Target Operating Model - V070809

Target Operating Model (TOM) Discussion Document

Deloitte Consulting LLP July 2009

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Contents

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Meeting Objectives §

Gain consensus on project objectives and goals

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Share our perspective on developing and institutionalizing operating models and key success factors

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Describe the proposed approach to develop and implement a new operating model

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Provide an overview of how Deloitte’s methods can be used to accelerate the project

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Discuss next steps to initiate the project

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Background – GIFT and TOM The Target Operating Model (TOM) project is a key component of AIU Holding’s Finance General Insurance Finance Transformation (GIFT) Program Guardian and will be targeted towards increasing capabilities and decreasing costs. GIFT Program Imperatives

TOM Project Objectives

§ Increase Transparency – Significantly improve walkback capabilities from financial reports to source transactions

§ Develop baseline – Develop single source of truth “current state footprint” to support proactive future workforce planning

§ Greater Standardization of Technology - Create a common financial language and technology platform

§ Define future state operating model – Develop future state Operating Model which meets the goals of capability improvement and cost savings

§ Improve Information - Improve quality and timeliness of information available to stakeholders

§ Achieve business benefits – Demonstrate measurable business value and success; realize benefits through the rationalization of headcount, locations, process and labor arbitrage

§ Standardize Processes - Standardize accounting processes, rules, and controls

§ Create business and employee buy-in – Gain leadership alignment around the Operating Model design, benefits and roadmap; gain employee buy-in to the new ways of working, roles and responsibilities and governance

§ Leverage Operating Model - Leverage shared services and centers of excellences

§ Implement future state design– Implement the

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Background – AIUH Finance Organization Design Project Since the TOM project was originally scoped, in support of project ATLAS, a Finance Organization design initiative has been started to conduct current state analysis, evaluate organization design options and define key function activities. Goals of this initiative include: § Identify core responsibilities of AIUH Finance (i.e., which functions should exist at the AIUH level) § Conduct current state analysis to determine which functions exist within Domestic Insurance and Finance Insurance § Define governance and control model for AIUH functions § Develop recommendations for sub-functions that should reside with AIUH vs. Business segments § Support Function Leads in developing detailed organizational models and check against high level cost baseline While the scope of the two initiatives might appear to overlap, we believe that both initiatives are complimentary and key in achieving the organization’s goals as related to the future state operating model ,and the two initiatives in conjunction can answer the following key questions: § How can Finance most effectively support / interact with the rest of the organization ? § What is the optimal global Finance organization / operating model (Local vs. COE vs. Shared Services)? § How will current on-going initiatives impact and optimally be integrated with the future Finance service delivery model? § What capabilities are needed to support the future Finance operating model? 

SHOW APPROACH HERE?

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The broader landscape of in-flight and planned initiatives across the enterprise will both be impactful to and impacted by TOM Initiatives are underway that will demand significant time and attention of leadership and key knowledge resources ¡ GIFT Program will … ¡ ATLAS will… ¡ Separation will… ¡ Reinsurance will… ¡ Global Claims Initiative

GIFT Release 1: CFP for CI Finance Organizational

2010

ATLAS – Treasury

ATLAS Investments

GIFT Release 2: CFP / CD (UK)

GIFT Release 3: CFP / CD (EUR)

GIFT Release 4: CFP / CD (JAP)

OneClaim (UK) – Auto

2011

2012

AIU Holdings Separation (IPO)

2013

ATLAS - Other

Reinsurance – Release 1

Reinsurance – Release 2

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2014

The objective of the Target Operating Model (TOM) project is to design a world-class Finance organization for AIU Holdings The project goals for TOM include the following: ¡ Design and implement the appropriate operating model which best meet the requirements, state of readiness and maturity of both AIU and CI’s finance functions ¡ Identify key functions and/or processes for redesign to conform with the new organization model (e.g., CoE’s, Shared Services) and enabling technology infrastructure ¡ Identify and realize business benefits through cost optimization, capabilities development and controls management ¡ Identify opportunities for outsourcing across the finance organization, including Finance IT, business processes, and functions ¡ Align TOM to overall corporate strategies, organizational vision, and impactful initiatives as necessary, as they affect the design and implementation of the program

Now overlapping with slide 4 – Just a few deltas that we maybe can incorporate into the earlier slide

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Deloitte’s Point-of-View and Market Intelligence

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Deloitte is uniquely qualified to assist AIU Holdings with this TOM effort Deloitte’s Finance Transformation offering has been recognized as the market leader by Kennedy Information’s evaluation of the FT market and competitive landscape.

