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TRANSFORM RunIntelligentOperationsDesign INSIGHTS volume 1 | JUNE 2015Analytics vs. client Genpact and MIT shape Harnessingfraud the art of the possible technology effectivelypage 36 page 40 Research highlights levers for advanced operating models page 16 Diversity in global operations page 42

GENERATINGCOST REDUCTION,MARGINIMPROVEMENT,CASH FLOWENHANCEMENT,SIMPLIFICATION,STANDARDIZATION,REVENUE GROWTH,CUSTOMERSATISFACTION,GEOGRAPHYEXPANSION, M&ARESTRUCTURING,COMPLIANCE,TALENT ANDTECHNOLOGYIMPACT We help transform and run business processes and operations. We Generate Impact.

FROM THE PUBLISHER’S DESKIntelligent OperationsThe secret weapon of market disruptorsMuch of today’s conversation of some of the best examples of operating models so that they closely regarding new social, incumbents fighting back. Banks can align with measurable business goals. mobile, analytics and now engage clients at scale through This is the objective of our work at collaboration (SMAC) technologies multi-channel models enabled by Genpact, the inspiration behind this is misleading. Technology is technology and related data-driven magazine and the mission of our not the issue: The issue is the insight. Pharmaceutical companies Research Institute (http://www. ability of businesses to reimagine can improve patient interactions genpact.com/home/resources): processes through its use. Some during the initial phases of product Sharing today’s art of the possible so recent enterprises have recognized launches. Industrial manufacturers our readers can leverage intelligent this and have used technology to can optimize the effectiveness of operations and make their enterprises upend entire industries. PayPal has their assets and capture more value more competitive. disrupted banking by encroaching from their clients by deploying cost- on the industry’s bread-and-butter— effective services based on more GIANNI GIACOMELLI payments. The Amazon juggernaut insightful data. Finance departments has moved seamlessly from books to can manage credit risk globally in real Chief Marketing Officer and Chair, merchandise. And a major revolution time. Many more examples of this Genpact Research Institute in public transport is underway at the responsive adaptation are described Genpact hands of Uber. in this, our premiere issue. These are archetypal examples of Our frames of reference must, intelligent operations—organizations however, change. Practices that are able to sense, act and learn developing in one industry can from the outcome of their actions cross-pollinate with those in others, at scale. Doing so has allowed them even as the divide between front and to out-compete incumbents whose back office loses its significance. operations are stuck in old, slower The sensing, acting and learning decision-making and improvement triggered by every client interaction cycles. The technologies these is now cutting across enterprises successful disruptors employ in unprecedented ways. And while matured almost at the same time strategy, corporate finance, product in mid-2013 and their combined design and creative marketing remain momentum is now formidable. vitally important, they must learn But when we look past the hype, to synergize with technology-driven it becomes apparent that they operations if they are to truly harness leveraged intelligent operations, not the power of new technology. just technology. Disruptors know this very well. Significantly, the playing field doesn’t The key to fulfilling the promise naturally favor disruptors. Think of technology is to focus on the processes that power advancedJune 2015, Volume 1 Number 1The contents of Intelligent Operations are covered by copyright and all rights are reserved. No material in this publication may bereproduced in any form without permission.

In this issue 06 20FROM THE FRONTLINE 13 Overcoming resistance to change06 Technology that works How to drive analytics and technology change in operations A former Unilever executive on where technology transformation gets tricky MAKING OPERATIONS INTELLIGENT08 Reimagining order-to-cash 16 Harnessing technology effectively How Schneider Electric's Nick Dadswell leveraged Working the levers that transform technologies for his company's operations operating modelsTHE MACRO VIEW 18 Advanced financial planning and analysis09 The right time to transform CFOs as data-driven strategists and their need for better operations An intelligence tool for the new normal 20 After-market billions10 A nine-industry overview The profitable impact of intelligent service operations Can a relatively stable period pave the way for advancements? 22 The case for advanced operating models Rudimentary approaches are damaging strategyIntelligent Operations is published by Genpact Research Institute, a unit of business process services provider Genpact.Genpact designs, transforms, and runs intelligent business operations, generating impact for hundreds of clients including more than one-fourth of the Fortune Global 500.www.genpact.comPublisher Editor Consulting editor Contributing editorGianni Giacomelli Amrita Thapar Robert Barclay Prashant Shukla

392828 In focus: The era of intelligent operations 38 Insurers as disruptorsINDUSTRY ROUNDUP Business process as a service helps insurers compete through speed and scalability32 Investment banking's new paradigm 39 Here comes the sun Shaking up traditional operations Expanding leasing operations while reducing capital expenditure34 Technology in sourcing isn't just about IT INNOVATION Driving the enterprise-wide impact of eSourcing 40 Genpact and MIT crowdsource the art of the possible36 Analytics vs. client fraud You do WHAT with THAT? Businesses with millions of transactions per day have hope TALENT CHALLENGE 42 Diversity in global operations: priceless How a range of viewpoints enriches the business ecosystemTo advertise, contribute or receive a copy, email [email protected] editors Production manager Cover design DesignStephane Cote, Rosa Harris, Kenneth Waldie Kavita Yadav The Delve Group Timeus Interactive

FROM THE FRONTLINETechnology that worksPascal Visee, former chief enterprise support officer at Unilever and currentlyan independent advisor, talked to Intelligent Operations about the small andbig challenges of new technologyPASCAL VISEE would be very wise to leverage ““ My view is that them to maximum extent. Now park companies haveExecutive advisor, former Unilever that for a second and reflect on the under-invested forChief Enterprise Support Officer general state of operations in most many, many years multinationals. My view is that and the state ofIn your view, Pascal, are companies have under-invested for operations generallyenterprises leveraging emerging many, many years and the state of is quite poor, partlytechnology effectively in their operations generally is quite poor, because operationsoperations? partly because operations have been have been managed managed in functional silos. It’s in functional silos.The technology that has come onto It’s appalling tothe market over the last few years appalling to realize that in a world realize that in ais almost mind-boggling in terms of world where westability and response times, as well where we put vehicles on Mars and put vehicles onas innovations such as software as a Mars, the numberservice (SaaS), mobile applications where we can buy Google Glass in of mistakes madeand social networks. All of these have the shop next door, the number of on a daily basis ingreat business value and companies mistakes made on a daily basis in both back and front both back and front office is still office is still as high06 as high as it is. So there’s a huge as it is opportunity for businesses to invest strategically in these technologies interconnected business operations to improve the performance of and reduce costs at the same time.Intelligent Operations June 2015

FROM THE FRONTLINEWhy are technology investments a “ Most of the money “ programs’: the one bank program, orstrategic priority now? spent on technology the one oil company program and so is spent at the local on. I think multinational companiesThere are two key reasons why and regional levels realized they were not really oneinvesting today is strategic rather and sometimes but they were a different companythan tactical. First, by investing only 20 per cent is almost in every geography. Now ifin these types of technologies, spent against a truly we look back we have to admit thatcompanies will finally be able to take global agenda. most of these programs failed. Theycomplexity out of the business to That will need to at best created a facade of beingenable better internal collaboration be reversed one company, while underneathand—even more importantly— the differences stayed. But overcollaborate with the customer. So business operations? the last two or three years withthere will be a big impact internally new collaboration technologies weas well as externally. Second, I think I sometimes have to smile when are increasingly able to scale upmultinational companies really I hear about big data programs operations while remaining locallyhave no choice but to invest now. and pilots within multinational relevant. So I think the dream ofOtherwise they will be overtaken companies. Not because I dismiss becoming one can become realityeither by internet-based companies the whole trend of big data. I think with new technology that’s comingor by start-up companies from it’s crucially important and it creates into the market.emerging markets, with no legacy a vast number of opportunities forand heritage. So multinationals had almost every multinational company. Earlier, you talked aboutbetter act now because otherwise The smile is because I know many operations taking place inthey will be out-competed. companies have not yet sorted their functional silos. How can the small data. And by small data I intelligent enterprise breakWhat are the challenges of mean the master data, the supplier those down?implementing an operations records, the raw-material records,technology agenda? the employee records. I see the same Most multinationals lack a really thing when it comes to analytics and integrated view of the performanceA large number of new technologies reporting. Many people talk about of their operations. Why? Becausehave come onto the market for analytics when they’ve got a very operations are managed incompanies to exploit. Once people in scattered reporting landscape. So my functional silos that have multiplethe C-suite get it and understand it recommendation would be: Yes, do responsibilities, including strategy,and want it, quite often their reaction your pilots in big data and analytics, functional expertise and operations.is “what does it cost?” and that’s but at the same time start sorting out The average C-suite leader will givea fundamental mistake. This is not your master data and your reporting. more time to strategy and expertiseabout throwing money at technology. than to operations. As a result, everyYes, the technology is important but Can strategic technology function has its own performanceit must be process and business- investments help companies management system. That wouldled and it must be embedded in an to align their operations across not be a problem if processes wereoverall transformation program. And business lines? limited to single functions but nearlyit’s equally important not to spend it every process crosses functionalin functional silos. But I know from A number of years ago there was borderlines. So in my view thereexperience in many companies, even a whole wave of so-called ‘one is only one option: Industrializein IT, most of the money is spent operations end-to-end with a singleat the local and regional levels and performance system that you roll outsometimes only 20 per cent is spent globally with aligned KPIs. That willagainst a truly global agenda. That create maximum transparency andwill need to be reversed. internal competition, driving both operational and cost performance. IOWhat role do big dataand analytics play in the Watch more attransformation improvement of YouTube/GenpactLtd. 07 Intelligent Operations June 2015

