The Fifth Case – Key Success factors of IT and operations merger integration in CIMB NIAGA

Preface

Talk about merger is talk about integration. Over the past several years, mergers have increased steadily in value and complexity how to integrating two business. In fact, two companies together are more valuable than two separate companies and it will gain a greater market share or to achieve greater efficiency.

Many companies conducting merger to find a balance between synergy realization and customer retention. Beside that, speed is an important factor for merger integration running smoothly, if a company takes too long or there is a delay in capturing the value, it can destroy the business case justifying the merger. In essence, balance between integration speed and profitable customer retention is essential.

Merger integrations are always challenging. Today’s IT and operations merger integration is one of the most important aspects in merger process. The IT & Operations integration will also drive the timeline for most other activities.

Accenture as a global management consulting, technology services and outsourcing company have a reputation to help manage the merger of the two companies operations. Accenture’s industry insights and experience in business integration as well as its proven experience in helping clients seamlessly transition to a post-merger activities in the future.

CaseStudy 2

CIMB Group of Malaysia — the fifth largest financial services provider in Southeast Asia acquired two banks in Indonesia: Bank Niaga and Lippobank. In term of assets, Bank Niaga was the sixth largest bank in Indonesia whereas Lippobank was the tenth. To comply with the Indonesia Central Bank’s “single presence policy”, CIMB embarked on a plan to merge these two banks. The merger would create the fifth largest bank (CIMB Niaga Bank) by total assets of more than USD 10 billion and also among the top five in terms of distribution network in Indonesia.

Due to the IT-intensive nature of the banking business, one of the most important aspects of a bank merger is the IT and operations merger integration. The speed of completing the merger depends on the speed of the IT & Operations integration, whereas true “one-bank” service happens only upon completion of the IT & operations integration. The IT & Operations integration timeline will also drive the timeline for most other activities

How Accenture Helped

Accenture was requested to provide integration services in the execution of the merger of the two banks. Accenture partnered with CIMB Niaga to provide the overall Merger Program Management Office.

Since Accenture’s scope covered mainly IT, it leveraged its proven “Merger Integration Framework and Methodology” to plan and execute the merger in two phases:

• In the Planning Phase, Accenture worked with CIMB Niaga in defining the ‘To-Be’ Target Operating Model for IT, Operations and selected business areas of the merged entity. The IT & Operations integration plan provides a clear roadmap with the best options on how the integration would be achieved within the timeline required by CIMB Niaga

• In the Implementation Phase, Accenture worked with CIMB Niaga to manage the execution of the merger integration activities to achieve Legal Day 1 and Operational Day 1, in line with the Target Operating Model and target schedule defined

Question:
What would be the key success factors in the planning phase that would make an impact in the implementation phase?

Based on case study, Accenture partnered with CIMB Niaga to provide the overall Merger Program Management Office. There are two phases that must be passed to successfully the program, which is Planning Phase and Implementation.

Planning Phase is a milestone that Accenture built for CIMB Niaga especially target Operating Model for IT, Operations and selected business areas of the merged entity. This programs include scope of planning, prepares work plans, cost estimates, and also schedule that required by CIMB Niaga.

In the Implementation Phase, Accenture worked with CIMB Niaga to manage the execution of the merger integration activities to achieve Legal Day 1 and Operational Day 1, in line with the Target Operating Model and target schedule defined

There are several key success factors in the planning phase that would make an impact in the implementation phase:

• Strategic planning
Every company must have purpose behind the business strategy with clear and achievable deliverables especially for IT environments and operations. Selecting target must determine because this is critical issue when the company consider the integration process. Targets valued based on the implementation of a company’s own best practices, processes and systems

• Due Diligence
A key activity in any merger, is due diligence. The benefit of a thorough due diligence effort is vital in helping companies understand what they are buying and in creating the right strategies especially conducting strategic operational and IT to obtain the desired value from a merger.

• Conduct Integration Planning
Integration process needs to run smoothly for the merger to take place and to reap the benefit from the synergy. Thus prior planning should be made even before the completion of the merger with clear timelines and milestone to ensure the successful implementation of the deal. For IT operational, this aspect must be prepared before implementation, so the system can running well to a post-merger activities in the future.

