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1 idelity OES Confidential Information Operational Excellence Operational Excellence Services Services 2006 – WCBF Conference 2006 – WCBF Conference Mike Cook Mike Cook Tom Angelone Tom Angelone Operational Operational Excellence Excellence Services Services

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1Fidelity OES Confidential Information

Operational Excellence ServicesOperational Excellence Services

2006 – WCBF Conference2006 – WCBF Conference

Mike CookMike Cook

Tom AngeloneTom Angelone

OperationalOperationalExcellenceExcellenceServicesServices

2Fidelity OES Confidential Information

Overview

Fidelity Investments is one of the world’s largest providers of financial services.

Largest provider of retirement savings plans (401(k), 403(b)

Institutional Retirement

2nd largest discount

brokerage firm

Provides human resources and

benefits outsourcing services

Retail / Brokerage

About Fidelity InvestmentsFidelity Investments is headquartered in Boston, MA with 37,000 employees worldwide and is one of the world's largest providers of financial services, with custodied assets of more than $2.5 trillion, including managed assets of over $1.2 trillion as of February 28, 2006. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 21 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm.

3Fidelity OES Confidential Information

Operational Excellence Services is an internal consulting organization that resolves challenging global business problems with custom solutions.

Serves as partners for business transformation.

Provides a full line of consulting service offerings with the primary focus on improving operational and organizational effectiveness.

Delivers value by enabling fact based, data driven business solutions.

Provides an objective perspective, enabling aggressive improvement by breaking down institutional paradigms.

Enables richer solutions, organizational ownership, and transfer of knowledge to business partner teams.

Operational Excellence Services - OES

Data-drivenData-driven Team-basedTeam-based ResultsResults

Chartered in 2002, OES ….

4Fidelity OES Confidential Information

OES provides a full line of consulting service offerings with the primary focus on improving operational effectiveness and……

• Performance assessment

• Process analysis / benchmarking

• Process design & reengineering

• Benchmarking• Opportunity

identification• Prioritization• Business case

development• Benefits

realization plan

Service Offerings

OperatingModel DevOperatingModel Dev

Off-shoringOff-shoringQuality SystemsQuality Systems

OperationsImprovement

OperationsImprovement

PerformanceMgmt

PerformanceMgmt

• Business strategy alignment

• Operating strategy dev

• Operating model definition

• Operating model development

• Strategy alignment

• Business drivers

• Balance scorecard / metric definition

• Measurement framework development

• Demand flow• Capacity mgmt• Performance

standards• Operations

mgmt training• Short interval

management• Operations

performance coaching

• Quality assessment

• Quality strategy• Assurance -

defect prevention

• Control – statistical prediction

• Quality metrics• Education

• Organizational assessment

• Org design / alignment

• Skills assessment

• Core competency analysis

• Change management

• Outsourcing / shared service analysis

• Functional decomposition

• Opportunity identification

• Solution design• Business case

development• Migration prep

OrganizationDesign &Alignment

OrganizationDesign &Alignment

……delivering value by enabling fact based, data driven business solutions with an objective perspective.

OperationsConsulting OperationsConsulting

OES – Service Offerings

5Fidelity OES Confidential Information

Enabling Operational Excellence within Fidelity--- OES Service Offerings ---

OES – Vision

Value Chain Change – Driving transformational change in terms of the role and function a business unit plays within a broader value chain or company context.

Operating Model Change – Driving strategic change and significant performance improvements across an entire business unit encompassing multiple capabilities and processes.

End to End Process Change – Driving performance improvements around an end-to-end process contained within a business unit and possibly extending to suppliers and customers.

Departmental Change – Tactical change focused within a department or area.

Magnitude of Change / Risk

Val

ue

End to EndProcess

OperatingModel

Departmental

Value ChainBusinessTransformation

“OES provides measurable value to Fidelity and it’s customers in a partnering relationship by enabling fact based, data driven business solutions with an objective perspective.”

