CFO DEPARTMENTS EXECUTIVE STRATEGY MEETING DECEMBER 10, 2012.

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Presentation transcript:

CFO DEPARTMENTS EXECUTIVE STRATEGY MEETING DECEMBER 10, 2012

Enterprise Infrastructure Services Datacenter, Desktop, Mobility, Network, Telecom (Fattorini) 90 Application Development & Maintenance (Schlei) 42 Information Technology (Steve Andujar) EVP, CIO Home Entertainment (Bailey) 18 Motion Pictures (Patel) 17 Television (Ohanian) 22 Sales & Distribution Production Support Inventory Management International Planning Studio Operations Demand Planning Marketing Exhibitor Relations Data Analytics Corporate Systems (Buckholtz) 17 Security Environmental Health Services Financial Systems (Rezai) 37 SAP and Ariba Support Finance Optimization IT Production Support WPF Networks Consumer Products TV Productions Trintech, Concur, CCM Marketing People & Organization Participations & Residuals Studio & Production (Gueron) 21 Distribution Productions Sales & Marketing Title & Rights Management Payroll Legal IT Asia Pacific (Choo) 19 IT Europe (Allsop) 23 IT Latin America (Buil) 10 OCIO Compliance, Projects, Sourcing (Veo) 10 Headcount Information Technology Structure 2

Information Technology Global Operations 3 India ~ 250 TCS Sao Paulo 10 IT Staff London 23 IT Staff Hong Kong 19 IT Staff Los Angeles 256 IT Staff Total Headcount – 326 Poland 18 IT Staff

Information Technology Systems Landscape 4

Information Technology Managing over 340 Systems 5 Motion Pictures & Production, including Studio Operations 106 applications Home Entertainment 43 applications Television 51 applications Box Office Receipts International Release Planning International Sales Reporting Business Affairs Production Cost & Accounting Script tracking Marketing & Publicity Studio Facilities Management Consumer Products Sales Order Processing Distribution & Inventory Mgmt Manufacturing & Procurement Accounts Receivables Chargeback Management Vendor Managed Inventory International Contract Mgmt International Revenue Sharing’ Trade Promotion Management Domestic Distribution International Distribution Accounts Receivables Sales & Availability International TV Sales Mgmt B2B Marketing Web Site SET/AXN Channel Traffic Systems Digital Broadcast Distribution Title and Rights Management Worldwide Product Fulfillment 57 applications HR, Legal, and Security (Corporate) 63 applications Finance & Treasury (Corporate) 24 applications Global Products & Rights Domestic Distribution International Distribution Global Logistics Stock Footage Music Clearances Vendor Coordination Domestic HR International HR Time and Attendance Legal Entity Management Corporate Communication Visitor Management Security Operations General Ledger Procurement & Accounts Payable Payroll Outside Participations Residuals International Accounting Systems Banking & Foreign Exchange

Information Technology Spend by Year SPE IT Spend as a % of SPE Revenues 2.3% 2.6% 1.4% 1.8% 2.2% 1.9% 1.8% 1.7% 1.8% SPE’s IT Spend as a % of Revenue is less than half the industry average Industry IT Spend as a % of Revenues 3.7% 4.9% 5.7% 5.9% 4.5% 4.6% 5.5%

AreaInitiativeWhat We Have Done/Savings What We are Doing/Savings IT TransformationReduced domestic staff by 150 and sourced offshore development and support to TCS Reduced effective wage rate from $78hr to $39hr saving $11.9M annually in overhead/capital spend Continue to optimize and consolidate where practical Reduction in Capital Spending Reduce capital spending by $15M from $65M in FYE13 to $50M in FYE14 Reduction in capital spending will yield $3.5m in depreciation savings and $1.6M in overhead savings Continue to prioritize capital project initiatives and maintain offshore leverage for further cost reduction Contractor ConversionsConvert long term contractors to full time positions to reduce costs and legal exposure Evaluate reductions to align with reduced IT capital spend. Assess off shoring of resources in stage 3 of Asia SSC Contract RenegotiationEvaluate software and service contracts for cost reduction opportunities With the help of Corporate Procurement renegotiated telecom and software contracts resulting in $500k in savings Continue to evaluate contracts as they are due for renewal Portfolio RationalizationRetire underutilized systems to reduce costs Retired approximately 45 systems to date yielding $600k in savings Continue to evaluate systems for retirement Information Technology Cost Savings Initiatives 7

AreaImpactWhat We Have Done/Savings What We are Doing/Savings Consolidation of Support Functions Identify areas where like IT business functions can be consolidated (i.e., marketing, sales, mobility) Target savings of $500k Data Center Consolidation Consolidated into third party hosted facilities including SCA data center in Virginia Hosting Imageworks Albuquerque servers and B2C webhosting. Eliminated space in Corporate Pointe. Total savings $2.4M Further opportunities to relieve crowding on the lot by moving equipment to El Segundo Reduce Travel ExpenseEliminate non-essential travel and non travel related expenses Reduce travel expenses by 50% through the remainder of the year resulting in savings of $300k Continue to leverage video teleconferencing for non-essential meetings. Cancel conferences and training travel Joint Sony InitiativesFind opportunities to consolidate like services with other Sony companies Leveraging the Sony ORMC in India for common systems support Continue to evaluate opportunities for consolidation like help desk and data center and IT procurement Information Technology Cost Savings Initiatives

Information Technology IT Transformation - TCS Summary 9 To reduce costs and improve IT services, Sony Pictures Entertainment entered into an outsourcing agreement with Tata Consulting Services for application and infrastructure support Tata Consulting Services (TCS), based in India, is a leading provider of information technology and business consulting services Direct savings of overhead and capital spending of approximately $72M over 6 years. Total contract value $123M Services include: – Application development and maintenance for 205 applications – Network and data center support and monitoring – Global support desk for 7,000 users Replaced 137 full time positions and 105 U.S.-based contractors with TCS resources The contract term is 6 years covering FYE11 through FYE16

10 InitiativeCapitalOverhead Reduced spending on projects, enhancements, hardware & software $15,600$5,100 Reduce contractors, rates and hours1,000 Negotiate maintenance contracts540 Consolidation of functions500 T&E reduction400 Total Savings to IT Overhead$15,600$7,540 Initiatives that benefit operating units: Webhosting1,000 Imageworks data center consolidation1,000 Total Savings$15,600$9,540 Information Technology New Cost Savings Initiatives - Summary

CFO Department Headcount New Business Support 11