Organizational Transformation - Redefining Business Operating Model

A large multibillion dollar manufacturing entity with presence across many Geographies with a complex matrix structure was performing sub-optimally at a functional level. The mandate based on extensive research and analysis was to relook at the entire business model and ensure that the matrix works efficiently, and the reporting relationships are clarified. As part of the assignment, we also looked at the existing work that was done, staffing, skill requirement and setting up a transactional back office.

strategy of the organization
  • Based on the new operating model, define what work gets done where and how to measure the success of such work - the need was to identify work distribution of the function was segregated and allocated to corporate, regional and local organizations
  • Define the roles, responsibilities, accountabilities, and key performance indicators for the various roles across the entire functional organization. Pilot the model across a select set of corporate functions - Human Resources, Procurement, IT and Finance
  • Explore the possibility of setting up a back-end transactions processing centers to optimize resources and costs. This included identifying processes that can move to the back office and SLAs associate with delivery.
  • Support the entire transformation effort with a business plan that returned positive results over a 3-year period with a further detailed plan for implementation over 5 years.
  • The implementation was set up successfully over the first full year where the following deliverables were achieved:
    • New business operating models
  • A new functional organizational structure complete with role profiles for all unique positions, skill requirement, reporting relationship and performance metrics
  • SLAs were defined for interactions amongst all levels of organization -corporate, regional, local and the Global Business Service (GBS) centers (back- office transaction processing centers)
  • identified a minimum of 2 transactional processes that were fully documented with SLAs and migrated to the GBS operations (end to end processes included
  • The plan was to implement the whole effort over a 5-year period. All the key topics listed above were implemented over the first 12 months, while the migration plans for additional process was under implementation by the organization internally.

    • The entire transformation would yield a headcount optimization of over 17% and headcount cost optimization of over 28%. Process migration to GBS was estimated at 30% for the piloted functions. The effort would yield an IRR of 50+% and an NPV of USD 8Mn over a 5-year period. Year one real savings was booked at USD 700K