6Fidelity OES Confidential Information

Level ofSupport OES

BusinessUnit

FacilitatedOES Led BU Led

Progression over time to develop new capabilities & skills

An OES objective is to collaborate with and enable Business Units to develop new capabilities and skills over time through complete knowledge transfer.

OES – Collaboration and Engagement Model

OES and Business Unit CompleteBusiness Diagnostic and Determine

Highest Impact Projects

OES and Business Unit CompleteBusiness Diagnostic and Determine

Highest Impact Projects

OES and Business Unit Jointly Complete High Impact Delivery Projects

OES and Business Unit Jointly Complete High Impact Delivery Projects

Business Unit Begins to Own and LeadContinuous Improvement Efforts

Business Unit Begins to Own and LeadContinuous Improvement Efforts

7Fidelity OES Confidential Information

Small teams focused on well defined deliverables

Project team workouts

Information sharing

Issue Identification / Resolution

Direction setting

Small TeamsCross-Functional

Project Workouts

OES - How Work Gets Done

The Team-Based model results in relevant solutions, organizational ownership and institutionalized change.

8Fidelity OES Confidential Information

Why do Organizations Transform Themselves?

Strategic Opportunities and Threats

Evolving customer and business partner needs – increasing customer sophistication, focus on cost competitiveness

Opportunities to expand / grow business

Leveraging core competencies to develop new service offerings

Opportunities to take existing service offerings to new markets (e.g., internal to external)

Increasing regulatory requirements

Competitive threats from higher quality, lower cost providers

Off-shoring opportunities

Operational Challenges

Customer service issues – speed, responsiveness, flexibility and quality

Degrading cost effectiveness -- as compared to competitive service providers

Lack of focus on core processes

Functional silos – lack of end-to-end process integration

Process inefficiencies -- proliferation of redundant, non-value added activities

Misalignment of roles & responsibilities based on skill levels

Building a performance based / continuous improvement culture

World class organizations constantly challenge their business models to maintain competitive advantage and deliver additional value to their customers.

Operational Excellence and Business Transformation

9Fidelity OES Confidential Information

Process &OperationalExcellence

ProcessDefinition

Ownership& Organization

Alignment

Simplification &Standardization

Visibility &Transparency

Measurement &Control

ContinuousImprovement

Customer Focused Common Understanding of Processes & Relationships Reduced Reliance on Institutional Knowledge

Improved Process Accountability Streamlined Organization

Reduced Complexity Reduced Risk Improved Consistency

Aligned & Integrated Performance Metrics and Scorecards Visibility into Current Performance Focuses Improvement Efforts

End-to-End Process Visibility via Technology Integration

Proactive Process Mgmt Real-time Responsiveness

Process Optimization Improved Business Performance

Operational excellence is enabled through six key principles….

Keys to Operational Excellence and Business Transformation

10Fidelity OES Confidential Information

Business Transformation

6 to 10 weeks Timing Varies

Develop Implementation

Roadmap

DevelopOperating

Model

RefineVision &Strategy

ConductBusiness

Diagnostic

Where are we?

What are the key issues and opportunities from a customer, internal and external perspective?

Where are we going?

What is our vision & strategy for

addressing key imperatives?

What will our business look like?

How should we structure our business to achieve our vision

and deliver on our strategy?

How do we get there?

What is the most effective approach for

implementing the strategy and operating

model?

Initiate Quick Wins and Pilots (Value Acceleration)

Large, integrated, complex business process issues require a more holistic approach than simply applying D-M-A-I-C or Lean Methodologies.

