Management of information systems

PROJECT REPORT
ON
MANAGEMENT OF INFORMATION SYSTEM

CONTENTS OF THE REPORT
 Case Study:1 – Asian Paints
• Company’s profile at a glance
• Industry Analysis – Porter’s 5 Force Model; Overall Corporate Strategy, Business
Strategy
• CRM Vision at AP
• Flow of Information at AP
• Key Challenges
• Future Trends
• Implementation Process & Best practices
• CRM at AP; Business process transformation and value realized
• Optimizing critical processes
• Future Road Map
• The Benefits
• Customer Focused Strategies; Lessons Learnt
 Case Study: 2 – IDBI Bank Improves Profitability with Integrated Management
Accounting System
• Background – Bank’s Profile, Shareholding Pattern
• Contribution of IT Department @ IDBI
• Technology & Tech Initiatives, Overall IT Spending 06-07
• Vision; Business Strategy
• IDBI Bank’s Business Chart and Organizational Chart
• IDBI’s Approach, Analysis Across all Business Units and Products

• Oracle Financial Services Pricing Management, Transfer Pricing Component; Profitability
Manager
• Ability to assess employee performance
• Implementation process
• The Benefits
• Achievements and New Business Initiatives
 Case Study: 3 – The Procter & Gamble Company
• Background – Company’s Profile, Products, Culture
• Key Challenges
• Understanding Customer Needs
• Implementation process & realization of value
• Unique Implications For Supply; Information Flow in P&G
• Results
• Benefits; Lessons Learnt
CASE STUDY – 1
ASIAN PAINTS – THE CUSTOMER EXPERIENCE GETS A
NEW LOOK WITH SAP® CRM
COMPANY’S PROFILE AT A GLANCE
 India’s largest & among top 10 decorative coatings, paints company in the world.
 Five Paint & two Chemical Factories in India and over seventy sales establishments.
 3000 in India 1400 employees in International operations.19,000 + dealers in India
 Has joint ventures in 22 overseas markets and operates through five corporate brands viz. Asian
Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans.
 Forbes Global magazine ranked Asian Paints among the 200 Best Small Companies in the World
for 2002 and 2003 and presented the 'Best under a Billion' award.
 Started by four entrepreneurs, Champaklal Choksey, Chimanlal Choksi, Suryakant Dani and
Arvind Vakil
 Turnover: INR 0.35 million(1945) to 54.3 million(2009)
Asian Paints Limited, with annual revenues totaling US$680 million, is India’s largest paint
company and the third-largest paint company in Asia today. The company has an enviable
reputation in the corporate world for professionalism, fast-track growth, and customer-
centricity. Asian Paints has offices in 22 countries, and its 30 paint manufacturing facilities
service consumers in over 65 countries.

INDUSTRY ANALYSIS: PORTERS 5 FORCE MODEL
DISCOVER:
• This forms the basis of fast growth.
• AP has identified opportunities abroad in developing countries similar to India.
• To enter into these countries they adopted the process of acquisition.
DEVELOP:
OVERALL CORPORATE
STRATEGY: ASIAN PAINTS

• Paint industry is primarily a product-oriented industry up till now.
• Huge potential exists in the service side also.
• Introduction of color-world, providing service in painting and interior decoration etc are steps
taken to acquire the whole chain and becoming full service provider.
• Need to ensure value-adding services are possible. These can be integrated to provide an
umbrella service.
• Constant reminders to the customers to repaint, or upgrade.
DEFEND:
• Consists of rural and the urban market in which AP is playing.
• They are a target to many global companies, which are playing in Indian market via Indian arm
of their operations like ICI has Berger, Kansai has JN
DEEPEN:
• Industrial segment of Indian paint industry where AP has a weak presence.
• It has a presence in automotive segment but ranks a poor second.
• It needs to form alliances with foreign players to enter into this segment.
• It can also look for tie-ups with the company. Its move of taking over Haucoplast is one step in
this direction. Their tie-up with PPG has given them a good presence in automotive segment,
capturing clients like Santro, GM, Ford etc.
BUSINESS STRATEGY: ASIAN PAINTS
• AP has acquired short-term competitive advantages by using its distribution strength and
logistical efficiency in order to raise the Cost of doing business for all its competitors to attain
this advantage.
• The advantage is short-lived and ultimately imitable.
• Moreover, AP has established such an extensive network that getting incremental advantage
would be very difficult.
• Futuristic approach should be gaining competitive advantage through channel control or
occupying mind space.
ASIAN PAINTS - CRM VISION
“The implementation of SAP CRM gave Asian Paints greater visibility into all financial
transactions during a job.”
“SAP CRM transformed our organization and allowed us to expand into the services
business.”
Deepak Bhosale
Senior Manager, CRM Initiatives
Asian Paints Limited

