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CUSTOMIZING THE SERVICE MODEL TO ALIGN WITH ORGANIZATION OBJECTIVES

CUSTOMIZING THE SERVICE MODEL TO ALIGN WITH ORGANIZATION OBJECTIVES CNI’s Journey, Mistakes, and Lessons Learned Kenny Ong CNI Holdings Berhad. Contents:. Before we start… Identify Business Objectives Align Service Model Internal Customer Indicators Notes, Problems, Issues Starting Up.

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CUSTOMIZING THE SERVICE MODEL TO ALIGN WITH ORGANIZATION OBJECTIVES

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  1. CUSTOMIZING THE SERVICE MODEL TO ALIGN WITH ORGANIZATION OBJECTIVES CNI’s Journey, Mistakes, and Lessons Learned Kenny Ong CNI Holdings Berhad

  2. Contents: • Before we start… • Identify Business Objectives • Align Service Model • Internal Customer Indicators • Notes, Problems, Issues • Starting Up

  3. Intro: CNI • 18 years old • Core Business: MLM • Others: Contract Manufacturing, Export/Trading, eCommerce • Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan • Staff force: ± 500 • Distributors: 250,000 • Products: Consumer Goods and Services

  4. Intro: CNI CNI’s Shared Services background • CNI Malaysia • CNI Global • Key Elite

  5. A. Before we start…

  6. “…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 inconsistent" CEO, Anonymous

  7. Before we start… In the old days of HR… • Average training hours per staff • % of staff attending training • # of training programs • % of training programs conducted • Training needs analysis conducted • Competency models developed • Training budget as % of payroll What’s wrong with this picture?

  8. Before we start… Moral of the story… • Innovation: • Business models • Products • Services • Market Leadership • Competitive differentiation Get the picture?

  9. “What is the moral of the story?”

  10. B. Understanding the Business Objectives Strategy and Intent

  11. Strategy: Value Disciplines Product Leadership(best product) Operational Excellence (low cost producer) Customer Intimacy (best total solution) Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

  12. Strategy: Value Disciplines Product Leadership • New, state of the art products or services • Risk takers • Meet volatile customer needs • Fast concept-to- counter • Never satisfied - obsolete own and competitors' products • Learning organization • Operational Excellence • Competitive price • Error free, reliable • Fast (on demand) • Simple • Responsive • Consistent information for all • Transactional • 'Once and Done' • Customer Intimacy • Management by Fact • Easy to do business with • Have it your way (customization) • Market segments of one • Proactive, flexible • Relationship and consultative selling • Cross selling

  13. Sample KPIs for Each Discipline • Operational Excellence • Price • Selection • Convenience • Zero Defects • Growth Product Leadership • Marketing • Functionality • # of Successes • # of Failures • Learn from key users • Interdisciplinary teams • Pipeline • Customer Intimacy • Customer Knowledge • Solutions Offered • Penetration • Customer Data • Customer-success focus

  14. Strategy: Value Disciplines • Operational Excellence • Move know-how from top performing units to others • Benchmark against best in class • Ensure operations training for all employees • Use disciplines like TQM for continuous learning to reduce costs and improve quality

  15. Strategy: Value Disciplines • Customer Intimacy • Capture knowledge about customers • Understand customer needs • Empower front line employees • Ensure that everyone knows the customer • Make company knowledge available to customers

  16. Strategy: Value Disciplines • Product Leadership • Reduce time to market • Commercialize new products fast • Ensure that ideas flow • Reuse what other parts of the company have already learned • Ensure there are multiple sources of funding

  17. Make it easy to eat 50% drive-thru Meals held in one hand Make it easy to prepare High Turnover Tasks simple to learn & repeat The McPlaybook* Make it quick • “Fast Food” • Tests new products for Cooking Times Make what customers want • Prowls market for new products • Monitored field tests *Adapted from: Businessweek , Februrary 5th 2007

  18. Strategy: Value Disciplines Product Leadership(best product) Operational Excellence (low cost producer) Customer Intimacy (best total solution) Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

  19. Strategy: Value Disciplines Product Leadership(best product) Operational Excellence (low cost producer) Customer Intimacy (best total solution) Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

  20. Financial Shared Services • Strategy and Intent of the Business? • FSS role in the strategy? • FSS Strategy and Intent? • Objectives of FSS? • FSS Service Model?

