Target Operating Model (TOM

)
Discussion Document

Deloitte Consulting LLP
July 2009

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Contents

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Meeting Objectives
§ § § § § Gain consensus on project objectives and goals Share our perspective on developing and institutionalizing operating models and key success factors Describe the proposed approach to develop and implement a new operating model Provide an overview of how Deloitte’s methods can be used to accelerate the project Discuss next steps to initiate the project

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Background – GIFT and TOM
The Target Operating Model (TOM) project is a key component of AIU Holding’s Finance General Insurance Finance Transformation (GIFT) Program Guardian and will be targeted towards increasing capabilities and decreasing costs. GIFT Program Imperatives § Increase Transparency – Significantly improve walkback capabilities from financial reports to source transactions § Greater Standardization of Technology - Create a common financial language and technology platform § Improve Information - Improve quality and timeliness of information available to stakeholders § Standardize Processes - Standardize accounting processes, rules, and controls § Leverage Operating Model - Leverage shared services and centers of excellences TOM Project Objectives § Develop baseline – Develop single source of truth “current state footprint” to support proactive future workforce planning § Define future state operating model – Develop future state Operating Model which meets the goals of capability improvement and cost savings § Achieve business benefits – Demonstrate measurable business value and success; realize benefits through the rationalization of headcount, locations, process and labor arbitrage § Create business and employee buy-in – Gain leadership alignment around the Operating Model design, benefits and roadmap; gain employee buy-in to the new ways of working, roles and responsibilities and governance § Implement future state design– Implement the

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Background – AIUH Finance Organization Design Project
Since the TOM project was originally scoped, in support of project ATLAS, a Finance Organization design initiative has been started to conduct current state analysis, evaluate organization design options and define key function activities. Goals of this initiative include: § Identify core responsibilities of AIUH Finance (i.e., which functions should exist at the AIUH level) § Conduct current state analysis to determine which functions exist within Domestic Insurance and Finance Insurance § Define governance and control model for AIUH functions § Develop recommendations for sub-functions that should reside with AIUH vs. Business segments § Support Function Leads in developing detailed organizational models and check against high level cost baseline While the scope of the two initiatives might appear to overlap, we believe that both initiatives are complimentary and key in achieving the organization’s goals as related to the future state operating model ,and the two initiatives in conjunction can answer the following key questions: § How can Finance most effectively support / interact with the rest of the organization ? § What is the optimal global Finance organization / operating model (Local vs. COE vs. Shared Services)? § How will current on-going initiatives impact and optimally be integrated with the future Finance service delivery model? § What capabilities are needed to support the future Finance operating model?

SHOW APPROACH HERE?

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The broader landscape of in-flight and planned initiatives across the enterprise will both be impactful to and impacted by TOM
Initiatives are underway that will demand significant time and attention of leadership and key knowledge resources ¡ GIFT Program will … ¡ ATLAS will… ¡ Separation will… ¡ Reinsurance will… ¡ Global Claims Initiative

GIFT Release 1: CFP for CI Finance Organizational OneClaim (UK) – Auto

GIFT Release 2: CFP / CD (UK)

GIFT Release 3: CFP / CD (EUR)

GIFT Release 4: CFP / CD (JAP)

2010

2011

2012

2013

2014

ATLAS – Treasury

AIU Holdings Separation (IPO)

ATLAS - Other

ATLAS Investments

Reinsurance – Release 1

Reinsurance – Release 2

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The objective of the Target Operating Model (TOM) project is to design a world-class Finance organization for AIU Holdings
The project goals for TOM include the following: ¡ Design and implement the appropriate operating model which best meet the requirements, state of readiness and maturity of both AIU and CI’s finance functions ¡ Identify key functions and/or processes for redesign to conform with the new organization model (e.g., CoE’s, Shared Services) and enabling technology infrastructure ¡ Identify and realize business benefits through cost optimization, capabilities development and controls management ¡ Identify opportunities for outsourcing across the finance organization, including Finance IT, business processes, and functions ¡ Align TOM to overall corporate strategies, organizational vision, and impactful initiatives as necessary, as they affect the design and implementation of the program

Now overlapping with slide 4 – Just a few deltas that we maybe can incorporate into the earlier slide

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Deloitte’s Point-of-View and Market Intelligence

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Deloitte is uniquely qualified to assist AIU Holdings with this TOM effort
Deloitte’s Finance Transformation offering has been recognized as the market leader by Kennedy Information’s evaluation of the FT market and competitive landscape.