“As a result of our implementation of SAP CRM, we have improved process control and
accounting transparency.”
Aroop Chatterjee
Group Brand Manager of Asian
Paints Home Solutions and
Interactive Marketing
Asian Paints Limited
To emerge as a truly “Customer Centric” Organization wherein we understand and manage
the ever-changing expectation of our existing and prospective customer in a profitable way
CRM @ ASIAN PAINTS
 Not technology but an approach a company takes towards its customers.
 About setting up processes for interacting and building relationship with customers.
 Spans most of the customer touch-points
 Unified view of the company to the customer
FLOW OF INFORMATION AT ASIAN PAINTS

KEY CHALLENGES
• A Fresh Approach to the Customer Experience
Asian Paints Limited, India’s largest paint company, has a reputation for professionalism and
fast-track growth. Customers are at the core of all Asian Paints business activities. A simple but
unbeatable concept of “going where the customer is” drives all its major initiatives. In 2001
Asian Paints executives realized that the firm’s long term growth depended on their ability to
forge ever-closer ties to the end consumer. At the same time, the Asian Paints help line had
received calls from these consumers expressing a need for a more complete solution to their
home painting needs – and Asian Paints learned that they had demanding expectations when it
came to service and overall project execution. But because the company sold its products
through a network of dealers, it lacked visibility into the entire painting process and the needs
of the homeowner. This situation prompted Asian Paints executives to explore ways to
establish a more direct link to the end customer.

A TYPICAL CUSTOMER’S TOUCH POINTS:-
• Launching a Service Brand
With this in mind, Asian Paints made the decision to move from a strictly product-based
manufacturing business to a services model. With the launch of Asian Paints Home Solutions,
the firm would build a “service brand” by offering value-added services ranging from in-person
color recommendations to feng shui consultations. The goal was to deliver an Asian Paints
“signature look” through the use of specific color combinations and themes. To achieve this
goal, Asian Paints needed a scalable customer relationship management (CRM) system that
could map the major business processes of Asian Paints Home Solutions and provide visibility
into all customer interactions. First, it required state-of-the-art call center capabilities that
would include activity management for customer calls and activity scheduling, as well as a lead
management system that could prioritize and route leads for proper handling.
• Developing a Customized Solution
Standardizing the sales delivery processes and establishing financial controls would necessitate
developing a custom solution. This solution required a secure Web interface enabling leads
from the help line to be forwarded to a home solutions service provider for handling. This
service provider might be an independent home painting firm or interior designer, for example,
in the Asian Paints network. The home solutions provider is responsible for using the system to
perform all major tasks associated with a job: schedule appointments, record completion of site