FROM THE FRONTLINEReimagining order-to-cashHow Schneider Electric’s Nick Dadswell leveraged technologies for hiscompany’s operationsNICK DADSWELL mission-critical nature of what we our credit collections standards do for our clients. Being able to guide across the company and findingDirector of finance business all relevant actions leading to better technology solutions that enableservices at the multinational DSO, from the ones in our shared those processes in a scalable way,Schneider Electric services to the activities happening in both geographically and in terms of the field across portions of our order- granularity of actions. We selectedNick, what does your to-cash (O2C) process, was the main a Systems of EngagementTM for O2Ccompany do? objective. Clearly, a key boundary (Genpact Akritiv) which extended condition is client satisfaction—our the SAP system of record for bothFormerly known as Invensys, our O2C should respect that. credit management and collections.business was recently bought The system took credit at the frontout by the large multinational How did you pinpoint what parts end and then used the same tool setcompany Schneider Electric. We you had to evolve, without taking and the information it captured toare primarily focused on energy on too much at once? impact our collection performance.controls in everything from widgets A key design principle in this newto nuclear power plants. This is a We know the specific metrics that technology was its intuitive usability,fast-evolving, global business and my impact those business outcomes. We as we knew that driving adoptionorganization globally manages all our have always tracked many of those— throughout the company wouldtransactional financial processes. for example the aging profile of client otherwise be an impossible task. segments to drive specific actions.Can you give us an example of A lot of that work was manual What is the business impact youa critical business outcome you though and not scalable, which led generated?wanted to impact by reimagining to limited granularity and timelinessyour business operations? of the insight. Additionally—the The initial expectations were actions required couldn’t always exceeded, but that’s not all. OurWe were aiming at improvement in be triggered effectively throughout operations are indeed becomingdays’ sales outstanding (DSO) and our large enterprise, especially in more intelligent globally every day,overall better management of our circumstances where we wanted to so we are able to learn from whatcredit to our clients. This is a global act fast on issues such as emerging our global ecosystem is doing. Weenvironment where client credit risk risks for specific client segments are using information in the systemprofiles are variable and our sales in specific geographies. We also and we can promptly identify whereprocesses are complex, reflecting the knew that we had complex existing there are outstanding issues. We systems, primarily SAP, covering can publish concise and actionable parts of that operation and that an reports for the CFOs indicating overhaul of those wasn’t practical. which region, which country, which customer they need to focus on. Where did you start reimagining We learn from the alert metrics and your operations? the resolution and we are able to become more and more effective We looked at our global processes over time as we accumulate data and how they could enhance visibility and experience. IO of key metrics and progress and steer the effectiveness of our global activities. This involved refining08Intelligent Operations June 2015

THE MACRO VIEWThe right time to transformGlobal companies have experienced unprecedented volatility. The Volatility andAdaptation Index provides leaders with the predictive intelligence they need tohelp their organizations adaptGlobal companies have below. Capital markets are currently Three ways to adapt experienced unprecedented undergoing the most volatility, volatility in recent years followed by retail and commercial In Genpact’s experience, business and are adapting to banking. Leadership changes leaders who use insights from the compete under new conditions. contributed the highest share VAI follow three main approaches to These radical shifts result from of volatility events while fewer adaptation. First, lean management several factors including profit companies reported mergers and principles can help align strategy warnings, cost cutting, government acquisitions and deterioration of with execution to facilitate long- regulations, M&As and leadership financial conditions compared to term adaptation. Second, lean changes. The Genpact Volatility previous periods. management and Six Sigma practices and Adaptation Index (VAI) tracks can also be effectively utilized for these trends across a sample of The VAI reveals that companies tend short-term, continuous improvement more than 800 companies in nine to respond to a volatility event within supported by insights gained from industries. The index is a predictive three to six months as they adapt to business intelligence and other tool providing business leaders with the new landscape. Business leaders methods. And finally, intelligent the intelligence needed to undertake can use this information to predict operations enabled by advanced, adaptation measures, often by moves by competitors and to identify prescriptive analytics—often transforming business operations. ways of adapting more quickly. supported by big data—can drive Comparative speed of adaptation rapid and large-scale change. IOA period of relative stability is often a prime determinant of marketplace advantage. In short, The most recent results of this successful adaptation results from ongoing research reveal moderate having the right knowledge in hand volatility, both in the number of at the right time. companies reporting volatility events and the number of events in each The Genpact Volatility Index company. Adaptation responses Sharp differences in trend across industries; volatility and adaptation pick up in capital through leadership changes, restructuring and M&A have also markets, healthcare, and manufacturing increased, but the total volatility and adaption index remains relatively Volatility and Adaptation Index volativity events stable. These conditions provide adaptation responses an opportunity for organizations to undertake longer-term operating adjustments. The pace and effectiveness of this adaptation will determine their place in the rapidly changing competitive landscape.Volatility and adaptation trends Acquisition Leadership Restructuring Financial Industry, OVERALLdiffer sharply across industries or change condition regulatory or geographicMovements in the VAI for nine geographicindustries since 2013 are shown expansion change 09 Intelligent Operations June 2015

THE MACRO VIEWA nine-industryoverviewA period of relative stability prevails, marked by sharp,industry-specific variationsThe Genpact Volatility and Timeline: February 2014 - January 2015 concentrate increasingly on M&A Adaptation Index (VAI) is and geographical expansion. These based on 800 large global VOLATILITY EVENTS findings point to a time of increased companies in nine industries. stability and recovery for the sector.The most recent update of the F financial I industry, regulatory orindex indicates that overall, these pressures geographic changes RETAIL BANKINGenterprises are in a period of relative Hstability. But volatility and adaptation ADAPTATION RESPONSESvary considerably across industry. LWhat follows are the key trends. A acquisitions or R restructuring / L leadership geo expansions cost-cutting changes LIFE SCIENCES HLife sciences # events per company F # events per company RLife sciences fell sharply from the Asecond most volatile industry in I2013 to fifth in 2014, with about 41 F Aper cent still showing some signs of LRvolatility and structural adjustment.Companies are exploiting this I L Hopportunity to focus on long- L % companies impactedterm adaptation measures, with Hacquisition/expansion being the most % companies impacteddominant driver. Most of the industryis looking at innovative business Retail banking Commercial bankingmodels and emerging markets toaccelerate beyond low, single-digit Retail banking continues in first place Commercial banking is ranked thirdgrowth rates. This is reflected in life in 2014. This is not insignificant, on the VAI in 2014 up sharply fromsciences’ M&A and geographical as the volatility levels in the sector ninth place in 2013. Volatility levels,expansion, which accounts for 62 have dropped in terms of general however, declined consistently duringper cent of the index in 2014. Low volatility by about 65 per cent the course of the past year with a 35incidence of deteriorated financial from even higher levels in early per cent decrease from early 2014 toconditions and cost cutting, 2014. Still, nearly half of the retail beginning of 2015. Over 59 per centobserved in only 13 per cent and banking firms covered by the index of commercial banking firms found9 per cent of the organizations were impacted by one or more themselves undergoing destabilizingrespectively, indicates a period of destabilizing events, particularly events over the course of 2014,economic recovery. Many firms also leadership changes, restructuring particularly acute financial stresses.undertook leadership changes and and challenging financial conditions. However, those stresses lessenedrestructuring, transforming their Instances of leadership churn, somewhat toward the beginning ofoperations (finance functions in however, are decreasing markedly: 2015, with companies reporting suchparticular) to improve cash flow, from 38 per cent of companies incidents falling from 29 per cent onmargins, revenue and brand loyalty. impacted on an average during an average in 2014 to 16 per cent. In 2014 compared to only 17 per cent addition to this decreasing volatility, towards the beginning of 2015. In commercial M&A and geographical addition to restructuring, many expansion are on the rise in response retail banks are also beginning to to the reduced financial stress. More10Intelligent Operations June 2015

THE MACRO VIEWfirms are also beginning to undertake INSURANCE the sharp surge it witnessed duringleadership changes, with their share H the same period in 2013. M&A andof the index increasing to 51 per cent geographic expansion have slowed,of the index in 2014 compared to 27 # events per company impacting 19 per cent of companiesper cent in 2013. during 2014 down from 29 per cent in 2013. The source of volatility has# events per companyCOMMERCIAL BANKING AL H shifted to leadership churn, whose H share in the index increased from R 16 per cent in 2012 to 33 per cent in LF IF 2014. This combination may indicate R L the onset of a challenging period for the sector. % companies impacted CONSUMER GOODS A still represent a decrease of 30 per H I cent from the beginning of 2014. Nevertheless, 48 per cent of capital L L H markets firms have experienced a A# events per company % companies impacted volatility event in the past year and many have experienced more than FRInsurance one. Financial stress incidents have become more widespread, affecting I HThe insurance sector has 23 per cent of firms over the courseexperienced a period of relative of the year. Leadership changes—an Lstability over the last 12 months adaptation that can cause significant % companies impactedplacing it in eighth position in volatility—remain high but steady,the index’s rankings. Only 18 per affecting about 33 per cent of firmscent of firms have experienced a within the industry.destabilizing event in 2014. Financialstresses played a minimal role and CAPITAL MARKETS Healthcareindustry, regulatory or geographic Hdisruptions are consistently low. The healthcare sector ranksHowever, the sector is beginning # events per company L seventh on the VAI in 2014. But theto make adaptive moves that sector experienced a sharp rise incan themselves cause volatility. F disruptions over the course of theLeadership churns contribution to the I last year. Although only 20 per centindex was 32 per cent in 2014, and R of firms on average were affected byM&A and geographical expansion volatility events during 2014, duringcontributed 48 per cent. Generally A H the three months ending in Januarystable conditions are likely behind 2015 this number went upthese trends and may signal a period L to 59 per cent, with leadershipof long-term strategic adaptation for % companies impacted changes and M&A being thethe industry. dominant drivers.Capital markets Consumer goods Leadership churn in particular rose from impacting 21 per centThe capital markets sector is ranked The consumer goods sector is of firms during most of the yearsecond on the VAI in 2014, up positioned in fourth place in 2014 to 36 per cent in the three monthssharply from sixth place in 2013. The down from third place in 2013. ending January 2015. Perhaps as aindustry is subject to substantial About half of consumer goods firms result of these leadership changes,pressures from leadership changes, included in the index experienced a restructuring has begun to play asystemic restructuring and disruptive event during the last year. larger role in the industry as well.fluctuating financial conditions. Volatility levels during the course However, financial stresses haveThere is some cause for optimism of the past year have risen steadily begun to ease and volatility fromsince these high levels of volatility in second half of 2014 although the industry, regulatory and geography rise is relatively modest compared to 11 Intelligent Operations June 2015