Key Highlights
§ Deloitte received the highest rating of “Strong” across all Finance Management Core Capabilities, across categories of “CFO Vision & Strategy”, “Finance Organization”, “F&A Processes”, “F&A Technology”, “Execution”, and “Value Enhancement” § Deloitte is a leader for global shared services combining process, technical knowledge, change management capabilities, understanding of technology, and insight on labor and tax issues § Deloitte is the only provider rated strongest in 14 of 16 FT core categories and assessed as having advanced depth and breadth of capabilities § Deloitte has an advantage in meeting the needs for clients to engage a tax strategy advisor as they consider global business integration strategies

*Source: Kennedy; Finance Management Consulting Marketplace 2009-2012; © BNA Subsidiaries, LLC; reproduced under license.

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From our experiences with AIG and in industry, we understand both the key success factors and challenges in the design and execution of TOM

Cultural

Competing Priorities

Unclear Scope and Objectives

Alignment with Other Strategic Initiatives

Decision Making

Inability to Execute Strategy

Complexity and Speed of Change

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We have assisted many clients in redesigning their operating models, and are seeing a trend towards a more centralized F&A Organization
Many Fortune 500 Companies Have Moved Or Are Moving To A Balanced And Centralized Finance Delivery Models To Gain Synergies

Decentralized
Time Warner Cable Comcast AT&T T-Mobile Cardinal Health J&J

Semi-Autonomous

Balanced

Centralized

MSO and Communications

Rogers Communications Verizon

Pharmaceuticals

Pfizer BMS Merck

Process Manufacturing

DuPont Air Products Rohm & Haas HP Nissan NA GE Honeywell

Other Manufacturing

IBM Mars, Inc

Textron Raytheon Limited Levi Strauss Gap

Ford GM

Consumer Business

Nike Hanes Brands S.C Johnson Land O’Lakes

Procter & Gamble Owens Illinois Sara Lee Campbell Pepsi General Mills

Consumer Packaged Goods

Other Fortune 500

Agilent Wells Fargo Aetna Cargill

Shell

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Insurance companies have some unique learnings to gain from their operating model redesign efforts
Within the Financial Service Industry, varying organization structures exists. Examples of decentralized, centralized and hybrid models exists across leading insurance and finance companies.
Insurance Company #1: Finance is decentralized by line of business - each business unit submits its own 10K filing Insurance Company #2 & #3: Financial reporting activities centralized at corporate level but remaining functions decentralized Insurance Company #4: Strong control over external reporting functions and other key functions centralized

Independent Business Unit
Finance Company #1: An Independent product line BU Org structure with a strong focus on outsourced shared services

Controllership Carve-out

Centralized CFO

Finance Company #2: An Independent product line BU Org structure with a strong focus on outsourced shared services

Finance Company #4: Centralized organization with strong CFO control over financial and regulatory reporting

Finance Company #3: Historically, an Independent product line BU Org structure, evolving into a centralized finance function

Both Finance Company #1 and Insurance Company #1 are moving towards more centralized models: ¡ Finance Company #1: A finance transformation initiative underway, to move transaction activities offshore and allow onshore resources to focus more advisory activities ¡ Insurance Company #1: While the current structure provides the opportunity to produce results quickly, there are multiple redundancies and less consistency across the organization. As a result, the company is considering moving to a more centralized operating model
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We have also seen a growth in F&A outsourcing activity
F&A continues to grow because of the breadth of business processes that are sourcing candidates; the F&A business outsourcing market size has grown to approximately $32 billion
§ AP, AR, and GA appear in more than 80 percent of right sourcing strategies, and more than 70 percent have an offshore component § Mainland Europe is currently adopting services as quickly as North America and the U.K. § Approximately 85 percent of Sourcing contracts have 5- to 10-year terms (the average is 6.8 years)

F&A Sourcing Scope Transaction Processing
Accounting to Reporting (General Accounting)
General Leger Accounting Consolidations Monthly / Quarterly Close Financial Reconciliation

