2011 Award Winner: Value Creation

Excellence in Value Creation Award 2011 - Europe sponsored by Germany Trade & Invest

Winner: Jacek Levernes, HP Global Business Services



STRATEGY

Global Business Services (GBS), HP’s internal shared services organization (SSO), is one of the forefront SSOs in the industry. During the first 11 years of its existence, GBS has built a strong track record in process delivery with a combination of high productivity and quality.

GBS aspires to become the thought leader in SSO evolution. GBS believes its strategy to evolve from a provider of transactional & administrative services, to a trusted business partner and business process owner for HP, is the breakthrough in this evolution.

GBS in EMEA region (Europe, Middle East and Africa) as the process owner, intends to add value to HP’s businesses over and above the transactional and administrative work it has been historically doing as part of its former value creation strategy called ‘Value Creation 1.0’ (VC1.0). The VC1.0 strategic program, based purely on process excellence and quality culture approach provided a strong methodology to standardize, optimize and automate processes in order to increase processes efficiency and productivity.

For GBS EMEA, process ownership means a significant change in the way we define value creation for our partners, compared to the typical shared service environment. This transformation requires a paradigm shift in the strategic thinking that drives process optimization and value creation. A change in the approach and methodology used within GBS – the ‘Value Creation 2.0’ (VC2.0) strategy was carefully crafted to focus on:

• Understanding all touch points in the End-to-End (E2E) process
• Full integration of all partners in the E2E process mapping
• Assimilation of our partner’s financial and strategic objectives into GBS objectives

METHODOLOGY

Driving ‘Value Creation 1.0’ strategy we took advantage of best-in-class methodologies (like Six Sigma, Fallout Management System, Industrial Engineering, Value Stream Mapping and Data Flow Analysis methodologies) to continuously improve efficiency of the processes serviced by us. For advanced process mapping, we were also taking advantage of professional tools such as ProVision system from Metastorm.

The shift from VC1.0 to ‘Value Creation 2.0’ (where the focus was moved onto E2E view on the business processes and evolution towards business effectiveness) required a set of new methodologies and extension of existing ones. The approach taken was to leverage from already mastered methodologies (to maintain focus on process efficiency) instead of creating the methodologies framework from scratch.

The VC2.0 program began early 2010 with the objective of indentifying multi-million-dollar opportunities. The key success factor to VC2.0 was the creation of a Unified Process Improvement Methodology and GBS’ evolution towards a Center of Processes Expertise for entire HP.

Unified Process Improvement Methodology (UPIM)

Unified Process Improvement Methodology is a part of the Business Process Management (BPM) Framework. This is a disciplined approach to identify, design, execute, document, monitor, control and measure business processes in order to achieve consistent and targeted results aligned to the organization's strategic goals.

The real strength of UPIM comes also from the fact that it does not only cover the methods and tools but comprises set of implementation guidelines applicable across the GBS organization.

Center of Processes Expertise

Based on the growing demand of our partners and our desire to drive the GBS SSO organization to the next level in value creation (VC2.0), the organization started to increase business acumen beyond what is considered a SSO typical level.

In the past years, GBS EMEA acquired very strong competences in managing and improving processes by developing our own group of process experts and consultants combining both, improvement methodology knowledge and deep business understanding. This team also works with GBS world-wide process organization ensuring global alignment and best practice sharing without the need to use external consultants.

As the result of the successful VC 2.0 implementation GBS EMEA delivers value through consistent methodologies and is recognized by our partners as a Center of Process Expertise.

COMPLEXITY OF CHANGE

Ownership of processes necessitates new skills, new methodologies, more complex roles and diversification of services portfolio. Extensive reporting activities, customer facing activities, pre-sales services and analytics are some of the new type of services performed by our organization. In the last two years, GBS EMEA increased four times the number of customer facing and pre-sales roles.

Proposing and communicating a business alternative in a transparent manner was the main way of overcoming resistance from some of the partners’ decision makers. Appropriate sponsors and champions of change in both organizations were identified to support implementation of the new strategy. Showing tangible results in VC1.0 stage, participation and involvement in shared initiatives for VC2.0 stage, decisively contributed to building trust and moving forward.

The proactive business approach was supported by a programmatic cultural change. We are no longer asking ‘what else we can do?’ Rather, with our process insights, we are pro-actively advising on what more we can do to increase our value to the partners. We were prepared to take the next step, adding extra value to the business, as a natural evolution for the processes we own and operate, assuming full accountability for business performance.

BENEFITS / HARD ACHIEVEMENTS

Measurable outstanding results achieved by GBS EMEA in 2010 definitely proved the success of the VC2.0 strategy. The majority of value created was based on cash flow enhancement and additional revenue generation.

We showcased to our partners that their return on investment in GBS EMEA is more than just cost rationalization. We shared yearly Net Present Value and Internal Rate of Return calculations that demonstrated the positive return on their investment. All initiatives were verified and approved by our partners’ finance organizations to ensure real value creation.

Apart from pure financial measures, we developed new Key Business Indicators (KBI) based on the strategic and financial objectives of our partners. Two examples of such KBIs are:
• A new KBI in marketing operations that gave our partner visibility on how advertising investment dollars are utilized and if it’s aligned with financial objectives.
• KBI for printing services to measure how much additional revenue was created due to the new process capabilities and how the portfolio mix looks after its extension.

DIFFERENTIATORS

The GBS Organization has experienced outstanding growth in the EMEA region since its origin. By having 2 multi-functional delivery centers covering a wide spectrum of advanced processes, we exceeded assumptions of the initial SSO business case by +300%, which proves the strategy chosen was highly successful.

There’s no doubt the key enabler of GBS’ success in this region is the paradigm of value creation as primary sense of SSO existence. This paradigm evolves in time. As exemplified in this application, we recently moved to a next generation value proposition (VC2.0). GBS did evolve from an "operator of a process" focusing on world class cost into a "real business partner", by considering ownership for objectives that goes far beyond cost optimization.

We believe this innovative approach will set the next generation standard for other SSO organizations. Being true owners of the business processes within the company SSOs are naturally predestined not only to create value as perceived by customers, but to also challenge the status quo and partner with them in redefining what value means. That‘s why we refer to our SSO customers as partners.

The concepts listed below are key to this innovative approach and as such they are true differentiators of our achievements:

• Innovative (for SSO industry) view on value – value is everything the end customer of entire company pays for – instead of everything the SSO customer/partner pays for.
• Deep understanding of business processes End-to-End – starting from end customer request, ending with the fulfillment of that request.
• Holistic Unified Business Process Improvement methodology in place – taking advantage of standard methodologies (lean, Six Sigma) and adding breakthrough perspectives; expanding toolset; securing strong governance.
• Acting as "Center of Process Expertise" for our partners
• Offering best value proposition - coming from delivery centers specialization & best location strategy, without losing synergies of cross-center cooperation thanks to unique organizational architecture.
• Value creation based culture – comprising set of customized principles; well defined goals setting process; defined talent development programs and career paths; focus on customer care