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The latest trends and technologies driving GBS maturity

1Q 2016 Pulse Survey Results—Thursday, 19 May, 2016

KPMG Global Insights Pulse

2©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Webcast participants

Stan LepeakDirectorGlobal Research, Management Consulting KPMG LLP (US)

David BrownGlobal LeadShared Services & Outsourcing Advisory,KPMG LLP (US)

Managing Director,Management Consulting KPMG LLP (US)

Liz Evans


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KPMG’s shared services and outsourcing advisory practiceKPMG has the ability to support member firms’ clients transform enterprise

services and help improve value, increase agility and create sustainable business performance.

Who we are

What we do

How we do

it

The Shared Services and Outsourcing Advisory practice brings a specialized team of more than 1,000 professionals within KPMG’s global network of independent member firms operating in 155 countries. We help clients design, build, and manage information technology (IT) and business processes across the enterprise.

We help clients align their business strategy, organization and execution to enable them to manage the entire IT and business process life cycle improving business performance, and laying the groundwork for genuine business transformation.

We apply focused research, automating tools, proprietary data, clear business acumen, and a forward-thinking mind-set to provide timely, objective, actionable advice and practical approaches for clients.


Polling Question 1:

In which of the following industry groups does your organization operate? (Please select 1)

Business or IT service provider

KPMG employee

Financial services

Diversified industrials/manufacturing

Energy and natural resources

Healthcare and pharmaceuticals

Retail consumer goods, Food and beverage

Technology

Government/Education

Other


KPMG Global Insights Pulse

The surveys are a quarterly review of global business services (GBS) market trends and individual observations from the ‘front lines’.

Input sources: Topics evaluated: Primary functional focus:

— 1000+ KPMG sourcing advisors

— 12 leading global business, IT, and cloud service providers

— KPMG market research

— Drivers for GBS usage

— Demand and buying patterns

— Deal attributes

— Thematic topics for each Pulse Survey

— The role of the GBS executive

— GBS governance

— Update on process and cognitive automation

— Call center/customer care

— Finance and accounting

— Human resources

— Information technology

— Procurement

— Real estate and facilities management

— Vertical industry BPO

— Emerging BPO/KPO functions

Focus on performance, trends, and futures

— Launched in 2004 by EquaTerra*

— Part of a growing family of KPMG Pulse market research studies

* KPMG LLP (US) KPMG Holdings Limited (UK) and KPMG International acquired the business and subsidiaries of advisory firm EquaTerra, Inc. in February 2011.

1Q16 Global Insights Pulse Survey results:


Summary — key findingsThere are a variety of means organizations can employ to drive increased maturity levels for their global business services operations thereby furthering meaningful and measureable business outcomes. Three key paths to support this approach are promoting and enhancing the role of a single, global, GBS executive leader, improving the capabilities for conducting GBS governance, and adopting and exploiting opportunities with process and cognitive automation to both improve the efficiency but more importantly the effectiveness of GBS operations and capabilities.

234

The role of the GBS executive

Process and cognitive automation adoption trends

1 GBS market trends

Governance best practices for GBS

GBS market trends


Demand dashboard

Service providers: Pipeline growth last quarterAdvisors: Demand increase by service delivery modelnext 1–2 quarters

Service providers: Demand next 1–2 quarters Advisors: Top functional focus areas for service delivery improvement efforts

65% 72% 65% 67% 69% 60% 31% 33% 54%

3Q13 4Q13 1Q14 2Q14 3Q14 1Q15 2Q15 4Q15 1Q16

33% 33% 46% 55%

BPO ITO Sharedservices

Internal processimprovement

4% 39% 57%

Down Flat Up

Source: KPMG Global Pulse Survey 4Q15 Note: Numbers may not total 100% due to rounding.