THE MACRO VIEWchanges —already low—have Manufacturing Timeline: February 2014 - January 2015diminished still further. The manufacturing sector was VOLATILITY EVENTS H E A LT H CA RE not subject to the upheavals that H characterized some other sectors F financial during 2014, but firms still face pressures many challenges. The sector is ranked sixth on the VAI up from I industry, regulatory or average 2014 values of 21. Nearly geographic changes 45 per cent of firms were affected# events per company L by a disruptive event, although the ADAPTATION RESPONSES F majority of those were adaptions— I primarily leadership churn and A acquisitions or A M&A or geographic expansion, both geo expansions R of which have increased by small H amounts. Financial stress, along with R restructuring / L industry, regulatory or geographical cost-cutting % companies impacted concerns remain a very small source of volatility for the sector. IOHigh tech L leadership changesThe high tech sector ranks at thebottom of the industries measured MANUFACTURINGon the VAI. On average only 20 per Hcent of high tech firms have beenaffected by a disruptive event since # events per company LFebruary 2014, with essentially allof them being adaptations: M&A or Ageographical expansion, leadership FRchanges or restructuring. ILeadership churn has seen a small L Hbut significant increase, fromaffecting on average 8 per cent of % companies impactedfirms during last year to 14 per centin the most recent three-monthperiod. M&A events have also seena modest uptick, although incidencelevels remain substantially belownearly every other sector.HIGH TECH H# events per company R For more details on the VAI, L visit http://www.genpact.com/ H home/volatility-adaptation-index A FI L % companies impacted12Intelligent Operations June 2015

THE MACRO VIEWOvercoming resistanceto changeHow to drive a transformation agenda that leverages analytics and technologyin operationsAs enterprises strive “Executives have “ and even harder when quantitative to take advantage of their own way of analytical techniques seem to be emergent technologies, doing things and pointing one way while conventional they frequently find when you introduce wisdom points another.themselves running up against analytical methodsseemingly insurmountable barriers into an organization, Influence from the topto implementation. Many business you’re asking peoplesystems have become so mature— with years and years The key to overcoming thisand their inter-relationships so of experience to do institutional resistance, he says, is tosophisticated—that the task of things differently foster a culture of change as a meanstransforming processes can seem of driving value to clients. Thatprohibitive both in terms of sunk cultural shift must flow right fromcosts and human effort. This is the the top, he adds. CEOs and seniorcase, for example, in attempting to leaders send signals through theirharness the power of analytics to actions and their priorities and thoseoptimize process management. values permeate the organization to become deeply felt institutionalThe primary challenge in values. Leaders who understandimplementing cutting-edge analytics the opportunities offered by toolsis not about math or science, says such as quantitative techniques andPaul Burton, senior vice president of advanced analytics―who are willinganalytics and research at Genpact. to take action without yielding to“What most organizations have is institutional conservatism―willa cultural problem,” he maintains. reap rewards at every level of“Executives have their own way the enterprise.of doing things and when youintroduce analytical methods into an Burton points out that a willingnessorganization, you’re asking people to implement analytics is crucial,with years and years of experience to but it’s also only a first step. Manydo things differently.” otherwise efficient and successful organizations suffer from aBurton suggests that old habits, PAUL BURTON fundamental misunderstandingingrained processes and ‘the way about the nature of the analyticsthings have always been done’ Senior vice president of analytics and process itself.pervade even the most rigorous research at Genpactmanagement environment—and the “Most organizations have theirmore experienced executives are, the data scientists spending themore vulnerable they are to the traps overwhelming majority of their timeof traditional thinking. Change is hard and resources engaged in the 13 Intelligent Operations June 2015

THE MACRO VIEWmechanical aspects of managing Engagement TM’,” says Sanjay effective engagement system suchdata—gathering it, manipulating it, Srivastava, senior vice president and as this grows the technology stacktransforming it, crossing the t’s and chief digital officer at Genpact. “It’s while shrinking the people stack bydotting the i’s,” he says. And while a layer of adaptive technology that empowering individuals to do morethese activities are important― sits on top of multiple systems of using the same underlying structures.indeed essential―to the analytics records to provide a single unified The result is an optimized network ofprocess, every minute spent on interface.” Using this system, an record systems running at a greaterprogramming is a minute that could operator travels seamlessly from level of productivity and efficiencybe invested in the achievement of one end of the process to the than ever before.analytical insight to help make better other, obviating the need to log inbusiness decisions. to multiple applications. This also But there’s a subtler benefit avoids the potentially bottomless to employing a Systems ofBurton believes Genpact complexities of differing procedure, EngagementTM that yields an evenis developing the tools and language and geography. An greater long-term return. “It allows ustechnologies that enterprises will to record touches and lets us reallyneed to minimize time lost on data “An effective think about the end-to-end processmanagement and maximize time engagement in a new way,” says Srivastava. Bygained for driving client value. system grows the noting the nature, frequency andProcess, methodology and domain technology stack position of touchpoints, a system ofexpertise must all be working toward while shrinking engagement lets forward-thinkingthe same goal—and operating at the the people stack enterprises exert significantly greaterhighest level—to frame problems by empowering granularity of control over everyin their proper context and solve individuals to do point of the end-to-end process. Itthem. Enterprises hampered by also allows them to standardize theirorganizational silos can’t properly global operating model. Checks andleverage their own expertise and the control points become consistentresults are often worse than useless. and processes becomes routineBad data leads to bad decisions, regardless of specific geography.Burton stresses. And bad decisions The result? A system of records thatdamage clients, stakeholders and is both simplified and amplified,executives alike. capable of interacting with clients, suppliers and business partnersEngaging people and more using the “ everywhere in the ecosystem. “The same underlyingharnessing machines structuresFrom enterprise resource planning SANJAY SRIVASTAVA(ERP) systems to customer contactdatabases to state-of-the-art salesautomation software, most globalenterprises employ extensivesystems of records. These systemsare typically mature, structured andabove all rigid—elaborate softwareinfrastructure tailored to a singlespecific function. However, businessprocesses such as order-to-cashspan multiple functions. This meansthat many rigidly constructeddatabases must constantly interactwith one another to accomplish eventhe simplest transaction, all too oftenwith predictably substandard results.“We’ve solved this problem Senior vice president and chief digitalwith what we call a ‘Systems of officer at Genpact14Intelligent Operations June 2015

