© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Sourcing & Governance

Dagens Industri | Strategisk IT 2012-03-28 Sheraton Hotel Carl Rönnerstam KPMG Stockholm

Carl Rönnerstam Head of IT Strategy & Transformation

KPMG Advisory Sweden Management Consulting

Telephone +46 766 312 590 carl.ronnerstam@kpmg.se

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG Advisory – Core Propositions

KPMG can help improve the effectiveness and efficiency of the finance function and generate real insights to deliver additional value to the business.

Guidance on the most appropriate strategies for: Creating and implementing

Shared Service Centers Outsourcing/offshoring of IT services Ensuring implementation of effective controls

Improvement of business performance management and utilization of technology

to support governance and control.

KPMG can support companies in adapting to

and addressing the consequences of new regulatory standards,

including FATCA IFRS

Providing support to ensure availability, efficiency and

confidentiality in information systems by translating

operational knowledge into IT knowledge.

KPMG can help companies enhance revenue and implement sustainable cost reductions.

Value creation and minimization of risk from M&A, integration and separation.

Optimization of operational activities by identifying improvement opportunities and contributing with experience on implementation.

TRANSACTIONS & RESTRUCTURING

RISK & COMPLIANCE

Forensic

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Provider Performance & Satisfaction Study | Drivers

78%

49%

44%

27%

25%

13%

72%

46%

36%

19%

17%

67%

42%

29%

17%

6%

Cost savings

Access to skills

Quality improvement

Financial flexibility

Time to market

Change agent

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Provider Performance & Satisfaction Study | Governance

How would you qualify the overall skills/competencies of your organisation to manage your outsource providers?

Do you agree that your service provider has an efficient and effective governance model.

2%

43%

47%

8%

80%

76%

74%

72%

70%

70%

69%

68%

68%

64%

64%

63%

63%

63%

63%

61%

60%

59%

58%

57%

57%

54%

54%

Medelvärde 65%

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Relationship Management is key to success

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

How do we understand to focus both on doing things right, and also doing the right things?

The platform for successful IT organizations is based upon the understanding of the core of demand management and supply management.

■ Demand Mgmt | doing the right things

■ Supply Mgmt | doing the things right

Demand & Supply

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Demand & Supply Management Framework

IT-leverans Verksamhet Demand Management

Supply Management

EFFECTIVENESS “göra rätt saker”

Varför? Vad?

Affärsprocesser Funktionalitet

Krav

EFFICIENCY ”göra saker rätt ”

Hur? Vem?

Applikationer Infrastruktur IT-lösningar

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG Sourcing Lifecycle

G IMPLEMENTATION

SOLUTION

STRATEGY

OPTIMIZATION

GOVERNANCE

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG Sourcing Lifecycle

Governance Service Delivery

Management Business Alignment

Sourcing Strategy

Service Delivery Model

Sourcing Assessment

Governance scan/survey

Opportunity Analysis and Business Case

Internal Improvements

Shared Services - Captive centre

Outsourcing – Offshore

InSourcing

Negotiation & Contracting

Transition

Transformation

Change Management

Project Management

Interim Management

Diagnostic and Benchmark

Renegotiation Support

Contract Review

Performance & Satisfaction

Measurement

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Strategy

How would you like to transform your business by taking advantage of sourcing and governance?

Do you know why to do what?

• Sourcing conversations usually starts with IT. The problem is, it often ends there, too.

• Sourcing is a major game changer.

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Strategy | Methodology

Service towers and preferred delivery options

+

Service tower Preferred delivery option

Risks and attention points

A: Housing + Hosting

Outsourcing Feasibility in terms of changing the organization

C: Work placeservices

Outsourcing Impact for every country has to be detailed

D: Specific Business Applications: SAP

Share service Center

Preferred location has to be determined

E: Specific Business Applications: SAAS

No changes Complex demand / supply organization

…

Sourcing objectives

■ Maximize financial flexibility■ Reduction of operational IT focus and increase focus