13%18%20%

25%35%35%

49%51%

All areas, including IT

Supply chain

Customer care

Procurement/source to pay

Data & analytics

HR

F&A

IT


Advisors: Top approaches to improve service delivery capabilities

8%

14%

23%

24%

25%

30%

31%

42%

48%

51%

0% 20% 40% 60% 80% 100%

Investments into process & cognitive automation

Use/expansion of offshore captive SSCs

Insourcing work previously outsourced

Use/expansion of BPO

Use/expansion of ITO

Investments into/improvements to enterprise software

Investments into cloud computing services

Use/expansion of SSCs

Improve current SSC/outsourcing governance

Internal process improvement/re-engineering efforts

1Q16 1Q15 1Q14


Polling Question 2:

How has your or your client organization(s)’ appetite for shared services and outsourcing changed over the past 12 months? (Please select 1)

Relative interest in/use of outsourcing has grown/increased compared to shared services

Relative interest in/use of shared services has grown/increased compared to outsourcing

No change in interest/use of one service delivery model compared to the other

N/A, don’t know


Advisors: Demand by industry

7%

30% 25%

16%18%

12%

15%

12% 8%

46%

Banking, Financial Services, Insurance

Pharma/Biotech CPG, Food & Beverage, Retail, Wholesale

Energy/Utilities, Oil & Gas

Healthcare

Govt (Fed, State, Local), Education/Non-Profit

Telco

Manufacturing

No one specific sector/vertical industry

Transport & Logistics

Source: KPMG Global Insights Pulse 1Q16


Polling Question 3:

What is your or your client organization(s)’ top preferred means to improve global business services delivery capabilities? (Please select 1)

Improve governance and management capabilities of existing efforts

Internal process improvement/process re-engineering efforts

More use of ITO

More use of BPO

Investments in IT — cloud, enterprise systems, data analytics, etc.

All of the above

Less use of shared services and outsourcing

N/A, don’t know


Advisors: Demand growth by service delivery modelAdvisors: Demand by service delivery model over the past 1-2 quarters

Advisors: Demand by service delivery model over the next 1-2 quarters

2%

6%

7%

9%

43%

48%

60%

58%

55%

46%

33%

33%

0% 20% 40% 60% 80% 100%

Internal process improvement

Shared services/SSC

ITO

BPO

Down Flat Up

3%

6%

9%

11%

47%

55%

63%

63%

50%

39%

27%

26%

0% 20% 40% 60% 80% 100%

Internal process improvement

Shared services/SSC

ITO

BPO



Demand by service delivery model: net change in demand(Next 1-2 quarters) net change in demand (Up-down responses)

0%

10%

20%

30%

40%

50%

60%

70%

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q15 2Q15 4Q15 1Q16

Internal process improvement Shared services/SSC ITO BPOSource: KPMG Global Insights Pulse 1Q16


Service providers: pipeline growth last quarter

3% 3% 3%10%

4% 8% 6% 4% 8% 8%17%

4%

45%

21%

36%32%

36%

52%

19%

32%

24%

29%24% 35% 33% 31%

32%

62%50%

42%

55%

76%

61%68%

61%

38%

78%

60%

76%65%

72%65% 67% 69%

60%

31% 33%

54%


Down About the same Up



Service providers: pipeline growth next 1-2 quarters

3% 7% 3%13% 10%

4% 6% 4%

24%

35%52%

39%49% 27%

41%32%

25%33%

28%

46% 50%31% 48%

39%50% 39%

74%

59%

45%

61%51%

59% 59%68% 65% 67%

72%

50% 50%

63%52%

62%50%

57%


Decrease Remain the same Increase



Service providers: top functional areas of demand

4%

4%

8%

17%

29%

33%

38%

42%

50%

50%

Customer care

Other

Procurement/source to pay

HR

Bundled multiple business functions

Data & Analytics

F&A

Bundled business functions with IT

IT

Vertical industry specific services

1Q16 1Q15 1Q14Source: KPMG Global Insights Pulse 1Q16


Service providers: demand by industry (Top 10)


8%

13%

13%

13%

13%

33%

33%

38%

50%

67%

Transportation & Logistics

Automotive

Bus Svcs/Consulting, Const./Eng.

