Analyst Meet
August 27, 2002
“Living up to the promise”
Business transformation through
technology
U. B. Pravin Rao
Analyst Meet
August 27, 2002
IT Is a Powerful Enabler As Well as A Driver to Unlock
Business Value
Technology
Business Value
Case
Study
High
Dell
Business Value
Created
Dell
CapitalOne
SKF
GE
GE
Walmart
AT&
T
NHS
Pfizer
Low
Low
Technology
Maturity
High
Created
Greater
Organisation
flexibility
Inter Enterprise
Cost
Rationalisation
Driver/ Enabler
Internet based
value chain
collaboration
Marketplace
Innovation (new Data Warehousing
and Mining
Capital one products)
Multi tier EDI,
Data Warehouse,
Process
EPOS
flexibility
Walmart
Increase Scope
of
Remote Sensing
Service
SKF
Increased
Employee
VPN
Productivity
AT&T
Knowledge
Improved
Management
Partner
Tools
Productivity
Pfizer
Knowledge
Improve Quality Management
Tools
of Service
NHS
Source: Corporate websites, Economist, Infosys Analysis
Slide 1
Analyst Meet
August 27, 2002
… And Such Business transformation Through Technology is the
Center of Infosys’ Go-to-Market Position Today
Elements
Focus
Go-to-market
position …
Client
…executed
through
Integrated
Capabilities
Competencies
…and built on
Fundamentals
Values
Company
/ Core
Architecture
“Transforming business
through integrated technology
solutions. Absolutely, Positively!”
(Emphasis on Value, Execution & Comfort
factor)
Breadth
& Depth
of
Integrated
Service
lines
( Meeting
Clients’
full service
Needs )
Domain
Expertise
Technology
Excellence
( What
clients
value
the most )
( “In sync
with the
latest,
at par
with the
best )
GDM
( Core
Value
Driver )
Prime &
Partnership
( Single
point
accounta bility while
leveraging
“partner
web” )
Trust
Based
Senior
Relationship
( Building
comfort
Factor )
One Firm
Execution
( Global
scale,
single
Face )
Open Governance
Talent Magnet
Performance-Ethic
Slide 2
Analyst Meet
August 27, 2002
“Living up to the promise”
1 – Manufacturing
2 – Telco
3 – Retail
4 – Retail
5 – Insurance
Analyst Meet
August 27, 2002
Case Study # 1: Developing a Roadmap for Transformation of Supply
Chain by Leveraging e-Business Technologies
■
■
■
■
The Client
The European subsidiary of a leading global manufacturer of food-grain and
agricultural chemicals
The Challenge
Need to reduce supply chain costs
■
■
■
■
Need to achieve maximum impact from limited e-Business budget
■
■
■
■
Reduce the costs “hidden” in the extended supply chain
Integrate business with technology to improve effectiveness of supply chain
Benchmark against “best-of-breed” in industry
Identify Quick Wins with short payback
Leverage latest technologies for communication and e-Business to achieve greater
integration with vendors, customers and logistics & transportation partners
Better integration among internal systems to support and streamline supply chain
processes
Build internal consensus regarding future direction
Slide 4
Analyst Meet
August 27, 2002
Define & prioritize initiatives to streamline the supply chain
processes and create an implementation roadmap
The Approach
Diagnosis
Analysis
Synthesis
Identify Quick Wins
Review ‘As
Is’ Supply
Chain and
Initiatives
• ‘As-Is’ state for key
supply chain processes
Assess SCM
Pain/
Opportunity
Points
Identify and
Prioritize
Initiatives
High Level IT Architecture
• Inventory and
description of identified
initiatives
• SCM “pain points” and value
creation opportunities
• Benchmarking of
supply chain e-maturity
against industry peers
• Prioritized initiatives and Quick Wins
• Key SCM trends & B2B focus areas
Define
eBusines
s
roadmap
• Business case analysis
& payback calculations
• Phased implementation
roadmap including
time, cost and resource
budgets
• High level IT architecture
Slide 5
Analyst Meet
August 27, 2002
Implement prioritized initiatives and build supporting
architecture in phases
eSupply Chain Within the
Organization
The Response
•
•
Enterprise
Application
Integration
Reduce supply chain costs
Attain supply chain excellence
Production
Scheduling
Salesman
Finished Goods
Movement
eSupply Chain With Business
Partners
•
Lay the foundations of future
growth
B2B with
Suppliers
B2B with
Transporters
Client
Client
B2
B
B2
B
Order to
cash
Order to
cash
Suppliers
Transporters
Demand Supply
Demand
Applications
Extranet
Territory
Forecast
& Plan
Transpor
t Planner
EAI
Production
Scheduling
Application
Producti
on Plan
Transport
Plan
Applications identified
Slide 6
Analyst Meet
August 27, 2002
Resulting in Over $ 2.5 M of annual benefits for $ 3.4 M of one-time
investments
The Benefits
Projected Cashflows
Value in '000 US$
4000
3390
3000
2536
2681
2773
629
629
629
2864
NPV (Discount factor)
3 Year NPV
5 Year NPV
Payback Period
12.50%
1123.2
4024.1
2.2
Savings
2000
1000
1196
629
Investments
0
2001
2002
2003
Year
2004
2005
Annual