  21. C. Aligning the Service Model

  22. Aligning Service Model • Role of FSS • Objectives of FSS • 4-Wheels

  23. Alignment: 4-Wheels Service Model Resources Structure Leadership Person Corporate Objective FSS Role & Objectives Principles

  24. FSS Role? Corporate Center Strategy Policies Service Results Request Financial Shared Services SBUs, Divs, Depts Service

  25. FSS Objectives? Market Leadership, Competitive Differentiation, Business model, M&A, CSI Direct Business Impact, primary KPIs, external customers Transformation Systems, Standardize, Benchmarking, ERP, Streamlining, Automation, Governance Process improvement, service innovation, secondary KPIs, internal customers Best Practices Budgeting, Reporting, Financial Analysis, Forecasting, Tax, Legal, Treasury Consistency, Analysis, Value creation, customization Value-added Cost reduction, Efficiency, Agility, Fast Copy Transactional AP, General Ledger, B/S analysis, Accounting, Fixed Assets, AR, Facilities

  26. Eliminate redundancies Remove no value-adding activities Cost Savings Focus on Core Economies of Scale Compete with external vendors Specialized skill sets Move from staff to line Salary Band Career Path Manage external vendors B.U.s appreciate services Additional revenue w/o interfering core Divestment/IPO MSC tax break Make accountable to SBU vs. HQ Undertake large infra projects Open & Hidden Objectives

  27. Alignment: Framework • Price Transparency • Business Management • Market Responsiveness • Best Practice • Process Standardization • Service Culture Principles

  28. Alignment: Framework Structure • Org Structure • Job Design • Policies & procedures • Governance • Management Systems • BSC and KPIs • Benchmarking • A.B.C.

  29. Alignment: Service Structure One Internal Customer In-sourcing Co-sourcing Multiple Internal Customers Joint-Venture External & Internal Customers BPO Corporate Center Financial Shared Services

  30. Alignment: Internal Structure

  31. Alignment: Internal Structure Migrate processes to standard platforms, scaled migration, joint-process ownership

  32. Alignment: Internal Structure SLAs, Audit Compliance, Business Controls, records Management, service request processing, digitization

  33. Alignment: Internal Structure identify processes to migrate, customer relationships, value migration, CS interviews, performance evaluations

  34. Alignment: Framework Resources • Tools • ICT Systems • Digitization • Self Service • Workflow • Physical facilities • In-source? • Co-source? • JV? • BPO?

  35. Strategy: Framework Leadership • Customer focused • Attentive to market standards • Costs • Service • Best practices • Accountable for SLAs, ISLIs • Build relationships with BUs • Bottom line management • Tradeoff between Cost vs. Value

  36. Alignment: Framework Person • Specialist Career Ladders • Staff -> Frontline • Team-based • Duplication • Standard or Creative? • SS vs. Staff mindset • Sourcing • C&B, Retention • In-source? • Co-source? • JV? • BPO?

  37. Alignment: Framework Resources Structure Leadership Person Corporate Objective FSS Role & Objectives Principles

  38. D. Internal Customer Indicators

  39. Measurement & Satisfaction “In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they weresatisfied or very satisfied.” HBR March/April 1996

  40. Corporate-level BSC 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? Internal Process “To satisfy our customers, in which internal business processes must we excel?" Financial “To satisfy our stakeholders, what Financial objectives must we accomplish?”

  41. Customer Who do we define as our customer? How do we create value for our customer? Internal Process To satisfy customers while meeting budgetary constraints, at what business processes must we excel? Financial How do we add value for customers while controlling costs? FSS Strategy How do we enable ourselves to grow and change, meeting ongoing customer needs Employee Learning and Growth FSS-level BSC Corporate Objectives

  42. ISLI ISLI = Internal Service Level Index. Services and Levels Expectations, Priorities, Improvement Plans Service Costs

  43. Relationship = Expectations

  44. ISLI Matrix Best Practices Transactional Transformation Value-added Customer Intimacy Standard Product Leadership Operational Excellence

  45. ISLI Direct Business Impact, primary KPIs, external customers Transformation Process improvement, service innovation, secondary KPIs, internal customers Best Practices Consistency, Analysis, Value Value-added Cost reduction, Efficiency, Agility, Fast Copy Transactional Time Cost Quantity Quality

  46. ISLI Direct Business Impact, primary KPIs, external customers Transformation Process improvement, service innovation, secondary KPIs, internal customers Best Practices Time Cost Quantity Quality Innovation Service Consistency, Analysis, Value creation, customization Value-added Cost reduction, Efficiency, Agility, Fast Copy Transactional

  47. ISLI Direct Business Impact, primary KPIs, external customers Transformation Process improvement, service innovation, secondary KPIs, internal customers Time Cost Quantity Quality Innovation Service KPI Best Practices Consistency, Analysis, Value Value-added Cost reduction, Efficiency, Agility, Fast Copy Transactional

  48. ISLI Time Cost Quantity Quality Innovation Service KPI Impact Direct Business Impact, primary KPIs, external customers Transformation Process improvement, service innovation, secondary KPIs, internal customers Best Practices Consistency, Analysis, Value Value-added Cost reduction, Efficiency, Agility, Fast Copy Transactional

  49. E. Notes, Problems, Issues

  50. FSS viewed as simply Cost Cutting No change in C&B structure “Shadow” services at BUs Incongruent with Company Strategy HO allocation Just consolidate, no Redesign Complicated, Legal-jargon SLAs FSS leadership turnover FSS staff < competent than BU staff Who should bear external party costs? Infra ownership SLA yes, but ISLI no Staff unwilling to go to FSS FSS taking orders from Big Boss vs. BUs Notes, Problems, Issues

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