Ent./Media, Hospitality/Travel

High Tech

CPG, Food & Bev., Retail, Wholesale

Energy/Utilities, Oil & Gas

Manufacturing

Healthcare

Banking, Financial Services, Insurance

1Q16 1Q15 1Q14


Global quarterly outsourcing deal trendingMovements of global IT-BPO deals*

1Q16 witnessed a sharp increase in total contract value as compared to 1Q15. There was an increase of 83 per cent in total contract value and 19 per cent increase in the total number of deals in 1Q16 as compared to 1Q15. Though there was an increase in both these parameters, the average contract value also decreased by approximately 30 per cent in 1Q16 as compared to 1Q15

35.3

55.9

20.3

43.953.3

28.0 25.2 29.139.8

26.421.8

75.9

38.8

22.8

39.9

428

516

299

426 422

326

270

316

259

245

192

334253

112

228

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2012 2013 2014 2015 2016Value (USD billion) No. of deals

Total deal valueUSD120.4 billion


Number of deals1,473

-17%

Number of deals1,144

-22%


32%

Number of deals891

-22%

Deal value

1Q15

1Q1683%

No. of deals

1Q15

1Q16

19%

*The term deals is interchangeably used with contracts throughout the analysis unless otherwise specified. Deals analyzed are global sourcing contracts of size USD5.0 million and above only. Source: IDC (www.idc.com), Contract Database, Apr 2016, KPMG member firms research & analysis based on the IDC contract database


5.4

64.9

7.1

97.5

29.1

101

649

99

453

102

1Q14 2014 1Q15 2015 1Q16

IT-BPO deals across geographiesQuarter-on-quarter comparison of break-up of deals*

2.3 8.0 4.1

16.5

0.8

26

97

15

122

15

1Q14 2014 1Q15 2015 1Q16

17.5

47.5

10.6

45.1

10.0

132

398

78

316

111

1Q14 2014 1Q15 2015 1Q16

* Deals originating from the geography

Source: IDC (www.idc.com), Contract Database, Apr 2016, KPMG member firms research & analysis based on the IDC contract database

EMA

AMERICAS

ASPAC

• Americas continues to be the major outsourcing region contributing 73 percent of the total deal value in 1Q16. EMA and ASPAC regions contribute to 25 percent and 2 percent respectively

• While Americas experienced a multi-fold growth in deal value in 1Q16 as compared to 4Q15, both the ASPAC and EMA regions faced a drop in deal value

• The outsourcing market in EMA grew by more than 90 percent in number of deals while ASPAC had a dip of 2 percent in 1Q16 as compared to 4Q15

Total contract value (USD billion) No. of contracts



David Brown, KPMG’s Global Lead, Shared Services and Outsourcing AdvisoryKPMG in the US

“ “

— Creating strong GBS leadership at the executive level as a peer to other CXO roles is critical to enabling the drive to higher levels of GBS maturity and delivering meaningful and measureable business value and outcomes beyond cost savings.

— Most GBS groups are still organized and managed by function or geography, though this will change over the next three years, moving towards end-to-end process ownership and global management models.

— Functional or geographic GBS leadership rarely (in <10% of organizations) rolls-up into a single global GBS executive, though awareness of the need for this role and planning for its implementation is growing.

— GBS executive leadership, in whatever form, faces many challenges to improving GBS capabilities, especially in enabling end-to-end process ownership and gaining executive level support for GBS operations and improvement efforts.

Bringing GBS services into one organization that operates under one accountable executive leader is crucial in maximizing efficiency and effectiveness and driving greater business value.


Advisors: GBS organization and management models —today and in three yearsToday

In three years

20%

19%

25%

16%

56%

65%

60%

56%

24%

16%

15%

27%

0% 20% 40% 60% 80% 100%

Organized and managed globally

By end-to-end process

By geographic region

By function

Uncommon Common Very common

71%

77%

22%

15%

26%

20%

63%

58%

3%

2%

15%

27%

0% 20% 40% 60% 80% 100%

Organized and managed globally

By end-to-end process

By geographic region

By function



Polling Question 4

How important is it to have a single, CXO level, GBS lead? (Please select 1)

Not important, other elements of GBS are more critical

Important, but not a show stopper if not in place

Very important to the long term success of the GBS organization


Advisors: GBS organization and management models —today and in three years

12%

21%

40%

32%

28%

28%

11%

7%

6%

9%

4%

4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

3Q14

1Q16

No plans, not on the radarAwareness but no actionDeveloping plans to install role/under discussionPlans being executed, 3+ year timelinePlans being executed, 1-3 year timelineRole already established



