F&A Case Study: Finance Transformation in Unilever Europe June 2008 IBM Corporation Use or disclosure of data contained in this document is subject to the restrictions on the last page.
Agenda IBM global capabilities in business process outsourcing Unilever experience The One Unilever Program Solution Overview Results to date Questions & Answers 2 IBM Corporation
Our core BPO approach aims at optimizing Global Delivery benefits... Krakow Sofia Stockholm Rotterdam Edmonton Calgary Lenexa Tulsa Dallas Houston Montreal Greenock Markham Newcastle upon Tyne Toronto St. John Endicott Lexington Durham Greenville Atlanta Nashville Costa Rica Bogotá Dublin Paris Bratislava Lisbon Madrid Athens Istanbul Budapest Chandigarh Bangalore Calcutta Pune Okinawa Shanghai Manila Delhi/Mumbai Brisbane Finance and administration Hortolandia Procurement Human resources Customer relationship management Buenos Aires Industry-specific In plan 3 IBM Corporation
As clients turned to IBM to outsource and transform processes, our MBPS business and portfolio has grown to meet their needs 2002-2003 2007 CRM F&A HR Procurement CRM F&A HR Procurement Banking Back Office Insurance Administration CRM F&A HR Procurement Banking Back Office Insurance Administration Integrated Service Management Road User Charging Supply Chain Management Learning Outsourcing Consumer finance and equipment loans (Mitsui Life Insurance) 4 IBM Corporation
Why IBM? Gartner Survey : BPO Preferred Providers 12 11 10 9 8 7 6 5 4 3 2 1 0 Gartner Dataquest, Jan. 2005 IBM Accenture ADP Deloitte HP Microsoft PwC Morgan Stanley CIO Survey: Execution Capability 40% 35% 30% 25% 20% 15% 10% 5% 0% 35% 16% IBM Global Services Accenture 13% 6% 6% 5% 5% 4% HP TCS EDS Perot Systems Unisys CSC Morgan Stanley, May 2005, IT and BPO capabilities Meta Survey: Best-in-Class BPO Providers 45% 35% 25% 15% 5% 0% IDC: BPO Leadership Among IT Service Providers Ability to Grow Share High Low 41% Low 34% IBM Accenture Niche 18% EDS HP Crisis Potential Meta Group, Jan. 2005 ( Has attributes most important in BPO ) 13% HP 10% 10% Capgemini Bearing Point Wipro Infosys Capgemini EDS 9% 9% 8% Infosys ADP CSC ACS Unisys Leadership IBM Accenture Legacy 7% Fidelity Siemens High Opportunity Alignment IDC, August 2004 and April 2005 5 IBM Corporation
Agenda IBM global capabilities in business process outsourcing Unilever experience The One Unilever Program Solution Overview Results to date Questions & Answers 6 IBM Corporation
Unilever: the Global Breakdown * 2007 Sales 40 billion The Americas 33% Europe 38% Asia/Africa 29% Foods 54% Home Care 18% Personal Care 28% 7 IBM Corporation Source : Unilever Annual Review 2007
The European One Unilever Program: Simplify the organization * One Unilever company One common ERP system Finance Shared Services HR Transformation European Supply Chain All at the same time! 8 IBM Corporation
Unilever Europe - The Objectives: Preparation for Growth - Revenue generation, profitable growth and winning in the marketplace remain Unilever s primary objective - Free resources to focus on growth and winning in the market Simplification - Create a simpler organization - Achieve cost synergies or savings - Remove structures and behaviors that breed complexity Leveraged Scale - Find ways to exploit the size and scale of Unilever - Generate these savings for use as investment in Unilever brands 9 IBM Corporation
The One Unilever Program: a new operating model for Europe * From To Fairly independent Business Groups and Countries often operating as a loose federation An integrated European business that optimizes synergy and scale at European and country level, through the One Unilever Program 3 of everything! 10 IBM Corporation
Agenda IBM global capabilities in business process outsourcing Unilever experience The One Unilever Program Solution Overview Results to date Questions & Answers 11 IBM Corporation
Unilever Europe: the FAO solution * Deliver against the One Unilever Program for Finance & Accounting Provide a highly transformational solution, leveraging asset-based process solutions & global delivery capabilities, which delivers - Best practice processes, enhanced data quality, controls & greater speed of information - Flexible, adaptable operating and financial model - Significant operating savings Enabled by fundamentally joint governance model operating from top to bottom from initial contract deliberation through the present 12 IBM Corporation
