CUSTOMIZING THE SERVICE MODEL TO ALIGN WITH ORGANIZATION OBJECTIVESCNIs Journey, Mistakes, and Lessons LearnedKenny OngCNI Holdings BerhadContents:A.Before we startB.Identify Business ObjectivesC.Align Service ModelD.Internal Customer IndicatorsE.Notes, Problems, IssuesF.Starting UpIntro: CNI1.18 years old2.Core Business: MLM3.Others: Contract Manufacturing, Export/Trading, eCommerce4.Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan5.Staff force: 5006.Distributors: 250,0007.Products: Consumer Goods and ServicesIntro: CNICNIs Shared Services backgroundCNI MalaysiaCNI GlobalKey EliteA. Before we start“in the past 18 months, we have heard that profit is more important than revenue, quality is more important that profit, people are more important than profit, customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our performance is inconsistentCEO, Anonymous Before we startIn the old days of HRAverage training hours per staff% of staff attending training# of training programs% of training programs conductedTraining needs analysis conductedCompetency models developedTraining budget as % of payrollWhats wrong with this picture?Before we startMoral of the story1.Innovation:Business modelsProductsServices 2.Market Leadership3.Competitive differentiationGet the picture?“What is the moral of the story?”B. Understanding the Business ObjectivesStrategy and IntentOperational Excellence(low cost producer)Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995Product Leadership(best product)Customer Intimacy(best total solution)Strategy: Value DisciplinesOperational ExcellenceCompetitive priceError free, reliableFast (on demand)SimpleResponsiveConsistent information for allTransactionalOnce and DoneCustomer IntimacyManagement by FactEasy to do business withHave it your way (customization)Market segments of oneProactive, flexibleRelationship and consultative sellingCross sellingProduct LeadershipNew, state of the art products or servicesRisk takersMeet volatile customer needsFast concept-to- counterNever satisfied - obsolete own and competitors productsLearning organizationStrategy: Value DisciplinesSample KPIs for Each DisciplineOperational ExcellencePriceSelectionConvenienceZero DefectsGrowthCustomer IntimacyCustomer KnowledgeSolutions OfferedPenetrationCustomer DataCustomer-success focusProduct LeadershipMarketingFunctionality# of Successes# of FailuresLearn from key usersInterdisciplinary teamsPipelineOperational ExcellenceMove know-how from top performing units to othersBenchmark against best in classEnsure operations training for all employeesUse disciplines like TQM for continuous learning to reduce costs and improve qualityStrategy: Value DisciplinesStrategy: Value DisciplinesCustomer IntimacyCapture knowledge about customersUnderstand customer needsEmpower front line employeesEnsure that everyone knows the customerMake company knowledge available to customersProduct LeadershipReduce time to marketCommercialize new products fastEnsure that ideas flowReuse what other parts of the company have already learnedEnsure there are multiple sources of fundingStrategy: Value DisciplinesThe McPlaybook*Make it easy to eat50% drive-thruMeals held in one handMake it easy to prepareHigh TurnoverTasks simple to learn & repeatMake it quick“Fast Food”Tests new products for Cooking TimesMake what customers wantProwls market for new productsMonitored field tests*Adapted from: Businessweek , Februrary 5th 2007Operational Excellence(low cost producer)Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995Product Leadership(best product)Customer Intimacy(best total solution)Strategy: Value DisciplinesOperational Excellence(low cost producer)Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995Product Leadership(best product)Customer Intimacy(best total solution)Strategy: Value DisciplinesFinancial Shared ServicesStrategy and Intent of the Business?FSS role in the strategy?FSS Strategy and Intent?Objectives of FSS?FSS Service Model?C. Aligning the Service ModelAligning Service Model1.Role of FSS2.Objectives of FSS3.4-Wheels Alignment: 4-Wheels Service ModelPrinciplesCorporate ObjectiveFSS Role & ObjectivesStructureResourcesLeadershipPersonFSS Role?Financial Shared ServicesSBUs, Divs, DeptsCorporate CenterStrategyResultsRequestServicePoliciesServiceFSS Objectives?TransactionalCost reduction, Efficiency, Agility, Fast CopyAP, General Ledger, B/S analysis, Accounting, Fixed Assets, AR, FacilitiesValue-addedBudgeting, Reporting, Financial Analysis, Forecasting, Tax, Legal, TreasuryConsistency, Analysis, Value creation, customizationSystems, Standardize, Benchmarking, ERP, Streamlining, Automation, GovernanceBest PracticesProcess improvement, service innovation, secondary KPIs, internal customersTransformationMarket Leadership, Competitive Differentiation, Business model, M&A, CSIDirect Business Impact, primary KPIs, external customersOpen & Hidden Objectives1.Eliminate redundancies2.Remove no value-adding activities3.Cost Savings4.Focus on