of data to measure current performance standards of our clients Roll out transformation roadmap Assess realistic effort estimation for greater productivity Identify top metrics that have direct impact on financials Use the Business Value Realization (BVR) Framework to implement projects to improve performance and deliver dollar benefits to our clients Track performance measurements across the Infosys BPO F&A practice Identify the current stage of performance of the engagement and compare the engagement performance with internal and external benchmarks Identify best practices from best-in-class engagements Analyze factors that contribute to low performance, and determine drivers for performance improvement Roll out Benchmark ScorecardMeasurable business value:How Infosys BPOs benchmarks move F&A clients to the next level12Industry-wise performance Number of non PO invoices per FTE per month450040003500300025002000150010005000BestAverage4481 4481913 82213509541063985160395914941133308308Overall PerformanceManufacturingFinancial Service and InsuranceCommunication, Media and EntertainmentEnergy, Utility and ServicesPrint, Publishing and MediaOthersOverall PerformanceManufacturingFinancial Service and InsuranceCommunication, Mediaand EntertainmentEnergy, Utility and ServicesPrint, Publishing and MediaOthersExamples of analysisSample level of details achieved during benchmarking study: for an accounts payable process Invoice processingMetric details / ClientsManufacturing FSI EM EUS EM PPNM CMELarge commodity manufacturer - NAM - Special InvoicesGlobal Electronics Giant Chennai - APACLeading Brokerage FirmEurope headquartered private equity firmLeading Apparel RetailerLeading American Media & Publishing HouseGlobal communication service provider UK based mobile telecom network companyTime taken to process each invoice (PO based) 1.0 4.0 15.0 6.0 10.0 5.0 3.0 3.5Total time for common process Steps 1.0 4.0 10.0 6.0 10.0 5.0 3.0 3.5Invoice document verification 1.0 2.0 1.0 3.0 1.5 0.5 0.5Invoice data entry (Indexing, Data entry and duplicate check)1.0 3.0 8.0 5.0 7.0 3.5 2.5 3.0Matching Auto Matching 2 way 3 way 2 way 2 way Auto Matching 2 way 2 wayTotal Time for additional process steps 0.0 0.0 5.0 0.0 0.0 0.0 0.0 0.0Check and analysis of PO 3Separate duplicate check 2Invoicel archivalAverage number of line items per invoice 1 3 3 4 3 2 1 4Number of data entry fields 6 21 24 21 22 12 12 21Time taken per data field (seconds) 0.17 0.14 0.33 0.24 0.32 0.29 0.21 0.14Time taken per invoice line item 1.00 1.33 5.00 1.50 3.33 2.50 3.00 0.88Industry-wise analysis: Number of non-PO invoices per FTE per month13Percentage of automated journal entries Comparison with external benchmarksInfosysAnalyst 190%80%70%60%50%40%30%20%10%0%Average Best-in-class19%61%86% 84%Industry-wise analysis: Number of PO invoices processed per FTE per monthInvoices per FTE per annum (both PO and Non PO-based invoices)Percentage of automation in journal entriesIndustry-wise performance Number of PO-based invoices per FTE per monthOverall PerformanceManufacturingFinancial Service and InsuranceCommunication, Mediaand EntertainmentEnergy, Utility and ServicesPrint, Publishing and MediaOthers500045004000350025002000150010005000BestAverage4867 48671023 103813509511870 7175411108978308308OthersOverall PerformanceManufacturingFinancial Service and InsuranceCommunication, Media and EntertainmentEnergy, Utility and ServicesPrint, Publishing and MediaNumber of Invoices per AP FTE per annum Comparisonwith external benchmarks80000700006000050000400003000020000100000 Average Best-in-class Top Performers12254 10563 8768505582323610933686673283047173InfosysAnalyst 1Analyst 214Industry-wise performance Work days taken to close the books during month endOverall performanceManufacturingFinancial service and InsuranceEnergy, utility and servicesPrint, publishing and media12.010.08.06.04.02.00.0BestAverageOverall PerformanceManufacturingFinancial Service and InsuranceEnergy, Utility and ServicesPrint, Publishing & Media1.01.05.13.310.011.03.05.05.3 5.5Workdays taken to close the books during month endThe way forwardWith the in-depth knowledge captured by the practice through the benchmarking exercise, today Infosys BPO is ready to offer Finance and Accounting (F&A) benchmarking as a value service offering to our existing and prospective clients. With over 610 benchmarks, we have consultants with over three years of experience in benchmarking, and we developed an in-house benchmarking tool for data collection, computations and presentations. The success of this exercise has encouraged us to institutionalize this benchmarking exercise for other practices in Infosys BPO, including Sourcing and Procurement (S&P), Human Resource Outsourcing (HRO), Sales and Fulfilment (S&F), and Customer Service (CS).We strongly believe that whether or not you outsource your F&A processes, you should undertake a benchmarking exercise, which could serve as an eye-opener for process improvements and transformation. Because with Infosys BPOs F&A Benchmarks, there is no one-size-fits-all yardstick the metrics are an apples-to-apples comparison that lead to the realization of true business value. As they say, the numbers dont lie.15About the AuthorsRamanjaneyulu (Ram) Dasari Consultant, Finance and Accounting, Infosys BPO LimitedRam is a Consultant in the Infosys Finance and Accounting, Control and Compliance Group. Ram was the Principal Architect for Infosys BPOs F&A Benchmarking study. He actively worked on developing and rolling out the benchmarking scorecard with the improvement journey for Infosys BPOs engagements, and was part of the core team involved in suggesting the projects to be implemented for obtaining best-in-class performance. Ram is a chartered accountant, a graduate in commerce, has professional certifications including IFRS certified by ICAI, and is trained on Sarbanes-Oxley, SSAE 3402 / ISAE 16, and US GAAP.Vinay Gopala Rao AVP and Strategic Business Practice Head - Finance & Accounting Practice, Infosys BPO LimitedVinay heads the Finance and Accounting practice for Infosys BPO. Prior to his current role, he was the Associate Vice President and Global Head for one of the biggest client engagements at Infosys BPO. He was also the Global Head of Risk and Compliance and Finance Centre of Excellence for the Infosys BPOs F&A Practice. He comes with 23 years of experience in the finance industry, with 17 years spent extensively in the practice of subjects such as accounts, audit, taxation and corporate law. Vinay was a partner in a large chartered accountant firm based out of Bangalore. Vinay is a chartered accountant who holds a diploma in systems audit, and is a member of The Institute of Internal Auditors (Florida, USA).2- Edward Altman, Sathish Kasthuri, Harry JoseCreative content and business process outsourcing (BPO) may seem like an odd couple probably more so than Jack Lemmon and Walter Matthau from the 1968 movie of the same name. But Lemmon and Matthau overcame the odds by complementing each others strengths. Today, creative content and business process outsourcing can do the same, meet customer expectations head-on and enhance content monetization in the process.Todays digitally savvy customers expect no less than Any Content, Anytime, Anywhere, on Any Device what we refer to as 4A. Adopting cloud computing is only the beginning of 4A because technology alone doesnt guarantee success in monetizing content, meeting customer expectations does. Meeting these expectations will require a holistic strategy that blends cloud implementation with insights from social media and advances in content search. This is where media and entertainment (M&E) enterprises should leverage a BPO partner with strong technology capabilities in order to create an intuitive and relevant content delivery framework that unlocks the monetization potential of 4A. It will give customers the content experience they have come to expect. In essence, like Vito Corleone would say, Make them an offer they cant refuse.Any Content, Anytime, Anywhere, Any DeviceFour aces in a winning strategy for media and entertainment enterprises18During the same interview, Alison Sheridan, a customer in the audience, told Bob Iger, I bought an iPad, I bought the adapter to go to my projector, I bought the movie Up! (2009), and because of high-definition copy protection, I cant play it on my projector. Both Alison Sheridan and Bob Igers granddaughter underscore a big shift in content consumptionthat while technology has made it possible to consume content in newer ways, it is actually the expectations of the customer that is the real business driver. And M&E enterprises are aware of this shift. Today, their customer base spans different generations with different levels of (Today) I can show my granddaughter a Mickey Mouse short (movie) that was made in 1931 on my daughters iPad. Robert (Bob) Iger, President and CEO, The Walt Disney Company; All Things Digital D9 interview with Kara Swisher, June 30, 2011.The new tipping pointCustomer expectations, not technologydigital maturityeven the seven-year old sitting in the backseat of her fathers car, watching her favorite channel on the familys iPad.For the better part of the previous decade, the focus of the M&E industry was on technology. Topics like digitization, developing better encoding techniques for faster streaming, enabling HD / 3D content, and digital rights management were top of mind for top management. Not anymoreM&E enterprises are realizing that the customer is at the center, and that her/his demands and expectations are driving or will drive technology innovations, and not the other way round.The big shift: Ubiquitous content consumption becomes a fundamental rightA peek inside the customers mind reveals that ease of use and ease of access are top priorities irrespective of device, platform, and type of content.I want to access so many types of content books, news, movies, sports events, cable, musicImagine you could read the thoughts of media customers, a power similar to Mel Gibsons character in What Women Want. These are probably some of the thoughts you would hear.What customers wantThe content experience is so different on different devices the way I read, hear, and see. And lets not even get started on digital rights management.I have to store content in so many places (both physical and virtual) book shelves, CD racks, portable devices, cloudAs long as I legally own the content that I have, why shouldnt I be able to consume any of my content, anywhere I am, any time that I feel like, on any device that I own? Why shouldnt this be a fundamental right to view content that I have bought?19Anytime, anywhere, any device or 3A is not a radically new concept. People have been talking about it for a while now, and quite a few firms have tried to implement it as well. The Wall Street Journal is one firm that actively uses this concept in its advertisements. However moving from 3A to 4A, i.e. adding the fourth ace of any content is a complete paradigm shift. 