THE MACRO VIEWvalue is beyond productivity,” says another, is one classic example. the third-level tasks for which they“Srivastava. “It’s in the compliance, But the science’s sophistication are best suited. But he says humanthe control, the governance—in is growing day by day and the judgment might not remain angetting standardization across development of intersystem irreplaceable commodity forever. Inglobalized spaces.” interoperability—the mimicking his opinion, further innovations in of human action—is the key to the area of artificial intelligence mayEmbedding automation that evolution. eventually allow automated systems to mimic the decision-makingRote, menial tasks—a nagging source The three levels of business process. That would multiply the usesof process inefficiency—are endemic process work of automation to an unknowable, butto the business world. Recent exciting, degree.advances in automation, however, Ghosh says most business processare likely to have a massive impact work can be broadly categorized “ Robotic automatedon the science of business process into three different levels. “The first processes aremanagement. While robotics will level is the managing and positioning beginning to excelbenefit those enterprises that fully of data; the second is algorithmic [at managing andgrasp its applications, the hype analysis. Both of these activity sets positioning datatends to run ahead of the reality: are fundamentally about working and algorithmicAutomation is not a panacea. At the with multiple systems and disparate analysis], freeing upsame time, says Shantanu Ghosh, data sets, ensuring the validity and invaluable humanGenpact’s senior vice president and the authenticity of those data,” resourceshead of CFO services and consulting, he explains. “These are tasks atit has immense potential to be the which robotic automated processes The bottom linelow-cost, high-ROI transitional model are beginning to excel, freeing upenterprises need as they make the invaluable human resources for the Technology is not the limitingdifficult transformation to integrated, third and final level.” factor. Transformation—ideally thestreamlined digital processes. reimagining—of existing operations The third level, says Ghosh, is the is hampered by poor change“Robotic automation has been application of real intelligence to management and a misunderstandingaround for a long time,” says make correct decisions. For now, of what’s possible today. PracticalGhosh. Something as basic as an there is often no substitute for choices in scoping interventions,email rule, sending messages from human judgment, so the long-term creating a culture of analyticsa given address from one folder to goal of intelligent operations should and embracing a new class of be to use automation to minimize technologies can go a long way to and eventually eliminate first- and make transformation a reality. IO second-level work. That way, employees can concentrate on Watch the complete interviews at YouTube/GenpactLtd SHANTANU GHOSH 15 Senior vice president and CFO services and consulting at Genpact Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENT: COVER STORYHarnessing technologyeffectivelyA groundbreaking survey shows that new technologies represent just onelever of operating model transformation—and that their value varies fromindustry to industryBusiness leaders have access to Applying the levers considered lower. For example, only an array of new technologies. 24 per cent of insurance executives Cloud, big data, advanced Genpact analysts compared the say that technology can materially analytics, robotics and mobility impact and applicability of radically impact operations, compared with 51 are obvious examples. Radically improved use of technology with per cent for SSC/BPO/hybrid. improved use of technology can the other two principal operating generate large financial impacts, but model levers: business process Evaluating technology’s impact in many cases other levers of business re-engineering (BPR) and advanced transformation—such as shared organizational structures (shared Because technology is seen services and outsourcing—are more service centers/SSC, business as having relatively limited widely applicable. process outsourcing/BPO or hybrids applicability despite big dollar of the two). Executives’ estimates of impacts suggests that many large A 2014 Genpact-commissioned the average dollar impact of these organizations have already adopted survey polled nearly 1,000 executives levers vary substantially across advanced technologies, leaving across a spectrum of industries to business functions and industries. BPR and SSC/BPO/hybrid as more assess the potential of advanced Technology appears to offer the attractive approaches. As well, operating models for meeting largest potential impacts in nearly the applicability of technology strategic enterprise challenges. every case. Yet the applicability varies significantly across business It focused on decision-makers in of each lever also differs across finance, procurement, marketing, industries and functions. Figure 1: Technology’s risk and operations. To illustrate these concepts, Figure financial impact and degree 1 maps the annual average US of applicability The top enterprise challenges it dollar impact of technology against reveals differ significantly by industry. its degree of applicability for the Financial impact is highest for finance but For example, regulatory compliance finance, procurement, marketing is the biggest issue in banking and life and risk functions. Finance executives technology is more widely applicable in sciences, cost reduction and agility rate the dollar impact of technology are priorities for consumer goods highest, but consider this lever the marketing function executives and innovation takes less applicable than counterparts precedence in high tech. in the other functions. By contrast, Technology Impact technology is highly applicable to $US mm These distinctions aren’t surprising. the marketing function but impacts However, the data also allowed are lower. $250 Finance Genpact to track how advanced operating models address key Similar variations occur across Risk enterprise challenges across different industry-specific operations. In business processes, revealing patterns nearly every case the financial $200 of technology applicability and impacts of technology are rated its impact on multiple industries $150 Marketing and functions. higher than for other operating model Procurement levers while the applicability is $100 20% 24% 28% 32% 36% Technology Applicability16Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENT: COVER STORYprocesses within each function, so The business function/processes in to understand how to couple itaccurately identifying candidates the upper right segment are those with process re-engineering andfor technology investment requires that executives say can be materially organizational redesign, thenselectivity at the function level. For affected by technology while having apply it to business processes withexample, executives point to certain multiple impacts on the most the best potential for addressingapplications, such as master data important enterprise challenges. enterprise challenges. This directsmanagement (MDM), as having Examples include procurement/ scarce resources to activities withhigh impact on multiple business intelligence, procurement/ the greatest capacity for positiveenterprise challenges. MDM and marketing/analytics. business outcomes and reduces The bottom left segment shows complexity by creating commonTo evaluate the impact of business the opposite: functions with low ground for cross-disciplinaryfunctions, Genpact analysts created impact and with low technology teams. Identifying partners with thea “Function Impact Index” that applicability. This includes several appropriate expertise can help manyweighs each according to the finance and risk processes. Two companies move decisively in animportance of the business procurement processes—supplier risk unforgiving competitive environment. IOchallenges it addresses. A high and performance management andindex means the function addresses sourcing/category management—lie A fewthe most important enterprise outside the general pattern, with very definitionschallenges, making it a better high applicability but moderate impact.candidate for new operating models. These areas may require discretionaryFigure 2 maps the impact index judgment from experts.for selected functions againstapplicability (the proportion of Exploiting technology effectivelyexecutives who say that technologycan have material impact on Genpact’s experience indicates that Financial impactthe function). the key to exploiting technology is is defined as the average “positiveFigure 2: Technology applicability and impact on business impact” from radicallyenterprise challenges improved use of technology expressed in US-dollars-per-Procurement and marketing offer a good combination of applicability and impact on year. Survey respondents in eachmultiple enterprise challenges business function estimated the amount, taking into accountTechnology Applicability reduction of cost, capital required60% MDM Binutseilnliegsesnce and improvement of cash and Analytics revenue growth.50% mAcauamtnopamagiaegtmnioenn/t Technology applicability MDM MDM is defined as the percentage of a function’s executives who stated Stress testing Tprraoncsuarcetmioennatl that radically improved use of technology could have “mate-40% KYC/AML FP&A rial impact” on the function’s business processes or support mLooannitpoorrintfgolio SCmoaautneragcgionergym/ ent operations. pSueprfpolriemrarniscke& u/nodreigrwinLraiottiiaonnng M/ cuulstit-oCmhaenr neenlgmagaermkeetinntg The function impact index Collections combines two factors for each function: (1) The percentage of30% P2P R2R respondents who believe that improvement in the function will Basel2 DcoomddplFiarnancek “materially address the chal- iBmaspelel mentation lenge” and (2) the percentage O2C who rate the challenge in the top20% three for their business. 80 120 160 200 Function Impact Index Finance Procurement Risk Marketing 17 Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTCFO +Advanced = Data Driven StrategistFP&A Research Insights More robust Financial Planning and Analysis can help CFOs to meet their strategic business partner role.FP&A's increasingly strategic role Finance Executives see FP&A as a crucial lever to manage the most materialin today's environment organizational challenges.FP&A HELPS MEET THESE TOP CHALLENGES:Enable agility Manage risk Increase growth Reduce costsand adaptability and scalabilityAdvanced operating models can *Percentages are the number of respondents selecting these top challenges.strengthen FP&A in 3 ways An independent survey of FP&A leaders shows that mature organizations should focus their attention on organizational models, technology and data accuracy* ORGANIZATIONAL MODEL Mature FP&A organizations leverage global or regional shared services and outsourcing more often than their less-mature peers - allowing them to realize economies of scale, improve service levels, and share best practices while building capabilities for supporting enterprise-wide strategic roles. Immature FP&A organizations are Two-thirds of FP&A organizations have target models twice as likely to use decentralized that include global and regional SSCs for: organizational models 53% of immature FP&A organizations 22% of mature FP&A organizations Decision analysis Performance Planning & & management management budgeting reporting *Survey conducted by an independent research firm amongst 150 finance and accounting executives from large enterprises in mature marketsIntelligent Operations June 2015

