Advisory Services Shared Services: A realistic concept for the regional telecommunication companies CANTO 2005 Annual Telecommunications Conference and Trade Exhibition, St. Kitts, June 2005 Patrick Newton

© 2 Telecom companies need to respond to the issues and trends affecting them Industry Overview Key Industry Trends Globalization Rationalization, M&A Deregulation, Privatization Cost Reduction Technology innovation Information to Knowledge Transformation Risk Management Government Regulations

© 3 These external and internal factors lead to a refocus in the way we manage our business Higher internal demandsExternal factors Need for business management refocus Higher quality support Higher reliability of delivery Lower vulnerability Standardization Need for cost reduction Technology opportunities A more demanding client Efficient and effective work

© 4 What is Shared Services? We can define Shared Services Center (SSC) as follows: The joining of similar processes spread over several organizational units or departments with the objective to render services in an efficient and effective way to other internal organizational units or customers. Characteristics SSC An innovative approach to standardizing and streamlining the delivery of common processes in one or several physical locations These processes are traditionally transaction oriented and have common characteristics across business units It will lead to economy of scale because of standardization and a more simplified process, a more integrated ICT infrastructure and because of a reduction of overhead costs Leads to a clearer (internal) customer relationship because of having a well defined service level agreement

© 5 Adds value by: Business Orientation: Characteristics of each Quadrant: ã Made up of different skill sets ã Must be managed and motivated differently ã Has different set of objectives, goals and vision What processes are best suited Shared Services? Enterprise Generic Business Unique Technical Skill Low Cost Producer Corporate Control and Strategic Planning Shared Services Business Unit Analysis Business Unit Transaction Processing Shared Services

© 6 HUMAN RESOURCES Benefits Recruiting Payroll Training Career Planning FINANCE & ACCOUNTING General Accounting Accounts Payable Accounts Receivable Fixed Assets Financial Reporting Tax Accounting Tax Compliance Billing/Invoicing Loss Prevention MERCHANDISING Order Management Replenishment Inventory Logistics Point-of-Sale PROCUREMENT Strategic Services Tactical Purchasing REAL ESTATE Lease Administration Property Management Construction Services INFORMATION TECHNOLOGY Data Center Operations Communications Operations Network Support Second Generation Shared Services

© 7 Concentration of management means: Joining similar processes which are spread over several organizational units or several departments within one organizational unit into a shared service center, with the objective to deliver more efficient and effective services to internal units or customers.

© 8 Organizational management models Degree of standardization Degree of centralization Decentralized Coordinated decentralized Concentrated (Shared Services) Joined SSC (possibly outsource)

© 9 Decentralized model Management Every unit or department has its own services management Advantage: close to core processes and customization possible Disadvantage: difficulty to manage efficiency and quality from an enterprise perspective Management

© 10 Coordinated decentralization model Management of services is done on unit level Advantage: close to core processes, customization possible, clear on quality standards per unit level Disadvantage: difficult to manage efficiency and quality from an enterprise perspective MT Unit Departments Unit Departments Unit Departments Management

© 11 Concentration model MT Unit Shared service center Management through MT Advantage: enterprise focused on efficiency and effectiveness Disadvantage: standardization and distance from core processes.

© 12 Joined shared service center (possibly outsourced) MT Department MT Department Shared service center Management trough a Joint Venture Advantage because of economy of scale Disadvantage: distance from core processes, possible standardization issue Organization 1Organization 2 Joint Venture

© 13 “Establish relationships and terms & conditions with identified suppliers based on defined requirements” “Determine the need for and availability of materials, goods and services” “Manage supplier relationships over time” “Commit with supplier for purchase of materials, goods or services” “Verify physical receipt of materials, goods and services” “Strategic Work”“Transactional Work” “Determine appropriate supplier for delivery of required materials and/or services” “Define and establish purchasing strategies and tactics, including commodity level strategies” Materials & Services Receipt Strategy Development Negotiation & Contracting Monitoring & Management RequisitioningSourcing Order Placement Purchasing Fundamental Business Purpose “Ensure the acquisition of, payment for and management of materials, goods and services which satisfy on-going business requirements at lowest total cost and in a way which is aligned with company and operational goals and objectives” Invoice Payment “Confirm acceptable supplier performance and pay for materials & services received” Integrated Technology Enablement Shared Services Business Case : the Purchasing process

© 14 Shared Services Business Case : the Purchasing process

© 15 Leveraging the Internet – the E-Business Landscape B2C = Business2Consumer B2B = Business2Business B2W=Business2Workforce Internet Computing Model eStorefront Click&mortar eServices B2C B2B B2W eData eBackoffice eHR eFinance ePurchasing eChaineSales| Service

© 16 B2B Solutions – The Digital market place E-Market Research|Quote|Buy|Sell| Deliver| Service Customer Marketplace Customer.com Supplier Marketplace Supplier.com Service.com Knowledge Management TelephonyMediaERP|CRM|SCM Portal Supplier Knowledge Customer Knowledge Corporate.com Web Customers Suppliers Portal

© 17 The digital market place model consists of the above core components. B2B Solutions – The Digital market place Demand Management Logistics Supplier Integration Buying Services Auction Exchange RFQ Catalog Configuration Management Content Management Credit Management Transactional Accounting Data Management Digital Marketplace Customer Relationship Management Product Data Management Online Sales Selling Services Customers Designers Sstem Integrators Distributors OEMs

© 18 Cost reduction due to shared services per function 20-50% 20-40% 25-35% 20-30% 10-25% 5-20% 10-20% 5-15% Human Resources Facilities and Services Accounts Payable/Receivable Information Systems Environment, Health and Safety Legal Tax Procurement Planning/Financial Analysis Treasury/Risk Management Public Affairs Savings % Source: Booz-Allen & Hamilton Transaction Based Services Expertise-Based Services Cost reduction with SSC between 25% - 40% with ROI between 1-3 years

© 19 Management and Organizational restructuring will ask for an integrated approach Humans Resources and Culture Organization and Management Processes and Procedures ICT Result

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