External Reporting
Order to Cash
Order Entry Billing Legal Entity Reporting Statutory Reporting

Source to Settle
Requisition Materials Purchasing / Procurement

Fixed Asset Accounting

Tax Planning / Accounting

Benefits Admin. / Accounting

Inquiry Handling

Payment Processing

Accounts Payable

Cash Application

Collections

Regulatory Reporting

Rating Agency Relations

Premium Accounting (Ins)

Re-insurance Accounting (Ins)

Investment Accounting/ Securities Pricing (FS)

Daily P&L / Mark to Market /Middle Office

T&E Accounting / Reimbursement

Procurement. Card Admin

Bank Reconciliation

Treasury / Trust Management

Investor Relations

Business Decision Support
Planning
Strategic Planning Budgeting & Financial Planning Forecasting Accounting / Tax Policy Internal Audit

Finance Management
Control
Financial Analysis Internal Consulting Project Management Finance Function Management Human Performance Management

Management Reporting
Revenue Key: Allocations Expense / Performance Measurements Multi-Dimensional Reporting Profit Center / Customer / Producer Profitability Acquisitions & Divestitures

Specialized Expertise
Risk Management (CM) Actuarial Analysis / Reserving (Ins) Real Estate Mgmt.

Business Liaison

Training & Development

Source: Deloitte Research, IDC Not Typically Outsourced

Key
Less Commonly Outsourced Most commonly Outsourced

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Our Approach and Methodology

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Deloitte has experience in implementing Target Operating Models, and can leverage methodologies and toolsets that encompass people, process and technology
A proven toolkit of established TOM accelerators and tools: Deloitte has a significant knowledge base that will be invaluable for this project. This includes best practice operating models, process models/processes, organization designs and governance frameworks as well as numerous examples of these from recent client experiences. We also have a suite of tools and methods that our teams use to ensure consistent quality outcomes on our engagements and often enable us to accelerate project timelines. The table below outlines some of our key materials and tools which are relevant to this engagement.
Maturity Stages by Process

Operating Model Definition, increasing detail, effort and associ ated benefit

Organisation Design
Vision & Mission
Vision and objectives of the TOM, e.g.: • Business goals. IT strategy aims such as cost reduction, risk reduction, greater agility • Sourcing options, strategic sourcing, single source, multi-vendor etc.
Ogier IT Skills Assessment – Overall View
Ogier IT fun ction and Application Suppor Tea t m (AST) wer presen t ed with a skil e ls assessment matri to compl x et e This consiste of an industry sta . d ndard list of applicat ion skills plus the option to add in additional skill , w hich were then inc orporated into the over s all res ults. Staff we re asked to ra e the t m sel ves ac cor ding to their skill in each area i. e Not Used, Beginne s . r, Intermedi at e, Advanced and Exper and results colla ed and charted a ross overall s kills areas . The results ar t t c e available in their entiret y via the completed Skills Matrix .

Maturity Stage by ITIL v3 Process Area

Maturity Stage Summary
The following provides su mmary descriptions for the measu red maturity stages.

Target Operating Model Design
Definition of the high-level principles e.g.: • Multi-supplier/Service Integrator model • TOM design principles • Lean management & control • ITIL-aligned processes etc Definition of the retained IT org: • Level 1 Roles descriptions • Level 2 Role responsibilities, skills & capabilities • Performance Measures & Targets Definition of Governance: • Governance forums responsibilities, escalation • Reporting requirements • IT metrics & targets • Balanced scorecard

Deloitte IT Skills Framework
B ackground
The skills ava ilable to the IT de partm e nts are dive rse. T hese are mainly centred around Inf rastructur and Ogi e er known applications ( hose n a t med on Ogier’s App licat ion Matrix). Howev er t he re are als o many skills a vailabl e which a re not being used.

