Operations As-a-Service - The Untapped Opportunity

The Untapped Opportunityof Operations-as-a-ServiceRussell IvesManaging DirectorAccenture Operations16th June 2016

AccenturePOV:OperationsAsAService

The As-a-Service economy is here and APAC is leading the way

46%are planning to implement new capabilities throughAs-a-Service by mid-2017

8% of APAC organisations have already implemented a core enterprise function As-a-Service

62% see it as critical for their organisation to remain competitive

Source: "Ideals of As-a-Services" Study, HfS Research 2015

As-a-Service: The intersection of Cloud, IT Outsourcing and Process Outsourcing

Business Processes

Applications & Infrastructure

Cloud

Standardized

Consumptionbased

Futureprotected

Innovationenabled

ScalableVendoragnostic

Plug inOutcomeoriented

4

Evolution of Operations-as-a-Service

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Outcomes& Insight

Businessoutcome aligned , risk reward & gainsharing

Embedded use of providers toolsand analytics with client platforms

Plus Industrydepth, insightand innovation

All “offices”with insight & industry focus

Industry process knowledge, analytic insight, client integration

4th Gen

Plus consumption based pricing, CAPEX to OPEX

Plus Cloud based standardised applications

Plus Platforms, scalability and flexibility

All offices, integrated cloud based platforms, IT support

Plus leading edge technology capability

OperationsAs a Service

5th Gen

Client Objectives

Services

Commercial

Platforms

Capabilities

Offshore

FTE-based focused on labor arbitrage

Client’s own platforms

Plus global capability

More back office and industry processes

Offshore migrationAd hoc process improvement

2nd Gen

Operational Excellence

FTE-based with SLA’s and limited risk reward & gain sharing

Client’s own platforms plus provider tools

Plus “noiseless” delivery

Moving into the “middle office”

Process excellence,6 sigma, useof tactical tools

3rd Gen

Pioneers

Pioneering mega deals with lift &shift focus

Client’s own platforms

Cost savings, outsource non-core functions

Financial Services, F&A, HR

Migration of client ‘As-is’ capability

1st Gen

BPO As-A-Service

Operations-as-a-Service stack comprises 5 components

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Applications and Platforms

ANALYTICINSIGHT

INDUSTRYEXPERTISE

Business Processes

Cloud

Security

Infrastructure

6

Why move to Operations-as-a-Service


What are the most significant drivers in your move to the “As-a-Service Economy”?

Source: "Ideals of As-a-Services" Study, HfS Research 2015Sample: Total = 716; Enterprise Buyers = 178; Advisors/Consultants = 176; Service Providers = 372

13%

17%

21%

23%

31%

39%

52%

53%

66%Reducing the overall cost of process delivery

More digitally-aligned operations

Access better data to improveour business

Move to an outcomes-driven sourcing model

Reduced reliance on manual labour to deliver processesResponding to disruptive competitorsAbility to access, in “real time”, more flexible pools of skilled labourPre-empting competitors in our target growth markets

No more value to be found in current sourcing model

7

APAC leading the way to As-a-Service


Source: "Ideals of As-a-Services" Study, HfS Research 2015 Sample: Total = 716; Enterprise Buyers = 178; Advisors/Consultants = 176; Service Providers = 372

How quickly will your core enterprise processes be delivered “As-a-Service”?

6%

2%

8%

6%

28%

46%

46%

44%

48%

46%

31%

31%

12%

9%

15%

13%

10%

We are already there Within 2 years Within 5 years Within 10 years Never

Asia Pacific

UK

North America

Europe

Australian Universities adopt Procurement As-a-Service to drive higher savings Greater aggregated spend means higher savings for Australian universities


University Procurement Hub is a new way of delivering core procurement services through aggregation across universities with the flexibility for universities to select additional services to meet specific requirements as they evolve

UPH provides a platform that transforms how universities across Australia can source and buy everything they needto meet their unique requirementsand delivers direct savings to support the continuing excellence that’s the hallmark of Australian higher education, today and tomorrow