benefits of
over $2.5
Million
Payback in 15 months
Client Testimonial – CIO “We has a long history of working with large traditional consulting firms.
However, the way Infosys worked collaboratively with our people and crafted a unique solution on
business and technology aspects appealed to the Leadership Team.The benefits delivered by Infosys
were very tangible.”
Slide 7
Analyst Meet
August 27, 2002
Case Study # 2 : A large Telco spent $300-400M1 more annually due to poor IT
effectiveness compared to best-in-class organizations
■
Telco IT effectiveness was
conservatively equated to
“Average in Class” on the
Capers-Jones productivity
benchmarks scale
■
Capers-Jones Productivity
benchmarks for the “Best in
Class” were used to arrive at the
extra spend ( based on current IT
Delivery & Maintenance Budget2 )
•$1,000
•$900
•$800
•$700
•$600
•$500
•$400
•$300
•$200
•$100
•$0
•Million AUD
■
High Level Approach
Based on the data available and
stakeholder interviews, Telco was
assessed between Levels 1 and
2 on the CMM Maturity scale
Telco
•Development
•Best
•Maintenance
• These estimates of expected overspend are based on IT
Effectiveness and not on any unit cost differentials
1 Does not include Operations, Infrastructure, Internal IT staff costs
2 Current IT Delivery & Maintenance Budget excluding spend on Redundant applications $891 M
Slide 8
Analyst Meet
August 27, 2002
… And faced the risk of being caught in a vicious circle of
poor IT effectiveness due to continued business pressures
Implication: Lower IT Effectiveness
Likely Telco response
Cut in
discretionary
IT Expenditure
Reduction in
investment
spend
Arbitrary cuts in
budgeted
expenditure
• Lesser money to invest in application
rationalization
• Lower investment in crucial
infrastructure projects (without
immediate benefits)
• Cutting back existing implementation
plans will have cascading effect on IT
efficiency
• Compromise on lifecycle activities that
will reduce delivery reliability
Slide 9
Analyst Meet
August 27, 2002
We proposed a 3 - phased transformation program that would help
Telco launch, consolidate and sustain improvements in IT effectiveness
Launch & Enable
Evangelize & Consolidate
12 Weeks
Medium Term (6 - 12 Months)
Rollout & Sustain
Long Term (1 Year +)
• Create Inventory
• Migration plan
• Partial Migration to a lower cost base
• Decommissioning completed
• Consolidation of applications kicked
off
• Clear migration roadmap for the
entire Telco portfolio
• Rationalized portfolio
Delivery
Process
• Process Definitions for some Project
types
• Run Pilots
• Rollout to all of IS
• Process definitions for all project
types
• Estimation Model definition
• Rollout across Telco
• Automated process management
• Formal capability assessment
People and
Governanc
e
• Define Metrics, Skeletal Org Structure,
Governance Mechanisms, KPIs
• Process Capability Baseline, Dashboard
• Rollout to all of IS; Launch training
• Metrics-Inventory (IRM) integration
• Communicate
• Rollout across Telco
• Communication & Training
Investment
Planning
• Review IT budgets for next financial
year
• Ensure adequate investment in
infrastructure elements
• Institutionalize demand management
processes
• Monitor returns and effectiveness
of prior investments
Application
Portfolio
Slide 10
Analyst Meet
August 27, 2002
The solution needs a cumulative investment of $50-80M over three years and
can potentially yield annual benefits of $300-400M1 by the third year
Investment yields positive
returns within one year
Rollout & Sustain
350
Evangelize & Consolidate
Million $
250
150
Launch & Enable
50
-50
3
Savings
1 Assuming
6
Investments
12
Months
24
36
Represent self-financing investments that
yield benefits within the same period
that current annual spend will continue every year for baseline estimates
Slide 11
Analyst Meet
August 27, 2002
Case Study # 3 : Developing a New Supply Chain Blueprint
for a Leading Apparel Company
The Client
■
A leading designer, marketer & distributor of premium lifestyle products
■
■
■
Four categories of products – apparel, home, furnishings & fragrances
Brand portfolio consists of some of the world’s most widely recognized brand
names
Net sales of USD 2.2 billion in FY 2001
The Challenge
■
Need to improve inventory productivity
■
■
■
Reduce the cash to cash cycle time
Reduce the total inventory in the pipeline
Need to reduce supply chain operations costs
■
■
■
Reduce the transportation costs
Reduce the manpower costs
Reduce the inventory carrying costs
Slide 12
Analyst Meet
August 27, 2002
The Approach
Migrate to the “To-Be” state …
Information Flow
Design
Suppliers
Inbound
Logistics
Warehousing
Outbound
Logistics
Retailers
Customer
Product Flow
Supply Chain Execution
Vendor Management
Design and Development

