Client Challenge
Challenging market conditions had led our client, a global manufacturing, technology and services organisation, to embark on a major cost reduction programme to protect margins. At the same time, the organisation also embarked on a series of transformation programmes aimed at improving revenue and developing innovative new digital products and services.
The CIO had been tasked with reducing IT spend by 15%, whilst also:
- Building new capabilities required to support an ambitious digital agenda
- Driving the modernisation of the IT landscape e.g. investment in workplace and collaboration services, standardisation of complex ERP landscape
- Supporting the transformation of the business based on new services and new sales capabilities
- Continuing to support major business change projects such as mergers and carve outs of business units.
Approach
Wavestone was appointed to programme manage the delivery of the cost benefits. A bottom-up review of applications, infrastructure, networks and supplier contracts identified more than 100 initiatives which were assessed for benefits, costs to implement, impact on the business and feasibility to implement to achieve the benefits to support the cost targets.
A backlog of initiatives was established, and a number of work streams incepted to drive implementation of initiatives. As definition and implementation work progressed, a tracking approach was implemented so that the Executive board could understand actual and likely savings achieved, and the risk against achieved the required cost targets. In addition to this bottom-up approach, Wavestone also led top-down reviews of the operating model, sourcing approach and enterprise architecture.
A comprehensive business change and communications plan was developed to help explain the changes to key stakeholders, including the business, impacted staff and their representatives.
Results
As a result of the programme, initiatives worth over 25% of cost were identified and profiled against business impact, timescales and benefits.
Due to implementation timescales and business priorities, some of the initiatives were deprioritised for a later stage, with the 15% target savings achieved for the following financial year.
Further savings were identified from a supplier spend review, resulting in consolidation of suppliers and new controls on external spend.
A new target operating model was developed in conjunction with the IT leadership team. This established new capabilities in analytics, robotics, AI and business integration, strengthened service and existing capabilities such as supplier management, enterprise architecture and project portfolio management strengthened. These investments in new capabilities were offset by de-duplication of core IT functions across the organisation, and by establishing a revised location strategy based on a new Global Delivery Centre for applications. This resulted in 30% of roles in high-cost locations moving to a new global delivery centre in an existing offshore site.
Wavestone was retained to support the implementation of the target operating model.