3A became a reality because of the ubiquitous nature of the Internet. But, the hurdle was and still is in viewing and getting access to the not for free video content, which is not that easy because of the complexities in digital rights management. Today, it is not uncommon for different firms to own the rights for parts of the same content. Examples include: Different firms owning the rights to the same content in different geographies Different firms owning the rights to the same content in different mediums such as movies, books and merchandise Different firms owning rights to different sequels / derivatives of the same original workImplementing 4AA media and entertainment company including the M&E ecosystem, which consists primarily of distribution entities (such as iTunes, Netflix and Hulu let alone the Broadcast Networks and Cable Companies) may not choose to implement all the four As at the same time. The other thing to be borne in mind is that the move towards 4A is driven by customers by their demand that consumption of any legally purchased content on any device, anytime, anywhere, be made a fundamental right. Since digitized content is what travels across devices, it stands to reason that the customer push towards 4A will be dependent on how comfortable they are in the digital world. Teens watching their favorite program on their tablet will be much more comfortable digitally (than their 70-year old grandfathers trying to navigate a Facebook page) and are more likely to subscribe to innovative 4A offerings from M&E enterprises. Four aces in one handThe challenges and opportunitiesWith a diverse ecosystem of content creators, distributors and consumers, implementing each A in the 4A strategy comes with its own set of unique challenges: Anytime: Implementing any time is more of a technology challenge as media and entertainment companies try to improve their content delivery methodology in a manner where they can make use of existing customer bandwidth to deliver a satisfactory customer experience Anywhere: The challenges in implementing anywhere are similar to anytime, with rights management, regulatory compliance and content format issues thrown in for good measure Any device: Enterprises find it difficult to cater to multiple content formats that suit the customers device of choice Any content: The biggest challenge is the ability to convert any content the customer has legally purchased into a format that is compatible across devices. Since the device of choice for content consumption is most likely to be a digital one, the content also will need to be in the digital format. The device has to be equipped to showcase the content. Since most of the content is subsidized through advertising, continuing to serve brands without compromising on customer experience is another critical aspect20Connecting the dots, the cloud will play a major role in the implementation of 4A. All the industry efforts in this direction will leverage the advantages that the cloud offers. A few examples of industry initiatives include: Digital lockers for customers (such as UltraViolet and KeyChest) Compatibility with any device through a universal format or storage of multiple formats Storage and delivery CDN (content delivery networks) Access and rights management on the cloud Content licensing and IP management seamlessly across geographiesWe began this point of view by stating that the customer is setting the pace for innovation in media and entertainment, and that 4A is the direction in which we see the industry moving to. The digital maturity of the customer will also determine the ease and acceptance of offerings in the 4A space. However, it will not be all smooth sailing on the quest for 4A. Hurdles will need to be crossed. The customer will now have access to all the content they can ever wish to consume. This is a good problem to have, since finding the solution to this problem will keep increasing content consumption.It is here that two corollary trends, which have come about because of increased digital maturity of customers, appear with potential implications for content providers. One is the rise of social media, and the second is the need for instant search gratification.Trend 1 The connected customerTodays connected customers revel in the ability to have social conversations that are not affected by the vagaries of time and distance. On forums such as Twitter, they share whats on their mind at any given moment including the content they are consuming / wish to consume instantaneously. Access to these conversations will enable content owners (creators) to peek into the minds of their customers. To capitalize on social conversations, we recommend a social media command center that interprets social data to capture the voice of the customer. Using insights from the command center, enterprises can create products and tailor solutions that enable ease of content access across platforms.Trend 2 Instant search gratificationAs customers move through the stages of 4A awareness to 4A addiction, they will increasingly seek instant gratification in content search. In their quest for this gratification, customers may complain of a poor digital experience and lose interest adversely impacting content monetization.We recommend that content distributors make their content more discoverable across the digital web through enriched tagging and recommendations, which are the first steps in the holy grail of instant search gratification.Drive conversationReports and insights Facilitate collaborationLeverage advocatesSocial media collaboration and analytics toolsThe social media command centerPeer recommendationsEnriched taggingDiscovery of appropriate contentContent discoverability through peer recommendations and enriched taggingIntegrating cloud usage with social media analytics and instant search gratification21The ability to leverage the intersection of cloud delivery, social media analytics, and advanced metadata tagging will enable M&E enterprises to unlock their complete content monetization potential. To further this goal, Infosys BPO has created a 4A intersection framework. This unique framework enables M&E enterprises to mine the digital web for insights and push the right content to the right customer.CloudSocialMediaEnriched metadatataggingIntersect of metadata tagging and social mediaIntersect of clouddelivery of 4A and enriched metadatataggingIntersect of cloud delivery of 4A and social mediaUse inputs from social media and peerrecommendation to ne tune searchand make it more relevantMore relevant search results in cloud delivery of 4A the sales process happens through the cloud; metadata tagging makes right-selling, up-selling, and cross-selling more seamlessCustomized recommendation through suggestions and recommendations based on analyticsContent strategyon insights gleaned from social mediaSale of long-tail content use trending topics to push the sale of long-tail contentThe central intersect combines cloud delivery of 4A, enriched metadata tagging, and social media to maximize effectiveness of monetization strategyThe winning handPutting it all together in the 4A world22The way forwardThe digital revolution is here to stay, and studios and networks must adapt to the change. Just like what happened when VHS and cable revolutionized the movie industry, and when compact discs and portable music players revolutionized the music industry. The 4As any content, anytime, anywhere, any device is todays revolution. One that will transform the industry towards a customer-centric, omni-content future. It is no longer just about managing processes to make content omnipresent across channels. M&E enterprises must now look to their BPO partners to operationalize the 4As successfully so the right content reaches the right customer, at the right time, at the right place, and on the right device. And not just any BPO provider will do only a BPO partner that has a vision for the digital media future and is invested in it for the long term can support studios and networks in this journey. Such a partnership will be imperative to achieving the winning hand.23About the AuthorsEdward Altman Business Head Media and Entertainment, Infosys BPOEdward is on the cutting edge of developing and implementing a wide suite of BPO / media services for Hollywood studios as well as cable and broadcast networks.His career spans 30 years in information technology, of which more than 15 years were in the entertainment and consulting industries, including stints at Twentieth Century Fox, Paramount Pictures, and MGM where he served as the Chief Information Officer. He received his BS and MS degrees in mathematics / computer science from the University of Michigan.Sathish Kasthuri Principal Consultant Solution Design, Media and Entertainment, Infosys BPOSathish has experience in various media and entertainment industry segments such as online, broadcast and publishing. For the past 16 years, he has worked in multiple areas and has well-rounded experience in business process management, especially in content management. He is a member of the core team of the Infosys BPO media and entertainment practice, with focus on go-to-market strategy and development of alliances.Harry Jose Head of Marketing, Infosys BPOHarry currently heads marketing for Infosys BPO. Prior to this, he was heading the ECS Centre of Excellence, in which capacity he was responsible for all thought leadership and domain competency enhancement initiatives across energy, communications, media & entertainment and services practices of Infosys BPO. Harry was a member of the core team of media & entertainment practice of Infosys BPO and focused on external messaging. He has over 11 years of industry experience across multiple domains. Harry holds an MBA from Nirma Institute of Management, Ahmedabad.3- Madhukar Tata, Rakesh Kumar, Manoj BahetiDriving Global Process Transformation