Knowledge Sharing and Networking Session IAOP Australian Chapter Business improvement and cost reduction through transformational outsourcing presented.

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Presentation transcript:

Knowledge Sharing and Networking Session IAOP Australian Chapter Business improvement and cost reduction through transformational outsourcing presented by Ben Jaaniste Wednesday 14 March, 2012

Contents 3.Presentation objectives and context. 4.Transformational outsourcing defined. 5.Change drivers in Australian financial services. 6.Benefits of transformational outsourcing and ‘ingredients’ for success. 7.Delivery challenges and concluding comments. 8.Q&A. 2

Presentation objectives and context  Apology on behalf of Jeff Westbrook.  Outsourcing is a strategic lever which can improve business performance, mitigate risk, and reduce cost. The relative merits of other levers including automation, operational excellence (e.g. Lean or Six Sigma), and re-organisation (e.g. internal shared services) are not assessed; nor will I comment on the economics of offshoring.  This presentation is based on personal observations gained from 15 years experience in financial services as a consultant and employee. It does not necessarily reflect nor characterise my experiences at my current employer Suncorp Group Limited. 3

Transformational outsourcing defined 4 Conventional outsourcing  Buyer / seller relationship.  Cost reduction is key.  Contracted metrics and service credits drive performance.  Little incentive to improve or vary from contractual terms.  Governance model focuses on compliance with agreed terms. Transformational outsourcing  Collaborative relationship.  Shared accountability for strategic business outcomes.  Fundamentally changes the way an organisation operates.  Incentivises both parties (i.e. to gain (or lose) jointly).  Characterised by mutual trust, information transparency, and commitment to each party as business partners.

Change drivers in Australian financial services 5 Increased pressure on cost and the need to do things differently Downturn in demand Relentless pressure from natural disasters Volatile investment markets Increased competition Reduced margins  A confluence of events have laid the foundation for structural change in Australian financial services.  In short, there will be a need for companies to do more with less, and leverage new markets and capabilities which are not readily available in the domestic environment.

Benefits of transformational outsourcing and ‘ingredients’ for success 6 Capability Internal readiness Potential for benefit  Skilled and experienced resources across all delivery streams.  Highly motivated partner with demonstrable capability in areas of relevance, and a proven track record of delivery.  C-level sponsorship and leadership.  A broad and compelling vision of the transformed ‘end state’.  Enterprise-level alignment between strategic initiatives which bring-about change.  Cultural impacts understood and actionable.  Transparent, consistent and regular communications.  Availability of the right people at the right time.  Capability uplift at an enterprise level: -Performance and quality. -Responsiveness to changes in market conditions.  Capacity uplift: -Access to large global talent pools with new ideas / innovations. -Flexibility to scale-up or down.  Strengthened competitive positioning through focus on core ‘differentiators’.  Expense base shifted from fixed to variable.  Risk mitigation by the alignment of accountability and control. Comprising...

Delivery challenges and concluding comments 7 Sponsorship and leadership, but no ‘followship’? Same mess for less? Too much, too soon?  Transformational change cannot be achieved by a simple lift and drop of sub- scale or inefficient business processes.  A transformed ‘end state’ should instead be something to be embraced. It should excite and reward an external partner, and inspire and motivate staff.  Business transformation is best- delivered at an accelerated pace – but care must be taken to avoid recklessness.  Understanding the impact of change at an enterprise level is critical – given the fact that delivery resources are not always dedicated to the project, nor even present in the same country.  Outsourcing is complex and difficult at the best of times – a transformation agenda makes it an even tougher delivery proposition.  Resistance at any level will affect benefit realisation, and must be addressed in a timely, consistent and effective manner.

Questions ? 8