Key Highlights § Deloitte received the highest rating of “Strong” across all Finance Management Core Capabilities, across categories of “CFO Vision & Strategy”, “Finance Organization”, “F&A Processes”, “F&A Technology”, “Execution”, and “Value Enhancement” § Deloitte is a leader for global shared services combining process, technical knowledge, change management capabilities, understanding of technology, and insight on labor and tax issues § Deloitte is the only provider rated strongest in 14 of 16 FT core categories and assessed as having advanced depth and breadth of capabilities § Deloitte has an advantage in meeting the needs for clients to engage a tax strategy advisor as they consider global business integration strategies

*Source: Kennedy; Finance Management Consulting Marketplace 2009-2012; © BNA Subsidiaries, LLC; reproduced under license.

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From our experiences with AIG and in industry, we understand both the key success factors and challenges in the design and execution of TOM

Cultural

Competing Priorities

Unclear Scope and Objectives

Alignment with Other Strategic Initiatives

Decision Making

Inability to Execute Strategy

Complexity and Speed of Change

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We have assisted many clients in redesigning their operating models, and are seeing a trend towards a more centralized F&A Organization Many Fortune 500 Companies Have Moved Or Are Moving To A Balanced And Centralized Finance Delivery Models To Gain Synergies

Semi-Autonomous

Decentralized

MSO and Communications

Time Warner Cable Comcast AT&T T-Mobile

Centralized

Balanced

Rogers Communications Verizon

Cardinal Health J&J

Pharmaceuticals

Pfizer BMS Merck

Process Manufacturing

Other Manufacturing

DuPont Air Products Rohm & Haas HP Nissan NA GE Honeywell

IBM Mars, Inc

Consumer Business

Consumer Packaged Goods

Other Fortune 500

Nike

Ford GM

Textron Raytheon Limited Levi Strauss Gap

Hanes Brands S.C Johnson Land O’Lakes

Procter & Gamble Owens Illinois Sara Lee

Agilent Wells Fargo Aetna Cargill

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Campbell Pepsi General Mills

Shell

Insurance companies have some unique learnings to gain from their operating model redesign efforts Within the Financial Service Industry, varying organization structures exists. Examples of decentralized, centralized and hybrid models exists across leading insurance and finance companies. Insurance Company #1: Finance is decentralized by line of business - each business unit submits its own 10K filing

Independent Business Unit Finance Company #1: An Independent product line BU Org structure with a strong focus on outsourced shared services

Insurance Company #2 & #3: Financial reporting activities centralized at corporate level but remaining functions decentralized

Insurance Company #4: Strong control over external reporting functions and other key functions centralized

Controllership Carve-out

Centralized CFO

Finance Company #2: An Independent product line BU Org structure with a strong focus on outsourced shared services

Finance Company #4: Centralized organization with strong CFO control over financial and regulatory reporting

Finance Company #3: Historically, an Independent product line BU Org structure, evolving into a centralized finance function

Both Finance Company #1 and Insurance Company #1 are moving towards more centralized models: ¡ Finance Company #1: A finance transformation initiative underway, to move transaction activities offshore and allow onshore resources to focus more advisory activities ¡ Insurance Company #1: While the current structure provides the opportunity to produce results quickly, there are multiple redundancies and less consistency across the organization. As a result, the company is considering moving to a more centralized operating model --

We have also seen a growth in F&A outsourcing activity F&A continues to grow because of the breadth of business processes that are sourcing candidates; the F&A business outsourcing market size has grown to approximately $32 billion § AP, AR, and GA appear in more than 80 percent of right sourcing strategies, and more than 70 percent have an offshore component § Mainland Europe is currently adopting services as quickly as North America and the U.K. § Approximately 85 percent of Sourcing contracts have 5- to 10-year terms (the average is 6.8 years)

F&A Sourcing Scope External Reporting

Transaction Processing Accounting to Reporting (General Accounting)

Source to Settle

Order to Cash

General Leger Accounting

Consolidations

Monthly / Quarterly Close

Financial Reconciliation

Requisition Materials

Purchasing / Procurement

Order Entry

Billing

Legal Entity Reporting

Statutory Reporting

Fixed Asset Accounting

Tax Planning / Accounting

Benefits Admin. / Accounting

Inquiry Handling

Payment Processing

Accounts Payable

Cash Application

Collections

Regulatory Reporting

Rating Agency Relations

Premium Accounting (Ins)