Rapid IT Service Diagnostic tool
Strategy Gen eration Servi e Measurement c Financial Management Servi e Reporting c Serv ice Portfolio Management

5 4 3 2 1 0

7 Step Improvement P rocess

Demand Management

Applications Management IT Operations Management Technical Management Access Management Problem Managemen t Request Fulfil ent m Event Management

Servic Catalogue Management e Serv Level Management ice Capacity Management Availa ity Man bil agement IT Servi e Continuity Man c agement Inform ation Securit Man y agement Supplier Management Transition Plan ning & Support Change Management

Target Operating Model Principles

Obse rvations
The IT skil ls assessment identif ies those a reas where training could be pro vided as well as are as wher s taff possess skills which a e re not being used. The skills assessment uses a standar lis t of applicat ions from t he D d eloitt e database. This repr esents a wideranging skill set o pre e f f rred skills . The main skill set is centred a round Infrastruc ture Applications and Ogier known applic a ions (those named on Ogier’s Application Matrix). t

Level 1 – Chaot ic Processes an d roles ar e not defined. Activ ities in this area ar e largely u nstructured and uncoordinated.

Functional Operating Model Functional Target Operating Model

Definition of functional TOM: • Design of future state functional groups in TOM • Description of functions and key responsibilities Definition of processes e.g.: • Level 1 to 3 process design • RACI responsibility matrix • Process metrics & targets

However, there a re several areas of skill where sta f posse s s k s f s ills t hat they are not using. These ar m a e inly aro und Infra tructure, Dev s elopment and Deskt o p To ols, as well as some Ogier known apps. In some area such as Securi y, the s t re are no ex perts – but the re are staff who have skills in that area a nd ar not using them. e In some area such as Voic e Serv s ices, Re quirements Gathering and D at a Wareho us in g the re are o nly basic skills with no Exper s or Adv t an ced leve s taff. l Fur her de ailed inf o t t rmat ion can be found in the Ski lls Matrix. Thi contain s a s detailed br eakdown of ski lls, graphs of sk ill levels a nd a n over view o skil c lusters. f l

Ke y Recomm endatio ns
Review skills matrix and identify a reas where further training i s needed. Each high level category (left) is broken down into specific applications. Reso urces should centre on Ogie known applicat ions as these are t he r apps Ogier identified as necessary to the Business. There a re al s o ‘Og ier added apps’ which are those appli a ion s identified by staff as being part c t of their everyday ski llset. For areas where further training or rec ruit ment ha bee s n identified, the skills matrix has also hi ghlight e d a ny staff who have skills in an ar ea where they are not using them in their job role This ma . y fil a l development nee for Ogie in terms of utilising an existing skillset. d r
©20 07 Deloitte MCS Limited. Private

Level 2 – Reactive Basi c processes are defi ned and fol lowed to some extent. P rocesses can often be byp assed and there is a lack of owne rship. Acti vities ar e largely reactive and ineffi cient in nature. Level 3 – Proactive Processes are agreed, wel l do cumented, communicated a nd enforced. R oles are defi ned and individuals are suitably trained. S upporting technology is u sed to help deliver process objectives. Ser vice Leve ls are in place an d agreed Level 4 – Service Driven Processes have clear end-to-end service oriented targets assoc iated to the m, an d efforts are made to continually improve. Advanced technologies are u sed to ass i st.

Organisation

A M B E R

Process Governance & Performance Reporting

and Confidential.

Deloitte’s Target Operating methodology provides an end-to-end view of the required target functions and capabilities of an IT Organization.

Deloitte has an established business design group that specializes in the detailed design and implementation of organizational structures Our approach goes significantly beyond ‘wiring diagrams’ and job mapping. We adopt a hypothesis driven approach that defines the capabilities required to deliver against strategic objectives.

Incident Management
500

Servi e Desk c

450

400

Deloitte’s Skills Framework tool assesses the skills capabilities in an organization, and aligns this to the organization’s needs.
350 300 N ot Used Expert 250 Advanced Intermediate Beginner 200 150 100 Managem e nt Data W arehousing apps 50 Requirement s A nalys is Business I ntelligence Package I ntegrat ion

We can also draw on a best practice framework called Skills Framework for the Information Age (SFIA).