Business Transformation Approach

Phase 2Strategy & Operating Model Development

Phase 1Assessment

Phase 3Implementation

11Fidelity OES Confidential Information

Key Outputs

• Scenario analysis• Strategic intent / vision –

mission, vision, principles, positioning, value prop

• Service offering definition & Go-to-market strategy

• Operating strategy – definition of service delivery model & core capabilities

• Business / financial model (as required)

• Refined Service Delivery Model

• Core process architecture (end-to-end)

• Organization architecture• Performance management

architecture• Technology architecture• Structural / location

analysis• Voice of the Customer

• Current state to future state transition strategy

• SOW definitions & estimates

• Prioritized initiatives rationalized against current initiatives

• Multi-generational roadmap

• Refined business case

Develop Implementation

Roadmap

DevelopOperating

Model

RefineVision &Strategy

ConductBusiness

Diagnostic

Initiate Quick Wins and Pilots (Value Acceleration)

Each phase of the approach builds on the previous phase to develop a cohesive and customer focused strategy and operating model.

Business Transformation Approach

• Current state documentation• Business driver analysis• Customer input / feedback• Internal ops assessment by

capability area – SWOT • External benchmarking (as

required)• Summary of key business

imperatives & opportunities• Initial business case

Phase 2Strategy & Operating Model Development

Phase 1Assessment

Business Transformation

Phase 3Implementation

12Fidelity OES Confidential Information

A Closer Look -- Business Diagnostic

The business diagnostic provides a thorough analysis of organizational strengths, weaknesses and opportunities from multiple perspectives.

Internal Capabilities

Competition

TechnologyTrends

Regulatory Changes

Industry Trends

Vision & Strategy

Operating Model

GrowthOpportunities

CompetitiveAdvantage

EffectiveOperations

Vo

ice

of

the

Cu

sto

mer

Customer / Business PartnerValue Delivery

BusinessDiagnostic

Business Diagnostic

Customer(s) Perspective Overall satisfaction Service levels Views on cost competitiveness Customer business direction Key requirements / needs – current vs. future Opportunities to provide additional value

added services

Internal Perspective - Capability Assessment Definition of core capabilities / competencies Capability assessment – strengths &

weaknesses around process, technology, organization structure, use of metrics, etc.

High level breakdown and analysis of end-to-end processes

Performance assessment

Other External Perspectives Competition Technology trends Regulatory changes / influences Industry trends (e.g., emerging products)

13Fidelity OES Confidential Information

A Closer Look -- Vision & Strategy Refinement

The strategy phase articulates the organization’s strategic intent, service offering strategy, and operating strategy based on the imperatives and findings identified in the diagnostic.

StrategicIntent / Vision

ServiceOffering &

Go-to-MarketStrategy

OperatingStrategy

Mission and vision Organization role within

larger company context and industry

Positioning Types of products and

services provided Value proposition Measures of success

Market / customer definition Services strategy –- short-term vs. long-term Customer segmentation strategy Growth strategy for existing vs. new services Pricing strategy

Operating principles Service delivery model Core competencies / core capabilities Sourcing strategy by capability / by service

offering (insource vs. outsource) Shared service approach

Business Diagnostic

Results

Vision and Strategy Refinement

14Fidelity OES Confidential Information

Core Capabilities Process Definition Capability Blueprints Best Practices

Value Analysis Alignment Limitations Best Practices

Technology

A Closer Look -- Operating Model

Process Organization

Performance Management

Culture and

Behavior

Strategyand

Structure

Process

OrganizationDesign

HumanCapital

Aligns

Enables Drives

Inspires

Drives Enables and Limits

Supports Facilitates

Inspires Inspires

Shapes

Technology

Operating Model

Framework Metric Definition Scorecard Control Plans Mgmt Process

Assessment Culture Alignment Skills Sizing

Operating Model

Provides a shared vision for the organization and serves as a critical

foundation for the transition and future improvements

The operating model provides the framework to ensure improvement efforts are aligned, integrated and balanced to enable optimal business performance.

15Fidelity OES Confidential Information

The Process blueprint defines the core end-to-end processes required to deliver an organization’s services.

A Closer Look – Process Blueprint

Indicates ‘how work gets done’ and ‘how services get delivered’ from an end to end perspective.

Represents the critical business documentation that clarifies what activities must be completed and by whom.

Is an essential training and communication tool that supports the transition and change management process.

Builds upon the operating strategy and service delivery model defined in strategy phase.