Critically, more aggregated spend drives higher savings for all participating universities, who will benefit from improved process efficiency, spend visibility, effective spend analysis from richer data and marketing intelligence to drive continuous improvement

Accenture Insight - Australia's University Procurement Hub

9

Deutsche Bank has plunged boldly into theAs-a-Service economyAccenture is helping Deutsche Bank transform its procurement operations


Which enables benefits that include

Providing indirect procurement operations and accounts payable processing services

Maintaining its procurementIT system

Automating thesource-to-pay process

Migrating the on premise procurement IT platform to an on-demand, cloud-based solution…

15 percentoperational savings inprocurement operations.

15 percentoperational IT savingspost migration.

Process automationand the migration to a simpler, standardised,on-demand cloud solution.

Greater cost control, faster procurement processing, streamlined transaction processes and an improved user experience.

Rio Tinto migrates to cloud-based As-a-ServiceThe new information systems and technology delivery model incorporates:


Pay-for-use pricing: costs are fully flexible and services are scalable based on business demand

Modernization of enterprise resource planning and information management platforms

Consolidating and hosting applicationsin the cloud, managed via the AccentureCloud Platform

Rio Tinto expects to directly benefit from significant cost savings through increased business agility and cost flexibility inherent in cloud services, and from continued lower infrastructure prices in line with cloud economic trends.

The solution is based on a platform for innovation, including a co-located innovationhub in Singapore, and a long-term commitment to partnering.

Accenture Newsroom - Rio move to ground breaking As-a-Service in the cloud

11

Operations-as-a-Service bundles capabilities under a flexible commercial model aligned to outcomes


2

Supports new business models

Pay for whatyou use

Scalequickly

Plug in

3

Delivers business outcomes

Innovatefaster

Driverevenue

Reducecosts

1

Transforms business services

Intelligent Agile Robust

Infrastructure

Cloud

Security

Applications and Platforms

ANALYTICINSIGHT

INDUSTRYEXPERTISE

Business Processes

12

What is holding back Operations-as-a-Service


How significant are the following obstacles holding back your enterprise’s move to the “As-a-Service Economy”? (% Highly Significant – APAC)


15%

23%

23%

23%

23%

23%

31%

31%

31%

39%Missing definitions around business outcomes

Lack of willingness from our service provider(s) to cannibalize their existing revenue models

Outdate procurement & contracting capabilities

Lack of “change agent” leadership

Lack of a “burning platform” to do anything radically different

Few available “plug and play” services

General inertia in our organization to change from the status quo

Lack of support from our service provider(s)to share risks/gains with us

We don’t have the talent in-house to evolve the current model

Lack of trust in service providers

13

What will have the biggest impact on adopting Operations-as-a-Service


How much impact would the following actions have on helping you reach your desired “As-a-Service” end-state, if you were to make them today?(% Highly Significant – SVP & up)


Invest in effective analytics tools & skills

Replace your existing (legacy) service provider(s) with "As-a-Service" driven providers

Identify/hire a transformational leader/change agent

Accomplish creative problem solving/"Design Thinking"

Write-off legacy IT investments and move straight into cloud delivery of processes supported by As-a-Service

Retrain existing internal operations talent to redesign processes

Hire new operations talent to redesign processes 39%

41%

44%

44%

56%

61%

61%

14

As-a-Service critical success factors


1 Get design thinking

Transform the operating model, integrate your provider, leverage automation and analytics.

2 Exit the cocoon

Get closer to your clients: exploit intelligent automation and analytics insights to drive customer centric innovation.

Get skills on bothsides of the fence

Ensure you have the right skills inside your organisation and your provider. Shared value and cultural fit are critical.

3 Rewrite the rules

Retire traditional rigid outsource contracts and replace with new, dynamic, flexible contracts that encourage innovation and change.

4

accelerating theAs-a-Service economy

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Leadership & Management

Operations As-a-Service - The Untapped Opportunity