surveys, submit job estimates, order paints through Asian Paints dealers, record progress of
jobs, invoice customers, and conduct customer satisfaction surveys. The new solution would
allow both the provider and Asian Paints Home Solutions to view all customer interactions and
financial information in real time. This same system would also provide updates on the status of
marketing rewards programs. In addition, robust reporting functionality was required to
generate a variety of sales, lead, and activity analysis reports. This functionality would also be
used to tabulate results of the customer surveys submitted at the completion of a job.
• Preparing for Growth
When the time came to select a new system, Asian Paints studied the functionality of the most
recent release of the SAP® Customer Relationship Management (SAP CRM) application very
carefully. The company was already using SAP solutions and had implemented SAP CRM in its
existing call centers. Asian Paints determined that SAP CRM best met its criteria and opted to
build on existing infrastructure. Notably, total cost of ownership considerations did not play a
major role in this decision. Asian Paints was building a new service business and realized that
there would be attendant costs in creating a custom solution.
The custom solution was a separate project that would require integration with the basic CRM
system. After considering other options, Asian Paints decided on the SAP NetWeaver® platform.
The Web Dynpro development environment allowed for rapid application development as well
as custom development of the user interface. And it would integrate seamlessly with SAP CRM.
The architecture called for the new solution, branded “project Tantra,” to retain the lead and
opportunity management functionality of SAP CRM. Then, all process associated with sales
delivery would be implemented through the custom solution. Integration with the SAP
NetWeaver Business Intelligence (SAP NetWeaver BI) component was also a critical factor. Data
from both SAP CRM and the custom solution would be uploaded to SAP NetWeaver BI to
generate various reports. Lastly, Asian Paints, as an existing SAP customer, realized that
development of a custom solution would require the strong support that SAP could provide.
FUTURE TRENDS
 Increased customer expectations.
 Exponential customer base.
 Increased number of interaction channels.
 Information on all touch points for effective marketing
 Accountability of every rupee spent
 Need for increased customer satisfaction/ customer loyalty
 Complaint to opportunity

IMPLEMENTATION PROCESS AND BEST PRACTICES
• Deepening Ties with End Customers
In launching its new service business, Asian Paint’s key objective was to deepen its ties to the
end consumer. As a result, the CRM system needed to offer visibility into all customer
interactions and financial transactions. At the same time, this system would standardize
business processes at each stage of a painting job. Thanks to the implementation of SAP CRM
and the custom solution, processes were optimized in the following areas:
• Financial controls – There is now greater transparency into all financial transactions from billing
and collections to contractor–dealer payments.
• Sales delivery – Asian Paints standardized the sales delivery processes to be followed by each
provider. Since the sales delivery process can be lengthy, the system allows Asian Paints to
monitor the quality of service its customers receive from the start of a project to its completion.
• Customer data management – Asian Paints now has one centralized system for managing all
customer data, which provides greater visibility into customer needs and is now available for

use in campaign management and in the development of predictability models, among other
activities. And because this data is available in real time, reports can be generated
instantaneously.
• Getting the Job Done Quickly
The implementation project launched in December 2001, and the first component, the
interaction center, went live in April 2002. All other components including the custom solution
were implemented by August 2002. The project team was comprised of both business and IT
staff, ensuring that both business and technical requirements were addressed.
Close collaboration between Asian Paints and SAP resulted in adherence to tight schedules. The
SAP Customer Competence Center location in Singapore developed prototype scenarios specific
to Asian Paints, and SAP Labs made valuable contributions to the design and configuration of
the custom solution. A workshop on enterprise service oriented architecture, held for IT staff,
assisted Asian Paints in developing a blueprint of its custom solution as an extension of its
existing infrastructure. Two Asian Paints Home Solutions providers participated in a three-
month pilot – an essential element of the project. Because many of the providers did not have
strong computer skills, a simple, intuitive interface would be crucial for user adoption. The
feedback received during the pilot was critical to the successful deployment of the solution and
prevented delays when the system ultimately went live. The system initially went live in four
major cities, and the remaining eight cities were added in early 2007.
• Ensuring Success through Strong Governance
Strong governance proved to be another key to success. Asian Paints established a review
committee to conduct interim reviews at key stages of the deployment, which ensured that all
major business and technical issues were addressed prior to rollout. Strong project
management ensured that key milestones and the go-live date were met.
• Supporting Service Providers with Training and Tools
Because the providers using the solution were not particularly proficient computer users,
training was essential. Asian Paints organized an extensive training program consisting of
classroom sessions that included training in basic computer skills and office applications, as well
as in the use of the custom solution. Since both the business processes and IT infrastructure
were new to the providers, Asian Paints also established a provider support system. A front-line
support person who is trained to field business questions handles initial queries. Questions of a
technical nature are forwarded to an IT rep. The IT rep then replies to the front-line support
person who, in turn, conveys the response to the provider. This support system ensures that
any operational issues at the home solutions business level are addressed in a timely manner.
CRM AT ASIAN PAINTS

Simplicity drives Adoption …
Home
 User Friendly User-interface.
 Personalization.