on actual ICT demand

■ Get access to more innovative and more advanced

service concepts

D1 D2 D3

T1 1 3 2

T2 2 3 1

T3 3 2 1

D1 D2 D3

T1 1 3 2

T2 2 3 1

T3 3 2 1

D1 D2 D3

T1 1 3 2

T2 2 3 1

T3 3 2 1

2

Preferred sourcing model

Define baseline

Detail strategy

- Selection approach- Governance and

retained organisation- Impact & risks- Business Case

Implementation plan

Sourcing strategy

Reasons■ Business focus

(core / non core)■ Improve quality

■ Actual sourcing

experiences■ Standardize

service delivery

■ Increase

financial flexibility

■ Cost reduction

■ …

Results■ Baseline (financial

and operational)■ Market insight

■ Sourcing model

(scope, service towers and delivery

options)

■ Vendor model

■ Governance impact■ Implementation plan

■ Business case

Input for:■ Selection process

■ Detailed Shared

Services implementation plan

■ Transition /

Transformation plan

■ Benefits monitoring

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Too Late to Wait Organization

• How does a successful retained organization look like?

• How big organization is needed to execute necessary governance?

• How do I transform my retained IT organization to effectively support a modern sourcing landscape?

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Organization | Methodology PH

ASE

As-is Analysis & Strategy

High level Organisation & Process Design

Preparation of Implementation

STEP

S

Detailed Organisation & Continued Process Design

Mapping current situation on Demand Supply Model EQ

Strategy definition for business case and new organisation

Design principles

Develop to-be organisation based on role clustering

Select relevant process chains

High level process design

Define products and RACI mapping per product/roles

Role-functionmapping: functiondescriptions

High level processdesign for remainingprocesses

Define final organisation including functions

Benchmark database input

1

2

3

4

5

6

8

9

10

11

A B DC

Go/no go decision

Define organisationincl functions and sizing

7

Implementationplan

12

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Organization | Example

Beställarorganisation

Extern IT-leverans

Affärsenhet/Avdelning

Central Governance

Decentral Governance

IT-leverans Verksamhet Demand & Supply Management

Affärsenhet/Avdelning

Decentral Governance

Intern IT-leverans

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Organization | Benchmarking

€ X miljoner

Total IT - utgift € Y miljoner

B %

A %

Utgifter för Demand Mgt + Supply Mgt som % av total IT - utgift

1

2

3

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Organization | Benchmarking

Demand Management IT Delivery Business Supply

Management

Strategiskt

Taktiskt

Operativt

Alla roller inom Demand och Supply Management

X - Y % Taktiskt och operativt supply management

Cirka Z %

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Management Control

Operational Control

Change & Innovation

Business Governance

Strategic Planning

Annual planning cycle

Portfolio management & architecture

Strategy & policies

Operations & operational control

Support

Requirements, project & change management

Release, test & transition management

Service level management

Contracts & service agreements

Project portfolio management

Organisation development & human resource management

Security, compliancy & quality management

Finance

Stra

tegi

c Ta

ctic

al

Ope

ra-

tiona

l

Organization | Example Processes

IT-leverans Verksamhet Demand Management

Supply Management

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Benchmarking

Do you really gain the full value?

■ Price ■ SLA ■ Satisfaction ■ Performance

How do you understand if your current delivery gives you enough competitive advantage?

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Effektivitet – Lean, Six Sigma

Target Operating Models

Organisationsstrukturer

Addera värde till processer Vi kan öka effektivitet och addera värde till processer i enlighet med t ex Lean och Six Sigma och motsvarande.

Transparent Target Operating Model Vi designar tydliga TOM-strukturer genom hela värdekedjan för att säkerställa transparens från demand till supply.

Tydlig organisationsstruktur Vi etablerar en (“retained”) organisationsstruktur som är logisk, genomförbar och relevant med avseende på komplexitet och IT-budget.

Processmodell

Governanceutvärderingar

Rollmodell Demand&Supply

Ihopkopplade demand-supplyprocesser Vi etablerar ihopkopplade demand-supplyprocesser för att säkerställa väl fungerande processer från strategisk till taktisk nivå.

