KPMG -EXCELLENCE IN BUSINESSMANAGEMENT AND STRATEGY - Connected Kenya 2012

Kenya ICT 2012 SummitIndia Case Study

EXCELLENCE IN BUSINESS MANAGEMENT AND STRATEGY

© 2012 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Global Business Outlook …

•Inflation - Consumer price inflation

easing due to weaker demand and

price decline

•back suggested that the GDP of India had crossed the trillion-dollar mark. The recent

appreciation of the Rupee since January 2007 by approximately 10% helped reach the

milestone far earlier than it would have been otherwise possible.

•In short, at Rs 45 to a US dollar it would still be roughly $900 billion. At Rs 40 to a US

dollar, the GDP of India now stands at $1 trillion. Let us extrapolate these arguments

mathematically on a 'linear scale.' At Rs 20 to a US dollar, India's GDP would be $2 trillion;

at Rs 10 it would be $4 trillion, at Rs 5 it would be $8 trillio

n; at Rs 2.5 it would be $16

trillion and at 1 Rupee to a dollar it w

ould be approximately $40 trillion.

• Unemployment high, but signs of

recovery in US jobs, •News reports a few weeks back suggested that the GDP of India had crossed the trillion-

dollar mark. The recent appreciation of the Rupee since January 2007 by approximately 10%

helped reach the milestone far earlier than it would have been otherwise possible.

•Poor infrastructure a major hurdle

for growth•News reports a few weeks back suggested that the GDP of India had crossed the trillion-






at Rs 10 it would be $4 trillion, at Rs 5 it would be $8 trillion; at Rs 2.5 it would be $16

trillion and at 1 Rupee to a dollar it would be approximately $40 trillion.

•Fears of US slowdown haunt IT

companies

•News reports a few weeks back suggested that the GDP of India had crossed the trillion-






at Rs 10 it would be $4 trillion, at Rs 5 it would be $8 trillion; at Rs 2.5 it would be $16

trillion and at 1 Rupee to a dollar it would be approximately $40 trillion.

•Economic Growth - Global GDP

Growth estimate for 2012 - 2.5%

(2.8% in 2011); Euro area in mild

recession•News reports a few weeks back suggested that the GDP of India had crossed the trillion-



• Emerging Markets – Tight money,

declining capital flows, currency

volatility•News reports a few weeks back suggested that the GDP of India had crossed the trillion-



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Global Trends – shifting dominance

3Organizations willing to diversify risks while pursuing labor arbitrage

Global outsourcing growing at over 25% CAGR with huge unaddressed market

Traditional sourcing destinations – down from 52% to 27%Newer Locations – up from 7% to 23%

India and Philippines and preferred destination – steady to stagnant growth


Facets of India – Success of ICT industry

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The Indian Information Technology industry accounts for a 7.6% of the country's GDP and export earnings as of 2011

More than 2.8 million people are employed in the sector either directly or indirectly, making it one of the biggest job creators in India and a mainstay of the national economy

In 2011-12, annual revenues from IT-BPO sector is estimated to have grown over US $100 billion

India's outsourcing industry is expected to increase to US $225 billion by 2020. The most prominent IT hub is IT capital Bangalore

Each year India produces roughly 500,000 engineers in the country

IT-BPO employees

India’s share of the global sourcing market

Number of companies offering IT services, BPO, ER&D and Software Products

Number of MNC centers in India

Number of countries serviced by India

Number of languages served

2.8 mn

58%

5,000+

750+

~70

35+


Convergence of Eco System …

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Chennai Detroit of India

Top 20 Auto makers Ford and Hyundai, the German luxury car maker BMW, Daimler, Mitsubishi , Renault-Nissan, Peugeot………..

Bangalore Silicon Valley and other states

Innovation and R&D

Software Economic Zone IT-ITES , Jewels , Apparels, Handicraft – Over 200

40 Incubators

Regulatory bodies

GIC657


Right Track – To achieve global competitiveness

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Education & Training Capital Standard and Framework Industry Promotion Government and Legal

Delivery Company – Dominators Supplier and sub contractors SME and Niche Players

In ICT - it is far more effective to develop and promote a nation as opposed to promoting individual enterprises.