Contract Overview * Largest BTO F&A ever signed in Europe - Approx. 750 FTEs across 24 countries - 7 years Full Finance and Accounting Scope - Accounts Payable - Travel and expenses - Fixed assets - Bill to cash (Collections, Dispute Management, Cash & Banking, Accounts Receivable) - General ledger, including intercompany, tax and statutory reporting Solution leverages BTO Global Delivery capability & Asset-based Process Solutions - 3 Tier delivery model, with services from Krakow, Braga & Bangalore Centres - Deployment of BTO asset-based process solutions Accounts Payable : digitalisation, OCR technology, full integrated workflow (DCIW) Invoice to Cash process : full Equitant ARCollect tool suite modified for CPG Travel & Entertainment : GERS solution Timelines - Contract Signed Dec. 2005 1st Go-live : April 06 (UK & Poland) - 2-year transition 13 IBM Corporation
Unilever current in scope staffing, by country * Approx 750 FTEs in scope across 24 countries Sweden Finland Denmark Estonia Netherlands Germany Latvia UK Lithuania Ireland Poland Belgium Czech Republic France Slovakia Delivery Locations Krakow Braga Bangalore Spain Portugal Switzerland Italy Austria Slovenia Croatia Romania Hungary 14 IBM Corporation
Agenda IBM global capabilities in business process outsourcing Unilever experience The One Unilever Program Solution Overview Results to date Questions & Answers 15 IBM Corporation
IBM Delivery Team for Unilever Quick Overview Krakow 290 * Rotterdam 1 Braga 65 The IBM delivery team now reaches c.700 people Manila 10 Today, IBM is processing over 125,000 invoices/month 1.6 million/year 10,000 expense claims/month 120,000/yr 6,000 additions to asset legder/month 9,000 account reconciliations/month Close the books with Unilever for 223 legal entities Bangalore 340 In 2007, Headcount tripled 11 countries were transitioned c.40 IBM tool deployments Volumes increased over 230 % 16 IBM Corporation
Transition Keeping the timeline * End 2006: 30% coverage - End 2007: 90%+ coverage 17 IBM Corporation
Service Delivery AP TE FA GL B2C Europe Successful ramp-up of centres Quick stabilisation SLAs achieved GL above expectations AP OK but some issues Bill-to-Cash so far so good Country A Country B, C, D, E Country C Country D Country E Country F Country G Country H Country I Country J 18 IBM Corporation
Independent Customer Satisfaction Survey Key Conclusions Harris International Report The Client was satisfied with the performance of IBM Global Services team and was particularly pleased with the partnership he has with the PE Although there has been a significant improvement in the working relationship at the sub-team level the Client felt there was room for further improvement. The client would like the team to be more proactive, in particular at the sub-team level. The respondent was pleased that the transition was still on schedule in spite of an ambitious timeline. The Client expressed concerns about life after transition. He felt that it was important that IBM should manage the succession planning very carefully. 19 IBM Corporation
Unilever Europe: results to date * New centralized One-Unilever finance and accounting organization Standardized and enhanced processes and technology Significant cost savings Pan-European service management, including greater visibility/access to information for decision making and continuous improvement All countries in plan transitioned in line with expectations. All SLAs consistently met, every month. Flexible delivery model adapting to evolving Unilever s business A delighted client and a strong relationship. 20 IBM Corporation
Concluding remarks * - Integrated approach to transformation leads to success - Partnership, Governance and Change Management are key - Outsourcing is a Journey, not a Project 21 IBM Corporation
Agenda IBM global capabilities in business process outsourcing Unilever experience The One Unilever Program Solution Overview Results to date Questions & Answers 22 IBM Corporation
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Thank you 24 IBM Corporation