Re-insurance Accounting (Ins)

Investment Accounting/ Securities Pricing (FS)

Daily P&L / Mark to Market /Middle Office

T&E Accounting / Reimbursement

Procurement. Card Admin

Bank Reconciliation

Treasury / Trust Management

Investor Relations

Business Decision Support

Finance Management

Planning Strategic Planning

Budgeting & Financial Planning

Control Accounting / Tax Policy

Forecasting

Internal Audit

Financial Analysis

Expense /

Performance Measurements

Multi-Dimensional Reporting

Source: Deloitte Research, IDC

Profit Center / Customer / Producer Profitability

Acquisitions & Divestitures

Risk Management (CM)

Key Not Typically Outsourced

Project Management

Specialized Expertise

Management Reporting Revenue Key: Allocations

Internal Consulting

Less Commonly Outsourced

Most commonly Outsourced

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Actuarial Analysis / Reserving (Ins)

Real Estate Mgmt.

Finance Function Management

Human Performance Management

Business Liaison

Training & Development

Our Approach and Methodology

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Deloitte has experience in implementing Target Operating Models, and can leverage methodologies and toolsets that encompass people, process and technology A proven toolkit of established TOM accelerators and tools: Deloitte has a significant knowledge base that will be invaluable for this project. This includes best practice operating models, process models/processes, organization designs and governance frameworks as well as numerous examples of these from recent client experiences. We also have a suite of tools and methods that our teams use to ensure consistent quality outcomes on our engagements and often enable us to accelerate project timelines. The table below outlines some of our key materials and tools which are relevant to this engagement.

Operating Model Definition, increasing detail, effort and associ ated benefit

Maturity Stages by Process

Organisation Design Vision & Mission

Maturity Stage by ITIL v3 Process Area

Deloitte IT Skills Framework

Vision and objectives of the TOM, e.g.: • Business goals. IT strategy aims such as cost reduction, risk reduction, greater agility • Sourcing options, strategic sourcing, single source, multi-vendor etc.

Ogier IT Skills Assessment – Overall View

Ogier IT fun ction and Application Support Team (AST) were presen t ed with a skills assessment matrix to complet e. This consisted of an industry standard list of applicat ion skills plus the option to add in additional skills , w hich were then inc orporated into the overall res ults. Staff we re asked to rat e them selves ac cording to their skills in each area i. e. Not Used, Beginner, Intermediat e, Advanced and Expert and results collat ed and charted ac ross overall s kills areas . The results are available in their entiret y via the completed Skills Matrix.

Target Operating Model Design Definition of the high-level principles e.g.: • Multi-supplier/Service Integrator model • TOM design principles • Lean management & control • ITIL-aligned processes etc

Obse rvations

Strategy Generation Service Measurement Financial Management Service Reporting Service Portfolio Management

5

7 Step Improvement P rocess

Applications Management IT Operations Management

The IT skills assessment identif ies those areas where training could be provided as well as areas where s taff possess skills which are not being used. The skills assessment uses a standard lis t of applicat ions from t he Deloitt e database. This represents a wide-ranging skill set of pref erred skills .

Functional Operating Model Functional Target Operating Model

Definition of functional TOM: • Design of future state functional groups in TOM • Description of functions and key responsibilities

However, there are several areas of skills where staf f posses s s kills t hat they are not using. These are m ainly aro und Infras tructure, Development and Deskt op Tools, as well as some Ogier known apps.

Process

Technical Management

In some areas such as Securit y, there are no experts – but there are staff who have skills in that area and are not using them.

Access Management

Ke y Recomm endatio ns

For areas where further training or rec ruit ment has been identified, the skills matrix has also highlight ed any staff who have skills in an area where they are not using them in their job role. This may fill a development need for Ogier in terms of utilising an existing skillset. ©20 07 Deloitte MCS Limited.

Private

A M B E R

Problem Management Request Fulfilment

Deloitte’s Cultural DNA assessment

SBU Column

Regional GSS IT Column

SBU CIO Column

Track and Manage Vendor Contracts –managed by GSS IT

Business Strategy and Structure

C = Consult, I = nI form

R=Responsible, A=Accountable

1 Receive finalised contract after

\ Programmes, Policies, Processes, Practices Physical Work Environment People Profile, Assumptions and Behaviours

Provides a “hard” and tangible way to understand the “soft” and complex issue of culture. It is a rigorous and statistically valid tool which provides insights into behaviors, behavioral drivers and barriers for change.