 Higher acceptability.
 Intuitive interfaces and hence lower training effort.
 Browser based access.
 Easy to deploy.
Flexible Enterprise CRM …
 E-SOA enabled
 Ready to deploy enterprise services

 Easy Customization of screens.
 Faster deployment
 Quick Report Creation
 Rich Email, Calendar integration.
 Offline access using Adobe interactive forms
 Clear upgrade & migration from previous CRM release.
Comprehensive SAP CRM 2007 …
 Superior Customer Insights
 360 degree view Key Stake Holders

 Tight integration between SAP CRM 2007 – backed ERP to support for end-to-end business
processes.
 Flexible to connect to other communication applications via web-services.
 Able to achieve seamless integration between customer channels.
BUSINESS PROCESS TRANSFORMATION AND VALUE REALIZED
MOVING ASIAN PAINTS CLOSER TO CUSTOMERS
Asian Paints has made clear gains in achieving its long-term goals, as follows.
 Faster customer acquisition – The new online system for forwarding and following up on
leads improved overall response times and reduced the time required to acquire new
customers.
 Revenue – In the four years since the implementation went live, 17,500 persons registered for
Asian Paints Home Solutions consultations, and of these, 5,000 signed up for painting jobs.
Targeted revenue for the period 2006 –2007 is US$8 million to $10 million, and the company
crossed the 30,000 mark in cumulative number of customers.
 Optimized visibility into customer needs – The new solution gives Asian Paints greater
visibility into all customer interactions. As a result, the company has gained a deeper
understanding of the needs of its end customers and has tailored its service business to meet
these needs.
 Scalability – This new solution can accommodate Asian Paints’s continued growth well into the
future. In fact, Asian Paints doubled the number of cities covered without modifications to the
CRM system.
CUSTOMER TOUCH-POINTS IN SAP CRM

CRM TOUCH POINTS – ENGAGEMENTS!!!

OPTIMIZING CRITICAL PROCESSES
The implementation of SAP CRM enabled Asian Paints to establish a direct link to its end
customers and to meet customers’ need for a home painting service. The following table
illustrates the processes that changed as a result of this implementation and the impact of
these changes.

FUTURE ROAD MAP
Through its implementation of SAP CRM, Asian Paints has established a direct link to its end
customers, and put in place processes to ensure that their high expectations will be met. In an
effort to realize an even greater return on its IT investment, Asian Paints used its SAP CRM
infrastructure to develop an e-recruitment platform in 2006. This platform allows employment
agencies to review openings and upload job candidate information, reducing the time required
to fill open positions. In the future, Asian Paints plans to leverage its
SAP CRM investment in the following areas:
• Campaign management – With improved customer intelligence, Asian Paints now plans
targeted campaigns to its customers.
• New market segments – Asian Paints plans to extend its CRM initiative to indirect customer
influencers such as architects and interior designers.
• Complaint-handling system – Asian Paints plans to develop a formal complaint-handling system
to tackle customer problems with both service and paint. By having selected a scalable system
such as SAP CRM, Asian Paints has laid the foundation for its long-term growth.
THE BENEFITS
Asian Paints is creating a strategic, competitive advantage for itself. The company is
experiencing increased employee productivity and faster adoption of innovations. In addition,
the total cost of ownership of the company’s IT solutions and overall infrastructure has
decreased dramatically. The integration with Adobe Acrobat and the ability to create, complete,
and submit reports and integrate mail has proved to be helpful in streamlining Asian Paints’
processes. With this implementation, we exponentially increased our visibility into and
governance over our business processes and all internal and external parties involved in the
recruiting effort.
By leveraging existing solutions and improving efficiency through better processes and
practices, the IT group is able to add new, customized services and applications in-house—
eliminating the need to purchase new software or hire consultants to develop software that
may not integrate easily with existing IT systems.
Asian Paints is able to compose an enterprise architecture that supports efficient processes and
applications that are reusable and can be built on. In addition, by lending its expertise in HR business
processes, the HR team is able to influence the applications and services provided by IT. As a result, the
company is certain that its investment in future technology development will be time and money well spent.
The SAP® Customer Relationship Management (SAP CRM) application provides the necessary
flexibility to quickly develop distinctive capabilities and deliver superior customer experiences.
SAP CRM drives rapid user adoption and productivity and provides quick time to value while
supporting your strategic CRM initiative. It also delivers best-in-class, front-office functionality
and support for end-to-end, industry-specific processes. As a company evolves, the