Advisors: biggest challenges facing GBS executives

43%

49%

43%

35%

61%

52%

41%

43%

44%

45%

52%

42%

Expanding & integrating GBSoperations across processes &

functions

Enabling an integrated IT model,systems & applications to support GBS

Performing governance globally acrossall GBS processes

Executive level support to adopt and/orexpand GBS

Enabling end-to-end process ownership

Evolve GBS focus from cost savings tostrategic business value

1Q16 3Q14Source: KPMG Global Insights Pulse 1Q16



“Liz Evans, Managing Director, Shared Services and Outsourcing AdvisoryKPMG in the US

“ “

In an integrated environment, the need to have clearly defined roles and responsibilities and hand-offs in your governance environment are extremely significant for success.

— Good governance coupled with strong change and program management is critical to the success of an organization’s global business services efforts, especially as focus shifts to delivering meaningful and measureable business outcomes above and beyond cost savings.

— Governance is a perennial challenge to the success of shared services and outsourcing efforts, especially with integrated delivery models comprising global business services.

— The bar of what constitutes “best in class” GBS governance is constantly being raised so even as organizations’ skills improve they are still often not able to keep up with the demands placed upon them by more advanced and aggressive GBS efforts.

— The biggest challenge to GBS governance efforts is a fundamental lack of governance maturity and capabilitiesat a level required to support existing GBS efforts.

— The top governance success factor to ensure expected value is delivered from GBS efforts is measuring business outcomes against original business case expected value.

— Clearly defined roles and responsibilities for the new governance & operating organization and end-to-end global process ownership are the top two critical considerations for GBS governance.


Biggest GBS governance challenges

19%

32%

39%

41%

41%

50%

61%

0% 50% 100%

Inability to execute operationallyagainst GBS operating model

Lack of technicalautomation/integration in support

of GBS

Lack of enterprise-wide supportfor a new GBS operating model

Stakeholder misalignmentregarding business scope and

expectations

Lack of strategic alignmentbetween business strategy and

GBS strategy

Lack of clear ownership for GBSstrategy and execution

Lack of governance maturity andcapability to manage GBS scale

and scope

Advi

sors

Serv

ice

prov

ider

s

15%

10%

50%

55%

55%

35%

70%

0% 50% 100%



Top enabling technologies for GBS governance

5%

14%

18%

21%

23%

30%

35%

39%

42%

51%

0% 50% 100%

Asset management tools

Mobility applications

Vendor managementtools/applications

Risk compliance andmanagement tools

Contractmanagement/procurement tools

Integrated custom developedtools

Sophisticated data analytics andreporting tools/dashboards

Microsoft products

Performance monitoring tools

Workflow tools for alerts,approvals, etc.

Advi

sors

Serv

ice

prov

ider

s

5%

26%

21%

37%

26%

37%

47%

21%

47%

32%

0% 50% 100%Source: KPMG Global Insights Pulse 1Q16


Top governance success factors to ensure GBS value


18%

29%

35%

36%

48%

51%

71%

0% 50% 100%

Effective customer surveying andimplementation of appropriate action

plans

Ability to effectively extract andanalyze GBS information in support

of the business

Monitoring achievement of costreduction and efficiency objectives

Focus on continuous improvementfor key business/technical processes

Clearly defined process integrationbetween the GBS org. & bus.

units/suppliers

Effective monitoring of keyperformance indicators and service

levels

Measuring business outcomesagainst original business case

expected value

Advi

sors

Serv

ice

prov

ider

s

12%

41%

29%

29%

53%

35%

94%

0% 50% 100%


Top considerations for successful GBS governance organization

25%

27%

33%

45%

53%

54%

57%

0% 50% 100%

GBS governance organizationalignment with regional operating

structure

Effective structure and focus ofjoint governance boards

Well-articulated scope and focusof the governance organization

Talent, experience, and skills ofGBS governance organization

Well-defined integration betweenthe governance org. & the

retained org.