with an End-to-End ApproachPart One26Any global organization is meant to operate as a unified entity where each function and process is an essential cog that keeps the wheels turning toward greater performance and competitiveness. Each part or function is supposed to align with the other so that the whole , i.e the organization runs like a well-oiled machine. But heres the catch functions are often myopic, focusing on short-term enhancements that provide a short spurt in performance, but dwindle over the long term and are counterproductive to the interests of other functions and the organization.A parallax view of the parts is not a functional one, but a view of the people, process and technology put in place to achieve the organizations strategic objectives. These fundamental blocks should operate in complete harmony, aligned to the organizational objectives for which they exist. The same problem that exists for different functions exists here as well functional entities are not able to visualize the interlinkages between people, functions / processes, and technology. The solution then, is to look at functional processes not through the tinted glasses of local interest, but with an expansive enterprise-wide global view, one that identifies points of convergence and impact across functions. The underlining theme is to focus on global optimization to build a best-in-class throughput delivery machine rather than focus on a few parts / units of it. With this overarching context, through this two-part series, we explore how organizations can overcome local conflicts and drive global process transformations. We will look at potential root causes of these conflicts and try to identify points of convergence to arrive at a few core transformation levers, exploiting which will take us to the next level of organizational performance. But first: what is the value that is at stake?Functional processes in todays global enterprises are highly complex and more interconnected than ever with multiple global units at the helm of different processes. There are fundamental questions that keep haunting CXOs in spite of many strategic initiatives undertaken by them in a bid to become more competitive and improve operational performance. Some of these concerns are: All these strategic concerns relate to efficiency and effectiveness of the operational processes, which are key to an organizations success. Our experience in working with leading global organizations have strengthened our belief that successful organizations of the future will be agile, nimble and adaptive enterprises. Such an enterprise can be built by: How can we improve reliability and predictability of our business operations? Knowing what to do How can we grow both in volumes and in profits?Knowing how to do itHow can we create a formidable competitive advantage?Doing it without which of course, knowledge of what and how is meaningless 27Due to complex relationships between functions and the matrix nature of any organization, an action / change at a function however local it seems may lead to multiple effects across functions with varied impact in terms of higher costs, loss of revenue, and stakeholder satisfaction. Here are five impact areas where business value takes a hit when organizations work in a siloed environment.An organizations value creation potential is governed by the efficiency and effectiveness of its business processes and how it can manage them in a cost-effective manner. Resources are scarce and come with a certain cost, and how they are utilized gives the required competitive edge to the organization. We have seen that organizational costs such as cost of goods sold, cost of operation, and cost of working capital are impacted by challenges in aligning business functions and by not having a global or enterprise-wide view.A case in point here is challenges in sourcing contract management and inability to realize negotiated savings. Aberdeen Group reports (Contract Management Research 2006) average contract leakage rates of 21% as organizations strive to implement their sourcing decisions. Best-in-class companies experience about 14% leakage whereas all others see 24% leakage. Small companies experience up to 40% leakage. These are hard-negotiated savings that are not realized as actual savings due to lack of coordination and understanding of contract terms across functions business users, procurement, and accounts payable. The trade-off between logistics costs and service levels presents another conundrum. Sales managers realize a 1.5% increase in service levels as defined by fill rates, can result in an uptake of $15 million for every $1 billion of revenue (Aberdeen Survey 2012). However, this would involve a higher number of less than truckload (LTL) shipments versus full truckload shipments resulting in higher logistics costs something that a logistics manager in a siloed organization would not find optimal.The existence of an organization hinges on the way it serves its customers to meet their requirements. Organizations need to be flexible and agile to excel in competitive marketplaces and meet varying customer requirements. This calls for nimble, transparent and integrated business processes across the functional walls revolving around a central shaft called customer focus. Else there are possibilities that functions will become myopic and too focused on their individual excellence to miss the very reason of their existence, that is efficient and effective customer service and business acquisition. Finished goods inventory management, at times, is one of the areas of conflict between a sales manager and inventory manager. A sales manager would like to shorten lead times and keep ATP timelines as short as possible with larger inventory, whereas an inventory managers focus is optimizing the stock in hand. However, this may significantly increase the risks of stock-outs due to longer lead times, resulting in potential opportunity loss. A trade-off between the two becomes inevitable in a siloed organization where boundaries prevent optimal inventory management strategy.28Teams working in silos would definitely be able to achieve their KRAs. However, they would fail in meeting the satisfaction levels of end customers whom the organization is interacting with. There are multiple external stakeholders for an organization such as customers, vendors, shareholders, and society at large. If an organization fails to achieve what it set to achieve as its vision, it would not be meeting the expectations of its stakeholders. Therefore, it is very essential that functional silos should be avoided. Instead, organizations should promote integration not only within teams but also among various global teams.Internal stakeholders, employees and managers are part of any organizations foundation and contribute to basic fabric that shapes it. They are part of the culture and in many ways determine the direction it takes. Their level of morale, confidence in the system, and how they are embedded in the overall puzzle cutting across functions help organizations achieve larger goals that may be negatively impacted in a constrained environment. A functional silo is apparent during recruitment of new people in the organization. Recruitment being within HR and being driven by a metric of hiring a set number of resources within a specific time is focused only on bringing people into the organization. More often than not, actual requirements of functions / business units that will deploy these people are missed out, result in a mismatch between role requirement and skillset of the individual. This may lead to a dissatisfied employee who is forced into a position or role he may not be interested in, and also result in a dissatisfied manager who does not know where to deploy the misfit resource. However, if the end-to-end process view is taken, this can be eliminated.A classic example in this case would be inability of an organization to demand rate cuts in purchases from a vendor with whom they have been dealing over years. This would happen because the purchase and finance team in organizations are not integrated with each other, which results in delays in processing vendor invoices, meaning late payments to vendors. This in turn leads to dissatisfaction among vendors.Competition among organizations has increased manifold with an increasingly global marketplace being the new operating reality. This is forcing organizations to think out of the box, bring in new ideas, and accelerate their innovation and transformation journeys. This is especially true of industries that are R&D-heavy such as automotive and pharmaceuticals. But due to their organizational structure being such where functional silos get created, organizations struggle even to run their existing operations and hardly any resource is left to be utilized for innovation creating a vicious cycle where thinking beyond operations become impossible.With organizations being spread across geographies, functions like human resources, sourcing and procurement need urgent focus to be well integrated. In case of sourcing and procurement, coordination and best-practice sharing among sourcing teams across geographies can help control spend by using effective negotiation strategies, cross-leveraging vendors, and other synergies.ee y vuu29Organizations fail to understand that processes are a continuous flow of activities that cut across functions and systems. Mostly, they are not able to visualize the inter-linkages between and within the processes and get so engrossed in their individual functions that they lose their focus on organizational throughput the ultimate objective they should thrive to achieve. We should define logical pieces of processes and subordinate functions, departments, measurements and technology to the process needs. This beyond the functional silo approach offers tighter control over business outcomes and helps manage businesses in an effective and predictable manner, resulting in a definite competitive edge in the marketplace and helps deliver the most important thing business value.The most valuable strength of an end-to-end process-centric approach is that it significantly increases an organizations flexibility and agility. Being focused on global excellence, it also helps improve scalability and stability by harmonizing process structure and flow across the organization. Building such an organization requires multiple functions to