organization can ensure outstanding customer experiences and respond immediately to market
requirements.
Delight Customers
SAP CRM helps foster collaboration between your organization and your customers, facilitating
superior interactions and experiences across all channels.
Empower Team
SAP CRM empowers employees to perform business functions and manage interactions with
their customers – anytime, anywhere. With SAP CRM, organizations can employ
comprehensive, real-time views of all customer information to drive its actions and support
collaboration across its global business network.
Grow Business
SAP CRM delivers simplified access to insights into customers, so one can differentiate and
grow its organization, provide superior customer experiences, and make the most of business
advantage.
Differentiate Business
Customer relationship management involves developing close relationships with customers and
driving profitable growth. At the same time, the connected, global economy provides

customers with a wide variety of options available at the press of a button. Before a
salesperson’s first visit, a potential customer has researched company, products, and
competitors’ prices, and has read other customers’ reviews about their service experiences –
good and bad. As a result, CRM is no longer just about streamlining sales, service, and
marketing operations. With information just a click away, products quickly becoming
commodities, and margin pressures increasing, differentiation is key. To differentiate an
organization, maximize profits, and deliver superior customer value and exceptional customer
experiences across all touch points, one must design and continuously improve business
processes and interaction channels. SAP CRM provides the flexibility needed to create
unsurpassed customer experiences. With support for a wide range of end-to-end business
processes, the application helps address an array of marketing, sales, and service situations.
One can deploy SAP CRM incrementally and easily adapt and extend the application as
customer needs change and your business environment evolves. With SAP CRM, one can
ensure consistent and relevant interactions across all channels. Access to accurate and timely
customer information helps you make the most of every contact during a customer’s entire
relationship with your organization. SAP CRM helps drive customer value, loyalty, and
profitability across your value chain. With best-in-class front-office functionality that supports
industry-specific processes, SAP CRM helps turn the vision of customer driven growth into
reality.
Setting New Standards for CRM
In the last 35 years, SAP has become the global leader in business software, serving more than
43,000 customers worldwide, including organizations of every size and type. Along the way,
SAP has accumulated a unique knowledge base of best practices in more than 25 industries –
including yours. The SAP tradition of leadership continues with a new generation of CRM
software that gives your company unprecedented speed and flexibility to improve bottom line
by improving customer relationships.
Drive Growth
Increase revenues by improving customer loyalty, boosting wallet share, speeding new
products to market, and closing more sales. Launch new products faster. Deploy new channels
to reach new customers, penetrate underserved segments, and enter new markets. Help sales
teams focus on strategic tasks as increase win rates and convert more leads into sales
Maintain Operational Excellence
Improve efficiency and effectiveness by streamlining end to- end business processes, enhancing
service levels, and cutting costs and errors. Shorten cycle times, increase order accuracy,
reduce the volume of customer calls, decrease billing disputes, and lower inventory costs with
better order-to-cash processes. One can resolve issues faster and boost customer satisfaction
with low-cost interaction channels such as Web-based self-service and online order
management.
Enhance Competitive Agility
Respond faster to change, optimize customer experiences, and differentiate company from
competitors with innovation. Adapt your business processes quickly to respond to changing

market conditions and customer demands. Launch new initiatives rapidly to speed time to
market. Align channels with customers’ interaction needs and preferences to ensure
consistency and convenience across all customer touch points. With complete customer insight,
one can drive innovation that differentiates products and services.
FINANCIAL AND STRATEGIC BENEFITS
• Targeted revenue of US$8 million to $10 million in 2006–2007
• Established direct sales channel to customers thanks to help from the home solutions business
• Built relationship with applicator community across 30,000 customer sites
CUSTOMER-FOCUSED STRATEGIES

WHY SAP WAS SELECTED
• Ability to meet all criteria Integration of the SAP NetWeaver®
• Business Intelligence component
• Scalability
• SAP support
LESSONS LEARNED

SAP CRM enabled Asian Paints to build a service brand through Asian Paints Home Solutions.
With its scalable CRM infrastructure, Asian Paints is poised to continue its expansion into the
services market.
The following are the key takeaways from this implementation.
CASE STUDY – 2