Leadership

Individual steps which link to other processes

SBU CIO RM S&A F&OC PE&O TRM ADE Regional GSS IT Regional Head of GSS IT Shared Services RM M&C SM IDS DCS ADM VM Global GSS IT M&C SM IDS DCS S&A ADM VM Vendor AD Vendor AS Vendor Infrastructure Vendor

Deloitte’s Cultural DNA assessment
Mission, Vision, Values Business Strategy and Structure Brand Promise

Process Design
I I I A,R I A, R A, R I -

SBU Column

SBU CIO Column

Regional GSS IT Column

Global GSS IT Column

Changes t o activities not yet reviewed

Prog ramme Desi gn & Control

Vendor Activities

Track and Manage Vendor Contracts –managed by GSS IT
R=Responsible, A=Accountable C = Consult, I = nform I 1 Receive finalised contract after

Deloitte Intelligent PMO
•  •

Governan ce S tructure Vision D esi gn Approach

Strategy C hart Board Control

Assurance

Risk & Issue Management
 •

Risk Awaren ess Risk and Issue s log Escalati on pro cess M itigation Activi ty Continge ncy p l anning Reporting

Program me Design & Cont rol

Out come Management

Inf ormation

Ogier known

Enterprise

ID

0

Deloitte’s diagnostic tool is an ITIL version 3 aligned assessment tool which provides a structured and comprehensive approach to quickly understanding current state maturity across the entire IT process, control, organizational, and supporting technology spectrum.
Level 5 – Value Driven Processes are h ighly mature and ve ry well integrated into the Business requirements. T he Business and IT work together to i mprove.

Knowledge Management Serv ice Asset & Config Mgmt Evaluation Release & Deploym ent Mgmt Serv ice Val dation & Testing i Key: Maturity Stage Sc ore by Proces s Area Desired Stat e

Ogie r added apps

Tools

Mobile S erv i es c

Desktop T ools

Voice S er vices

In frastruct ure

Test ing T ools

Development

Certif ication

Hardware

Security

IT SM

Risk & Iss ue Management

Outcome Management

Busi ness Case/ Investme nt Appr aisal Key Performa nce Indicators Metrics
 

Best Practice/ Benchmarking

PMO
Planning & Progre ss Reporting Stakeholde r Management & Communic ations

negotiation
2 Receive vendor performance metrics

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Planning & Pro gress Reporting
 •

Realisation plan a nd tracking tool Owne r/Responsibility alignme nt Post progr amm e re view
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Program me Support

Pro gram me Support
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and analysis from Service Management
3 Discuss vendor performance between

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Scope M anage ment Integr ated p lan

Financial Control Qual ity Control Change Control Configuration C ontrol Secretariat Orga nisation Chart Filing Structure Contact List

\ Programmes, Policies,
Processes, Practices Physical Work Environment People Profile, Assumptions and Behaviours

Provides a “hard” and tangible way to understand the “soft” and complex issue of culture. It is a rigorous and statistically valid tool which provides insights into behaviors, behavioral drivers and barriers for change.

Deloitte’s process design approach includes a number of tools to support specific parts of the design process. These include:
SM & VM
R R C C -

A, R

4 Review performance (metrics) with

vendors on a periodic basis

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5 Analyse service level credit regime and 6 Discuss applicable penalties and

identify applicable penalties / incentives incentives

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9 Evaluate contract value and adjust if

RACI modelling for establishing clarity around roles, responsibilities and interfaces. Governance structure design. Capability mapping tools.

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Deployment of a standard PMO often does not provide the necessary insight to steer a program intelligently and highlight the real risks and issues ahead of time.

Depende ncy t racking Resource Estima ting Reporting tem plates, process and s chedule Exce ption re porting
• • •

Stak eholder Ma nagement & Communications
 •

Stakeholder M apping Contact tracker and ca lenda r Communica tion produc ts

Deloitte’s iPMO is designed to deliver complex technology programs ensuring integration, Information-lead and intelligent management of programmes.

Deloitte research and our substantial experience of IT organizations allow us to offer comparisons across all industries, Our practitioners are highly skilled in implementing leading practices and technologies.

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Approach framework
Our approach is designed to help you define options and gain stakeholder consensus
Create a common set of service delivery design principles, and formulate a supporting future state vision. Benchmark the vision to internal and external data points. Design and completion of detailed architectures for the selected Target Operating model, e.g. detailed IT, people, process etc. architecture underlying the TOM, including a detailed business case and financial impact assessment.

Identifying and aligning the finance function behind an organizational strategy is the critical first step in developing a Target Operating Model strategy

Conducting an assessment across functions within the Finance organization will help identify opportunities and key activities that need to be incorporated in developing a future target operating model

Determine the future shape of the operation by using the previously defined design principles and strategy to create service delivery options. Analyze , prioritize and select the most viable option for subsequent implementation.