Deloitte’s Skills Framework tool assesses the skills capabilities in an organization, and aligns this to the organization’s needs. 300

Not Used Expert

250

negotiation

I

I

I

-

-

-

-

-

A,R

-

I

-

-

-

-

-

and analysis from Service Management

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-

-

-

-

-

-

-

-

-

-

-

R

-

-

-

A, R

I

I

-

-

-

I

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Intermediate Beginner

150

-

-

-

-

-

-

I

-

-

Vendor Activities

Governan ce S tructure Vision D esi gn

SM & VM

vendors on a periodic basis

-

•

Approach

identify applicable penalties / incentives

-

-

-

Risk Awaren ess Risk and Issue s log Escalati on pro cess

-

•

M itigation Activi ty Continge ncy p l anning Reporting

•

6 Discuss applicable penalties and

incentives

7 Execute penalty / incentive payment 8 Distribute financial impact of

penalties/incentives across SBU

-

-

-

-

-

-

-

-

A, R

-

-

-

R

C

-

-

-

-

-

-

C

-

-

-

-

I

I

-

-

I

A,R

I

C

C

I,C

C

C

-

A, R

C

-

-

-

-

-

C

C

R

R

R

R

C

R

-

-

C

C

R

-

-

-

-

-

-

C

R

R

-

R

C

C

C

C

-

C

-

-

-

C

A,R

-

-

-

C

C

C

-

A, R

C

-

-

-

-

-

C

C

-

C

A,R

-

-

-

-

-

-

-

A, R

C

-

-

-

-

-

-

-

-

A,R

-

-

-

-

-

-

-

A, R

-

-

-

-

-

-

-

-

-

-

A,R

-

-

-

-

-

-

-

A, R

C

-

-

-

-

-

-

C

-

-

A,R

-

-

-

-

-

-

-

A, R

C

-

-

-

-

-

-

C

-

C

-

I

C

-

ID

apps

Tools

Managem e nt

IT SM

Security

Hardware

Voice S er vices

Ogie r added apps

Ogier known

Certif ication

Development

Test ing T ools

In frastruct ure

Desktop T ools

Mobile S erv ic es

Enterprise

Data W arehousing

Level 5 – Value Driven Processes are h ighly mature and ve ry well integrated into the Business requirements. T he Business and IT work together to i mprove.

-

I

-

-

C

C

C



Best Practice/ Benchmarking



Realisation plan a nd tracking tool Owne r/Responsibility alignme nt Post progr amm e re view 



Planning & Progre ss Reporting

Program me Support

Pro gram me Support Financial Control Qual ity Control Change Control



•

Scope M anage ment Integr ated p lan

Stakeholde r Management & Communic ations

Depende ncy t racking Resource Estima ting Reporting tem plates, process and s chedule Exce ption re porting •

•

Configuration C ontrol Secretariat Orga nisation Chart

•

•

•

Filing Structure Contact List

•

•

•

Deployment of a standard PMO often does not provide the necessary insight to steer a program intelligently and highlight the real risks and issues ahead of time. •

Stak eholder Ma nagement & Communications Stakeholder M apping Contact tracker and ca lenda r



•

Communica tion produc ts

•

-

I

Key Performa nce Indicators Metrics 

Planning & Pro gress Reporting

-

-

Busi ness Case/ Investme nt Appr aisal 

•

-

I

9 Evaluate contract value and adjust if

necessary

Out come Management

Outcome Management

PMO



-

I

-

Level 4 – Service Driven Processes have clear end-to-end service oriented targets assoc iated to the m, an d efforts are made to continually improve. Advanced technologies are u sed to ass i st.

Deloitte’s diagnostic tool is an ITIL version 3 aligned assessment tool which provides a structured and comprehensive approach to quickly understanding current state maturity across the entire IT process, control, organizational, and supporting technology spectrum.



Risk & Iss ue Management

•

-

R

R

Level 3 – Proactive Processes are agreed, wel l do cumented, communicated a nd enforced. R oles are defi ned and individuals are suitably trained. S upporting technology is u sed to help deliver process objectives. Ser vice Leve ls are in place an d agreed



Program me Design & Cont rol

•

-

I

-

Change Management

Knowledge Management Service Asset & Config Mgmt Evaluation Release & Deployment Mgmt Service Validation & Testing Key: Maturity Stage Sc ore by Proces s Area Desired Stat e

Level 2 – Reactive Basi c processes are defi ned and fol lowed to some extent. P rocesses can often be byp assed and there is a lack of owne rship. Acti vities ar e largely reactive and ineffi cient in nature.