End-to-end global businessprocess ownership

Clearly defined roles &responsibilities for the new

governance & operating org.

Advi

sors

Serv

ice

prov

ider

s

17%

11%

50%

33%

67%

44%

78%



Top relationship management components for GBS governance

18%

23%

30%

36%

38%

38%

43%

48%

0% 50% 100%

Clearly identified personnel match-ups and working relationships

Well-defined and communicatedchargeback and cost allocation

methods

Internal and external service levelagreements

Clearly defined decision rightsamongst key stakeholders

Dedicated relationship managersbetween the bus. units & the

governance org.

Well-defined service catalogshared with the business

Appropriate stakeholderrepresentation on jointmanagement boards

Service agreements in placebetween the GBS org. & the bus.

units

Advi

sors

Serv

ice

prov

ider

s

22%

28%

33%

28%

78%

6%

50%

44%


Process and cognitive automation


The evolution of process automation

Basic process automation

Enhanced process

automation

Cognitiveautomation

Rules engine

Screen scraping

Work flow

Machinelearning

Large-scale processing

Adaptivealteration

Artificial intelligence

Big data analytics

Naturallanguage processing

Processing of unstructured data

and base knowledge

RULES

LEARNING

REASONING

01

02

03

— Artificial intelligence— Natural language recognition and

processing— Self-optimization/self-learning— Digestion of super data sets— Predictive analytics/hypothesis generation— Evidence-based learning

— Built-in knowledge repository— Learning capabilities— Ability to work with unstructured data— Pattern recognition— Reading source data manuals

— Macro-based applets— Screen scraping data collection— Workflow— Visio®-type building blocks— Process mapping— Business process management


Levels of client automation activity by maturity levelAdvisors

Service Providers

72%

41%

19%

27%

40%

43%

3%

19%

19%

1%

4%

26%

0% 20% 40% 60% 80% 100%

Cognitive automation

Enhanced process automation


15% 40%

29%

14%

30%

33%

24%

15%

43%

67%

0% 20% 40% 60% 80% 100%

Cognitive automation

Enhanced process automation


No activity Self-education and planning Experimenting and running pilots Live implementationsSource: KPMG Global Insights Pulse 1Q16


Levels of automation by process

71%

81%

79%

76%

67%

63%

63%

56%

53%

22%

11%

13%

15%

23%

25%

26%

29%

29%

7%

8%

8%

8%

10%

11%

12%

15%

18%

0% 50% 100%

Source to procure

HR

SC/procurement

Quote to cash

F&A

Record to report

Customer care

IT

Procure to pay

No current plans Pilot Live implementation

Advisors

33%

22%

44%

42%

21%

28%

26%

11%

5%

50%

56%

28%

26%

42%

33%

32%

47%

37%

17%

22%

28%

32%

37%

39%

42%

42%

58%

0% 50% 100%

HR

Source to procure

Customer care

Quote to cash

Procure to pay

SC/procurement other

Record to report

F&A

IT

No current plans Pilot Live implementation

Service providers



Polling Question 5:

In which process area is your or your clients’ organization(s) the most active in terms of implementing process automation solutions?(Please select 1)