Transparens i storlek, roller och förmågor Vi benchmarkar och utvärderar roller och förmågor inom demand-supply-organisationen och levererar ett business case för möjliga förändringar.

Tydlig referensmodell för roller Vi introducerar en tydlig och väl definierad rollmodell för att analysera roller i er organisation och för att stödja er i designen av framtida organisationen.

Processdesign

Skalbara processflöden Vi designar och implementerar varje processflöde på en detaljerad nivå så att organisationens anpassas till respektive processteg.

Strategic

Tactical

Operational

Business Demand management

Supply management IT Delivery

Annual planning cycle

Portfolio management & architecture

Strategy & policies

Operations & operational control

Support

Release, test & transition management

Finance

Organization development & human resource management

Service level management

Contracts & service agreements

Project portfolio management

Requirements, project & change management

Security, compliancy & quality management

€ 25 MiO

Total IT spend

€ 75 MiO

24%

12%

Spend on Demand mgt + Supply mgt as a % of total IT spend

1

2

34

Management

Management control

Operationalcontrol

Change&innovation

Businessgovernance

Strategicplanning

Service manager

Contract manager

Vendor (portfolio) manager

Asset manager

Application/ infraconsultant

Project sourcingmanager

Release manager

Test manager

IT project manager

Service portfolio manager

IT landscape architectInformation architect

Application portfolio manager

Security & complianceofficer

Business processarchitect

Business service manager

Administrativesupport

Project portfolio manager

Functional support

Change manager

Data administrator

Data quality analyst

Information analyst

End user

Information strategyanalyst

Program manager

Key user

Business processManager

Information owner

Application owner

Quality officer

Business director

Risk & complianceofficer

Business project manager

Service desk agent

Business consultant

IT process manager

Database administrator

Application engineer

Systems engineer

Process owner

CEO IT director

Information securityofficer

Demand manager Supply manager Delivery manager

Business processdesigner

Meta data manager Test coordinator Solution test manager Solution tester

IT purchaser

Service level Manager

IT controller

Service deliverymanager

Contract deliverymanager

Service coordinator

Solution architect

Solution designer Solution engineer

Deployment manager

Business Demand management

Supply management IT Delivery

Enterprise architect

CIO

Auditor

Manager

Ansvar

Tydliga roller och ansvar Vi kopplar ihop demand-supply-organisationen, processer och roller i en sammanfattande och direkt användbar RACI-matris, vilken tydliggör ansvar för varje roll i varje process.

Activity Category Definition/Characteristics

Value adding activity Activities that directly add value Something a customer will pay for Adds form, feature or function Enables competitive advantage (increase customer satisfaction, faster delivery, reduced

price.

Business Value Added Maintenance activities and unavoidable waste Legal/Financial reporting requirements Regulatory requirements.

Non-Value Added (Waste) Activities that are unnecessary and should be eliminated and/or simplified (lean out) The seven types of Lean Waste see next slide.

Value Add Analysis In order to eliminate waste – it must be identified Categorize all activities within a process into the following

types: − Value added− Business Value added− Non-Value added (Waste)

Often times value added activities represent a small fraction of the total process

Non-Value added activities (Waste) should be eliminated immediately.

Non-Value Added (Waste)

Value adding activities

Non-value adding

Governance & Sourcing Advisory

© 2012 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Qualified Glocal Research

Key Take-Aways It is never too late to establish best practice

Inadequate governance erodes sourcing value heavily.

Learn how to realize the value of your sourcing It is essential to focus on the what and not the how. The demand and supply framework puts it together.

Ensure goal alignment with your provider There is a risk to not deliver on the “intent” of the deal.

Track and measure internal satisfaction Keeping an open dialogue and obtaining regular feedback from internal clients is key to managing expectations.

Determine your organization’s level of trust Do whatever necessary to maintain or regain trust toward your provider to avoid diminishing value.

Carl Rönnerstam Head of IT Strategy & Transformation

KPMG Advisory Sweden Management Consulting

Telephone +46 766 312 590 carl.ronnerstam@kpmg.se