Mature FP&A organizations expect high business impact from improved use of advanced technology and are more aggressive at deploying it.Who expects high impact? Where is big data a priority for FP&A?Master data Planning Global datamanagement and and forecasting warehousesgovernance Immature FP&A Moderately Mature FP&A mature FP&A 17% 29% 6% 41% 27% 46% Very High Very High Very High high impact high impact high impact impact impact impact Planning Decision analysis & Performance & budget management reporting management 35% of 54% of 41% of 24% of 41% ofimmature FP&A mature FP&A immature FP&A mature FP&A organizations mature FP&A organizations organizations organizations organizations 25% of immature FP&A organizationsAdvanced organizational model and related practices are an untapped lever. They helpevolve the CFO's role into a data driven strategist with the ability to turn insights intoenterprise action. IO Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTAfter-market billionsHow an improved control environment of accurate,timely and granular measurements helped one majormanufacturer reap considerable rewardsIndustrial manufacturers often rely to perform historical failure trend Solution: a holistic approach on aftermarket service contracts analyses, find the root cause of for financial success—and the repeat failures, benchmark contract The key to solving these structural well-known world leader in aircraft profitability with peers and predict issues was in the quality of component manufacturing featured optimal pricing for future contracts. maintenance scheduling and related in this case study is no different. It Part of the problem turned out to costs. This data-intensive process counts on such contracts for 40 per be that multiple shops are involved relies on accurate, granular and cent of revenue and an even higher in repair jobs—each with its own timely measurements and insights. share of profits. unique systems and processes Yet while advances in technology creating complexity and the potential offer an array of opportunities— Typically, modern pay-per-use for inaccuracy. from sourcing of sensor data to contract pricing depends on the sophisticated predictive analytics, accurate and timely capture of A lack of auditability for example—these tools are useless complex historical information to if they aren’t fully leveraged. That assess failure probability. In this case Considerable time and effort went calls for a reimagined planning and study, the company in question was into manually scrubbing the data of maintenance process. struggling to maintain predictable erroneous bill of materials (BOM), earnings. Its aftermarket service mistakes in recording part numbers, The solution lay in designing and provider had been billing equipment labor hours and contract-specific optimizing a full Data-to-Insight-to- operators at rates fixed under expenses. Although roughly 70 per ActionSM arc. Recent advancements long-term engine maintenance cent of these errors were visibly mean that the continuous learning for the number of usage hours systematic and thus more easily from the feedback loop can now be flown. Estimated revenue for each preventable, the remaining 30 crystallized into powerful analytical period was based on initial contract per cent required judgment and tools, such as GE’s Predix™. The planning. But actual revenue detailed follow-up with different result is more meaningful data depended on the true parts and stakeholders across business units. leading to increased revenue and service costs amassed during the Finally and crucially, this process cost forecasting accuracy across same period—and these, in turn, lacked auditability, as the changes multiple scenarios. were contingent on downtime to data could not be traced back. Of incurred. Because revenue and profit course, revising financial audits to In this case study, a look into three are therefore variable, the enterprise restate revenue and profits can have clusters of analytical and related faced controllership issues such significant consequences. operational processes enabled the as deferred balances. The CEO’s Data-to-InsightSM and Insight-to- ability to understand the health What’s more, as is often the case, this ActionSM arcs. of the business was constrained. manufacturer’s narrow technology- Worse, difficulties in pricing future led efforts to automate the scrubbing Data-to-Insight-to-Action arc contracts accurately threatened of cost data had yielded poor results. to have a negative impact on sales Business interests and functions such Consolidate, Correct strategy and profitability. Literally billions of as finance, procurement, operations report and targets dollars were likely at stake. and supply chain are interdependent. EFFSETCETEIVRENESGSather For one thing, the cost of actual But a poor understanding of how VISPIRBOILVITIYDE feedback labor and parts during contract data was consumed by various Analyze performance wasn’t transparent. stakeholders throughout the chain As a result, company forecasters resulted in sub-optimal solutions Implement EXECUTE Measure were severely limited in their ability all around. ACTIONS Operate20Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTProvide visibility range ways. The company began computing and analytics, asset repairing more parts rather than management and mobile devices.(Data-to-Insight) replacing them. It could procure parts from cheaper sources. It The billion-dollar business impactReal-time visibility into critical could keep spare parts at optimalcontract performance metrics— inventory levels, conduct preventive The manufacturer and its clientsbilling and revenue accrued, maintenance and update benefit from lower maintenanceparts and service costs incurred, master data. costs and asset downtime reduction.planned and unplanned downtime, The bottom line: higher revenuefor example—required timely, These and related improvements not and profitability in the multi-million-accurate data capture. A system of only enhanced Data-to-ActionSM but dollar range from existing contracts;sustainable master data for critical also made the analytical processes better pricing and sales due tospare parts, such as engine modules much more efficient. Functional more reliable failure and costand other components, had to be experts worked alongside the forecasts; and radically superiordevised. Additionally, robust controls technology and analytics teams to controllership and auditability ofwere essential to ensure timely identify the most material metrics complex, global operations. Timelyaggregation of cleaner information to drive business outcomes. It also availability of accurate informationfrom multiple data sources like parts helped them define the technology, across all functions and with allMRP and repair shop ERPs. analytics, process and organizational stakeholders brings about short- and structure that influence those long-term enhancements to theData redundancies and mistakes metrics. A holistic view across entire value chain.were identified—and rules designed Data-to-Insight and Insight-to-to prevent those mistakes were Action helped design effective Lessons for other industriesdocumented and rolled out globally. analytics solutions and embeddedAs a result, analysts with a granular, targeted change management into Aftermarket services are a perfectoperator-level understanding of the business processes. As a result, 95 laboratory for what can happenunderlying processes performed per cent automation of manual data without integrated financialdata clean-up and follow-up on a aggregation freed up more than processes, big-data analytics andmore finite set of critical exceptions. 20 analysts to focus on insights global field operations alignment.This accurate data was then made rather than on the manual scrubbing But this case study holds lessonsavailable for cost analysis. Contract of data. The upshot: materially for many other industries. If Data-performance was regularly monitored improved operational scalability for to-Insights and Insight-to-Actionto determine discrepancies between the manufacturer and their clients. processes are reimagined withplanned and actual costs. A similar technology and analytics at theirprocess assessed downtime. Analysis The company also harnessed GE’s core, organizations can enhanceof service events and costs internally Predix software platform to unleash competitiveness significantly.benchmarked the performance of industrial-scale analytics for asset Focusing the transformation onrepair shops and service procedures. and operations optimization. The the material drivers of business core platform extracts cost from outcomes can help companiesSteer effectiveness and multiple data sources. An application achieve results faster andexecute at scale then processes this data and stores more practically. it in a central hub after validating(Insight-to-Action) it by applying predefined business Operations employing these rules that evolve regularly through strategies are clearly different fromThese new standard operating feedback loops. A secure interface traditional ones. Genpact calls themprocedures reduced costs in a wide allows globally located business “intelligent” because they leverage users to manage the exception analytics as an integral component flagged. Role-based access control of the business process. They can and automated reports ensure better sense and react to operational complete auditability when the conditions (such as asset usage data changes. The process solution patterns or new field operations reimagined around Predix lays constraints) and by learning from the foundation for more scalable, those data sets, a continuously more effective running of those important extensible, customizable and secure business processes ensues. IO data applications through distributed 21 Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTThe case for advancedoperating modelsMore sophisticated presentations can become a real cornerstone to strategyOperations leaders often uncertainty and market volatility. The of the underlying economics and struggle to present the same challenge exists when choosing quantifies the risk of falling short full strategic value of among alternative organizational of financial targets. Second, they their operating model models, such as internal shared should clarify the full value envelope, alternatives to those they report services, BPOs, hybrid services and including costs that occur in the to in the C-suite. This challenge is global business services. event of volatility or enterprise common across service and support discontinuities. In both steps, the operations, from banking processing To present their plans effectively impacts of alternative operating to finance and accounting. Assessing and retain the attention of top structures on these drivers must be advanced operations roles solely management, operations leaders rigorously modeled. through the lens of baseline-cost might think about a two-step reductions biases CEOs’ enterprise approach to building business cases. Step 1: total cost choices. In reality, the choice of First, they should consider the total of ownership alternatives can benefit from a cost of ownership to understand the more sophisticated value-modeling detailed cost structure of advanced Figure 1 illustrates two sets of cost approach that takes into account operations and map the cost drivers. levers. Very often, only the first the financial impacts of execution This leads to an understanding lever—production input cost—is taken fully into account. However, inFigure 1: Two sets of cost levers Genpact’s experience, other factors explain much of the variance in Production Direct FTE operation cost effectiveness. input cost InfrastructureOverall delivery The inability to pull some of those cost structure IT levers—whether due to scale, G&A process optimization capabilities, or access to cost-effective pools—can radically alter these costs. The team responsible for the business case should be able to model the effects of some of the key variables, as well as the impacts of a failure to optimize them. Agent Leakage source To demonstrate why such a productivity Inter-agent variance detailed analysis is required, Figure 2 illustrates the magnitude Waste / rework of the possible impact for a benefits administration operation. Understanding the effect of scale is often something that small22Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTcompanies struggle with unless Figure 2: Effects of scale on a benefitsthey have significant experience in administration operationtransforming and sharing operations.But even a large organization’s ‘Cost per Unit’ 5 SCALEcost structure might behave like a R2 = 0.90 10X scale can cut 50% ofcollection of small companies if the Ratio of FTEs per 1,000 employees servedrequisite scale is not achieved. That 4 cost-per-unit-of-workfailure can have significant cost OPTIMIZATIONimplications if the line-of-business 3units don’t have the necessary Standardization to scalescale or if there is limited process 2 explains variancestandardization, for example. 1 { COST ARBITRAGEUnderstanding cost drivers 100 Cost per hour can be 70% less -Building an effective model requires for same skills globally, andintegrating many such cost drivers to some extent, regionally(see Figure 3) based on estimatesof the materiality of each lever Benefits Admincombined with an understandingof how they can be harnessed. For 1,000 10,000 100,000example, some components, suchas bench levels, benefit greatly Company Sizefrom economies of scale or from employees, log scaleincreased scope and this enablesthe pooling of resources and the spreading of fixed costs. Other levers, these levers, process improvements such as associate compensation, can still generate benefits. respond well to global delivery. Although they typically have greater Shared-service organizations (SSOs), impact when combined with other business process outsourcing (BPO) levers, even without the ability to use and modern global business serviceFigure 3: Transactional processes, offshore exampleTRANSACTIONAL PROCESS Potential impact of advanced opso shore example process scale global scope Associate comp improv. delivery BenchDIRECT FTE % of cost Experience and tenure mix Direct supervision Entry level compensation Direct support 20-40 Proportion of temporary sta deployed Agent attrition Transportation, cafeteria 1-5 Average time to recruit and train 10-15 Span of control (across supervision levels) Recruitment, training 5-10 Grade role mismatch Support per 100 FTEs Rentals 5-10 Grade role mismatch Other infra Proportion of workforce availing transportation IT maintenance 1-5 Average fill rate Telecom Defects / no shows G&A [ 50-60% ] Average time to recruit and train Travel Recruiter productivity Recruitment yieldIT INFRA 5-10 Area per seat Seat utilizationG&A 10-15 Proportion of idle seat capacity [ 10-20% ] Desktop maintenance cost Number of tickets raised 1-10 Average bandwidth utilization 1-10 Number of G&A employees per 100 RGFTEs [ 5-10% ] Approval policy and compliance Policy for business class travel 1-10 1-10 [ 10-15% ] HIGH NO NEGATIVE IMPACT IMPACT IMPACT 23 Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENT(GBS) structures can affect these While the results are decidedly considerations are often ignored. Thecost structures with varying degrees situational, high-level estimates can following factors, in particular, areof certainty and the business cases readily be made. Figure 4 provides often not modeled appropriately infor alternatives must be built a simplified overview of the design business cases.appropriately. In other words, it is choices of different organizationalnecessary to account for the different models, as well as their typical ability Attribute value to uncertaintyfinancial risk profiles of each of to drive results.these structures and to ensure While proper investment valuationexceptionally robust modeling of the This example shows why practical takes uncertainty into account andalternatives, since the risk is borne by results depend on the theoretical discounts outcomes accordingly,the client organization. economic fundamentals of each business cases for shared services alternative model as well as the and other operational constructsAssessing the cost effectiveness execution excellence applied to do so rarely. This is a mistakeof different models these fundamentals. Creating these because the alternative options organizational constructs requires carry different levels of financialThe theoretical outcomes of the significant implementation effort risk―and management needs thisvarious options (SSOs, BPOs and and a rigorous business case information to support its decision-GBSs―typically with hybrid models) must take this into account when making process. The parametersdepend mainly on three things: the performing sensitivity analyses described above clearly havesize that the company’s operations for various alternatives. Yet material financial impacts, but thecan reach by itself for the relevant experience tells us that important ability of an organization’s businessfunctions; the firm’s ability to implementation considerations are planners to estimate them well variesoptimize processes; and the access often not modeled appropriately. significantly. This is especially truethe business has to labor pools that it when assessing risks for internalcan realistically maintain. Enterprises Modeling implementation risk shared services in that the typicalthat score well on these factors budgeting and financial controlsand feel that they have little risk in Implementation issues clearly for these services often don’t actexecution are the best candidates have an important impact on the as good stabilizers of initial budgetto optimize their financial profiles outcomes of alternative operating overruns. That can lead to the effectby retaining greater scope in-house. models. However, important known as “burning through theFigure 4: Simplified overview of organizational model design choices | NON EXHAUSTIVE | OPERATIONS COST LEVERS NECESSARY DESIGN SSC GBS KEY LEVERS DIRECT FTE COST Associate comp Experience and tenure mix Business Impact Bench Direct supervision Move tenured emp. Direct support to new projects Transport, cafeteria Recruitment, training Entry level compensation Low-cost locations Agent attrition Better career paths Span of control (across supervision levels) More standardized processes INFRA Rentals Seat utilization Better shift Other infra OPEX Proportion of idle seat capacity scheduling Depreciation More seat sharing IT IT, software maintenance Systems per user System sharing, Telecom bulk licenses G&A G&A - personnel G&A costs Shared G&A costs Non-recoverable travel, Approval policy and compliance sta welfare, meetings Better compliance through HIGH standardization IMPACT NO IMPACT24Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTmoney.” Poor estimates tend to result employees when the job market Consider benchmark findingsin under-investment for elements becomes more competitive?like talent and infrastructure to keep Benchmark studies demonstrate thatshort-term costs under control. The sensitivity analysis of the these cost drivers vary significantlyThis, in turn, may perpetuate cost business case needs to account for between best-in-class and “median”issues and lead to vicious circles. The the differential risks of the various organizations—and most likely,business case for top management alternatives. A BPO provider will so do the variances of the originalshould explicitly reflect the full often assume the most risk, whereas business cases. The best captivesrange of possible outcomes, since a mature shared service organization can have, for example, a lower,the expected results of internal will be able to estimate and manage fully-loaded cost per FTE than thatstructures may be more “noisy” than these variables to a certain extent. of the best BPO providers. However,those of process outsourcing where Meanwhile, a new team in a firm the median captive is roughly 40modeling is based on experience and with little experience in internal per cent more expensive than themore risk is borne by the provider. shared services will bear the highest median service provider. In general, level of risk. service providers and the very bestAssess the company’s captives enjoy structural advantages.financial risk The possibility of These include better opportunities a miscalculation to spread fixed costs, lower costsThe possibility of a miscalculation is significant and of resource acquisitions and tois significant and not just when not just when the give greater attention to indirectthe organization is new to such organization is new costs and process improvements.endeavors. Moreover, the to such endeavors In addition, several unquantifiableprobability of a mistake—and the aspects can have a negative impactseverity of its consequences―varies Avoid blind spots on the business case for the worst-widely depending on the type performing captives over longerof organizational construct Business cases often only use time horizons. Examples include thebeing considered. known costs, without seeking a opportunity cost of management proper understanding of all the attention to remote operations;In the case of a BPO agreement, for costs associated with the new fewer career developmentexample, the consequences will be organizational structure. Some opportunities for staff (leading toless severe if the service provider such costs may be embedded— higher retention costs); and a limitedhas done appropriate due diligence sometimes invisibly—in general ability to develop leading practiceand if the contract protects the buyer and administrative (G&A) or thinking. Clearly, the best in-housefrom all or part of the price pressure business-line cost structures. captives are great performers andresulting from an upward revision There is frequently little clarity the probability of reaching suchof a cost calculation. That said, regarding how those costs may performance should be accounted foroutsourcing relationships in which vary in the future, either in the in the related business case.the cost has been underestimated heat of the transformation battledo exist and are potential sources of or during steady-state operations. Step 2: clarify the fullinstability. That’s why it’s important Similarly, there is usually inadequate value envelopeto ensure that the service provider consideration of factors that mayhas enough data points to make an expose the business to pressures Today, most business cases foraccurate assessment of the cost of due to new environmental conditions shared services or BPOs arethe outsourced organization. (e.g. offshore labor markets) or constituted by efficiency and cost when the business is affected by measures and even these are notIn the case of an in-house shared new internal ecosystem requests fully accounted for. Instead, multipleservice transformation, the (e.g. governance, service level factors should be part of a robustbenchmark data available to the agreements, customer satisfaction). analysis and their cumulative effectmodelers are typically sparse and should be brought to the attention ofnot easy to relate to the new top management.situation. For example, how shoulda company model the cost of hiring Inflationpeople at scale in an offshorelocation? Moreover, what will the The impact of cost inflation onactual level of attrition be for key production resources is often not 25 Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTconsidered, although it affects Time-to-market are all situations that can exposealternative operating models firms and individual managers todifferently. Consequently, it is a Savings related to the value of time dangerous liabilities. Again, thesesource of bias when comparing represent only part of the full value scenarios are rarely quantified inoptions. In particular, the cost of equation. The ability to deploy business cases.in-house, fragmented operations support operations quickly or to(the baseline in Figure 5), is rarely scale them up to accommodate rapid Alignment of cost structurea steady cost. It tends to increase growth is particularly important with demandover time, especially in the event of at certain times. This comes intoadditional compliance requirements play, for example, when developing In addition to having better ramp-upor when improved effectiveness calls markets represent growth potential capacities, advanced operationalfor additional investments. Yet the or when emerging clientele segments models can typically better handlebaseline used as a comparison to require setups for different types fluctuations of demand. For instance,alternative delivery models is often of operations. they may be able to pool resourceskept artificially flat, obfuscating an better across business lines or toimportant source of savings or, at The inability of support operations implement more sophisticatedleast, predictability. Outsourcing to keep pace with demand can have staffing forecasts and resourcingcontracts also typically include a variety of implications. Consider mechanisms. They also tend toinflation-adjustment clauses that the following scenarios: Demand make workforces more fungible,shift the risk of unforeseen cost is left unaddressed, resulting in a such as by cross-training people orincreases to the provider. These loss of revenue and EBIT. Demand by redesigning processes so thatare particularly valuable in times is addressed, but at a higher SG&A different employees can performof volatility or when the company cost, resulting in EBIT dilution. different parts of the jobs at hand.doesn’t control future costs very well. Demand is addressed, but not effectively, for example when The overall impactThe time value of money the sales force cannot develop appropriate discount or credit Real-world comparisons betweenThe time needed to realize benefits policies due to the lack of timely internal SSO operations andisn’t the same across operating and precise cost-to-serve estimates tightly run BPO operations showmodels. This is especially true in from operations. Or finally, demand that cost differentials are largerthe initial phases (say over the first is addressed, but at the risk of when all of these cost drivers are24 months), when the ability to non-compliance with local or taken into account. The comparisonaccess pre-existing knowledge and international regulations. Theseinfrastructure makes a materialdifference in cost and investment Figure 5: Impact of cost inflationcurves. For example, an advanced500-person global-delivery operation operations cost ReaCliosstitcSBtrauscetliunreecan save well in excess of $5 to $10million per year, which translates Estimated Baseline Estimated Realisticto around $100,000 to $200,000 Cost Structure Cost Costper week. If two alternative delivery Di erencemodels take a significantly different Di erencelength of time to reach steady- NewofCCoosnttSintruuocutsurIemipnrPorveesmenecnetstate savings, the differential overa period of years will be significant. timeInterestingly, the same applies tothe end-of-cycle situation, whenthe company wants to evolve theoperating model and for example,merge it with other operations orturn it over to a service provider. Thevalue of time spent preparing forthese transitions is rarely accountedfor, but it can be material.26Intelligent Operations June 2015