Assurance

•

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5 Analyse service level credit regime and

Supplier Management Transition Planning & Support

Level 1 – Chaot ic Processes an d roles ar e not defined. Activ ities in this area ar e largely u nstructured and uncoordinated.

Strategy C hart Board Control

Deloitte Intelligent PMO

Deloitte’s process design approach includes a number of tools to support specific parts of the design process. These include: 4 Review performance (metrics) with

Package I ntegrat ion

We can also draw on a best practice framework called Skills Framework for the Information Age (SFIA).

•

3 Discuss vendor performance between

Business I ntelligence

0

Inf ormation

50

Requirement s A nalys is

100

Risk & Issue Management

-

Advanced

200



2 Receive vendor performance metrics

Brand Promise

400

350

•

A, R

Availability Management

The following provides su mmary descriptions for the measu red maturity stages.

Prog ramme Desi gn & Control

Changes t o activities not yet reviewed

Global GSS IT Column

Process Design

Mission, Vision, Values

Service Desk

500

450

SBU CIO RM S&A F&OC PE&O TRM ADE Regional GSS IT Regional Head of GSS IT Shared Services RM M&C SM IDS DCS ADM VM Global GSS IT M&C SM IDS DCS S&A ADM VM Vendor AD Vendor AS Vendor Infrastructure Vendor

Individual steps which link to other processes

Leadership

Capacity Management

Information Security Management

Incident Management

Our approach goes significantly beyond ‘wiring diagrams’ and job mapping. We adopt a hypothesis driven approach that defines the capabilities required to deliver against strategic objectives.

Service Level Management

IT Service Continuity Management

Event Management

Deloitte’s Target Operating methodology provides an end-to-end view of the required target functions and capabilities of an IT Organization.

Service Catalogue Management

and Confidential.

Governance & Performance Reporting

Deloitte has an established business design group that specializes in the detailed design and implementation of organizational structures

Demand Management

0

Review skills matrix and identify areas where further training i s needed. Each high level category (left) is broken down into specific applications. Resources should centre on Ogier known applicat ions as these are t he apps Ogier identified as necessary to the Business. There are al s o ‘Og ier added apps’ which are those applic at ion s identified by staff as being part of their everyday skillset.

Definition of processes e.g.: • Level 1 to 3 process design • RACI responsibility matrix • Process metrics & targets

3 1

In some areas such as Voic e Services, Requirements Gathering and Dat a Warehous in g there are only basic skills with no Expert s or Advan ced level s taff. Furt her det ailed inf ormat ion can be found in the Skills Matrix. This contain s a detailed breakdown of skills, graphs of skill levels and an over view of skill c lusters.

Organisation Definition of Governance: • Governance forums responsibilities, escalation • Reporting requirements • IT metrics & targets • Balanced scorecard

4 2

The main skill set is centred around Infrastruc ture Applications and Ogier known applic at ions (those named on Ogier’s Application Matrix).

Definition of the retained IT org: • Level 1 Roles descriptions • Level 2 Role responsibilities, skills & capabilities • Performance Measures & Targets

Maturity Stage Summary

Rapid IT Service Diagnostic tool

B ackground

The skills available to the IT departm ents are diverse. These are mainly centred around Inf rastructure and Ogier known applications (t hose n amed on Ogier’s App licat ion Matrix). However t here are als o many skills availabl e which are not being used.

Target Operating Model Principles

I

RACI modelling for establishing clarity around roles, responsibilities and interfaces.

Deloitte’s iPMO is designed to deliver complex technology programs ensuring integration, Information-lead and intelligent management of programmes.

Governance structure design. Capability mapping tools.

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Deloitte research and our substantial experience of IT organizations allow us to offer comparisons across all industries, Our practitioners are highly skilled in implementing leading practices and technologies.

Approach framework Our approach is designed to help you define options and gain stakeholder consensus

Identifying and aligning the finance function behind an organizational strategy is the critical first step in developing a Target Operating Model strategy

Conducting an assessment across functions within the Finance organization will help identify opportunities and key activities that need to be incorporated in developing a future target operating model

Create a common set of service delivery design principles, and formulate a supporting future state vision. Benchmark the vision to internal and external data points.