Product design and
development closer to demand

Vendor managed inventory
Logistics

Cross dock of shipments
Leverage 3rd party /
 Adherence to design calendar
suppliers and customers
logistics network
 Automated and Integrated transaction systems across the supply chain and business divisions

100% compliant vendors


Visibility to logistics and inventory data across the supply chain and business divisions
 Common pool of inventory across business divisions

Supply Chain Planning
Automated forecasting and planning systems across departments – merchandize planning, sales
planning, production / capacity planning, inventory planning and allocation

Forecasting and planning by door
 Integrated sales and operations planning across departments
Slide 13
Analyst Meet
August 27, 2002
The Response
… through implementing multiple initiatives …
Phase 1 Initiatives
In-Process Initiatives


Moving from FOB to
LDP/DDP

Vendor Compliance

Redesigning of Corporate
Calendar
Licensee VMI
 Forecasting & Planning Wholesale
 Cross-Dock – Retail
 VMI Stage I

Web based ASN Capture





3rd Party Fulfillment
Key Performance Indicators
Logistics and Inventory Visibility
Solution
Standardizing WMS Solutions
across DCs
Forecasting & Planning – Retail
Phase 2 / 3 Initiatives

Price Optimization Solution
 VMI Stage II
 Inventory Visibility and Order
Processing at Stores
 Streamlining Markdown Planning
and Execution





Global Production Planning
System
Transportation Optimization Tool
Global QA Module
KPI System Development
Corporate-wide Costing System
(Product costing being evaluated
to be moved to Phase 1)
Slide 14
Analyst Meet
August 27, 2002
The Results
Recurring annual benefits of $24MM for one-time
investment of $25MM
Implementati
on Phase
One-Time
Investment
Pay Back
Period
Phase 1
Phase 2 & 3
Recurring
Annual
Benefits
$ 13 MM
$ 11 MM
$ 11 MM
$ 14 MM
0.8 Year
1.3 Year
TOTAL
$ 24 MM
$ 25 MM
Slide 15
Analyst Meet
August 27, 2002
Case Study # 4 : Flawless Execution To Install Complex
Financial System
One Of USA’s Leading Fashion Specialty
Retailer
• Over 100 years in business
• 132 US Stores, located in 25 states
• 23 International Boutiques, primarily in
Europe
• Online presence and direct mail
catalogs
“When I work with Infosys I don’t have to worry about
them because they do not make promises that they can’t
keep. They are committed to making us successful”
CIO
Flawless Execution of Oracle Financials
• Replace outdated financial system and build a
foundation for future growth.
- Increase flexibility & back-office efficiencies
- Foundation for better controls and rules
- More manageable chart of accounts
- Greater reporting flexibility
• A key milestone in Client’s business transformation
- Foundation for integration with Retail Inventory and
Merchandising systems
• Relying on knowledge and expertise from 10-year old
relationship to minimize business impact of the
program.
“Infosys’ Organizational Change Management
Methodology, training and documentation ensured a
successful transition”
CFO
Slide 16
Analyst Meet
August 27, 2002
Case Study # 5: Partner To Create Transactional Web Site
USA’s leading provider of individual life insurance
• Named by Fortune as the Most admired company in the world, in its category.
• Providers of annuities, mutual funds, long-term care insurance, and disability income insurance.
Develop & launch an online funds transfer
option
• For variable life and annuity policy
holders
• Driven by business needs
- 24x7 customer self-service facility
- Lower reliance on customer service
call centers
- Extremely aggressive timeframe
- Prototype development
• Chosen based on prior experience of
Infosys delivering high quality results on
time and within budget
End-to-end Partnership
• From design to building of the site
• Delivered to extremely aggressive timeframe
Infosys originally hired in 1996
- Relationship started with Y2K initiatives
- Extended to all IT projects
“Infosys’ technological expertise and excellent
execution were exactly what we needed to
provide our customers the convenience of selfservice and online confirmation of important
transactions.”
Vice President, Information Systems
Slide 17
Analyst Meet
August 27, 2002
In Conclusion, Infosys’ Range Of Services From “Strategy To Execution”
Helps In Partnering On Such Transformation Initiatives
Design for
transformation
Design For A Constantly
Changing Business &
Technology Environment
Build and
Integrate
Build Future-Proof Solutions
That Enable A Continuous
Evolution Of The Enterprise
Institute Operational
Excellence
Client Needs For
Business
Transformation
Leverage Current
Investments in People & IT
Infrastructure
Consulting Services
Business & technology alignment
Architecture & roadmap definition
Enterprise IT Solutions
Package and systems integration
Custom software solutions
IT Operations Management
Applications management
IT Outsourcing & maintenance
Consulting &
IT Services
Product Strategy Consulting
Architecture & roadmap definition
Feasibility and prototyping
Product engineering
Software development & integration
Development & testing labs
Product Support Outsourcing
Product support centers
Custom product enhancements
Technology
Product
Development
Business Process Consulting
Process modeling and redesign
Continuous process improvement
Process Change Implementation
Process & IT reengineering
Change management
Business Process Management
Outsourced process centers
Shared services
Business
Process
Management
Slide 18
Analyst Meet
August 27, 2002
“Living up to the promise”
Thank You