successfully embrace several fundamental changes in their thinking, the way they work, and integrate with other functions internally as well as with partners (vendor supplier) across the organization. If we take a look at the conflicts / issues mentioned in this view point and think about the impact it can have on various business parameters, clearly the underlying theme to succeed is to focus on global optimization to create a best-in-class throughput delivery machine rather than focus on few parts / units within. Focusing on local excellence is good to create pockets of efficiency, which may or may not improve the throughput. Hence the functional conflicts should be looked at keeping their multiple impacts across processes and not in isolation. In the next section, we will look at potential root-causes of these conflicts and try to identify points of convergence to arrive at some core levers that will take us to the next level of organizational performance. Since the cause and effects are connected across functions / processes, addressing them will give rise to a quantum jump in ultimate throughput.30Processes are vehicles to drive business strategies that define the net outcome of an organization. It is but natural that the way processes are set up and aligned to business requirements impacts the objective an organization wants to achieve. The process structure should be designed to meet individual business requirements in the best possible way by keeping an eye on the larger global view. At times organizations working across geographies / businesses are too hung up on creating a rigid process structure across the organization, without taking into account their local cultural and regulatory requirements. Doing so may improve control / compliance, but will also create roadblocks and dissatisfaction that impact the organizations throughput.At the other end, we have seen organizations that work across geographies but have a decentralized structure, letting businesses operate as an individual entity having minimal control. At times this creates local excellence, but also limits visibility across the organization. It limits the leverage that an organization can have because of being global as well as the best practices it poses within.Processes behave the way they are measured. Any performance measurement framework should be designed keeping the overall organization goal at the center. Metrics / parameters should be constructively aligned and structured to promote harmony across functions. Many a time, organizations take a myopic view and focus on parameters that are function-centric and local in nature, which may align to the functions / processes they interact with, and at worst are in direct conflict with the way related processes are measured. This leads to multiple conflicts in the system, which can have impact across multiple functions. While many companies focus on metrics and KPIs, true value exists in stacking metrics in a schema that clearly brings out the interdependency of one metric on another.31Humans by nature are comfortable operating the way they do. They look at any change, however positive it may be, as disruptive and resist moving to a new way of working. This attitude creeps into the organizational culture, and when it does, people tend to be focused on narrow functional performances and stop looking beyond. At times, the way change is presented and managed doesnt provide an understanding of the larger picture and keeps them focused on their individual goals to an extent where it may lead to functional conflicts. To overcome this, organizations should identify the criticality of managing change, in order to ensure consistency and harmony across functions / processes.Technology is one of the fundamental levers to bring all the organizational functions on a common platform and help develop visibility across them. Most of the times, the way organizations grow over a period, they acquire / implement multiple technology applications and tools that may be point solutions to meet an individual functions requirement. These applications work mostly in isolation and are not integrated through a common interface, resulting in information residing at multiple locations and preventing a global view. It may lead to inconsistency and issues in integrity of information, which may result in potential conflict among stakeholders working across functions.32Functional conflicts should be viewed with their multiple impacts and not in isolation. In part one of this two-part series, we have looked at potential root causes of these conflicts. In our next part, we will identify points of convergence to arrive at a few core problems / leverage points, solving which will take us to next level of organizational performance. Since the cause and effects are connected across functions / processes, addressing them will set the stage for a global process transformation.In Part Two: The Opportunities, we will explore the solution with a focus on end-to-end process architecture and a few key enabling levers. The solution straddles four areas:Operating modelAlign process metrics to meet business goalsChange management effectivenessTechnology interventions33About the AuthorsMadhukar Tata Delivery Lead Business Transformation Services, Infosys BPOMadhukars focus is driving growth and managing delivery of Business Transformation Services an advisory practice focused on helping clients realize business value by leveraging multiple levers, including establishing their operating models. Madhukar has more than 16 years of experience in transformation and reengineering in varied industries, including manufacturing and services. He has been involved in designing various frameworks to assess organizational efficiencies and effectiveness that drive material impact to businesses.Rakesh Kumar Senior Consultant Business Transformation Services, Infosys BPOWith 13 years of experience, Rakesh has considerable expertise in designing and implementing integrated supply chain processes for global enterprises. Rakesh has worked with multiple clients across industries including process manufacturing, consumer packaged goods, retail, energy, and utilities. He has rich experience in business process re-engineering, process transformation, change management, strategic profitability improvement, and operations strategy.Manoj Baheti Senior Consultant Business Transformation Services, Infosys BPOManojs current role involves advising clients on business transformation, operational improvement and efficiency. He has 8 years of consulting experience across manufacturing industries covering areas such as the sell side of supply chain management and shared services studies.4- Madhukar Tata, Ardhendu BanerjeeDriving Global Process Transformation with an End-to-End ApproachPart Two36Functional conflicts can impede an organizations ability to realize business outcomes. In part one of this two-part series, we looked at what the challenges are that get created by these functional conflicts and how organizations suffer in meeting their business goals. In this part, we will identify points of convergence to arrive at the solution and the various enablers / levers supporting the solution, which will take us to next level of organizational performance. Since the cause and effects are connected across functions / processes, addressing them holistically will give rise to a quantum jump in ultimate throughput.The solution requires organizations to focus on the end-to-end process architecture and its potential enablers. In this point of view, we analyze four factors that comprise the architecture:Operating ModelAligning process metrics to meet business goalsTechnology interventionsChange management effectivenessToday all businesses are focused upon how to remain cost competitive, how to deliver best-in-class services to internal and external stakeholders, how to grow revenue, and how to innovate and transform existing process. To drive these focus areas, there should be a strong relationship between and within processes. A true end-to-end process view is critical to deliver transformation impact. Every functional area has a link with downstream and upstream processes and without understanding those linkages, true transformation is incomplete.37To overcome functional silos, the first step is to engage in detailed organizational effectiveness analysis. Designing an effective organization is key to breaking functional silos. By implementing models with global process owners (GPOs) at the core and bringing all the related processes on the same page, organizations will have end-to-end visibility of the processes. Such a model will also help eliminate conflicts among functions and have a balance of both macro and micro views. By identifying GPOs to help achieve larger end-to-end process goals, what organizations essentially get is end-to-end process owners who are not only equipped to handle and manage the change that is required in the organizational mindset, but also competent enough to understand the nuances of the overall process.Best practicesGlobal process owners (GPO) will initiate and drive policy measures for group-on-group consolidation, while serving as a single point of contact (SPOC) for internal business unit heads, and addressing any escalations related to the process for business units. GPOs will be responsible for any changes required in the process, and also play a critical role in validating and signing any process change.To garner broader stakeholder buy-in, it is crucial to identify global process owners (GPOs) who have end-to-end understanding of the business and its processes, especially in areas that require close interaction with stakeholders and where there is a constant exchange of knowledge and best practices. In most cases, the GPOs will be supported by a team that could be organized by business units / regional entities. This will enable the creation of a center of excellence (COE) that has the authority to change processes and drive their adoption.By working on this model, GPOs will be able to align all the processes under their purview and bring them into one platform in order to break functional silos.DepartmentsPurchase-to-payOrder-to-cashPlanning and budgetingNew product developmentLead-to-orderSales and servicesFinance Production Procurement LogisticsEnd-to-endProcesses38For example, in the finance and accounting function, if all the processes are to be aligned to procedures of