Determine the future shape of the operation by using the previously defined design principles and strategy to create service delivery options. Analyze , prioritize and select the most viable option for subsequent implementation.

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Design and completion of detailed architectures for the selected Target Operating model, e.g. detailed IT, people, process etc. architecture underlying the TOM, including a detailed business case and financial impact assessment.

With a target operating model design in place, a detailed implementation plan and roadmap clearly highlighting responsibilities, dependencies and sequencing of steps is needed to execute and deliver the future state operating model

Organizational Strategy Identifying and aligning the finance function behind an organizational strategy is the critical first step in developing a Target Operating Model strategy

Sample Output – Charter with Guiding Principles

¡ Confirmation of the strategy, objectives and critical success factors (CSFs) developed by the Finance Org Model project

Goals & Objectives

¡ Rationalization of functions across regions Possible Locations of Required Functions

¡ Leadership consensus and alignment ¡ Understanding the consistency with which these have been communicated, understood & applied

¡ Objectives List: Conduct executive interviews and/or workshops to identify and confirm strategy objectives

Activities & Deliverables

Holding Company Finance

Operating Company Finance

Shared Services Group

Enterprisewide finance functions and processes

Business specific finance functions and processes

Shared financial processes

Controllership

¡ Align Objectives: Review vision and organization structure designs from the Finance Org Model team and revise to fit with finance strategy objectives

Financial Planning & Analysis

¡ Voice of the Customer Analysis: Conduct surveys across functions and business units to understand issues and needs regarding Customers, Products and Channels

Tax Required Functions Treasury

¡ Organization Design ¡ Balanced scorecard

Toolsets & Accelerators

Risk & Compliance

¡ Operation Model Value Chain ¡ Voice of the Customer Surveys

Other

¡ Product & Service Segmentation

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Current State Assessment Conducting an assessment across functions within the Finance organization will help identify opportunities and key activities that need to be incorporated in developing a future target operating model

Sample Output – Functional Analysis

¡ Establish definition of current operating model and architecture (e.g., process, org, technology), including opportunities to leverage shared services and outsourcing

Goals & Objectives

¡ Identify where existing initiates on-going/planned impact TOM ¡ Capture key FTE, Business and Financial metrics and identify duplications, costs, and system constraints

Role Audit

Function External Audit Planning

General

¡ Change Management Documentation: Capture current and planned change management activities ¡ Function Analysis: Assess performance across functions using an industry maturity model and identify deficiencies

2

N

5

N

Internal/External Audit Support

Bus. Unit

3

N

Executing the Corp/OC Close

Corporate

3

N

Shared Svc

2

Y

Enterprise Consolidation

Corporate

1

Y

Manage G/L (Top Side JE)

Corporate

6

N

Manage G/L (Initiating JEs)

Bus. Unit

2

N

Manage G/L (Posting JEs)

Shared Svc

5

Y

Corporate

1

N

Bus. Unit

1

N

Shared Svc

1

Y

Foreign Exchange Translations

Corporate

1

N

Eliminations

Corporate

1

N

Accounting Policies Accounting Procedures Overhead Allocations

¡ Cultural DNA Assessment ¡ Rapid IT Service Diagnostic Tool

Toolsets & Accelerators

¡ Value chain analysis ¡ Maturity Model ¡ Resource/Skill/Function Database

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Shared Service

Bus. Unit

OC Consolidation

ip h s trle n o C

Activities & Deliverables

FTEs

Corporate

Internal Audit

¡ Current State Footprint Analysis: Understand, validate and map the current organization and processes to help in developing the TOM definition

Location

Future State Vision Create a common set of service delivery design principles, and formulate a supporting future state vision. Benchmark the vision to internal and external data points.

¡ Establish future state vision for service delivery channels (e.g., COE, shared services, regionalization, etc.)

Goals & Objectives

¡ Align to Finance Org Model initiative vision and confirm design principles for TOM

Sample Output – 2x2 An operating model matrix, as shown below, can be used to illustrate the focus of Finance’s strategic choices. For example, a cost efficient transaction processor’s likely focus will be the “Shared Services” quadrant.

