business transformation through technology

Analyst MeetAugust 27, 2002

“Living up to the promise”

Business transformation through technology

U. B. Pravin Rao


IT Is a Powerful Enabler As Well as A Driver to Unlock Business Value

Case Study

Business Value Created

Technology Driver/ Enabler

Dell

Greater Organisation flexibility

Internet based value chain collaboration

GE

Inter Enterprise Cost Rationalisation Marketplace

Capital oneInnovation (new products)

Data Warehousing and Mining

WalmartProcess flexibility

Multi tier EDI, Data Warehouse, EPOS

SKF

Increase Scope of Service Remote Sensing

AT&T

Increased Employee Productivity VPN

Pfizer

Improved Partner Productivity

Knowledge Management Tools

NHSImprove Quality of Service

Knowledge Management ToolsTechnology

Maturity

Bu

sin

ess

Va

lue

C

rea

ted

Dell

CapitalOne

NHS Pfizer

GE

AT&T

WalmartSKF

Source: Corporate websites, Economist, Infosys Analysis

Low

Low High

High


Elements Focus Architecture

…and built onFundamentalsValues

Company/ Core

Open Governance

Performance-Ethic

Talent Magnet

Breadth & Depth

of Integrated

Service lines

( MeetingClients’

full service Needs )

One FirmExecution

( Global scale,single Face )

GDM

( Core Value Driver )

TrustBasedSenior

Relation-ship

( Buildingcomfort Factor )

DomainExpertise

( What clients value

the most )

TechnologyExcellence

( “In sync with the latest, at par

with thebest )

Prime & Partner-

ship

( Single point

accounta -bility while leveraging

“partnerweb” )

Go-to-market position …

Client“Transforming business through integrated technology

solutions. Absolutely, Positively!”(Emphasis on Value, Execution & Comfort

factor)

…executed throughIntegratedCapabilities

Competencies

… And Such Business transformation Through Technology is the Center of Infosys’ Go-to-Market Position Today



1 – Manufacturing2 – Telco3 – Retail4 – Retail5 – Insurance


Case Study # 1: Developing a Roadmap for Transformation of Supply Chain by Leveraging e-Business Technologies■ The Client■ The European subsidiary of a leading global manufacturer of food-grain and

agricultural chemicals■ The Challenge■ Need to reduce supply chain costs

■ Reduce the costs “hidden” in the extended supply chain■ Integrate business with technology to improve effectiveness of supply chain■ Benchmark against “best-of-breed” in industry

■ Need to achieve maximum impact from limited e-Business budget■ Identify Quick Wins with short payback■ Leverage latest technologies for communication and e-Business to achieve greater

integration with vendors, customers and logistics & transportation partners■ Better integration among internal systems to support and streamline supply chain

processes

■ Build internal consensus regarding future direction


Define & prioritize initiatives to streamline the supply chain processes and create an implementation roadmap

• ‘As-Is’ state for key supply chain processes

• Inventory and description of identified initiatives

• Benchmarking of supply chain e-maturity against industry peers

• SCM “pain points” and value creation opportunities

• Key SCM trends & B2B focus areas

• Prioritized initiatives and Quick Wins

• High level IT architecture

• Business case analysis & payback calculations

• Phased implementation roadmap including time, cost and resource budgets

High Level IT ArchitectureHigh Level IT Architecture

Identify Quick WinsIdentify Quick Wins

Review ‘As Is’ Supply Chain and Initiatives

Review ‘As Is’ Supply Chain and Initiatives

Define eBusine

ss roadma

p

Define eBusine

ss roadma

p

Assess SCM Pain/

Opportunity Points

Assess SCM Pain/

Opportunity Points

Identify and Prioritize Initiatives

Identify and Prioritize Initiatives

Analysis SynthesisDiagnosis

The Approach


Implement prioritized initiatives and build supporting architecture in phases

Production Scheduling

B2B with Suppliers

Finished Goods Movement

B2B with Transporters

Enterprise Application Integration

B2B

Suppliers

Order to cash

ClientSupplyDemand

Transport Planner

Transport Plan

Client

B2B

Transporters

Order to cash

Applications

EAI

ExtranetTerritory Forecast& Plan

Production Scheduling Application

Production Plan

Demand

Salesman

Applications identified

eSupply Chain Within the Organization

• Reduce supply chain costs• Attain supply chain excellence

eSupply Chain With Business Partners

• Lay the foundations of future growth

The Response


Resulting in Over $ 2.5 M of annual benefits for $ 3.4 M of one-time investments

NPV 12.50%3 Year 1123.25 Year 4024.1Payback Period 2.2

NPV

NPV

(Discount factor)Projected Cashflows

1196

3390 2864277326812536

629629629629

0

1000

2000

3000

4000

2001 2002 2003 2004 2005

Year

Valu

e i

n '000 U

S$

Payback in 15 months

Investments

Savings

Annual benefits of over $2.5

Million

The Benefits

Client Testimonial – CIO “We has a long history of working with large traditional consulting firms. However, the way Infosys worked collaboratively with our people and crafted a unique solution on business and technology aspects appealed to the Leadership Team.The benefits delivered by Infosys were very tangible.”