a global standard, GPOs will monitor if the procedure for invoice processing or payments or closing books on time are being followed as per the standard procedure across all regions. This will make for better control and compliance for the organization and help avoid ambiguity that often impacts process efficiency.Another case in point is global organizations using different applications in different regions. These applications work as a standalone solution in a specific region and do not align to the group application, hence resulting in a large amount of time spent on consolidation. Instead, if there was a single instance of an application for the group as well as for the regions, then organizations could realize significant benefits in time savings, control, compliance, and better consolidation of data at a go. The role of a GPO is to drive this transformation to switch over from a multiple-instance application to a single-instance application.In order to realize the target objective, there should be a strong linkage within the related departments and the GPOs.To make any changes in the end-to-end process, all the departments / functions should have close partnership among budget holders (CXOs) and the GPOs, as most often, without this close partnership, cost incurred is not fully materialized and savings are not fully realized. Doing this, organizations can break the functional silos across processes and have a better impact on the overall objective of the organization without conflict of interests.For example, sourcing and procurement and finance functions have a clear overlap around the accounts payable function. The procurement function is heavily dependent on efficiency and compliance in the accounts payable process in order to derive savings. Significant value created in a source-to-pay (S2P) engagement can be eroded/ worn out by dissident spend with non-preferred suppliers, duplicate payments, and poor working capital management. Hence, it is critical to have finance involved in the S2P contract initiative right from the beginning along with sourcing and procurement, in order to ensure smooth hands-offs across the two functions.39Processes behave the way they are measured. A performance management framework should be all encompassing and aligned to organizational objectives and business strategy. It should enable holistic and pervasive operational performance management across the organization. The creation of a performance management framework to measure end-to-end metrics with due weightage to organizational goals is an important tool to break down boundaries. It helps bind the multiple functions together and creates a true culture of visibility, accountability, and performance enhancement.For example, one can achieve supply chain optimization by ensuring that inventory managers and logistics managers are also responsible for ensuring customer satisfaction through better fill rates and service levels. The overriding principle is to look at the organization in its entirety rather than by functions, using broad metrics such as supply chain costs, efficiency, and service levels rather than functional metrics.To understand how well the collaboration between the functions is working, organizations need to measure functional performance as per the framework defined and benchmark against the global best for that particular function as well as industry peers.Service providers have their own benchmark across the process for all the clients they provide the services to. Like Infosys BPO, which has over 600 benchmarks for their F&A processes across over 60 F&A clients. These benchmarks have been leveraged to deliver measurable value to clients.A common case is when companies track metrics for spend compliance and the cost of processing. Because sub-level metrics of both interact with each other, trying to optimize one often skews the other. So investing in systems and processes to improve spend compliance can generally hike the transaction processing cost. Companies however, can optimize both by following a comprehensive framework that lays down metrics in logical combinations and drilldowns.While many companies focus on metrics and key performance indicators (KPIs), true value exists in stacking metrics in a schema that clearly brings out the interdependency between one metric and another. The metrics should be global instead of local to achieve an end-to-end view and break functional silos.The metrics should have linkages designed in such a way that measurement of KPIs is done in a holistic manner. For example, accounts payable (AP) and procurement processes are measured separately, rather than factoring an end-to-end view that spans the source-to-procure (S2P) and procure-to-pay (P2P) lifecycle. Organizations also tend to have too many KPIs at an individual / local level, most of which do not link to the organizations global performance.Best practices40Technology can be an efficient and effective mechanism for sharing, transferring, and using data and information. For example, organizations with an integrated suite of workflow or performance management tools that support planning, budgeting, forecasting, and management reporting gain the rewards of faster access to the information required for decision making.This benefit is further enhanced if the technology is built on a consistent data model allowing information to freely flow between applications and users. The technology lever, when applied holistically, will enable an end-to-end view of the business and break down functional silos.Best practicesWe believe that closer alignment of processes, data and technology across functions and geographies can provide significant benefits as well as promote collaborative and integrated working practices. It will help improve working relationships across functions, and the breakdown of silos promotes more informed and quicker decision making.Business process management (BPM) solutions can help you model, execute, analyze, and improve your process. BPM helps lay a foundation for automation across your organization. This reduces process delays, improves process efficiency, and captures enterprise-wise business processes. By defining, managing, and accelerating processes, organizations can eliminate bottlenecks and improve productivity.Technology can provide better visibility, and the ability to provide real-time dashboards on the performance of all the components of the supply chain can act as a powerful motivator for all functions to strive toward common organizational goals. Automated workflows and cloud-based services also improve the ability for different functions to collaborate seamlessly across geographies, business units, and processes. For example, an inventory manager will be able to see the order pipeline and service levels or current annual target plan (ATP) figures to recalibrate her/his production and stocking levels. Similarly, an order management executive can suitably advise her/his customers on lead times, ATPs, and batches to be ordered to prevent any unnecessary increase in inventory levels or obsolescence of non-moving products.41Change is disruptive and almost always encounters resistance. A strong focus on change management was identified as one of the most important management practices to achieve best-in-class performance in any organization. Thinking beyond boundaries, across the function, requires a fundamental shift in the way people work and look at their roles. The success of this shift, which has the potential to unlock hidden potential of an organization and help improve their business performance, largely depends on an organizations capability in change management and the way they manage the change. This requires strong cooperation among the stakeholders and support from senior leadership to realize the complex value proposition due to any change on any function.Efforts in any change management initiative should include Communicating the strategic aims and specific changes of the project / program Training all affected stakeholders in the new processes and working environments Managing upskilling of the teams to provide more strategic support to their clients Implementing and enforcing new policies and processes aimed at complianceBest practicesChange management entails thoughtful planning and sensitive implementation, and above all, consultation with and involvement of, the people affected by the changes. If change is forced upon people, their natural reaction is to resist it. Hence, change management should ensure that the people affected by the change agree with and understand the need for change, have a chance to decide how the change will be managed, and are involved in planning and implementation of the change.If an organizational change entails new actions, objectives, and processes for involved stakeholders, it is necessary to develop understanding, involvement, plans, measurable aims, actions, and commitment. When implementing change, organizations run the risk of disrupting productivity and costing the company money. Properly managing change within an organization can help maintain company productivity while reducing the incidents that would affect efficiency. When employees are managed successfully through the change process, it can instill confidence that the next change can be effected as efficiently. And by breeding confidence in the organizations ability to effect change, one can control the cost of change significantly.For example, a source-to-pay (S2P) assignment that introduces new best practices in sourcing, PO processing, and vendor management process will require strong engagements with hundreds or thousands of stakeholders who are engaged in these processes to some degree. Without careful engagement, an organization risks both value leakage and even worse, service disruption. So to mitigate the risk, organizations should engage the right stakeholders for the changes and communicate the changes well in time. They should also assess its impact on the roles / responsibilities they handle, and see how the change fits into the overall process.42As most organizations scale up, their processes do get complex and tend to cut across functions and in many cases, across geographies. The levers discussed in this document address how to break functional silos to a great extent. Changing the culture from managing businesses as functions towards processes will be a step change for the people. The team is no more