MAKING OPERATIONS INTELLIGENTbetween like-for-like savings is instance, the best staff will quit) and exercise may not exist in-house,only one part of the cost envelope. it will become clear that the initial significant experience has beenThe rest, which often involves even operating model choice should have accumulated in the almost twomore significant monetary impact, been different. decades since the emergence of theis explained by some of the factors first captives and the widespread usediscussed above. The difference Finally, while a full discussion of the of process reengineering in service-between in-house fragmented impact of choices among operating type operations. This experience isoperations and advanced operations models is outside the scope of this accessible through an ecosystemis even more pronounced and these article, market evidence indicates of potential partners and is worthvariances should be fully accounted that an increasing number of accessing to enhance the decision-for in a rigorous business case. advanced operations are adopting making processes of advanced hybrid models. This suggests that operations. This approach will enableInclude hard-to-quantify items operations leaders should encourage operations leaders (as well as the executives to test a larger number CFOs, CIOs and COOs to whom theyInclusion of these often-overlooked of alternatives—each simulating report) to present more strategic,cost drivers leads to significantly different delivery models for various transformative cases to their CEOs. IOdeeper analysis than is typically parts of the relevant functions.performed. But even this does nottake full account of qualitative, Toward more robust businessbut still very tangible, factors. cases and enhanced decision-When applying these factors to an making for advanced operationsactual business case, care must betaken to base choices on realistic Many operations teams have onlyexpectations rather than best- a limited ability to create robustcase scenarios. Different delivery and sophisticated business cases.models provide different benefits As a result, decisions regardingacross parameters such as ease advanced operating models mayof setup, integration into business be either biased or stalled for theand intellectual property provisions wrong reasons. More sophisticatedas well as compliance and control. modeling that encompasses the fullWe observe significant variability value equation, including properin the actual achievement of those accounting for volatility and otherbenefits, not just because service uncertain scenarios, is essential toproviders and in-house shared building more robust business cases.services vary in how tightly they runthese operations, but also because While all the expertise necessary tothe scope of work delivered may not execute such a thorough planningbe appropriate or may differ fromthe planned scope. For example, an Market evidence This article is an abridged version ofin-house captive may be built with indicates that an a white paper first published onthe intention of delivering high-end increasing number genpact.com, A rigorous businessand highly proprietary work and of of advanced case for advanced operating modelsacquiring resources accordingly. operations are adopting hybridHowever, it’s common for leaders modelsof captive operations―whileoperationally strong―to lack thesalesmanship capabilities necessaryto convince internal clients tomigrate the work for which thecaptive was conceived. When thishappens, the expected financialresults will not be realized, and thecaptive may be destabilized (for 27 Intelligent Operations June 2015