Description

Core Process Definition

Process ‘SIPOC’ Diagrams Process Objective Frequency/Timing Overall Process

Owner/Accountability Suppliers Inputs Steps Outputs/Outcomes Customers

Process Flowcharts Sequence and relative timing of

steps Who completes each step

Key Outputs

Process

16Fidelity OES Confidential Information

The Technology blueprint identifies gaps in current technology solutions and provide a roadmap for future technology needs and investment.

Identifies high level technical and functional requirements across capability areas and core processes.

Define overall technology architecture to support new service delivery model – infrastructure, data, applications, integration, etc.

Identify and define core applications required to meet key functional requirements.

Identifies gaps in current technology solutions.

Provides roadmap for future technology investment.

Description Key Outputs

Technology Needs Analysis Functional requirements Technical requirements Integration requirements

Technology Architecture Infrastructure Data Application Networking / integration

Application Definitions

Technology

A Closer Look – Technology Blueprint

17Fidelity OES Confidential Information

Defines how resources should be organized to accomplish organization goals and objectives.

Identifies required teams along with the charters and missions of each team.

Defines organizational reporting relationships and appropriate spans of control for key leadership positions.

Defines key position along with roles, responsibilities, and skill requirements of each position.

Provides approximate estimate as to how many resources should comprise the organization.

Description Key Outputs

Organization Charts Organization framework Leadership structure Spans of control Reporting responsibility

Team Charters Mission Objectives Value Key Positions

Position Descriptions Description Reporting relationship / grade Scope Roles & responsibilities Key competency requirements Measures of success

Rough Sizing Analysis

The Organizational blueprint defines the proposed team structure and required competencies to effectively deliver service.

Organization

A Closer Look – Organization Blueprint

18Fidelity OES Confidential Information

Provides a method for aligning and accelerating organizational activity towards the accomplishment of specific strategic imperatives & objectives.

Establishes a set of measurements that provides an organization with a comprehensive picture of organizational performance.

Enables cultural change to allow all levels of an organization to know what is important and how their contribution helps the organization meet its strategic objectives.

Is a key driver of continuous improvement.

Description Key Outputs

Measurement Framework Key business drivers Measures of Success Balanced scorecard framework

Scorecard Hierarchy

Balanced Scorecards Scorecard Definition Ownership Key Stakeholders Measure Identification

Metric Definitions Description Calculation Measurement Frequency Etc.

The Performance Management blueprint provides a framework for aligning organizational activity towards strategic imperatives and key success factors.

Performance Management

Measures are the “Vital Signs” of an organization.

What gets measured, gets done !!

A Closer Look -- Performance Management Blueprint

19Fidelity OES Confidential Information

Implementation road mapping can be segmented into four primary steps.

Capability Description

Risk Assessment

Key Worksteps

High Level Work

Estimate

Sourcing to Contract

Capability Description

Risk Assessment

Key Worksteps

High Level Work

Estimate

Req to Check Capability

High Level Description of the Work and Required Activities

Defines logical releases needed to progressively build the capability

Multi-generational Roadmap

Capability 5

Q4 Q1 Q3 Q12003 2004

Short Term Projects

Capability 1

Capability 2

Capability 3

Capability 4

Q2 Q3 Q4 Q1 Q2 Q4 Q2 Q4Q32005 2006

Program Management & Monitoring

Program Level Change Management & Monitoring

Req to Check, Etc.

Sourcing to Contract

Commodity Mgmt & Planning

Detailed Project, Architecture, and Change Planning

Process Analysis, Design & Pilot

Competency/ Organization/ Culture Development and Implementation

Work Segment FY04,Q4 FY05,Q1 FY05,Q2 FY05,Q3 FY05,Q4 FY06,Q1 FY06,Q2

1. Statements of Work – Capability Initiatives

2. Prioritization 3. Transformation Plan 4. Detailed Planning

Assessment of relative business value and implementation cost/risk for each capability release

Prioritize initiatives by relative value and cost

Identify top priorities

Cost/Complexity

Bu

sin

ess

Va

lue

Short Term Opportunities

Evaluate Later

Choose Selectively and

Pace Appropriately

Choose Selectively if

possible Quick Win

Commodity Management & Plng.