Core5.Economies of Scale6.Compete with external vendors7.Specialized skill sets 8.Move from staff to line9.Salary Band10.Career Path1.Manage external vendors2.B.U.s appreciate services3.Additional revenue w/o interfering core4.Divestment/IPO5.MSC tax break6.Make accountable to SBU vs. HQ7.Undertake large infra projectsAlignment: FrameworkPrice TransparencyBusiness ManagementMarket ResponsivenessBest Practice Process StandardizationService CulturePrinciplesAlignment: FrameworkOrg StructureJob DesignPolicies & proceduresGovernanceManagement SystemsBSC and KPIsBenchmarkingA.B.C.StructureAlignment: Service StructureCorporate CenterFinancial Shared ServicesOne Internal CustomerMultiple Internal CustomersExternal & Internal CustomersIn-sourcingCo-sourcingJoint-VentureBPOAlignment: Internal StructureFSSTransition ManagementFulfillment & Service DeliveryBusiness DevelopmentAlignment: Internal StructureFSSTransition ManagementMigrate processes to standard platforms, scaled migration, joint-process ownershipAlignment: Internal StructureFSSFulfillment & Service DeliverySLAs, Audit Compliance, Business Controls, records Management, service request processing, digitizationAlignment: Internal StructureFSSBusiness Developmentidentify processes to migrate, customer relationships, value migration, CS interviews, performance evaluationsAlignment: FrameworkToolsICT SystemsDigitizationSelf ServiceWorkflowPhysical facilitiesResourcesIn-source?Co-source?JV?BPO?Strategy: FrameworkCustomer focusedAttentive to market standardsCostsServiceBest practicesAccountable for SLAs, ISLIsBuild relationships with BUsBottom line managementTradeoff between Cost vs. ValueLeadershipAlignment: FrameworkSpecialist Career LaddersStaff - FrontlineTeam-basedDuplicationStandard or Creative?SS vs. Staff mindsetSourcingC&B, RetentionPersonIn-source?Co-source?JV?BPO?Alignment: FrameworkPrinciplesCorporate ObjectiveStructureResourcesLeadershipPersonFSS Role & ObjectivesD. Internal Customer IndicatorsMeasurement & Satisfaction“In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.”HBR March/April 1996Financial“To satisfy our stakeholders, what Financial objectives must we accomplish?”Internal Process“To satisfy our customers, in which internal business processes must we excel?Customer“Who are our target customers?What is our value proposition?”Learning & Growth“What capabilities and tools do our employees require to help them execute our strategy?Corporate-level BSCCorporate ObjectivesFSS Strategy CustomerWho do we define as our customer? How do we create value for our customer?How do we enable ourselves to grow and change, meeting ongoing customer needsEmployee Learning and Growth Internal ProcessTo satisfy customers while meeting budgetary constraints, at what business processes must we excel? FinancialHow do we add value for customers while controlling costs?FSS-level BSCISLIISLI = Internal Service Level Index.Services and LevelsExpectations, Priorities, Improvement PlansService CostsRelationship = ExpectationsISLI MatrixCustomer IntimacyProduct LeadershipOperational ExcellenceTransactionalValue-addedBest PracticesTransformationStandardISLITransactionalCost reduction, Efficiency, Agility, Fast CopyValue-addedBest PracticesConsistency, Analysis, ValueProcess improvement, service innovation, secondary KPIs, internal customersTransformationDirect Business Impact, primary KPIs, external customersTimeCostQuantityQualityISLITransactionalCost reduction, Efficiency, Agility, Fast CopyValue-addedBest PracticesConsistency, Analysis, Value creation, customizationProcess improvement, service innovation, secondary KPIs, internal customersTransformationDirect Business Impact, primary KPIs, external customersTimeCostQuantityQualityInnovationServiceISLITransactionalCost reduction, Efficiency, Agility, Fast CopyValue-addedBest PracticesConsistency, Analysis, ValueProcess improvement, service innovation, secondary KPIs, internal customersTransformationDirect Business Impact, primary KPIs, external customersTimeCostQuantityQualityInnovationServiceKPIISLITransactionalCost reduction, Efficiency, Agility, Fast CopyValue-addedBest PracticesConsistency, Analysis, ValueProcess improvement, service innovation, secondary KPIs, internal customersTransformationDirect Business Impact, primary KPIs, external customersTimeCostQuantityQualityInnovationServiceKPIImpactE. Notes, Problems, IssuesNotes, Problems, Issues1.FSS viewed as simply Cost Cutting2.No change in C&B structure3.“Shadow” services at BUs4.Incongruent with Company Strategy5.HO allocation6.Just consolidate, no Redesign7.Complicated, Legal-jargon SLAs1.FSS leadership turnover2.FSS staff competent than BU staff3.Who should bear external party costs?4.Infra ownership5.SLA yes, but ISLI no6.Staff unwilling to go to FSS7.FSS taking orders from Big Boss vs. BUsF. Starting UpStarting UpStrategy and Intent of the Business?FSS role in the strategy?Objectives of FSS?FSS Service Model?Thank You.soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com