¡ Compare vision to industry practices through benchmarking

Method Of Adding Value

s s e n i s u B o T p i h s n o it a l e R

¡ Benchmarking Study: analysis of gaps in key design principles as compared to industry leading standards ¡ Financial Model 2x2 Matrices: analysis of to-be states across all finance functions

¡ Finance Transform Maturity Matrices ¡ Best Practice Benchmarking

Toolsets & Accelerators

Knowledge-based

High volume, low value add

Low-volume, high-value activities

Site Support

¡ Confirmed Future State Vision: clearly defined operational design principles and confirm through executive workshops

Activities & Deliverables

Transaction Processing

¡ Sourcing Matrix ¡ Key Design Principles

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ci fi c e p S

) n ¡ Distributed to location(s) for io g local service needs e r ,t ¡ Specialized services for each i n site u , te ¡ Manual or end-user Intensive i S (

icr e n e G

) e d i w y n a p m o C (

Shared Services

Business Partner ¡ Aligned with a f unction or BU or management team ¡ Knowledge transf er services ¡ Decision/action Intensive

Center Of Excellence/Corp.

¡ Consolidated organization ¡ Operational focus ¡ Process intensive with standardized services

¡ Expertise focus — ability to leverage ¡ “Best practice” development ¡ Issue/knowledge intensive

¡ Could cover countries or region

¡ Often organized by region

Service Delivery Analysis & Selection Determine the future shape of the operation by using the previously defined design principles and strategy to create service delivery options. Analyze , prioritize and select the most viable option for subsequent implementation.

Sample Output – Process Rationalization

¡ Develop options based on previously defined vision and design principles ¡ Analyze the opportunity and costs implications associated with each option and review with stakeholders

Maturity Lead Generation As -Is Value Stream Map

Report run on maturities in 4 months time

¡ Prioritization Matrix

6

Actuarial

26

Report run on maturities in 2 months time

Previous claims Policy changes

2 days

1 day

1.14 IS pass to maturity team

Every 2 weeks

4

2 days

1 day

(100 items per batc h tak es one pers on 1 hour to proc ess = 50 man hours to proc es s 5000)

(2 mins per K ey mas ter rec ord amendments * c.1000 amendments )

1 hour

1 hour

5

24

1.15 Maturity team pass to Actuarial Team

25

1.13 IS produce authorisations slips

3

1.12 IS run report on OB and produce XLS report

Check passed (c.70- 75%)

QA Actuarial

1.11 Maturity Team store slips in cupboard

1.07 Maturity Team compare check slip against EDM document

1.06 Maturity Team access EDM for legacy documentation

1.05 Maturity team receives & stores check slip

Every 2 weeks

1

1.04 Post delivered to maturity team

¡ Prioritized Options List:: facilitate workshop with key stakeholders to discuss and rank options by priority

2

1.02 IS check slips generated

¡ Scorecard and Evaluation Criteria: create criteria for evaluation and prioritization of TOM options

Error – can Change (c.20%)

Slip per customer

1.01 IS run a report on OB system

Activities & Deliverables

Name; Address ; Policy; Agency Number; Estimated Value

1.03 IS pass to post team

¡ TOM Options: identify viable TOM options showing functions, sub-functions, location / region and use of COEs / shared services

1.08 Maturity Team amend record on Webseries

Error – cannot Change (5-10%)

1.10 Maturity Team sign off check slip

¡ Make the final selection for future state TOM model

1.09 Maturity Team store other in Oddments Tub

Goals & Objectives

Page 2

Sample size 40

2 days

¡ Process Rationalization

Toolsets & Accelerators

¡ Location Feasibility Study

Page 1

¡ Shared Services / COEs / Sourcing Strategy

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Design Design and completion of detailed architectures for the selected Target Operating model, e.g. detailed IT, people, process etc. architecture underlying the TOM, including a detailed business case and financial impact assessment.

Sample Output – Future TOM Design

¡ Based upon the selected service delivery option, develop the detailed IT, people, process etc. architecture underlying the selected TOM

Goals & Objectives

CFO

¡ Identify the related metrics (cost, financials etc.), create a cost / benefit analysis and create the detailed business case and funding request

Finance Exec

Head of Business Partners

Activities & Deliverables

Management Accountant (Inv. Perpetual) 2 FTE Non IP UK Business Units 2 FTE

¡ Business Case: create opportunity cost and benefit analysis, including financial impact assessment

Head of Transaction Processing

Financial accountant 2 FTE

Head of Tax

Transactions Assistant

Financial Controller

BP Exec.

¡ Detailed TOM Design: create detailed organizational charts showing functional, systems and resource architecture models, including governance and accountability

Head of FAC

Head of Process Control and Improvement

Systems Analyst 2 FTE

Senior Transaction Processing

Indirect Tax Manager

Direct Tax Manager

Accounts Assistant (VAT)

Direct Tax Accountant 2 FTE

Head of Treasury

Treasury Assistant 1 FTE

AP 5 FTE

AP/FA 1 FTE

BP Exec.