within the four walls it is now global, virtual and matrix. The entire ecosystem has to evolve to support this.It is imperative that organizations continuously revisit their structures and open up to emerging technologies and best practices. Is there a possibility that organization structures are rewritten as processes and not as functions? Lets see what the future holds.43About the AuthorsMadhukar Tata Delivery Lead Business Transformation Services, Infosys BPOMadhukars focus is driving growth and managing delivery of Business Transformation Services an advisory practice focused on helping clients realize business value by leveraging multiple levers, including establishing their operating models. Madhukar has more than 16 years of experience in transformation and reengineering in varied industries, including manufacturing and services. He has been involved in designing various frameworks to assess organizational efficiencies and effectiveness that drive material impact to businesses.Ardhendu Banerjee Principal Consultant Business Transformation Services, Infosys BPOArdhendus focus is to drive the Finance Transformation group in Business Transformation Services an advisory practice focused on helping clients realize business value by leveraging multiple levers and establishing their optimal operating model. Ardhendu has 12 years of experience in transformation and service delivery in varied industries, including services and manufacturing. He has led several large finance and accounting transformation projects, where he set up the shared services model for clients and worked with CFOs to drive business value and realize new efficiencies.5- Shyam R RaoSOX Controls Driving Transformation of the Order-to-Cash Value Chain46How do you view the prescriptive internal control norms in Section 404 of the Sarbanes-Oxley Act (SOX)? As a complicated, burdensome set of additions to your order-to-cash (OTC) processes, or as a lever to unlock transformation in your order-to-cash processes and supply chain? Having successfully executed over 250 SOX engagements, we at Infosys BPO see it as the latter. In our experience, institutionalizing best practices in OTC processes can take enterprises much beyond a SOX Compliant Supply Chain. Enterprises can now move to higher value realms where SOX doesnt just enforce effective control, but also creates a best-in-class order-to-cash value chain. One that makes for a more agile supply chain, plugs revenue leakage, and enhances customer satisfaction. From being a tool that required great investment on the part of enterprises, there is now a definite return on investment (ROI) in implementing effective SOX controls. The best practices in this view point will tell you how.47SOX controls where OTC processes are todayAfter major accounting scandals plagued large enterprises, the Sarbanes-Oxley (SOX) Act was introduced in 2002, with a mandate for all businesses to implement a set of controls. The main aim was to protect investors. But on the other hand, implementing these controls required large monetary investments from enterprises.Section 404 of the SOX: Management assessment of internal controlsAccording to Section 404 of the SOX Act, all financial records were to be presented in a fair manner, and be open to an external audit. This threw up a number of challenges. The external auditor is able to provide the broad guidelines that the company should be working towards. However, it depends on the internal auditor from the company to scope the work. The controls did not make provisions for a disaster recovery or business continuity plan, and the onus lay on COOs and CFOs to include it in their plans. While Section 404 has been criticized in various circles, the benefits that can be accrued depend on the controls enforced by internal auditors, i.e. stakeholders responsible for OTC processes in the finance and accounting (F&A) functions. This flexibility means that stakeholders can customize SOX controls in a manner that not only optimizes processes, but also delivers business value.Compliant today, but theres room for moreMost F&A functions across industries are already tightly regulated by both internal and external auditors. SOX reporting requirements have been put in place to control and ensure compliance to global accounting and reporting norms. However, SOX compliance in operational processes such as procurement, order management, and inventory management is governed by less prescriptive norms. Herein lies the opportunity to do more with SOX controls. The operating functions have a direct bearing on cost of operations and customer satisfaction. Thus designing controls to meet Section 404 requirements by including industry best practices can help bring about a transformation in the process, as well as provide a competitive advantage for firms.Using shared services to enhance SOX controlsWhen OTC processes operate in a centralized shared services environment, the impact of enhancing SOX controls to enhance organizational value is much larger due to: Economies of scale Easy replication of best practices in consolidated operations Lower costs of establishing and controlling these initiatives Standardization is possible across business units, functions and geographies The ability to monitor and track initiatives with a common set of SLAs and KPIsThese potential benefits make a compelling business case for using SOX controls as a transformational lever for companies who have created SSCs or outsourced their OTC processes to BPO providers.48Best practices for creating a best-in-class order-to-cash value chainMany SOX controls have been introduced to address challenges in the order-to-cash value chain. However, these controls often do not produce the desired results. In spite of these controls, OTC processes are still weighed down by inefficiencies which include frequent errors, high manual dependencies, effort duplication, delays in approvals and shipping of goods. And these controls do little else than getting organizations closer to compliance missing out potential opportunities that can make real business impact.This section details common process challenges, typical controls put in place, and the best practices that be introduced as a part of these SOX controls. These practices will make OTC processes more efficient and help organizations gain greater control of their supply chain.Order Receiptchallenges typical control activity best practicesIncomplete or inaccurateorder entry.The order management system interlinked with the customer master, price master and product master.which it will not be processed.Customers expectation regarding lead time should be set at order entry.No order to be processed without a valid Purchase Order number.information.The data is researched on, corrected and re-entered on a timely basis.Recording of duplicatesales orders.Sales order numbers are sequentially numbered and a manual/system duplicate orders.The system will show a default warning message to prevent duplicate creation of sales order.Validate and process orders based on rules for minimum order policy, credit, product and service entitlement, sourcing and stock availability, lead-time and pricing, based on client policy.master and then orders should be accepted.Orders are automatically blocked by the system if the customer's credit limit is exceeded. Approval limits for releasing block orders are established and are enforced through manual discipline.Processing orders that are above approved customer credit limit leading to higher accounts receivable should be updated in the system. Any discount over and above the standard rate should be approved.Data in respect of price drops that is updated in the system is independently Higher discounts are applied to orders based on ad-hoc requests from sales teams.The challengeThe OTC value chain starts with the receipt of an order its capture and resolution is key to the efficiency of the cash-to-cash cycle. The presence of a large percentage of orders on hold clearly indicates an inefficient order receipt process. Generally, companies try to control these errors or incomplete orders by automating the process of order capture to indicate mandatory fields and auto-populating data wherever possible.The transformative solutionHowever, the key to transforming the process lies elsewhere in master data management. A well-maintained customer, product and price master database can be linked to the order-management system to avoid errors or delays in the order receipt process.49Customer InvoicingCollections and Customer Receiptschallenges typical control activity best practicesSales invoice is notgenerated or delayedfor every shipment.Send Advanced Shipping Note (ASN) to customer or site specifying order-lines by container by pallet by load.Manual invoices are created based on proper approvals.Replace low-value cash transactions with sales on company credit cards or direct debit.Consolidated billing for customers provide facility for customer group payment consolidation with automated allocation of payment where possible.On the approved release of a shipment from the warehouse, the system automatically produces invoices with the same date.without approval by the appropriate levels of management.Incorrect price, amount,and other informationon the invoice.including handling customers debit memoranda, e.g. claims from customers for reimbursement of extra handling resultant.System edits validate invoice data input against the standing data and the sales order system. Invalid data is rejected for corrected at a later date. The challengeDelays in invoicing directly leads to delayed revenue recognition and in case of errors in invoices, a loss of revenue as well. To avoid this, organizations tend to introduce control procedures that trigger an invoice in the system the moment the order leaves the warehouse (or inventory) vide a dispatch (or goods issue) note.The transformative solutionBuild a workflow solution to ensure speedy resolution of any disputes / claims from customers on the invoice.The challengeA common situation in the OTC process is the lack of follow-up activity on past due accounts. To address this, a control activity introduced is making collection calls and sending demand letters to all the past due accounts.The transformative solutionHowever, this one-size-fits-all approach may not produce results. Instead, companies should establish a value-driven proactive collection strategy. Focus on telephone