IDBI BANK IMPROVES PROFITABILITY WITH INTEGRATED MANAGEMENT
ACCOUNTING SYSTEM
“The implementation of Oracle’s Financial Services applications has provided improved
visibility of the contribution of each business unit to the overall profitability of the bank. This
has created a staff culture that is focused on generating higher value products and exceeding
customers’ expectations.” R.K. Bansal, Executive Director and CFO, IDBI Bank
Background
 Industrial Development Bank of India (IDBI) was established in 1964 by the Government of India
to provide credit and other facilities for the development of industries.
 IDBI Ltd is one of the top ten Development Banking Institutions in the world. Over the years
since its inception, it has proven itself as a strategic investor and successfully promoted several
world-class institutions within India, which have revolutionized the Indian financial markets.
Established as a DFI with the following functions:
• Plays the role of coordinator at all India level.
• Providing financial assistance for the establishment of new projects as well as for
expansion, diversification, modernization and technology up-gradation of existing
industrial enterprises.
• Undertakes wide-ranging promotional activities including entrepreneurship
development programmes for new entrepreneurs, provision of consultancy services for
small and medium enterprises, up-gradation of technology and programmes for
economic upliftment of the underprivileged.
• Assistance to backward areas by setting up of voluntary agencies, support to Science
and Technology Entrepreneurs’ Parks, Energy Conservation, Common Quality Testing
Centers for small industries, SIDBI etc..
• TCOs offer diversified services to small and medium enterprises in the selection,
formulation and appraisal of projects, their implementation and review.
• IDBI played a prime role in setting up of the Entrepreneurship Development Institute of
India for fostering entrepreneurship in the country.
• Pioneered capital market development
• By setting up National Stock Exchange – an electronic Stock Exchange, NSDL – a
Securities Depository, CARE – a Rating Agency, SHCIL – a Depository, etc.
• Products and services.
• Project finance, equipment finance, asset credit, equipment lease etc.
• Professional advice and services for issue management, project evaluation, corporate
restructuring, share valuation etc.
• Set up subsidiaries:
 IDBI Bank

 IDBI Capital Market Services Ltd.
 IDBI Investment Management Company Ltd.
 In line with the reforms in the Indian financial sector and to meet emerging post-reform
challenges, IDBI transformed from a development finance institution into a full-fledged
commercial bank in 2004.
 In 2005, IDBI merged its commercial banking subsidiary IDBI Bank. In 2006, the bank acquired
United Western Bank to further strengthen its position in the banking sector. Following these
mergers, the bank was renamed as IDBI Bank Ltd. The bank has a network of 564 branches and
955 ATMs across India. It offers a range of products and services covering: retail, corporate,
international banking, treasury management, merchant, and investment banking.
 In 2008, IDBI Bank was restructured into several customer-focused business units to streamline
processes and improve customer service. Following the restructure, the bank needed to
develop a system to better assess the performance of each business unit and take corrective
action if they were not delivering adequate profit.
 IDBI Bank engaged Oracle Consulting to deploy a range of Oracle’s Financial Services
applications that enabled the bank to measure each business unit’s contribution to profitability.
Using these applications, the bank can determine the performance of products, customers, and
branches, allowing it to devise strategies that boost revenue and overall profitability.
Shareholding Pattern: Dec 31, 2008