Detailed Work Plans Resource Estimates Cost Estimates Refinement of

Business Case

8FSM Confidential Information

FSM Implementation Planning

Objectives/Purpose: The overall objective of the Commodity Management and Planning initiative is to implement Commodity Business Planning, sourcing strategy development, and commodity governance activities that align with the delivery framework for the commodity. This includes the preparation of a sourcing, spend, and savings plan for the commodity that considers business unit requirements and planned purchases/projects/needs. Working with the Commodity Oversight Committee, the Commodity Leader leads this initiative and works to determine business unit purchasing plans and needs for the coming year, to aggregate purchases as appropriate, and to standardize requirements across business units as appropriate.

Owner: VP of Service Delivery

High Level Work Steps Develop Commodity Business Plan

template Develop category lifecycle cost

templates Develop commodity spend and usage

analysis templates Review and refine Commodity Business

Planning process blueprint Educate Commodity Leaders on the

Commodity Business Planning process and rationale

Initiate the Fidelity Supply Management Council

Implement commodity governance refinements in priority commodities (Professional Services, HR/Benefits)

Planning Considerations Lifecycle cost templates will vary by

commodity/category Initially, Supply Management Council

meetings may only be required quarterly

Release 1

Capability: Commodity Management and Planning

Release 2

High Level Work Steps Prepare spend and usage analyses for

priority commodities leveraging general office tools

Initiate Commodity Business Planning on priority commodities, leveraging templates developed in Release 1

Implement commodity governance refinements in ‘priority two’ commodities (Mar/Comm Services, Market Data, Technology, Communications)

Planning Considerations Integrate plans with Supply Market

Research and Analysis spend analytics pilot

Release 3

High Level Work Steps Utilize spend and usage analysis tools

(piloted by Supply Market Research and Analysis) to support the planning process in priority commodities

Roll out the Commodity Business Planning process to all commodities

Implement commodity governance refinements in remaining commodities (Travel Services, Real Estate, Admin. Services)

Leverage Commodity Oversight Committee governance structure to review and approve all Commodity Business Plans

Planning Considerations All commodity leaders should be in

place and driving the planning process

Overall implementation roadmap reflecting:

Priorities Dependencies Organizational

bandwidth

OperatingModel

A Closer Look -- Implementation Roadmap

Implementation

20Fidelity OES Confidential Information

Process &OperationalExcellence

ProcessDefinition

Ownership& Organization

Alignment

Simplification &Standardization

Visibility &Transparency

Measurement &Control

ContinuousImprovement

Customer Focused Common Understanding of Processes & Relationships Reduced Reliance on Institutional Knowledge

Improved Process Accountability Streamlined Organization

Reduced Complexity Reduced Risk Improved Consistency

Aligned & Integrated Performance Metrics and Scorecards Visibility into Current Performance Focuses Improvement Efforts

End-to-End Process Visibility via Technology Integration

Proactive Process Mgmt Real-time Responsiveness

Process Optimization Improved Business Performance

Remember operational excellence is enabled through six key principles…

Keys to Operational Excellence and Business Transformation

21Fidelity OES Confidential Information

Establish strong executive sponsorship and accountability.

Start with and maintain focus on the customer.

Think strategically and challenge the status quo.

Fully leverage the knowledge capital resident within your organization.

Ensure recommendations are supported by a robust business case.

Ensure model addresses human and organizational considerations.

Develop a pragmatic, rationalized and prioritized change agenda focused on value delivery.

Assign “benefit owners” to implement the transformation plan and drive accountability of results.

Key Success Factors

Successful transformation efforts are contingent upon several key success factors.

Business Transformation Success Factors

22Fidelity OES Confidential Information

Questions ?

Mike Cook – Vice President – OES

[email protected]

Tom Angelone – Lead Consultant – OES

[email protected]