Case Study # 2 : A large Telco spent $300-400M1 more annually due to poor IT effectiveness compared to best-in-class organizations

High Level Approach■ Based on the data available and

stakeholder interviews, Telco was assessed between Levels 1 and 2 on the CMM Maturity scale

■ Telco IT effectiveness was conservatively equated to “Average in Class” on the Capers-Jones productivity benchmarks scale

■ Capers-Jones Productivity benchmarks for the “Best in Class” were used to arrive at the extra spend ( based on current IT Delivery & Maintenance Budget2 )

1 Does not include Operations, Infrastructure, Internal IT staff costs

2 Current IT Delivery & Maintenance Budget excluding spend on Redundant applications $891 M

•Development

•$0

•$100

•$200

•$300

•$400

•$500

•$600

•$700

•$800

•$900

•$1,000

Telco •Best

• Mil

lio

n A

UD

•Maintenance

• These estimates of expected overspend are based on IT Effectiveness and not on any unit cost differentials


… And faced the risk of being caught in a vicious circle of poor IT effectiveness due to continued business pressures

Likely Telco response

Implication: Lower IT Effectiveness

• Lesser money to invest in application rationalization

• Lower investment in crucial infrastructure projects (without immediate benefits)

• Cutting back existing implementation plans will have cascading effect on IT efficiency

• Compromise on lifecycle activities that will reduce delivery reliability

• Lesser money to invest in application rationalization

• Lower investment in crucial infrastructure projects (without immediate benefits)

• Cutting back existing implementation plans will have cascading effect on IT efficiency

• Compromise on lifecycle activities that will reduce delivery reliability

Cut in discretionary IT Expenditure

Cut in discretionary IT Expenditure

Reduction in investment

spend

Reduction in investment

spend

Arbitrary cuts in budgeted

expenditure

Arbitrary cuts in budgeted

expenditure


We proposed a 3 - phased transformation program that would help Telco launch, consolidate and sustain improvements in IT effectiveness

12 Weeks Medium Term (6 - 12 Months) Long Term (1 Year +)

• Create Inventory• Migration plan

• Partial Migration to a lower cost base• Decommissioning completed• Consolidation of applications kicked

off

• Clear migration roadmap for the entire Telco portfolio

• Rationalized portfolio

• Process Definitions for some Project types

• Run Pilots

• Rollout to all of IS• Process definitions for all project

types• Estimation Model definition

• Rollout across Telco• Automated process management• Formal capability assessment

• Define Metrics, Skeletal Org Structure, Governance Mechanisms, KPIs

• Process Capability Baseline, Dashboard

• Rollout to all of IS; Launch training• Metrics-Inventory (IRM) integration• Communicate

• Rollout across Telco• Communication & Training

• Review IT budgets for next financial year

• Ensure adequate investment in infrastructure elements

• Institutionalize demand management processes

• Monitor returns and effectiveness of prior investments

Application Portfolio

Application Portfolio

Delivery Process

Delivery Process

People and Governanc

e

People and Governanc

e

Investment Planning

Investment Planning

Launch & Enable Evangelize & Consolidate Rollout & Sustain


-50

50

150

250

350

3 6 12 24 36Months

Mill

ion

$

Savings Investments

The solution needs a cumulative investment of $50-80M over three years and can potentially yield annual benefits of $300-400M1 by the third year

Launch & Enable

Evangelize & Consolidate

Rollout & SustainInvestment yields positive returns within one year

1 Assuming that current annual spend will continue every year for baseline estimates

Represent self-financing investments that yield benefits within the same period


Case Study # 3 : Developing a New Supply Chain Blueprint for a Leading Apparel Company

The Client■ A leading designer, marketer & distributor of premium lifestyle products

■ Four categories of products – apparel, home, furnishings & fragrances■ Brand portfolio consists of some of the world’s most widely recognized brand

names■ Net sales of USD 2.2 billion in FY 2001

The Challenge■ Need to improve inventory productivity

■ Reduce the cash to cash cycle time■ Reduce the total inventory in the pipeline

■ Need to reduce supply chain operations costs■ Reduce the transportation costs■ Reduce the manpower costs■ Reduce the inventory carrying costs


The ApproachMigrate to the “To-Be” state …

Product FlowProduct Flow

Information FlowInformation Flow

SuppliersInbound Logistics Warehousing Retailers CustomerDesign

Supply Chain Execution

Design and Development

Product design and development closer to demand

Adherence to design calendar

Vendor Management

Vendor managed inventory

100% compliant vendors

Logistics

Cross dock of shipments

Leverage 3rd party / suppliers and customers logistics network

Automated and Integrated transaction systems across the supply chain and business divisions

Visibility to logistics and inventory data across the supply chain and business divisions Common pool of inventory across business divisions

Supply Chain Planning Automated forecasting and planning systems across departments – merchandize planning, sales

planning, production / capacity planning, inventory planning and allocation

Forecasting and planning by door Integrated sales and operations planning across departments