calls for major value debtors and use automated dunning letters for low value debts, thus increasing the probability of timely payments.50Returnschallenges typical control activity best practicesNo follow-up is done onpast due accounts.Call details, including details of payment promises should be recorded on the accounts receivable (AR) system and followed up in a timely manner.Partner with high-value customers to encourage them to make payment on receipt of goods on the basis of a two match with the PO rather than to wait for invoice.Short payment is promptly referred to account management for resolution Electronic payments with electronic remittance advices uploaded into the sales ledger enabling automatic matching.The supervisor reviews the ageing report and compares the collections made during the period with the amount outstanding at the beginning of the period.Cash receipts do not relateto sales made, or are postedto the incorrectcustomer account.determine whom the check is for, the check will be temporarily applied against unapplied / unallocated cash amount. Collections will be responsible for clearing the unapplied / unallocated cash account.Receipts are applied to the customer accounts based on matching of customer name, customer number and invoicing number. Matching is done only against open invoices in the customer account.challenges typical control activity best practicesReturns are not authorized orare not as per companyreturns policy.The process of returns approval should be accelerated by providing approvers real-time inputs on adherence to established and updated return policies.Only approved refund requests are processed approval of high value claims from authorized client management personnel, automatic approval of low value claims.Returns from customers must be physically appropriate personnel.Cash receipts do not relateto sales made, or are postedto the incorrectcustomer account.Establish a system for recording and tracking claims and deductions (query management system), with the following attributes: Claim types including resolution service standards Routing of claims Escalation of unresolved claimsReceipts are applied to the customer accounts based on matching of customer name, customer number and invoicing number. Matching is done only against open invoices in the customer account.The challengeThe returns process is seen as an afterthought to the sales process and is given less focus in meeting common challenges in the process such as returns not being acted upon on time. This leads to delays in processing claims and ultimately an irate customer.The transformative solutionA quick way to improve customer satisfaction (CSAT) levels is to institutionalize best practices in prioritizing high value returns, automating low-value claims and an escalation procedure for unresolved claims.51Benefits of a transformed OTC value chainBy implementing the best practices outlined in the previous section, enterprises can: Lower cash-to-cash cycle time and realize better performance in working capital management by reducing the occurrences of inaccurate orders, wrong shipments, manual order management, errors in invoicing and collections which increase the cash cycle times Reduce revenue leakage by prevention of wrong pricing, discounts and credit limits being applied and resultant shorter cash cycles Achieve greater customer satisfaction accompanied by faster response/electronic tracking of orders, more efficient returns and refunds process, better response to changes in ordersThe above are results that can be found in a supply chain that is not only SOX compliant, but also in a more agile and flexible supply chain a definite return on ones investment in SOX compliance.52The way forwardThe best practices for SOX controls reflects Infosys BPOs vision on how to use this tool for driving transformation in the order-to-cash (OTC) value chain in particular, and in an enterprise, in a holistic manner. Any organization who has consolidated in a SSC or outsourced their OTC processes to a BPO provider must now arrive at a shared services strategy for SOX controls. This strategy should address the limitations of the typical controls and implement more evolved controls to create a function that is not merely SOX compliant, but one that has transformed their OTC value chain and delivers greater business value.53About the AuthorShyam R Rao Business Development Lead EMEA and APAC, Sales and Fulfillment Practice, Infosys BPOShyam has over 17 years of professional experience in supply chain, inventory optimization and after sales operations. He is responsible for conceptualizing and implementing shared service and outsourcing solutions and has led several solutions and consulting efforts for clients across the supply chain and sales operations domains.Prior to Infosys, Shyam worked in the procurement and supply chain functions in the hi-tech manufacturing and financial services industries. Shyam is an alumnus of the London School of Economics.6- Paul Millett and Shubhra AgrawalProcurement functions are at different states of maturity and effectiveness across organizations and often, within organizations. For some Chief Procurement Officer (CPOs), the challenge is to establish a strong foundation for process, policy, and delivery, while for many others it is driving efficiencies in the function to continuously deliver results. For most, if not all irrespective of where they are on the procurement journey there is a continual pressure to deliver and sustain value year-on-year with limited resources and budget.As companies in the pursuit of consistent and sustainable high performance make new demands, a new operating model is fast emerging one that forges partnerships to complement internal resources and capabilities. Infosys explores the issues with the traditional in-house procurement function and identifies five areas where the new analytics-based, value-focused operating model can deliver a wider range of benefits.The New Paradigm in ProcurementDriving Efficiency and Effectiveness With the Right Mix56A growing mandateBusinesses today have a two-pronged mandate for their procurement functions deliver substantial year-on-year value, in other words, be effective and do so with the best overall return on investment (ROI), i.e., be efficient. For the more mature functions, this means delivering ongoing value on external spend (3 to 7 %(1) year-onyear) and with an acceptable ROI (4 to 11(1) times their cost as a function). Beside cost savings, the procurement function must ensure they deliver the softer value from their supply base quality, safety, security of supply, risk management, and continuous improvement. Furthermore, leading procurement functions are increasingly getting involved in enhancing the revenue side of the P&L, leveraging the supply market to help drive product (or service) range enhancement, open new channels to market, or drive volume uplifts.Over time, the chief procurement officer (CPO)s mandate has widened across the organizations spend base to include complex spend categories marketing, legal, engineering and technical services, capital expenditure (CAPEX), maintenance repairs and operations (MRO), IT&T, property, and facilities maintenance that were traditionally the responsibility of technical or functional specialists. To identify and deliver value year-on-year from the external spend base, procurement teams must explore and leverage all available value drivers beyond pure price (i.e. focus on total cost and value through category and demand management, process improvement, and supply chain optimization). This expansion of procurements role throws up new challenges for the individuals and organizations, especially when both are not well prepared for the change.So how can procurement meet these challenges? Essentially, this requires having the right combination of people, processes, and technology to deliver consistent and sustainable high performance. Sounds simple, but how can this be done?(1) Source : Hackett Book of Numbers 201157Get the right procurement operating modelGlobally, procurement operating models are evolving to meet growing needs. Consequently, a clearly defined operating model that covers the entire procurement function from procurement strategy to transactional buying and all the enabling activities to support end-to-end procure-to-payment process is needed. Such an operating model should clarify procurements role and all the required capability areas essential for success including governance, mandate, operating principles, key processes, targets, key roles, and responsibilities. Specifically, the procurement team needs:For the model to deliver, the team needs to be armed with the skills, tools, data, market knowledge, analytics, and reporting capabilities requirements that are increasingly hard to fulfill with in-house teams. Therefore, CPOs are increasingly turning towards adopting a hybrid model that leverages external partners to provide some or all of the following:Clarity on its role across all external spend categories, business units or divisions, and geographiesClarity on its role within and functional interactions across the key end-to-end business processes including source-to-contract, contract-to-purchase, and purchase-to-paymentValue delivery targets by category portfolio and across the range of value drivers including sourcing, category management, and demand management Deep category expertise in niche or commoditised spend areas, allowing internal resources to focus on supporting the core business, for example, managing spend categories that drive competitive advantage Augmentation services to bolster internal teams with resources, tools and processes that can be plugged in to drive and deliver strategic sourcing, category management, contract management, supplier panel management, and analytical support, as needed Operational procurement services to drive effectiveness and efficiency from the transactional engine room of the procurement function including PR / PO conversion, tactical sourcing to drive value, compliance from the tail, master data and catalogue management to keep on top of the vendors, materials, etc., and ongoing spend analytics and reporting Best-of-breed tools and technology, either stand-alone hosted software or as-a-service enabled by expert support resources that target agreed outcomes and service levels Capability development for the team through a mix of formal and on-the-job