Contribution of IT Department @ IDBI
IT Team at IDBI Ltd under the strong management leadership has successfully aligned
business objectives with the smart technological implementations to the optimum utilization
for the organizational advantage.
The concept of anytime, anywhere banking has been made possible by offering uniform
services across various alternate channels such as ATM, Phone banking, Mobile banking,
Internet banking, etc. All the channels are integrated to the core banking system in a secure
and real time basis.
In the last 12 months IDBI Bank has launched several technologically innovative and customer-
centric key initiatives, providing effective alternate channels of payment to the customers. This
has also resulted in weaning away a number of customers from the traditional banking
channels to the more cost-effective alternate channels. Furthermore, there has been a
substantial improvement in the staff productivity, since the employees now focus on business
development rather than mundane operations.
IDBI Ltd believes in the principle of keeping the tech-team trim and utilize their services
optimally to deliver cutting-edge; rather bleeding-edge technological solutions. We have very
judiciously decided on the outsourcing strategy. This enables our internal team to focus on new
initiatives and enhancements to existing products. We also endeavor to ensure that the
technological solutions that we provide are scalable and cost-effective.
Technology and Tech Initiatives
In IDBI Ltd, expenditure on technology is considered to be an investment and not a cost.
Investment in technology is part of the plan to put in place building blocks for creating the
right organizational infrastructure. Large investments have been made in back-end technology
to strengthen processes, systems and control. This, in the long run, propelled by a top quality
management team has clearly set IDBI Ltd apart from its competitors.
Keeping in line with the policy of leveraging technology to drive its business, IDBI Ltd constantly
endeavors to implement and deploy new & emerging technology to drive the business needs to
the extent of not just meeting, but exceeding customer expectations. IDBI Ltd has always
endeavored to use its high-technology platform to provide cutting-edge services to its
customers.
IDBI Ltd offers its clients, fully secured and real time electronic delivery channels, providing
convenient and secure access to the banking information. It also provides its customers
centralized multi-branch connectivity integrated to a heterogeneous Core Banking System
across branches in India. This integration provides a seamless access point for clients for all the
banking products and services across the channels.

IDBI Ltd is the only bank that allows its customers to pay all their bills across any channel i.e.
Branch, ATM, Phone Banking, Mobile banking and Internet banking with Auto pay facility. For
example, a customer may register for his mobile bill payment through Internet banking. He can
pay the bill through ATM or Phone banking or Mobile banking, when the bill is presented.
Keeping pace with the ever-rising demands of our modern day clients, it has been our endeavor
to provide value added service with cutting edge technologies to our clients. In this direction
our Bank has launched many payment initiatives. The capabilities of Internet banking and web-
enabled talking ATMs have been fully exploited in most of these initiatives.
Using a single access to IDBI Ltd's Internet Banking, a customer can query & transact a variety of
information related to different applications / products, access the Demat particulars, access
the details with respect to GOI bonds, make a Card-to-Card transfer, effect an online tax
payment, purchase National Savings Certificate, Cash Management, etc.
IDBI Ltd was also the frontrunner with respect to secured electronic transmission of tax
collection data through the usage of Digital Signature Certificates.
IDBI Ltd launched a strategic Internet Banking platform to facilitate on line payments to & from
corporate customers & its dealers /agents, thereby enhancing corporate business through new-
age technology and offering supply chain financing solutions.
Overall IT spending for year 2005-2006
Overall IT spending for year 2005-2006 was approximately 50 Crores approximately. Major
spending this year has contributed to the branch automation initiative and the data center set
up catering to computing requirements of the growing organization. In tangible benefits
derived from smart implementations of IT initiatives are summarized as follows:
• The Returns on Investment (ROI) for implementing IT in organizational processes in the range of
50-75%. Organizational processes have improved and tasks get completed with great efficiency,
speed and accuracy.
• Customer centric initiatives improved the customer satisfaction as measured in terms of
Number of Positive responses by customers.
• Improved performance levels measured interims of TAT through State of the art computing
infrastructure and technology platform Integration for centralized Monitoring, Control and
Reporting.
In the Post merger scenario, the very important activity was completed that is to seamlessly
integrate the IT team at both the units of IDBI Ltd. The major IT initiatives were focused
towards centralization and Application/system integration of both the units i.e. the erstwhile
IDBI and IDBI Bank to consolidate and bring it to the common technology platform. Also there

was a pressing urgency to set up the state- of-the-art IT Infrastructure to cater to the ambitious
growth needs of the merged entity.
Vision
To be the trusted in progress by leveraging human capital and setting global standards of
excellence to build most valued financial conglomerate.
Business Strategy
 Optimize mix of corporate and retail banking
 Increase product offering by leveraging corporate relationships
 Rationalize and reorient human resources through on-going training
 Improve technology infrastructure
 Enhance & implement enterprise-wide risk management systems
 Focus on fee based income to boost profitability
 Strengthen brand equity
 Enhance market share
 Pursue organic growth opportunities
 Leverage core competency in project financing while creating additional business opportunities
in retail & commercial banking
 Inorganic growth domestically through bank acquisitions/ mergers
 Entry into Insurance, Asset Management
 Business operated as separate Retail Banking and Corporate Financing SBU(strategic business
units)s
 A common Treasury, Risk Management, Audit, IT and other support operations
 Integrated and Rationalized branch network
IDBI Bank’s Business Chart

