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Discussion Document
Contents
13
16
Meeting Objectives
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 Deloittes methods can be used to accelerate the project
-3-
TOM
Project Objectives
Increase Transparency Significantly improve walkback capabilities from financial reports to source
transactions
-4-
While the scope of the two initiatives might appear to overlap, we believe that both initiatives are complimentary and key in
achieving the organizations 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?
-5-
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
Model
2010
ATLAS Treasury
ATLAS Investments
GIFT Release 2:
CFP / CD (UK)
GIFT Release 3:
CFP / CD (EUR)
GIFT Release 4:
CFP / CD (JAP)
OneClaim (UK)
Auto
2011
2012
AIU Holdings
Separation (IPO)
2013
ATLAS - Other
Reinsurance
Release 1
Reinsurance
Release 2
-6-
2014
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 CIs finance functions
Identify key functions and/or processes for redesign to conform with the new organization model (e.g., CoEs, 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
-7-
-8-
Deloitte is uniquely qualified to assist AIU Holdings with this TOM effort
Deloittes Finance Transformation offering has been recognized as the market leader by Kennedy Informations 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.
-9-
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
- 10 -
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
- 11 -
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:
Independent
Business
Unit
Controllership
Carve-out
Centralized
CFO
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
- 12 -
Transaction Processing
Accounting to Reporting (General Accounting)
General Leger
Source to Settle
Order to Cash
Consolidations
Monthly /
Quarterly Close
Financial
Reconciliation
Requisition
Materials
Purchasing /
Procurement
Order Entry
Billing
Legal Entity
Reporting
Statutory
Reporting
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)
Procurement.
Card Admin
Bank
Reconciliation
Treasury / Trust
Management
Investor Relations
Accounting
T&E
Accounting /
Reimbursement
Finance Management
Planning
Strategic
Planning
Budgeting &
Financial
Planning
Control
Accounting / Tax
Policy
Forecasting
Internal Audit
Expense /
Performance
Measurements
Multi-Dimensional
Reporting
Profit Center /
Customer /
Producer
Profitability
Acquisitions &
Divestitures
Key
Not
Typically
Outsourced
Internal
Consulting
Project
Management
Specialized Expertise
Management Reporting
Revenue
Key:
Allocations
Financial Analysis
Less
Commonly
Outsourced
Most
commonly
Outsourced
- 13 -
Risk Management
(CM)
Actuarial Analysis
/ Reserving (Ins)
Real Estate
Mgmt.
Finance Function
Management
Human
Performance
Management
Business Liaison
Training &
Development
- 14 -
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.
Organisation Design
Target Operating Model Design
Process Design
- 15 -
Approach framework
Our approach is designed to help you define options and gain stakeholder consensus
Organizational
Strategy
Current State
Assessment
Service Delivery
Analysis &
Selection
Future State
Vision
- 16 -
Design
Implementation
Organizational Strategy
Identifying and aligning the finance function behind an organizational strategy is the critical first step in developing a Target Operating
Model strategy
Organizational
Strategy
Current State
Assessment
Service Delivery
Analysis &
Selection
Future State
Vision
Activities &
Deliverables
Organization Design
Balanced scorecard
Toolsets &
Accelerators
Implementation
Goals &
Objectives
Design
- 17 -
Current State
Assessment
Service Delivery
Analysis &
Selection
Future State
Vision
Activities &
Deliverables
Toolsets &
Accelerators
Implementation
Goals &
Objectives
Design
- 18 -
Current State
Assessment
Service Delivery
Analysis &
Selection
Future State
Vision
An operating model matrix, as shown below, can be used to illustrate the focus of
Finances strategic choices. For example, a cost efficient transaction processors
likely focus will be the Shared Services quadrant.
Activities &
Deliverables
Toolsets &
Accelerators
Implementation
Goals &
Objectives
Design
Sourcing Matrix
Key Design Principles
- 19 -
Current State
Assessment
Service Delivery
Analysis &
Selection
Future State
Vision
Activities &
Deliverables
Prioritization Matrix
Process Rationalization
Toolsets &
Accelerators
Implementation
Goals &
Objectives
Design
- 20 -
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.
Organizational
Strategy
Goals &
Objectives
Current State
Assessment
Service Delivery
Analysis &
Selection
Future State
Vision
Implementation
CFO
Finance Exec
Head of
Business
Partners
Management
Accountant (Inv.
Perpetual)
2 FTE
Non IP UK
Business Units
2 FTE
Head of FAC
Head of
Transaction
Processing
Financial
accountant
2 FTE
Head of Tax
Transactions
Assistant
Financial
Controller
BP Exec.
Activities &
Deliverables
Design
Head of Process
Control and
Improvement
Systems Analyst
2 FTE
Senior Transaction
Processing
Indirect Tax
Manager
Direct Tax
Manager
Accounts Assistant
(VAT)
Direct Tax
Accountant
2 FTE
Head of
Treasury
Treasury Assistant
1 FTE
AP
5 FTE
AP/FA
1 FTE
BP Exec.
Key
Management
Accountant 2 FTE
BP Exec. Offshore
Management
Accountant
(Offshore)
2 FTE
Toolsets &
Accelerators
BP Exec. ECS
2 FTE
- 21 -
AR
1 FTE
Cash Processing
1 FTE
Accounts Assistant
(Feesharing)
Commissions
1 FTE
Corporate General
Corporate Aligned to
Business
Region
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
Organizational
Strategy
Current State
Assessment
Service Delivery
Analysis &
Selection
Future State
Vision
Activities &
Deliverables
Toolsets &
Accelerators
Implementation
Goals &
Objectives
Design
- 22 -
- 23 -
Project Timeline
Timeline (weeks/months)
1
10
11
12
Organizational Strategy
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
Current State
Assessment
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
Service Delivery
Analysis & Selection
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
by priority
Design
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
- 24 -
Organization chart
Descriptive header
Label
Line 1
Line 2
Label
Label
Label
Line 1
Line 2
Line 1
Line 2
Line 1
Line 2
Label
Label
Label
Label
Label
Label
Line 1
Line 2
Line 1
Line 2
Line 1
Line 2
Line 1
Line 2
Line 1
Line 2
Line 1
Line 2
- 25 -
Potentially
highlight regulatory and tax concerns (e.g., data may need to reside in Japan)
- 26 -
- 27 -