With a target operating model design in place, a detailed implementation plan and roadmap clearly highlighting responsibilities, dependencies and sequencing of steps is needed to execute and deliver the future state operating model

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Organizational Strategy
Identifying and aligning the finance function behind an organizational strategy is the critical first step in developing a Target Operating Model strategy

¡ Confirmation of the strategy, objectives and critical success factors (CSFs) developed by the Finance Org Model project

Sample Output – Charter with Guiding Principles
Possible Locations of Required Functions Holding Company Finance Operating Company Finance

Goals & Objectives

¡ Rationalization of functions across regions ¡ Leadership consensus and alignment ¡ Understanding the consistency with which these have been communicated, understood & applied

Shared Services Group

Enterprisewide finance functions and processes

Business specific finance functions and processes

Shared financial processes

¡ Objectives List: Conduct executive interviews and/or workshops to identify and confirm strategy objectives

Controllership

Activities & Deliverables

¡ Align Objectives: Review vision and organization structure designs from the Finance Org Model team and revise to fit with finance strategy objectives ¡ Voice of the Customer Analysis: Conduct surveys across functions and business units to understand issues and needs regarding Customers, Products and Channels

Financial Planning & Analysis

Tax Required Functions Treasury

¡ Organization Design ¡ Balanced scorecard

Toolsets & Accelerators

¡ Operation Model Value Chain ¡ Voice of the Customer Surveys ¡ Product & Service Segmentation

Risk & Compliance

Other

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Current State Assessment
Conducting an assessment across functions within the Finance organization will help identify opportunities and key activities that need to be incorporated in developing a future target operating model

¡ Establish definition of current operating model and architecture (e.g., process, org, technology), including opportunities to leverage shared services and outsourcing

Sample Output – Functional Analysis

Goals & Objectives

¡ Identify where existing initiates on-going/planned impact TOM ¡ Capture key FTE, Business and Financial metrics and identify duplications, costs, and system constraints
Role Audit Function External Audit Planning Internal Audit Internal/External Audit Support Location
Bus. Unit Corporate Bus. Unit Corporate Shared Svc Corporate Corporate Bus. Unit Shared Svc Corporate Bus. Unit Shared Svc Corporate Corporate

FTEs
2 5 3 3 2 1 6 2 5 1 1 1 1 1

Shared Service
N N N N Y Y N N Y N N Y N N

¡ Current State Footprint Analysis: Understand, validate and map the current organization and processes to help in developing the TOM definition

General

Executing the Corp/OC Close OC Consolidation Enterprise Consolidation Manage G/L (Top Side JE) Manage G/L (Initiating JEs)

Activities & Deliverables

¡ Change Management Documentation: Capture current and planned change management activities ¡ Function Analysis: Assess performance across functions using an industry maturity model and identify deficiencies

p i h s e l r t n o C

Manage G/L (Posting JEs) Accounting Policies Accounting Procedures Overhead Allocations Foreign Exchange Translations Eliminations

¡ Cultural DNA Assessment ¡ Rapid IT Service Diagnostic Tool

Toolsets & Accelerators

¡ Value chain analysis ¡ Maturity Model ¡ Resource/Skill/Function Database

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Future State Vision
Create a common set of service delivery design principles, and formulate a supporting future state vision. Benchmark the vision to internal and external data points.

¡ Establish future state vision for service delivery channels (e.g., COE, shared services, regionalization, etc.)

Sample Output – 2x2
An operating model matrix, as shown below, can be used to illustrate the focus of Finance’s strategic choices. For example, a cost efficient transaction processor’s likely focus will be the “Shared Services” quadrant.