Key Management Accountant 2 FTE

BP Exec. Offshore

¡ Operating Model Design Management Accountant (Offshore) 2 FTE

¡ Diagnostic Process Blueprint

Toolsets & Accelerators

¡ Business Case / Financial Model Framework

BP Exec. ESS & EBS

¡ Key Metrics Measurement and Tracking Tool

BP Exec. ECS 2 FTE

¡ Lean 6 Sigma methodology

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AR 1 FTE

Cash Processing 1 FTE

Accounts Assistant (Feesharing)

Commissions 1 FTE

Corporate General

Corporate Aligned to Business

Region

Implementation With a target operating model design in place, a detailed implementation plan and roadmap clearly highlighting responsibilities, dependencies and sequencing of steps is needed to execute and deliver the future state operating model

Sample Output – Implementation Plan

¡ Design an implementation plan and roadmap based on TOM analysis, highlighting sequencing and dependencies

Goals & Objectives

¡ Review project portfolio for consistency & alignment ¡ Design authority established to govern the implementation and identify milestones Year 1

¡ Implementation work initiated

Sales and Service Collections and Recoveries

Product Design and Manufacture

¡ KPI Documentation: Identify key performance indicators (KPIs) to track the success of the implementation

Operations and IT Infrastructure

¡ Project Management Office Charter: Agree / achieve roadmap sign off and establish project management authority

Year 4

Outsource Recoveries

Year 5 Illu str

a ti

ve

Recoveries outsourced to low cost provider

Re-engineer product dev processes for core products

Product development processes optimised for core products White-labelled supplier utilised for non-core products

Implement white-labelled product design and manufacture, IT and operations for non core products Migrate processing to alternative supplier (TBC) for product design and manufacture, IT and operations for non core products

Alternative sourcing (TBC) utilised for core product design, manufacture, operations and IT

Risk Payments

¡ Deployment: Begin to execute on the roadmap by clearly defining short-term next steps and responsibilities

Shared Services Organisational Change

¡ Portfolio management methodology (PMM) ¡ Program Interdependency Planning

Toolsets & Accelerators

Year 3 Regional salary weighting introduced

Marketing

¡ Roadmap: Develop roadmap detailing activities, sequencing of steps, desired outcomes, and dependencies

Activities & Deliverables

Year 2 Implement regional salary weighting

¡ Change Readiness Assessment ¡ Key Industry Benchmarks ¡ Prince 2???

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Outsource Payments

Payments outsourced to low cost provider

Outsource simple, transactional processing

Re-organise functions to align with new organisational structure

Simple Shared Service processing outsourced to low cost provider

Project Timeline and Resources

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Project Timeline Timeline (weeks/months) 1

2

3

4

5

6

7

8

9

10

11

12

§ Identify and confirm strategy objectives § Align objectives to fit with finance strategy objectives § Conduct surveys to understand issues and needs regarding Customers, Products and Channels

§ Understand, validate and map the current organization and processes § Capture current and planned change management activities § Assess performance across functions using an industry maturity model and identify deficiencies

§ Confirm Future State Vision through executive workshops § Conduct benchmark analysis of gaps in key design principles as compared to industry leading standards

§ Identify viable TOM options showing functions, sub-functions, location / region and use of COEs / shared services

§ Analyze of to-be states across all finance functions using financial 2x2 matrices

§ Create criteria for evaluation and prioritization of TOM options § Facilitate workshop with key stakeholders to discuss and rank options

§ Create detailed organizational charts showing functional, systems and resource architecture models, including governance and accountability § Create opportunity cost and benefit analysis, including financial impact assessment

Milestone

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Organization chart Descriptive Labe Line 1 Line 2

Label

Label

Labe

Line 1 Line 2

Line 1 Line 2

Line 1 Line 2

Labe

Labe

Labe

Labe

Labe

Labe

Line 1 Line 2

Line 1 Line 2

Line 1 Line 2

Line 1 Line 2

Line 1 Line 2

Line 1 Line 2

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Key Success Factor / Our Experience (Sameer Shah) nGeneral market success factors nPitfalls to avoid given our knowledge of AIU Holdings nPotentially highlight regulatory and tax concerns (e.g., data may need to reside in Japan)

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Copyright © 2008 Deloitte Development LLC. All rights reserved.

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