F&A

HR

Procure to pay

Customer care

Quote to cash

Record to report

Source to procure

IT

N/A, don’t know


Biggest challenges to process automation

38%

48%

10%

19%

24%

33%

0% 50% 100%

Disparate underlying IT systems;lack of integration

Inconsistent and non-standardbussiness processes make it

impractical

Immaturity of RPA technologies

Client inability to build compellingand realistic business case

Lack of client appetite, budgetand skills to make required

process standardization

Determining where to start anddeploy RPA technologies

Advi

sors

Serv

ice

prov

ider

s

25%

29%

32%

39%

40%

41%

0% 50% 100%



Potential job losses by delivery model - next three yearsAdvisors

Service providers

26%

16%

17%

5%

42%

32%

44%

42%

21%

21%

22%

26%

5%

26%

17%

26%

5%

5%

0%

0%

0% 20% 40% 60% 80% 100%

Retained organization

Shared services

ITO operations

BPO operations

0-10% 11-20% 20-30% 30-50% 50%+

52%

23%

26%

23%

32%

40%

37%

36%

11%

26%

25%

27%

4%

9%

11%

11%

1%

2%

2%

2%

0% 20% 40% 60% 80% 100%


Shared services

ITO operations

BPO operations



Potential job losses by delivery model - next five yearsAdvisors

Service providers

20%

5%

6%

10%

20%

17%

15%

45%

20%

28%

40%

20%

35%

39%

20%

5%

20%

11%

25%

0% 20% 40% 60% 80% 100%


Shared services

ITO operations

BPO operations

0-10% 11-20% 20-30% 30-50% 50%+

25%

17%

16%

13%

42%

26%

28%

28%

25%

32%

31%

33%

7%

20%

15%

19%

2%

5%

9%

7%

0% 20% 40% 60% 80% 100%


Shared services

ITO operations

BPO operations



Likelihood process maturation will drive use of less outsourcing

16%

16%

12%

10%

25%

26%

26%

25%

44%

47%

40%

50%

9%

11%

15%

5%

6%

7%

10%

0% 20% 40% 60% 80% 100%

ITO - Advisors

ITO - SPs

BPO - Advisors

BPO - SPs

1 - Not at all likely 2 3 - Moderately likely 4 5 - Highly likely



Leveraging trends and technologies to drive GBS maturityThere are a variety of levers organizations have at their disposal to drive GBS maturity and deliver meaningful business benefits above and beyond cost savings

Move towards global, CXO level leadership on GBS

Drive end-to-end process ownership tied to global GBS governance efforts and leverage key technologies such as D&A and automation

Prioritize investments related to GBS governance (people, processes, technologies, authority) to get ahead of the curve rather than playing catch up

Clearly define GBS roles and responsibilities against retained organization and business units and ensure GBS governance value is measured in terms of business outcomes

Drive process automation maturity by defining a roadmap and prioritizing investments in efforts and technologies that bring the greatest business value; you cannot “skunk works” yourself to greatness

Recognize and account for the potential business value different types of automation can bring and the associated costs and complexities to implement

Recognize that white collar job loss due to increased automation is inevitable and take proactive steps to address ramifications

Learn more


Learn moreKPMG Shared Services and Outsourcing Institute (https://institutes.kpmg.us/institutes/shared-services-outsourcing-institute.html)

Global Insights Pulse Surveys (https://institutes.kpmg.us/institutes/shared-services-outsourcing-institute/articles/campaigns/ssoa-pulse-surveys.html)

GBS Maturity Research Program (https://institutes.kpmg.us/institutes/shared-services-outsourcing-institute/articles/campaigns/global-business-services-maturity.html)

KPMG Centers of Excellence Pulse Surveys http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/mc-pulse-survey/Pages/default.aspx

KPMG Institutes Home (http://www.kpmginstitutes.com/)

Blog: Reality Check (https://advisory.kpmg.us/blog.html)

Podcasts: Advice Worth Keeping (https://institutes.kpmg.us/institutes/shared-services-outsourcing-institute/events/podcast-series/advice-worth-keeping-podcast-series.html)

HfS Research: (http://www.hfsresearch.com/)

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http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/mc-pulse-survey/Pages/default.aspx

http://www.kpmginstitutes.com/

https://advisory.kpmg.us/blog.html

https://institutes.kpmg.us/institutes/shared-services-outsourcing-institute/events/podcast-series/advice-worth-keeping-podcast-series.html

http://www.hfsresearch.com/


The KPMG Shared Services and Outsourcing Institute

Appendix


Service providers: most common new deal pricing models

Fixed price

Time and materials

Value-based pricing

Cost plus

49% 31%

29% 10%



Service providers: most common new deal pricing models


49%

50%

47%

43%

49%

19%

28%

23%

22%

31%

30%

25%

34%

29%

29%

14%

15%

8%

11%

10%

3Q14

1Q15

2Q15

4Q15

1Q16

Fixed price Time and materials Value-based pricing Cost plus


Service providers: pricing pressure

36% 37%45%

54%

39%33% 37% 36% 33%

44%32% 36%

50% 50%63% 62%

67%

52%

64% 63% 52%46%

61%67% 63%

60% 67%56%

68% 64%44%

50%38% 39%

33%

48%

3% 4% 6%


More competitive/aggressive About the same as last quarter Less competitive/aggressive