IN FOCUSTHE ERA OFINTELLIGENTOPERATIONSA CHRONOLOGY OF THE Expansion of captives; systems-of-recordINDUSTRIALIZATION OF operations standardization initiatives.BUSINESS PROCESSES HOW WHATFirst captives, systems-of-records technologies emerge 2000 Communication tech Basic analytics suppo matures – bandwidth data cleansing, descrHOW WHAT WHO cost drops, ubiquitous analytics. connectivity. ERP promoted Illustrative examples of processes run Illustrative examples to enable “one company” Claims processing through advanced operations organizations strategies, but technology (transactional). limitations prevent fullERPs emerge; Transactional account General Electric (GE) – GECIS. achievement of vision. More complex financadvanced workflows. payable. Amex. including some judg British Airways. Use of Six Sigma and based ones (e.g. AR3Business process Basic document Lean at scale for non-reengineering maturity. digitization work. Dun & Bradstreet. industrial business processes. 3 AR - Accounts receivableIn-house support Engineering support. Large outsourcing contracts Captives mature.nearshore or offshore 400 signed (2000)1.services. Payroll. Pools of labor mature Large off-shore centers in global locations Nascent labor pools 200 operational (2000)2. (major cities in India, China, in major developing Hungary, Philippines). economy cities (e.g.Manila, Bangalore) fueled bymarket liberalization in theseeconomies.Technology Operations management Business Labor 1 Source IDC, disclosed contracts practices models 2 Source Everest Group Research

Market volatility (commodities, financial crisis); emergence of 2010 large scale Business Process Outsourcing (BPO); maturation of B2B internet; more intense scrutiny on controllership and compliance practices. HOW WHAT WHOds mature; large scale 2005 Operations new paradigm More complex analytics GE spins off and IPOs; Genpact WHO technologies emerge: SOA4 support e.g. model – company reaches 45,000 vision does not fully materialize, testing, some predictive employees (2010). but APIs5 start to emerge. Cloud analytics (e.g. aftermarket based (sharing of IT infrastructure, maintenance service cost, Large outsourcing application core code and parts fraud). 4,000 contracts signed (2010)1. of the application data), analytics, collaboration (portals, desk-based Complex banking processes. Large off-shore shared audio/video conferencing), business 1,000 services centers mobile technologies (e.g. mobile BI, BPO/SSC initial spreading workflow); data security issues are of GBS transformation operational (2010)2. first surfaced. emerges.ort e.g. GE’s GECIS reaches 20,000 employees riptive and matures into one of the very first More complex finance and Global Business Services (GBS). procurement work. cegment Large outsourcing Healthcare insurance fraud 3). 2000 contracts signed (2010)1. detection (2010). Large off-shore shared Next generation, analytics- 600 services centers operational driven process o perations science emerge (e.g. Genpact (2010)2. Smart Enterpricse Processes (SEPSM) (2010). 6 Operations organizational models mature (large-scope BPO and other business process services). Pools of labor mature in new cities a nd geographies (e.g. Poland, Latin America). 4 Service Oriented Architecture 5 Application Programming Interfaces

New normal of market uncertainty and regulatory pressure; Non-linear inflection of technology, opmaturation of BPO; emergence of GBS; rapid automation; smarter and more pervasive regulationadvanced analytics, in-memory database and big data; Systems of emergence of industrialized, intelligenEngagementTM and business process as a service emerge. 2015 HOW WHHOW WHAT WHO Significant pools of Fron sophisticated labor inclu New paradigm technologies available in multiple centers oper become mainstream; globally (including in developed API interfaces become markets, with more flexible work Finaindustrial-strength; Internet of arrangement e.g. home, part time), suppThings emerges; autonomics (aka able to collaborate seamlessly withrobotics, rapid automation) emerges their counterparts, enabling more Perv(2013); master data management complex global work. andbecomes hot topic and routinely suppintersects with advanced analytics; Analytics driven process analdata security solutions widespread; practices morph intodata privacy issues emerge. automation engines; new insights End- integ Pool of sophisticated labor into global operations cont in major centers (e.g. Delhi, contBangalore), formation of significantlabor in secondary (e.g. Lublin, BPO/SSC hybrid design and emerge from data science (e.g.Poland) and even tertiary locations transformation end-to-end social network analytics, people(e.g. Jaipur, India and Juarez, mature. More mature GBS have analytics); pervasive design ofMexico), as well as nascent ‘rural added front-office work to end-to-end, front-to-back officeshoring’ and ‘impact sourcing’ in back-office. operations.developed and underprivilegedlocations e.g. Africa. Global process owner concept More significant sharing of formalized. parts of operations across enterprises matures; GBS scope Rapid automation (autonomics/ expands and absorbs much complex robotics) of slivers of process work, CoEs (Centers of Excellence), and regional shared services work. Crowdsourcing emerges for (e.g. data input) across Genpact reaches 70,000 on i small-scope (both low and functions. employees. New paradigm technologies audhigh complexity); sharing of parts become pervasive, ERP coreof operations across end users Increasing amount of predictive Workday drives disruption starting to erode; APIs ubiquitous; Masre-emerges (client onboarding in analytics (e.g. CAT modeling in in the HR services market. Internet of Things mature; master indufinancial services). insurance, PHM6 in healthcare); data management solutions mature; some prescriptive analytics (e.g. Genpact-Markit joint Internet of Everything emerges; Adv Analytics driven process informing front line actions) venture - HSBC/Deutsche artificial intelligence solutions (per practices established (e.g. work. Bank/Citi/Morgan Stanley emerge; basic data security issues widGenpact SEPSM covers over 20 - for institutional banking solved, b ut deeper security issuesprocess); new insight into global Pharma regulatory affairs BPO. KYC onboarding. exposed in organizations’ in-house Muoperations emerge from data systems; data privacy solutions Extescience (e.g. social network Client onboarding in investment IBM Watson develops. widespread. Risk-control “certified” optanalytics, people analytics). banking – with partially shared system-of-records and Systems of mon data across market participants. Genpact partnership with EngagementTM. Oliver Wyman for financial Perv 6 Population Health Management risk operations. ope Wid high Inte inte ana thro - an feed “Ev

perating and business models; 2020ns; new risk management needs;nt operations.HAT WHOnt-to-back processes routinely Business process operationsuded in industrialized design completely absorbed rations of integrated GBS. by shared, often centralized, advanced operationsancial risk management groups?port at scale. Simple call centersvasive judgment based finance operations run by Software accounting work (e.g. strong as a Service (SaaS)port of financial planning & companies? lysis). Convergence of technology, -to-end financial risk control; data, process services grated zero-based approach, providers? tinuous auditing, and 90% trol automated. Major impact Emergence of specialized data brokers?VISIBILITY MANAGEMENT EXECUTION Five steps to ride the Intelligent Operations wave internal audit and external 1. Design, transform and run processes so that their output metricsdit. closely align with measurable business goals across enterprise silos. ster data management ustrialized operations. 2. Look more objectively and holistically at technology, analytics and organizational practices - and ensure their alignment to vanced analytics modeling the goals. rvasive predictive analytics,despread predictive analytics). 3. Harness now-mature ‘Systems of EngagementTM’ that complement ‘systems-of-record’ technologies.ulti-channel client engagement. ensive industrial asset 4. Treat analytics (Data-to-Insight-to-Action) as a process; embedtimization and remote insight at scale into the fabric of other enterprise processes. nitoring. 5. Consider operations of business processes as a strategic, vasive trade promotions untapped resource.erations in consumer products.despread and sophisticated h tech services support.elligent operations increasinglyegrate operations execution,alytics, and planningoughout the organizationnd benefit from granular dback loops.verything” as a service.

INDUSTRY ROUNDUP GENERATING CAPITAL MARKETS IMPACT newInvesptmaernat bdanikginmg's Shaking up traditional approachesTHE CHALLENGE A leading international OLD WAY NEW WAY investment bank is moving away from riskier trading activities. BUSINESS CHALLENGE Reduce per Reduce fixed Increase Move to Accommodate Unavailability of transaction costs in capacity of shared, new business experts required operations multi-asset model across costs post-trade platform 23 countries to scale up operations delivery due to the niche, high-end nature of work To compensate for the lower margins on less risk, the bank needed to streamline its operations. OLD WAY A few, highly risky trades with Less risky trades with lower NEW WAY large margins margins, processed more efficiently Intelligent Operations June 2015

THE SOLUTION 1 The processing transformation began with a large technology implementation to upgrade and centralize back-office systems. 2 4 Global consolidated back-office Operational processes were moved to the AleoYapsn“wcovnrfuaaorioidrptkbtltvhil,upHoloiedLaotnwohdeolrnetscnttlghteiiadncrveaapeKoecmttnnsoeiobvut,sngnraenPagyjci.un”lakitnzorNeiocsetdf,ifowicne shared platform and delivered from a ‘virtual Straight-through captive’ center, achieving unprecedented processing economies of scale. 600% 3 increase in To accommodate fragmented front-office systems, a trade throughput common process framework was developed enabling businesses to share the consolidated back-office across systems and asset classes.THE IMPACT BUSINESS IMPACT DELIVERED 40% 20% cost savings due to one-time cost savings productivity gains achieved through virtual captive over first three years Delivered business process Achieved an optimized delivery Streamlined back office optimizations through a Lean Six model unprecedented in the trade processing and Sigma approach, achieving a investment banking industry by focused on straight through number of productivity setting up and running a virtual processing. Productivity improvements minimized improvements including doubling captive that provided human intervention and the batch operations supported, experienced technology and operations teams working in increased the back office’s and increasing the number of managed services mode with trade processing capability. business users and geographies sophisticated trading platforms IO supported each by 33%. from an offshore location. Intelligent Operations June 2015