• Execute Integration Plan
This phase would involve the implementation of the plan developed in the previous phase. Decisions have to be made fast to speed the integration process and to prevent any distraction within the workspace in implementing the integration. A communication strategy needs to be developed to address the rumors and question that arise within the post merger integration.

• Evaluation
Planning and Implementation in IT and operations merger integration must be evaluated to reviewing the performance of the new entity to ensure that a successful integration has been completed and the objective of the merger have been achieved.

As a conclusion, a successful post-merger integration must include a robust IT and operation merger integration program. The merger program management office begin with Planning and Implementation phases, which is have a goal to gain a greater market share, reduced cost and to achieve greater efficiency.

Fourth Case – Improving Indosat Customer Service Level

Preface

In the telecommunication industry, number of mobile phones users has been increasingly competitive. In Indonesia many service provider try to become a leader in this industry, with a latest technology, triggered brand, marketing and pricing they trying to retain their customers. Service models show that losing customers is more costly than acquiring them, and as the masses mobilize, service providers are targeting customer retention.

This increasingly competitive drive every service providers are rethinking its service strategy, especially in terms of its ability to satisfy customer service and in terms of supporting IT services. Increasing customer level is a key to facing challenging market conditions, greater competition and more demanding customers.

Accenture as a leader in global management consulting have deep understanding and proven track record in telecommunication industry to develop and implement an integrated system to helps increase their customer level.

Case Study

As a response to telecommunication deregulation, Indosat formed a merger with Satelindo and IM3, which had caused the combination of several complex systems supporting its different types of products. The various systems include highly customized CRM systems and other supporting systems for the registration and activation of customers’ services. In addition, this merger had also caused multiple cards and voucher inventory systems causing complication in reconciliation and reporting. As the business becomes more dynamic, changes to the systems become more complex and tedious, thus causing long turn-around time during issues resolutions or new product creation. In addition, the reliability of these systems is also one of the biggest concerns within the business. As the complexity of the systems grew, the legacy systems have become unreliable, impacting the customers service level.

How Accenture Helped

Using the Accenture Communication Solutions, based on telecommunication industry best practices, Accenture implemented an integrated customer care and cards inventory management systems that combined all the wireless products within Indosat Accenture managed the project by working closely with the users to understand the business concerns and practices. In addition, the project was set-up with a combination of strong local resources combined skilled people from the region and skilled resources from Accenture’s delivery center. As a result, the systems implemented had been stable, and had been able to provide better service level to the subscribers. In addition, the project also consolidated Indosat’s products within a single system, which enabled the client to provide bundled services. Indosat in turn is able to effectively track its cards inventory and distribution, resulting in a higher accuracy of SIM cards inventory.

With the above adoption, how would Indosat improve its customer service level?

Based on case study above, Indosat experiencing some issue that must be resolved, with several accenture solutions such as implemented an integrated customer care and cards inventory management systems that combined all the wireless products. After the merger, the product and customer will be a single unit and integrated into one system, this implementation will help Indosat works more effective, efficiencies and also compilation in reconciliation and reporting can be reduced.

Another solution from Accenture is Implementation the various systems include highly customized CRM systems and other supporting systems for the registration and activation of customers’ services. Implementing CRM is a key because it will enable Indosat to move closer to the customer vision, focusing less on driving customer transactions for short term gain, and more on fostering trust based relationships over the long term. In essence, Indosat can sell more and spend less as their customers are better served.

Implementing a project need more resources especially from human resources. In addition, the project was set-up with a combination of strong local resources combined skilled people from the region and skilled resources from Accenture’s delivery center. By working as a team, problem and customer solutions will be addressed more quickly and efficiently, customer satisfaction is the goal of this program and of course Indosat will increase its level of quality service for their customers in the future.

The reliability of these systems is also one of the biggest concerns within the business. As the complexity of the systems grew, the legacy systems have become unreliable, impacting the customers service level. By Implementing new system it will enabled Indosat to scale capacity to support its growing customer base. The system also reduces the time to market for the new products and services that attract for retain customers in a highly competitive environment.

As a conclusion, to continue growing while delivering consistent value and service to the customers, Indosat with Accenture solution have implemented an integrated system that will assist Indosat to reap greater efficiencies in its customer service level. As a result, the systems implemented had been stable, and had been able to provide better service level to the subscribers. More importantly, it is ready to begin its journey toward becoming a high performance business.