training Consulting services to help define the right model and the most expedient way to get there, then forge a partnership to deliver the new model, and drive value delivery to make the transition self-funding58Well thought-out partnerships The way aheadIn the present market scenario, attracting and retaining experienced and skilled procurement professionals is a huge challenge. Naturally, many CPOs globally have begun leveraging specialist procurement partners to bolster their internal teams capabilities and capacity in select areas. This allows them to focus on spend categories or business processes that are deemed to be core or market differentiators for their organizations while partnering with outsourcing service providers for non-core categories. Clearly, partnerships are the way ahead, especially in the following five areas:1 BENCHMARKING TARGETSCollaborating with the right professional services firm or BPO partner can help rapidly and impartially identify areas of improvement through the following: A capability benchmarking assessment to identify and prioritize functional performance gaps and areas for improvement A value assessment across the full external spend base from which to plan and prioritize resource efforts to maximize value delivery and manage risk across the organizations entire spend baseThese two assessments help identify an end-to-end value delivery and functional improvement program that will ensure that the function is focused on doing the right things well.2 BOLSTERING yOUR STRATEGIC CAPABILITIESAt the strategic level (i.e., category strategy, source to contract, and ongoing category management), building a team with a mix of seasoned procurement professionals having strategic thinking abilities, robust procurement process experience, specialist category expertise and market knowledge, solid project management, facilitation, and change management abilities is essential. External partners can assist with: Deep category expertise (SMEs) to develop and implement category strategies through to completely taking over category management activities and delivering against year-on-year targeted outcomes Augmentation services to bolster the internal team on an ad hoc or project basis or in areas that require adherence to strict timelines and often where there is the need for a step change in process or performance Capability development to improve the teams skills and abilities to drive change and deliver across the end-to-end value chain Consulting services to assist with the upfront operating model design, right through to specific outcome-based value delivery programs593 DERIVING VALUE FROM TACTICAL ACTIVITIESFor tactical activities such as contract to purchase, tactical sourcing, and ongoing supplier and panel management, the procurement function is often under-resourced. As a result, these activities suffer and leave value that can be unlocked with an effective and efficient delivery model. External partners can assist by providing: Contract and supplier performance management services Supplier panel management services to maintain competitiveness and appropriateness of services supplier panels, facilitate the ongoing bidding and buying processes, and where appropriate bring best of breed tools and resources as a service Tactical sourcing (or spot buy) services to bring due process, governance, and compliance to the ad hoc spend whilst delivering commercial value through the sourcing process. Over time, this process will reduce the supplier tail through consolidation into existing contracts or leveraging supplier panels Catalogue management to establish and maintain product (or services) catalogues to enable the business to efficiently transact against pre-established supplier arrangements 4 ENSURING COMPLIANCEThere is a constant challenge to drive compliance in processes and policies while meeting required service levels efficiently. This challenge varies considerably depending upon the degree of process standardization and / or centralization across the organization, the degree to which the supplier base has been rationalized, and the state of the master data. External partners can assist with operational procurement services combining highly efficient processes, best of breed tools and technologies with a lower cost resource mix consisting of onshore and offshore resources and covering: PR to PO conversion services Master data management Invoice validation Accounts payable services5 ROBUST ANALyTICS AND REPORTINGFor the procurement team to be most effective, there is the need for robust data analytics and reporting, which requires high caliber analytical specialists that CPOs often struggle to recruit and retain. BPO partners can assist with specialist resources to perform: Spend cube analytics and reporting Specific category dashboards tailored to track category performance and compliance Benefits tracking and reporting Ad hoc analytical support60Make sure to balance onshore and offshore resourcesFor more than a decade, the BPO industry has successfully managed many of the transactional and operational business processes. These often being the first to be sent offshore to drive labour arbitrage efficiencies due to their resource-heavy nature.As CPOs seek solutions to drive effectiveness across the full spend base, opportunity to CPOs to drive value in spend areas they previously could not get their hands on! When done well this is enabling both increased year-on-year value delivery at equal or lower overall cost. Hence increasing procurements contribution as a key function within the business with demonstrable improvements in ROI.ConclusionProcurement outsourcing can therefore bring impressive returns on investment increases in organizational efficiency, effectiveness and productivity, build stronger and more strategic relationships with suppliers, and usher in substantial savings provided, the right operating model with the right mix of resources, in-house versus outsourced, and onshore versus offshore are used.Infosys BPO sourcing and procurement (S&P) practice has proven experience in catalyzing change and delivering measurable results across the sourcing and procurement value chain. Here is one such example where Infosys BPO brought to the table a credible value proposition that catalyzed a change in the way the client managed procurement spend, categories, governance, and analytics.The client has been a leading mining and metals company in business for more than 130 years. They faced a multitude of challenges from hiring woes due to unprecedented growth in the commodities sector, to low integration level of acquired entities, low adoption of spend management, decentralized operations and non-standardized processes, and a diverse technology landscape. In a bid to streamline its procurement function, the company began looking for a partner to support many of its transactional procurement processes that utilized the companys legacy ERP platform. In 2008, the company engaged Infosys BPO. What began as a market research engagement to understand the procurement outsourcing A case study How Infosys BPO helped a leading mining companymarket evolved into a long-term partnership to manage, optimize, and enrich several S&P processes. Over a period of nearly five years, we have delivered benefits such as: Insourcing, ROI of 1:12 delivered across the categories managed 12-15% cost reduction with category management of MRO against an annual average target of 4% Savings of US$1.1 million with compliance to contract management Savings of US$10.3 million through minor process improvements globally Reduced blocked payments from US$27 million to US$8 million over a period of 20 months (reduced by more than 99%) Handled 350K PO lines and 1.2 million invoices per annum globally Standardized and harmonized processes resulting in increased customer satisfaction Increased catalogue spend and compliance to contract spend Freed up 30% of category managers time Surpassed internal / external quality measures benchmarks61About the AuthorsPaul MillettPaul Millett is a Director of Portland Group and heads Portlands NSW team in developing, selling, then delivering consulting and BPO services and solutions to clients across all industry sectors. Portland Group, a wholly owned subsidiary of Infosys BPO, is a market leader in providing specialized supply chain and procurement professional services leveraging deep local expertise with offshore delivery capabilities enabled with leading technology solutions.Paul has over 17 years of experience with the FMCG industry and in supply chain consulting roles across global blue chip organizations, including Mars Europe, Accenture UK, WCI Group UK, AT Kearney, and Portland Group.Paul has developed supply chain and procurement strategies and delivered sustainable solutions in grocery retail, FMCG, financial services, building materials, construction, telecom, distribution, aerospace, healthcare, government, refining, steel and mining industries. Shubhra AgrawalShubhra Agrawal is a Consultant (solution design) at Infosys BPOs sourcing and procurement practice. She has more than 14 years of experience in supply chain management. Previously, Shubhra worked with the Indian armed forces helping them maximize value by building a strong supply chain management network, including sourcing and procurement for the armed forces. Currently providing consulting services to Fortune 500 companies, she is helping them transform their sourcing and procurement business processes.62Notes63Noteswww.infosysbpo.com 2013 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording or otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document. About InfosysInfosys is a global leader in business consulting, technology and outsourcing solutions. We enable clients in more than 30 countries to outperform the competition and stay ahead of the innovation curve. With $7.4B in revenues and 160,000+ employees, Infosys transforms enterprises to thrive in a changing world through strategic consulting, operational leadership and co-creation. Visit www.infosys.com to see how Infosys (NYSE: INFY) is Building Tomorrow's Enterprise today.Infosys BPO, the business process outsourcing subsidiary of Infosys, provides integrated end-to-end outsourcing and delivers transformational benets to clients through cost reduction initiatives, ongoing productivity improvements and process reengineering. For more information, contact infosysbpo@infosys.com