Goals & Objectives

¡ Align to Finance Org Model initiative vision and confirm design principles for TOM ¡ Compare vision to industry practices through benchmarking

Method Of Adding Value
Transaction Processing
High volume, low value add

Knowledge-based
Low-volume, high-value activities

¡ Confirmed Future State Vision: clearly defined operational design principles and confirm through executive workshops

Activities & Deliverables

¡ Benchmarking Study: analysis of gaps in key design principles as compared to industry leading standards ¡ Financial Model 2x2 Matrices: analysis of to-be states across all finance functions

¡ Finance Transform Maturity Matrices ¡ Best Practice Benchmarking

s s e n i s u B o T p i h s n o i t a l e R

c i f i c e p S

) n ¡ Distributed to location(s) for o i g local service needs e r , ¡ Specialized services for each t i n site u , e t ¡ Manual or end-user Intensive i S (

Site Support

Business Partner
¡ Aligned with a f unction or BU or management team ¡ Knowledge transf er services ¡ Decision/action Intensive

Shared Services
c i r e n e G ) e d i w y n a p m o C ( ¡ Consolidated organization ¡ Operational focus ¡ Process intensive with standardized services ¡ Could cover countries or region

Center Of Excellence/Corp.
¡ Expertise focus — ability to leverage ¡ “Best practice” development ¡ Issue/knowledge intensive ¡ Often organized by region

Toolsets & Accelerators

¡ Sourcing Matrix ¡ Key Design Principles

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Service Delivery Analysis & Selection
Determine the future shape of the operation by using the previously defined design principles and strategy to create service delivery options. Analyze , prioritize and select the most viable option for subsequent implementation.

¡ Develop options based on previously defined vision and design principles

Sample Output – Process Rationalization

Goals & Objectives

¡ Analyze the opportunity and costs implications associated with each option and review with stakeholders ¡ Make the final selection for future state TOM model
Maturity Lead Generation As -Is Value Stream Map

1.09 Maturity Team store other in Oddments Tub

Error – cannot Change (5-10%)

6

Actuarial

1.08 Maturity Team amend record on Webseries

26 QA Actuarial

1.05 Maturity team receives & stores check slip

1.06 Maturity Team access EDM for legacy documentation

1.11 Maturity Team store slips in cupboard

1.12 IS run report on OB and produce XLS report

1.07 Maturity Team compare check slip against EDM document

1.10 Maturity Team sign off check slip

1.04 Post delivered to maturity team

1.02 IS check slips generated

Check passed (c.70- 75%)

1.14 IS pass to maturity team

1.03 IS pass to post team

¡ Scorecard and Evaluation Criteria: create criteria for evaluation and prioritization of TOM options ¡ Prioritized Options List:: facilitate workshop with key stakeholders to discuss and rank options by priority
Every 2 weeks

1.13 IS produce authorisations slips

1.01 IS run a report on OB system

Activities & Deliverables

1.15 Maturity team pass to Actuarial Team

¡ TOM Options: identify viable TOM options showing functions, sub-functions, location / region and use of COEs / shared services

Name; Address ; Policy; Agency Number; Estimated Value 2

Slip per customer

Error – can Change (c.20%)

1

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Page 2

Every 2 weeks

Report run on maturities in 4 months time

Previous claims Policy changes

Report run on maturities in 2 months time

Sample size 40

¡ Prioritization Matrix ¡ Process Rationalization

2 days

1 day

2 days
(100 items per batc h tak es one pers on 1 hour to proc ess = 50 man hours to proc es s 5000)

1 day
(2 mins per K ey mas ter rec ord amendments * c.1000 amendments )

1 hour

1 hour

2 days

Toolsets & Accelerators

¡ Location Feasibility Study ¡ Shared Services / COEs / Sourcing Strategy

Page 1

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Design
Design and completion of detailed architectures for the selected Target Operating model, e.g. detailed IT, people, process etc. architecture underlying the TOM, including a detailed business case and financial impact assessment.

¡ Based upon the selected service delivery option, develop the detailed IT, people, process etc. architecture underlying the selected TOM

Sample Output – Future TOM Design
CFO

Goals & Objectives

¡ Identify the related metrics (cost, financials etc.), create a cost / benefit analysis and create the detailed business case and funding request
Head of Business Partners Head of FAC

Finance Exec

Head of Transaction Processing
Transactions Assistant

Head of Tax

Head of Treasury

BP Exec.

Financial Controller

Indirect Tax Manager

Direct Tax Manager

Treasury Assistant 1 FTE

Activities & Deliverables

¡ Detailed TOM Design: create detailed organizational charts showing functional, systems and resource architecture models, including governance and accountability ¡ Business Case: create opportunity cost and benefit analysis, including financial impact assessment

Management Accountant (Inv. Perpetual) 2 FTE Non IP UK Business Units 2 FTE

Financial accountant 2 FTE

Head of Process Control and Improvement

Senior Transaction Processing

Accounts Assistant (VAT)

Direct Tax Accountant 2 FTE

Systems Analyst 2 FTE

AP 5 FTE

BP Exec.