Service providers: contract profitability — new contracts

11%4% 7% 6% 5% 8% 4% 5% 6% 4%

11% 15%8% 8% 8%

30%

68%80%

61%63% 61% 62%

62%58%

80%69%

60%75%

61%

69% 79% 77% 75%

48%

21% 20%

36%30% 33% 33% 31%

38%

15%25%

36%25% 28%

15% 13% 15% 17% 22%

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q15 2Q15 4Q15 1Q16Contract profitability is improving on new contracts Contract profitability is about the sameContract profitability is declining on new contracts



Service providers: contract profitability — existing contracts

11%4% 7% 6% 5% 8% 4% 5% 6% 4%

11% 15%8% 8% 8%

30%

68%80%

61%63% 61% 62%

62%58%

80%69%

60%75%

61%

69% 79% 77% 75%

48%

21% 20%

36%30% 33% 33% 31%

38%

15%25%

36%25% 28%

15% 13% 15% 17% 22%

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q15 2Q15 4Q15 1Q16Contract profitability is improving on new contracts Contract profitability is about the sameContract profitability is declining on new contracts



Service providers: contract scope — existing contracts

11% 8% 7%15% 16%

10%4% 8% 10% 13% 8%

21%8% 8% 9%

43% 46% 48%

56%44%

62%

42%

71%

50% 50% 63%72%

78%

50%

54%

69%

67%57%

46% 46% 45%

30%41%

29%

54%

21%

40% 38%29% 28%

22%29%

38%

23%33% 35%

2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q15 2Q15 4Q15 1Q16Contract profitability is improving on existing contracts Contract profitability is about the sameContract profitability is declining on existing contracts


Speaker bios


Stan Lepeak

Stan LepeakHead, Global Market Research, KPMG Management Consulting

KPMG LLP (US)New York, NY+1 203 444 [email protected]

BackgroundLeads market research and thought leadership efforts for KPMG Global Management Consulting, focused on trends, issues and futures in enterprise services transformation and optimization, the threats and opportunities from market and technology disruptions and best practices in responding to and capitalizing on these market trends

Areas of focus expertise— The tactical and strategic organizational opportunities, challenges and ramifications

from- Technology disrupters and enablers such as cloud, big data and analytics, mobile,

Internet of things, social media, consumerization of IT, and robotics process automation

- Business disrupters such as globalization, increased regulatory and compliance complexity, talent and skills shortages, shifting global economic and competitive dynamics and geopolitical risks

— Global business services usage and models including shared services, process outsourcing and automation, and cloud and their leading practices and maturity models across major back (F&A, HR, IT, procurement, supply chain), middle and front office functions

— Use of data and analytics, process automation and related technologies to create and exploit “intelligent” business functions to enable organizational innovation and transformation

— Vertical industry and geographic trends and variations relative disruptive market trends and technologies and their impact on enterprise transformation and innovation efforts

Professional experience— 25 years experience in the business and IT services markets. Led global research for

leading boutique sourcing advisory firm EquaTerra (acquired by KPMG in 2011) for seven years. Previous to that worked for the META Group (acquired by Gartner in 2004) as VP and Research Director. He has had executive roles on the vendor and provider side in software and services industries as well as positions in finance, accounting and operations across several industries.

— Noted commentator and frequent speaker on global business services and globalization and business and IT enablers and disrupters.


David J. BrownBackgroundDave is the global lead for KPMG LLP’s (KPMG) Shared Services and Outsourcing Advisory practice. In this role, Dave provides Shared Service and Outsourcing advice to many of our larger, complex deal structures. Dave has more than two decades of experience in IT and business process outsourcing; shared services design/build/implement, sourcing management; contract renegotiations; and finance budgeting, planning, and analysis. Dave also delivers hands-on services as a client executive and has led many multinational deals and provided leadership support on several large and complex deals for both IT and business processes.

