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Target Operating Model Definition
1.
Target Operating Model
Defining the business future state Version 1.2 February 2009
2.
What is a
target operating model A definition of the future state of an organisation People Process Technology Customers Markets / Geographies Products How do I get a target operating model No prescriptive approach to delivering a T.O.M. No commonly agreed principles as to what goes into a T.O.M. Each organisation will have different needs and different focus. 2 Copyright © Maddison Ward 2006
3.
What are the
major components of a T.O.M? Culture Behaviours Leadership Procedures Training KPI’s Incentives/Reward Volumetrics Peer Reviews Business Rules Monitoring Management Information Environment PEOPLE PROCESS What should these look like in the future state? Customers TECHNOLOGY Products Customer online Markets CRM Order Management Financial systems 3 Copyright © Maddison Ward 2006
4.
The first challenge
is to define the target In defining our target operating model, we’re trying to answer the questions:- What kind of business do we want to be / what is our “vision”? What is our value proposition (ie, why are we here?) What products / services should we be offering At what pricing / margin What revenue and profitability targets should we have, over the next 5 years What cost base can we / should we support for the above What is our anticipated cost of sale What is our predicted cashflow How do we present ourselves to our market and what do we stand for? (What is our brand strategy and value) How do we make our customers aware of what we offer (What is our marketing strategy (ALT / BTL)) How do we sell to our customers (What is our sales strategy (online / direct to consumer)) How do we handle partner organisations (B2B) How do we provide our customers with customer service (how do we handle their enquiries / complaints) From whom do we source our raw materials (What is our supplier strategy) How do we distribute our products to our customers (What is our logistics / supply chain strategy) How to we utilise IT to support our business (What is our IT strategy (insource / outsource)) What financial / governance processes and controls do we need These are frequently described in the overall business strategy (5 year plan):- 4 Copyright © Maddison Ward 2006
5.
The first challenge
is to define the “end-state” We can then start to decompose these into models about how our business should look:- People What kind of people do we need? How many of them? How are they organised? Where do they sit? How do we measure them? What rewards / incentives do we have to put in place for them? What training do they need? What career / promotion prospects will we put in place for them? How do we deal with performance issues? How do we recruit them (or make them redundant from current state) Process What are our macro business processes (level 0) How do they decompose into units of work (level 1+) How do we measure their efficiency (KPI’s) What volumetrics do we believe each process will have (how often will the process be used) How much will each process cost to run What are the business rules for each process What triggers a business process (event, time, volume etc). What are the process hand-offs, and how does the organisation map to the process What systematic technology do we want to put in place to support each process (and how much value or cost saving does that bring compared to the technology total-cost-of-ownership – ie, do the volumetrics stack up to the cost?) What management information do we need to measure the process Technology What systems do our colleagues need to support the business processes we’re asking them to do How do our customers interact with us through technology What level of automation do we want through the various channels/segments/touchpoints! 5 Copyright © Maddison Ward 2006
6.
Where do we
begin? The commonly recognised starting point is the “customer experience” Customer Principles What products/services do we want to offer our customers How do we want to interact with our customers How much do we want them to do for themselves Do we want their online and offline experiences to be similar How do we contact our customers How often to we proactively communicate with our customers How much do we spend on each customer, and how much is the customer worth to us What do we want our overall customer satisfaction target to be, as a result? Customer Journeys What segmentation of customers do we have How do we want to treat each segment How much value do we get from each segment Will the customer journey be the same for each segment What are the steps through the journey, what are the inputs and what do we expect the customer to do / feel at the end of each step. Who, in our organisation is the touch-point for the customer through each of the journey steps? How do we measure customer satisfaction across each segment / journey (customer KPI’s). Strategies Customer Segmentation Model Customer Contact Strategy Call-centre Strategy Online / Social Media Strategy Customer Value Proposition (s) This tries the articulate the “Customer I Wants, and the overall approach to how those I Wants might be addressed within the cost/revenue parameters of the overall business 6 Copyright © Maddison Ward 2006
7.
The first challenge
is to define the “end-state” From which we can derive a set of colleague “I needs”:- People Organisation Design Remuneration / Compensation / Reward model Organisation Volumetrics Estates Plan Skills / Competencies Assessment Organisational Change Readiness Assessment Job Descriptions Employee Contracts Relocation / Recruitment / Redundancy Plans Training Plans Process Level 0, 1 & 2 Process Maps & KPIs Business Rules Specifications Workflow Archiving Physical Security Interim processes (transitional state) Manual procedures (for non-automated processes) Technology Systems requirements specification MI Requirements Lists of Values specification User Roles & Permissions Data Requirements & Ownership (including retention) Help Requirements Scripting Requirements Environment Requirements System Service Level Requirements 7 Copyright © Maddison Ward 2006
8.
Business capabilities will
have different focus For example, different emphasis on channels – call-centre design vs online design PEOPLE PROCESS Knowledge TECHNOLOGY PEOPLE Call Centre PROCESS channel Collateral TECHNOLOGY Online channel CUSTOMERS … but the overall design needs to be holistic, or consciously not (based on the business strategy and/or customer principles 8 Copyright © Maddison Ward 2006
9.
Summary
Business Strategy … what do we want to be? +underpinning strategies Customer Principles Customer Design BUSINESS PROGRAMMES … I wants Process Design … I needs People Design Technology Design transition states (releases) | implementation plans | Copyright © Maddison Ward 2006 pilots | launch plans | marketing plans etc 9
10.
The first challenge
is to define the “end-state” Example checklist 10 Copyright © Maddison Ward 2006
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