Third Case – Outsourcing Concept and The Critical Success Factors for Offshore Company

Preface

In the globalization area many companies make cooperation with external parties to meet their needs, it can be understandable, because the company basically can not stand alone. They require the supplier to obtain sources of raw materials, labor and other contracts. This is necessary so the company can better concentrate on core business activities, determining how to do more with less and also gain competitive advantage.

Outsourcing is an essential tool for every business. In fact, many outsourcing pioneers discovered that the early phase of industrialization is focused primarily within the IT environment. The problem is that sometimes the company’s capabilities in house can not accommodate these achievements, so need to outsource some processes or IT services.

IT outsourcing allows the business to focus on what really matters, meanwhile the vendor or IT outsourcing service provider focusing on their best skills of managing IT. Not only reduce cost, Implementing IT outsourcing is a strategic asset to help the companies stand apart in their markets. They seek to leverage IT as a key driver of high performance.

Accenture as a global management consulting, technology services and outsourcing company have a proven track record to provide a full range of IT needs, start from an application, design or infrastructure outsourcing to drive business outcomes.

CaseStudy

One of the largest offshore oil exploration and production company In Indonesia, operating in the Southeast Sumatra, completed its SAP ERP implementation project in 1998. The company then needed user support in applying the system to achieve and sustain the benefits of the SAP implementation. The company operates 24 hours a day, 7 days a week in an offshore location that requires high availability and reliability on its ERP and other applications. At the same time, its business environment also requires to have a highly productive information technology services in terms of quality, predictability and responsiveness. This high availability and reliability, predictable and yet cost effective information system support cost were a difficult challenge because the company did not have adequate IT resources.

How Accenture Helped

Accenture provided IT application support services, established the company’s IT business processes and managed the overall delivery of information technology services since 1998.
Accenture leveraged its IT Outsourcing Delivery Methods and IT Outsourcing Delivery Assets to ensure that the company achieves its outsourcing objectives of:
• Increasing productivity (quality, predictability and responsiveness) of IT services
• Providing access to skilled IT resources
• Increasing access to current IT technologies and best practices

What would be the benefit for the company in adopting an outsourcing concept?

Based on case study above, outsourcing services are no more related to only cost saving but have extended to offer greater benefits to the company, the benefit can be listed as below :

• Focus : By an outsourcing, it will help the company focus better on core business activities by managing other less important aspects of the business. The management in the company can spend more time managing details then actually planning and implementation.

• Cost : Reduction in cost of development is one of the biggest benefits offered by an outsourcing concept. It will reduce development cost approximately 30-50%.

• Maximum resource utilization : Internal resources of Accenture can be utilized in a manner so as to ensure skills of the resources are utilized to the maximum benefit.

• Advanced Technology : The Company will get the latest technology and best practice that Accenture implemented while delivering various services.

What would be the benefit for the company in adopting an outsourcing concept?

To be able to support the needs of the business, the company must realize there are some critical success factors for making outsourcing work. Here are some critical success factors:

• Manage the Relationship

Successful outsourcing is all about managing the relationship, there is a commitment from the management and the vendor (outsourcing company) to ensure that both parties gain the maximum benefit. Both parties should clearly understand the costs, risks and rewards of pursuing this path. There is some case that outsourcing relationships have failed. They failed because the responsibility of managing those relationships defaulted to the technical teams instead of the senior IT leadership who negotiated the deliverable for the outsourcing contract in the first place. This enables the management team to deal with problems before they get they get out of hand.

• Performance Management

The management must monitor and evaluate the performance of the outsourced service, identify all goals and objective from the beginning and this will enable the company to deal with performance issues before they get out of hand.

• Financial Management

Managing the financial management is just as critical as managing financial performance because it ensures that the outsourcer is meeting its delivery commitment for the non-IT items that are critical to the success of the outsourcing program.

• Service Value

Managing Service Value enables IT organizations to prove to the business that the outsource is delivering IT services optimized for cost and quality.

Conclusion

Outsourcing is an essential tool for every business. By an outsourcing concept the companies have the goals to Increasing productivity, reducing cost, improve reliability and predictability in the globalization area. Moreover, the company must realize that there are some critical success factors for making outsourcing work.