Professional and industry experienceIn addition to advising clients, Dave engages senior members of outsourcing service providers’ financial and IT delivery teams to establish and implement industry-accepted processes and structures related to outsourcing transactions.Before joining KPMG through the acquisition EquaTerra, where he held various senior leadership positions including the establishment of the Financial Architect & Benchmarking practices and was a client executive leading large multinational, multifunctional shared service and outsourcing engagements, Dave was a senior advisor at TPI. In that role, he assisted clients with the evaluation, negotiation, implementation, and management of IT and business process sourcing initiatives. Earlier in his career, Dave held various financial and IT positions in the telecom industry including Southwestern Bell Information Services, Southwestern Bell Directory Operations, Ameritech Advertising Services, and Bell Canada.

Sample client experience — Led a large Pharmaceutical company through a Global IT outsourcing transition involving transitions

with total contract value in excess of $1 billion — Led Eli Lilly’s global finance and accounting outsourcing transaction and global shared service

design/build and implementation— Provided financial and negotiation support for Unilever’s finance and accounting outsourcing deal

(Europe and North America)— Led an assessment of Oil’s (Brazilian Telecom) IT operations, outsourcing and joint venture options. Led

negotiations with third-party provider— Led a large U.S. Oil & Gas company through a Finance and Accounting outsourcing transaction

providing overall leadership and financial support.— Led a large transportation company through procure-to-pay sourcing opportunity providing leadership

and financial support— Assisted several clients with leadership and financial support that were pursuing IT and finance and

accounting sourcing opportunities through market assessments of their current finance and accounting environment, or financial support during the transaction or negotiation

David J. BrownGlobal LeadShared Services and Outsourcing Advisory

KPMG LLP (US)Orlando, FL+1 314 803 [email protected]


Liz EvansBackgroundLiz is a Managing Director with KPMG. Liz has over 18 years’ experience, focused on working with organizations to support transformational change, often in the form of shared services, outsourcing or other changes to the service delivery environment. Liz is a leader within the Outsourcing and Shared Services area and has led efforts to establish appropriate governance mechanisms for large transformation programs. Much of Liz’ work is spent advising client on how to successfully establish supplier portfolios and govern them effectively. She is experienced in the set-up, operations and program management within large programs of change. Prior to joining KPMG, Liz led the Governance & Transformation Advisory practice at EquaTerra. While at EquaTerra, Liz was a key contributor to the development of EquaTerra’s, governance, transition, Center of Excellence and health check methodologies based on her experience of working with global firms across the business service portfolio.

Professional and industry experience— State Governance Agency – Currently leading the engagement to provide input and market leading

practices to support the development of a robust and scalable governance model for the new Emergency 9-1-1 Call Program. The program is highly transformative and involves a large and complex stakeholder group.

— Global Pharmaceuticals Organization – Led the effort to design, build and implement an Outsourcing Center of Excellence. This organization reports directly to the CFO and has purview of all business process outsourcing agreements (traditional BPO and ITO). Led the development of the governance model for the newly define, multi-channel operating model. Currently leading the implementation of a multi-year managed governance service initiative.

— State Government Authority – Currently leading an engagement to review and re-design the IT outsourcing governance model as the client contracts for a multi-provider delivery environment. This multi-provider solution leverages a combination of a third party service integrator and multiple service providers.

— Global Pharmaceuticals Organization – Led the effort to design and implement the governance structure for the Finance & Accounting outsourcing relationship. Currently leading a multi-year managed governance service initiative.

— Global Beverage Organization – Led an engagement to collaboratively review and improve a strategic outsourcing relationship. Led the development and delivery of Service Provider Relationship Outsourcing training for both the client and a key service provider. Additionally, led an effort to determine gaps and remediation strategy for applications outsourcing governance for a multi-vendor environment

— Large National Health Plan – Led the review of the organization’s supplier governance across the Enterprise. The work developed an overall governance framework for Suppliers at the Enterprise, Divisional and Operational level. The roll-out incorporated the use of a tool to support the processes and structures established as part of the Enterprise Supplier Governance Office. Currently leading a multi-year managed governance service engagement.

Liz EvansManaging Director,Shared Services and Outsourcing Advisory

KPMG LLP (US)Chicago, IL+1 312 665 [email protected]

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