Outbound Logistics


The Response … through implementing multiple initiatives …

In-Process Initiatives

Moving from FOB to LDP/DDP

Vendor Compliance

Redesigning of Corporate Calendar

Web based ASN Capture

In-Process Initiatives

Moving from FOB to LDP/DDP

Vendor Compliance

Redesigning of Corporate Calendar

Web based ASN Capture

Phase 1 Initiatives

Licensee VMI Forecasting & Planning -

Wholesale Cross-Dock – Retail VMI Stage I 3rd Party Fulfillment Key Performance Indicators Logistics and Inventory Visibility

Solution Standardizing WMS Solutions

across DCs Forecasting & Planning – Retail

Phase 1 Initiatives

Licensee VMI Forecasting & Planning -

Wholesale Cross-Dock – Retail VMI Stage I 3rd Party Fulfillment Key Performance Indicators Logistics and Inventory Visibility

Solution Standardizing WMS Solutions

across DCs Forecasting & Planning – Retail

Phase 2 / 3 Initiatives

Price Optimization Solution VMI Stage II Inventory Visibility and Order

Processing at Stores Streamlining Markdown Planning

and Execution Global Production Planning

System Transportation Optimization Tool Global QA Module KPI System Development Corporate-wide Costing System

(Product costing being evaluated to be moved to Phase 1)

Phase 2 / 3 Initiatives

Price Optimization Solution VMI Stage II Inventory Visibility and Order

Processing at Stores Streamlining Markdown Planning

and Execution Global Production Planning

System Transportation Optimization Tool Global QA Module KPI System Development Corporate-wide Costing System

(Product costing being evaluated to be moved to Phase 1)


The ResultsRecurring annual benefits of $24MM for one-time investment of $25MM

Implementation Phase

Recurring Annual Benefits

One-Time Investment

Pay Back Period

Phase 1 $ 13 MM $ 11 MM 0.8 Year

Phase 2 & 3 $ 11 MM $ 14 MM 1.3 Year

TOTAL $ 24 MM $ 25 MM


“Infosys’ Organizational Change Management Methodology, training and documentation ensured a successful transition”

CFO

“When I work with Infosys I don’t have to worry about them because they do not make promises that they can’t keep. They are committed to making us successful”

CIO

Flawless Execution of Oracle Financials• Replace outdated financial system and build a

foundation for future growth.- Increase flexibility & back-office efficiencies- Foundation for better controls and rules- More manageable chart of accounts- Greater reporting flexibility

• A key milestone in Client’s business transformation- Foundation for integration with Retail Inventory

and Merchandising systems

• Relying on knowledge and expertise from 10-year old relationship to minimize business impact of the program.

One Of USA’s Leading Fashion Specialty Retailer

• Over 100 years in business• 132 US Stores, located in 25 states• 23 International Boutiques, primarily

in Europe• Online presence and direct mail

catalogs

Case Study # 4 : Flawless Execution To Install Complex Financial System


“Infosys’ technological expertise and excellent execution were exactly what we needed to provide our customers the convenience of self-service and online confirmation of important transactions.”

Vice President, Information Systems

USA’s leading provider of individual life insurance• Named by Fortune as the Most admired company in the world, in its category.• Providers of annuities, mutual funds, long-term care insurance, and disability income insurance.

Develop & launch an online funds transfer option

• For variable life and annuity policy holders

• Driven by business needs- 24x7 customer self-service facility- Lower reliance on customer service

call centers- Extremely aggressive timeframe- Prototype development

• Chosen based on prior experience of Infosys delivering high quality results on time and within budget

End-to-end Partnership• From design to building of the site• Delivered to extremely aggressive timeframe

Infosys originally hired in 1996- Relationship started with Y2K initiatives- Extended to all IT projects

Case Study # 5: Partner To Create Transactional Web Site


In Conclusion, Infosys’ Range Of Services From “Strategy To Execution” Helps In Partnering On Such Transformation Initiatives

Build and Integrate

Institute Operational Excellence

Design for transformation

Client Needs For Business

Transformation

Consulting & IT Services

Consulting ServicesBusiness & technology alignmentArchitecture & roadmap definition

Enterprise IT SolutionsPackage and systems integrationCustom software solutions

IT Operations ManagementApplications managementIT Outsourcing & maintenance

Business Process

Management

Business Process ConsultingProcess modeling and redesignContinuous process improvement

Process Change ImplementationProcess & IT reengineering Change management

Business Process ManagementOutsourced process centersShared services

Product Strategy ConsultingArchitecture & roadmap definitionFeasibility and prototyping

Product engineeringSoftware development & integrationDevelopment & testing labs

Product Support OutsourcingProduct support centersCustom product enhancements

Technology Product

Development

Design For A Constantly Changing Business &

Technology Environment

Build Future-Proof Solutions That Enable A Continuous

Evolution Of The Enterprise

Leverage Current Investments in People & IT

Infrastructure



Thank You

business transformation through technology

Documents