AP/FA 1 FTE

Key
Management Accountant 2 FTE AR 1 FTE

Corporate General

Corporate Aligned to Business

Region

BP Exec. Offshore

Cash Processing 1 FTE

¡ Operating Model Design ¡ Diagnostic Process Blueprint
Management Accountant (Offshore) 2 FTE
BP Exec. ESS & EBS

Accounts Assistant (Feesharing)

Toolsets & Accelerators

¡ Business Case / Financial Model Framework ¡ Key Metrics Measurement and Tracking Tool ¡ Lean 6 Sigma methodology

Commissions 1 FTE

BP Exec. ECS 2 FTE

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Implementation
With a target operating model design in place, a detailed implementation plan and roadmap clearly highlighting responsibilities, dependencies and sequencing of steps is needed to execute and deliver the future state operating model

¡ Design an implementation plan and roadmap based on TOM analysis, highlighting sequencing and dependencies

Sample Output – Implementation Plan

Goals & Objectives

¡ Review project portfolio for consistency & alignment ¡ Design authority established to govern the implementation and identify milestones ¡ Implementation work initiated
Year 1
Sales and Service Collections and Recoveries

Year 2
Implement regional salary weighting

Year 3
Regional salary weighting introduced

Year 4

Year 5
Illu str a ti ve

Outsource Recoveries

Recoveries outsourced to low cost provider

¡ Roadmap: Develop roadmap detailing activities, sequencing of steps, desired outcomes, and dependencies

Marketing Product Design and Manufacture Operations and IT Infrastructure Risk Payments Shared Services Organisational Change
Re-engineer product dev processes for core products Product development processes optimised for core products White-labelled supplier utilised for non-core products

Activities & Deliverables

¡ KPI Documentation: Identify key performance indicators (KPIs) to track the success of the implementation ¡ Project Management Office Charter: Agree / achieve roadmap sign off and establish project management authority ¡ Deployment: Begin to execute on the roadmap by clearly defining short-term next steps and responsibilities

Implement white -labelled product design and manufacture, IT and operations for non core products Migrate processing to alternative supplier (TBC) for product design and manufacture, IT and operations for non core products

Alternative sourcing (TBC) utilised for core product design, manufacture, operations and IT Outsource Payments Payments outsourced to low cost provider Simple Shared Service processing outsourced to low cost provider

Outsource simple, transactional processing

Re-organise functions to align with new organisational structure

¡ Portfolio management methodology (PMM) ¡ Program Interdependency Planning

Toolsets & Accelerators

¡ Change Readiness Assessment ¡ Key Industry Benchmarks ¡ Prince 2???

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Project Timeline and Resources

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Project Timeline
Timeline (weeks/months)
1 2 3 4 5 6 7 8 9 10 11 12

§ Identify and confirm strategy objectives § Align objectives to fit with finance strategy objectives § Conduct surveys to understand issues and needs regarding Customers, Products and Channels § Understand, validate and map the current organization and processes § Capture current and planned change management activities § Assess performance across functions using an industry maturity model and identify deficiencies

§ Confirm Future State Vision through executive workshops § Conduct benchmark analysis of gaps in key design principles as compared to industry leading standards § Analyze of to-be states across all finance functions using financial 2x2 matrices § Identify viable TOM options showing functions, sub-functions, location / region and use of COEs / shared services § Create criteria for evaluation and prioritization of TOM options § Facilitate workshop with key stakeholders to discuss and rank options

§ Create detailed organizational charts showing functional, systems and resource architecture models, including governance and accountability § Create opportunity cost and benefit analysis, including financial impact assessment

Milestone

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Organization chart
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Key Success Factor / Our Experience (Sameer Shah)
nGeneral market success factors nPitfalls to avoid given our knowledge of AIU Holdings nPotentially highlight regulatory and tax concerns (e.g., data may need to reside in Japan)

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Copyright © 2008 Deloitte Development LLC. All rights reserved.

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