Critical Success Factors to establish ICT

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Evolving Service Delivery Model

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Key Characteristics• Staffing people at the client site for face to face

client interaction• Used for specialized tasks requiring high

customer involvement

• Transferring work to a different location to reduce cost of sourcing

• Suited for well defined tasks with low customer interaction

• Presence of delivery centres in vicinity of the client for gaining dual benefits of cost and customer proximity

• Suited for specialized tasks with moderate customer interaction

• Multi tier operating model with hub acting as SPoC and central interface with clients

• Focus is to leverage location advantages and de-risk operations

• Suited for complex and specialized tasks which require moderate to high customer interaction

Onsite

Offsite/ Offshore

Near shore

Hub and Spoke

1980s 1990s 2000s 2010 and beyond...

Source: KPMG in India Analysis – Hub and Spoke operating model 2012


Take away from the manufacturing experience

Focus on core competency

Leverage benefits offered by emerging locations

Appreciate the cultural nuances of operating in a region

Maintain cost leadership at all times

Ensure brand value is not compromised

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One common philosophy of Leadership, Quality , Teamwork , People , Process and Technology

improvement across the organization .

Focusing on the needs of the customer, empowering employees, and optimizing existing activities in the

process.


What , Where , Who

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Business Excellence : Systematic use of quality management principles and tools in business management, with the goal of improving performance .Aligned to principles of customer focus, stakeholder value, and process management.

Where is it applicable : Applied across functional areas in an enterprise include continuous and breakthrough improvement, preventative management and management by facts.

What tools : MBNQA, EFQM , ISO , Balanced Scorecard, Lean, Six Sigma , process management, and project management………

Which Industry : IT - BPO ,Telephony and communication , Banking & Insurance , Financial Sector , Pharma, Hospitality , Healthcare , Manufacturing, Logistics etc .


• IT Development

CMMI DEV , ISO 20000 , PCMM, TMMI , Six Sigma,

BPO and IT IS

CMMI SVC, COPC, eSCM , ISO 27000, COBIT,PCMM, HIPAA, Six Sigma…

Communication :

TL 9000, eTOM CMMI SVC, ISO

Global Framework s and Business models adopted

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Management Function

HR

FinanceAdmin

Vendor ManagementIT Support

Service Management IT Infrastructure Services Production Support Application Management IT Enabled services/BPO

Product Management Test Factory Product Development - Application Development

Customers 3rd party Service providers/ Suppliers

PCMM , Competency Assessment

CMM

I DEV

, TM

MI

Cert – RMM, ITIL, PMP , Agile , Lean Sigma

Voice of Customer, COPC , eSCM

ISO 9001 COBIT

CM

Mi S

VC, I

SO 2

0000

, C

OPC


Why BE framework ?

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GLOBAL

High Level of Performance

Self Assessment for continuous improvement

Strategy Agility and correlate to performance .

Recognition and visioning

Designing and Managing Performance Management system .

Common Language of Excellence across Stake holder, customer and employee

Project Management and Supplier Management


Correlation between adoption of frameworks and ICT maturity

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Global trends – Productivity Improvements

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Suggestive Implementation Road Map for Kenya ICT- maturity of delivery engine

Draft sub-vision:

• By 2014 / 2015 : ‘X’ firms to be L3 on CMMi –DEV and CMMi - SVC: ‘Y’ firms to be L5 on CMMi –DEV and CMMi – SVC: ‘Z’ firms to be on PCMM L3: ‘XX’ firms to be on TIL: “XY” Six Sigma GB & BB: ‘XYZ’ firms to be on ……….

Draft sub-vision:

• By 2017 : ‘X1’ firms to be L3 on CMMi –DEV and CMMi - SVC: ‘Y1’ firms to be L5 on CMMi –DEV and CMMi – SVC: ‘Z1’ firms to be on PCMM L3: ‘XX1’ firms to be on TIL: “XY1” Six Sigma GB & BB: ‘XYZ1’ firms to be on ……….


Tested, successful collaborative methodology to achieve the vision of maturing the delivery model

Public

GoKKICT+

Private

Delivery EngAdvisorsAssessors

Donors

Create CoE

GoKKICT+KPMG +

Clustering

Awareness BenchmarkingReadiness check

Pilot

Implementation CertificationCapacityCapabilityCompetency

Finance modeling

Measures of success

AwarenessBenchmarkingReadiness

TrainingBaselineStructured Support


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Mahesh Punia Partner, Head Management ConsultingKPMG East AfricaTele : +254 20 2806126 [email protected]

Thank YouThank You

KPMG -EXCELLENCE IN BUSINESSMANAGEMENT AND STRATEGY - Connected Kenya 2012

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