INDUSTRY ROUNDUPTechnology in sourcing isn’tjust about ITDriving the enterprise-wide impact of eSourcingLarge pharmaceutical execute its commodity sourcing Process changes companies increasingly strategy in a repeatable and were strategically transparent fashion, in part because implemented in find themselves squeezed request for proposal/request for order to engage and quote (RFx) templates and the educate stakeholders between mounting research eSourcing knowledge base were not in eSourcing centrally maintained. This increased performance, gaps costs and price pressure from generic cycle times and compelled buyers to and solutions drug manufacturers. Transforming enter information manually for every operating models to increase bid. Another challenge was that efficiency and reduce costs is part regional category managers were of the solution. That encouraged a unaware of the eSourcing directive leading pharmaceutical enterprise and its goals and did not understand to maximize return on investment how the tool could advance their from an ambitious new eSourcing interests. Inadequate training and initiative. As a result, eSourcing experience with the tool’s benefits spending increased by $2 billion, led some of them to prefer personal cycle time per sourcing event was reduced by nearly half and the team involved was able to conduct 40 per cent more events annually.The price of low uptakeAs part of a larger IT implementation,this pharma major had deployedan off-the-shelf eSourcing tool thatincluded eAuction capabilities.The goal was to achieve bottom-line impact through improvedcompliance, more standardizedprocesses and better sharing of bestpractices. The original initiative,however, was not entirely successful.The tool was more complex thananticipated and was not perceived asuser-friendly, leading to poor uptakeand minimal spend throughout.The cumulative result was a failureto achieve anticipated cost savingsfrom improved procurementnegotiations and reduced return onthe technology investment.The company found it difficult to34Intelligent Operations June 2015

INDUSTRY ROUNDUPinteractions and manual bid users in a wide variety of other Finally, process changes weremanagement rather than the optimal languages. The team maintains the strategically implemented in order tocombination of eSourcing and face- RFx knowledge base, manages the engage and educate stakeholders into-face negotiations. process of setting up and monitoring eSourcing performance, gaps events and provides overall system and solutions.A complete solution administration. Members of this center of excellence also conduct Ongoing trackingGenpact’s extensive experience rigorous post-event analysis to track of performancewith Lean Six Sigma was applied the system’s performance. against targetsto conduct Value Stream Mapping ensured that the(VSM) of the pharma major’s Training and support project stayedsourcing processes and identify on trackroadblocks to adoption. This led to a To promote adoption of thethree-pronged strategy that included eSourcing tool, users get the training The payoff: savings in the tenscreation of a center of excellence for and support they need to use it of millionsend-to-end eSourcing, expansion of effectively. This includes helpingtraining and support capacity and buyers and category managers to By institutionalizing the eSourcingdissemination of best practices. understand and apply the tool’s process, the company achievedOngoing tracking of performance functionality to their work, as well much greater penetration andagainst targets ensured that the as training to enable suppliers to engagement, increased the use ofproject stayed on track. register and take advantage of its full eAuctions, boosted savings and range of capabilities. Team members achieved solid bottom-line impact.A dedicated Genpact team provides also operate help desks and resolve The business impact included nearlycomprehensive hands-on support queries from both buyers and doubling the eSourcing spend fromfor approximately 85 per cent suppliers. And for complex sourcing $2.2 billion to $4.2 billion, reducingof the company’s procurement events such as reverse auctions, cycle times by more than 47 per centspend across multiple divisions forward auctions, and dutch auctions, and increasing the number of eventsworldwide. This includes a group in the pharma player leverages its completed by the same team overIndia that handles English-language partnership with Genpact. than 4 per cent. Incremental savingssourcing events and counterparts are estimated at between $40 millionin Romania and China that support Best practices and $60 million annually. IO Cycle times were reduced through the creation of category-specific RFx templates for improvement-ready categories like marketing, meetings and professional services. Category managers were encouraged to adopt eSourcing through industry- leading training and templates and suppliers were provided with much-needed documentation that significantly reduced the number of repeated queries. The Genpact team also designed and maintained alert reports and fine-tuned the RFx configuration settings to help users understand why certain events were not managed through eAuction. Every action taken by the Genpact team was supported by a robust system of tracking metrics and targets that aligned eSourcing activities with the client’s goals and ensured continuous improvement. 35 Intelligent Operations June 2015

INDUSTRY ROUNDUP GENERATING ANALYTICS IMPACT Tackling buyer abuse The game-changing role of industrialized analytics Massive and widespread buyer abuse $ BUY $FRAUD 1 in every 100 DOLLARS of online revenue lost to fraud REJECTED REJECTED 1/167 1/36 1/14 1/4 online orders U.S./Canada orders rejected international orders rejected orders routed to lost to fraud on suspicion of fraud on suspicion of fraud manual reviewIntelligent Operations June 2015

Traditional approach allows buyers to routinely abuse existing policiesFalse claims of non-receipt of goods by buyers False claims of defective items Negative feedback Seller can report to operations Operations investigates OR REFUND Buyer blocked Seller refunds Solution - industrialized analytics Analyze multiple data sources to trigger investigation and blacklisting of high risk buyersCustomer DATA PREDICTIVE data PREPARATION ANALYSIS ENGINEPayment Customer TO INVESTIGATION UNIT history profile FeedbackTransaction history END RESULT Improved buyer ...increases buyer ...leading to Optimized operations e.g. Detection andseller relationship con dence and increased sales multiple accounts not prevention of 13,000 allowed trust... cases per year IO Intelligent Operations June 2015

INDUSTRY ROUNDUPInsurers as disruptorsA rapidly growing player’s operations lacked standardization and faced ever-evolving compliance obligations. Yet it had to scale up operations.How did the leaders do it?Aglobal insurance company with internal IT and consolidated management and reporting was growing at a 30 existing silos across functions and applications support. geographies, this strategy enabled a per cent-plus rate and scalable target model that optimized With the more robust BPaaS solution, processes for: the company is realizing gains in required operational operational efficiency, underwriting • Decision support capacity, quality and productivity.support for that growth in its global • F&A The business impact was more • Underwriting transformation than $10 million in the first year:operations. The firm did not want to • Regulatory reporting More than $50 million is projectedover-invest in infrastructure, favoring annually for year two and beyond. IOflexibility over fixed costs. Other Genpact’s solution provided corechallenges: the company’s existing insurance operations across multipleoperations lacked standardization lines of business, covering processesacross units and it was facing such as:increasing compliance obligations inan evolving regulatory environment. • Underwriting support • Claims processingThe solution was a full Business • Actuarial & risk managementProcess as a Service (BPaaS)strategy encompassing process supporttransformation, outsourcing and ITfor all back- and mid-office functions, The BPaaS delivery also supportedwith shared governance and SLA- finance and accounting, datadriven accountability. In additionto facilitating greater alignment38Intelligent Operations June 2015

INDUSTRY ROUNDUPHere comes the sunA leading equipment firm needed to expand its global leasing operations whilereducing capital expenditure. How did the company handle it?As the global economy operational setup, infrastructure and investments with the client to returned to sustained comprehensive, ongoing professional support solar equipment, a rapidly growth, the financial arm support. In addition to seamlessly emerging class of asset. of a leading equipment servicing operations across the globe, the Genpact partnership also offered The company’s BPaaS solution mademanufacturer had to deploy a host of other benefits: a major impact. The deploymentinnovative ways to accommodate was completed within 90 days andgrowing demand while keeping an • Deal booking and funding resulted in 50 per cent cost savingseye on the firm’s bottom line. The • Billing, cash applications and over other methods. And the firm’scompany established an ambitious expansion into solar equipmentthree-month timeline to accomplish collections promises to yield significant returnstwo major objectives: the creation of • Customer service and lease as it prepares to face the challengesa globally scalable end-to-end leasing of tomorrow’s global marketplace. IOoperation and the implementation terminationsof a new operating model that would • Originals and servicing platformlower capital expenditures. implementationThe firm found an elegant all-in-one solution by partnering with The delivery team leveraged itsGenpact to lease a Business Process extensive experience in managingas a Service (BPaaS) solution. The and lending operations toBPaaS model, designed at low cost optimize the company’s policiesand with variable pricing, included and procedures and handle the undertaking’s finance and accounting. Genpact delivered further value by sharing additionalIMPACTThe holistic BPaaS operating model, deployed in just 90 days,resulted in 50% cost savings over alternative solutions. Greater speed to marketIn addition, a Genpact partnership accelerated the company’s entryinto the fast-growing residential solar equipment market. 3 flexible quick and comprehensive month operations scalable operations across deployment deployment originations and Genpact servicing lifecycleengagement unique operating global begins model with 15 years’ operating lending / leasing servicing operations quick and capable expansion experience model globally across geographies 50% more cost reduced capital more e cient holistic BPaaS solution e ective expenditure F&A processes with variable cost structure 39 Intelligent Operations June 2015

INNOVATION Genpact and MIT crowdsource the art of the possibleYou do WHAT with THAT?MIT and Genpact Research Institute work together The technologiesto identify new advanced technologies Digital assistants SMART Real-time speech MACHINES translations SMART Rapid CROWDS automation SOCIAL Crowdsourcing SENSING product info MOBILE AND Prediction AUGMENTED markets USER INTERFACES People recommender systems Social badges Google Glass Virtual reality headsets Interactive tabletop displays LEGEND: TECHNOLOGY CLASSES SMART MACHINES SMART CROWDS SOCIAL SENSING MOBILE AND AUGMENTED USER INTERFACES Smarter machines can assume Machines are generally good at The emergence of the Internet as a responsibility for repetitive or difficult simple tasks,while humans are better Screens and mice are our tasks and free people up to at activities that require creativity. platform and the availability of cheap grandparents’ technology. undertake other activities. storage enable a proliferation of systems that gather and store data about the world.Intelligent Operations June 2015

The crowd thinks up unexpected applications for these technologies APPLICATION: Natural language conversation for customer support Language independent domain driven customer service Faster and 100% accurate insurance claim process Using mobile phones to collect data in emerging markets Predict client satisfaction scores in B2B environments Assembling the right team in real time Dynamic employee interaction data improves post merger integration Rapid verification for Return Merchandise Authorizations Simulate customer experience environments Visualization and modeling of complex business processes Join the conversationintelligentoperations.genpact.com Intelligent Operations June 2015