The Second Case – ERP Implementation on A state-owned integrated electricity company

Many organizations have implemented ERP system to draw as much value as possible from their investment and to use it as an enable of high performance. The system attempts to integrate all departments and functions across a company into a single computer system that can serve all those different departments particular needs, so that the various departments can more easily share information and communicate with each other. The concept of ERP system is simply because the technology can provide value added point, this include: eliminate of processes that do not need (elimination process), simplification of complex processes (simplification process), and unification redundant processes (integration process), and automating manual processes (automation process).

The key objective of an ERP system is an Integration Process, the integration between business processes helps develop communication and information distribution, leading to remarkable increase in productivity, speed and performance. The integration is typically accomplished by constructing a single database repository that communicates with multiple software applications providing different divisions of an organization with various business statistics and information

Accenture as a global management consulting, technology services and outsourcing company have a proven track record to implemented ERP System in many organization and always committed to delivering innovation and help client to improve their performance.

CaseStudy

A state-owned integrated electricity company employing around 38,000 staff, serving over 37 million customers (households, industry, business and others) with a total asset of USD 35 billion (December 2009), has been operating throughout the country with non-integrated systems and non standardized business processes. The company’s major issues were that business processes are not standardized and consolidated financial reports were not produced on a timely basis, lacking important decision-making information. In addition, lack of integrated knowledge and control of inventories and assets led to underutilization of assets. With respect to Talent Management, the company’s processes concentrated on basic record keeping and un-integrated payroll systems, making it difficult to introduce training plans, career management, succession plans, transparent performance evaluation, and other requirements of a modern Human Resource Management area.

How Accenture Helped

Accenture implemented an integrated Enterprise Resource Planning (ERP) that covers Financial Management, Material Management and Human Resource Management areas, using SAP.

Given the large scale of ERP Implementation and considering the company’s first experience with an integrated system, major change management effort is required. To minimize implementation risk, Accenture selected a multiple phase approach. Combinations of rollout sites were carefully picked to ensure minimal business disruption and yet breadth of functionalities is covered. Lessons learnt from earlier roll out was studied and immediately applied to the next one.

A total of over 500 training classes were held and a total of over 10,000 training days were consumed by users to learn the ERP system. Appropriate management sponsorship was maintained throughout the implementation, including training which resulted in over 95% training attendance rate.

Throughout the implementation journey, Accenture managed to help the company build ERP template that consists of standard policies, business process, chart of accounts and reports to be used at other company’s business units.

By implementing ERP, what would be the impact to the company’s business processes?

Based on case study above, Accenture implemented an integrated Enterprise Resource Planning (ERP) that covers Financial Management, Material Management and Human Resource Management areas, using SAP.

Financial Management

ERP for Financial management it’s a module that include Accounts payable, accounts receivable, fixed assets, general ledger, cash management, and billing. By using an integrated system it will provide maximum efficiency and accuracy in core financial functions, consolidated financial reports were produced on a timely basis, and also deliver comprehensive data to enable management to make strategic decisions.

Material Management

The state-owned integrated electricity company faced problem that lack of integrated knowledge and control of inventories and assets led to under utilization of assets. ERP for Material Management it’s a module that include material control, assets, procurement and inventory control. By using this ERP all process will be integrated and have a centralized database asset. The benefit implementation such as tighter inventory controls, stronger service within each department to control inventories and assets, and also increase operational performance.

Human Resource Management

ERP for Human Resources Management it’s a module that include recruitment process, training development, compensation, time and attendance, integrated payroll system. The implementation of an integrated system it will have a benefit such as reduced human resource administration, improved human resources service delivery, and also enable talent optimization that include career management, succession plans and performance evaluation of each personnel can be monitored by the system. Overall with ERP Human Resources department can work more efficient and effective.

As a conclusion, with all above aspect, ERP as an integrated system makes all business process running smoothly, although takes a long time to do implementation and training are required to learn it. The implementation of ERP System can assist the company to improve efficiency, productivity and business process performance. ERP also helps the company build cost effective solutions, give contribution to competitive advantage, and accelerate business results, so for the further management can make the right decision for the sake of continuity of business enterprise.
On another major business process, with a standardization financial reporting it will significantly reduce the time used to compile business planning, simultaneously to improve the quality and data integration.