IDBI Bank’s Organizational Chart
IDBI Ltd' Approach

IDBI Ltd was prompt to respond & adept to emerging scenario by understanding the impact of
changes in distribution of services, customer profiles & preferences, industry trends and acted
upon the same to convert the change to its advantage. IDBI Ltd has devised a customer centric
service delivery strategy, focusing on simple & value added services by utilizing the most
convenient and commonly used delivery channels. This required enhancing the existing technology
base to meet the varied and diverse customer requirements.
Analysis Across all Business Units and Products
Prior to implementing the Oracle solution, IDBI Bank did not have an adequate system to assess the
profitability of each line of business at branch, product, and customer levels. This type of analysis
would help the bank allocate resources in the right areas, and evaluate the performance of various
products to ensure these businesses stayed profitable.
“Being able to evaluate the performance of our business units and products at a granular level was
crucial to the bank’s future growth,” said P. Sitaram, chief general manager, finance and accounts
at IDBI Bank. In March 2008, IDBI Bank selected Oracle Transfer Pricing, Oracle Transfer Pricing
Online, Oracle Profitability Manager, and Oracle Financial Services and Oracle Profitability
Analytics to build an enterprise performance management system. Data is stored
in an Oracle Database whilst the applications act as knowledge engines and eventually enrich the
data collected from transaction processing systems. The bank is also a user of Oracle Financials and
Oracle Human Resources.
The Oracle solution enables IDBI to objectively assess performance at the desired granular level,
so IDBI can monitor the actual performance of each business unit, versus their target, each
month.
Regular performance monitoring is crucial to devise strategies, initiate appropriate actions, and
drive business in line with the overall performance objectives of the bank.
ORACLE FINANCIAL SERVICES PRICING MANAGEMENT, TRANSFER PRICING COMPONENT
Key features and benefits
• Real Time Transfer Pricing Results including TP Rates, Add-on Rates and Option Cost
Calculations
• Pricing Queries incorporate Allocated Costs, and Risk Based Capital
• Standard and custom product definitions
• Integration of Risk, Performance Management, Customer Insight, and Financial Compliance
Self-Service Usability and Real-Time Information

From their web browser, customer-facing users can generate deal-specific pricing information
in real time to help them understand hurdle rates inclusive of the transfer rate, multiple add-on
rates, allocated expenses, loss estimates and required capital. Queries can be run for pre-
defined standard products or custom products. The self-service user interface is designed to
support query and response, functionality required by lending personnel in the field. Any user
familiar with the products of the institution can readily access relevant pricing information. This
information is returned quickly and accurately, so that loan officers can react to customer
inquiries as fast as possible.
Consistent Methodologies
Oracle Financial Services Pricing Management assigns a transfer rate, multiple add-on rates,
including the option cost, to each modeled instrument by applying the same transfer pricing
techniques defined within the standard transfer pricing process.
Flexible Transfer Pricing for Customized Instruments
Oracle Financial Services Pricing Management custom queries allow users to create customized
instruments by defining non-standard term, payment, and re-pricing characteristics. Users can
define cash flow properties for individual instruments, enabling the pricing engine to generate
deal- specific cash flows, or users can directly input custom payment schedules along with other
relevant properties. Either way, the system will use the assigned transfer pricing method and
return resulting transfer rate details to the user.
Flexible System Configuration
Oracle Financial Services Pricing Management provides flexible administrative functionality,
allowing the system administrator to define and modify transfer pricing assumptions,
methodologies, and product properties, such as default cash flow characteristics, including a
product’s payment, re-pricing, and term attributes.
Standard Product Definitions
The Pricing Management administrator is responsible for defining instruments that represent a
standard set of products that the organization offers to its customers for which transfer rates
should be calculated and made available for queries.
Oracle Financial Services Funds Transfer Pricing provides a wide range of transfer pricing
methodologies to ensure that the correct level of precision is set for each account. These same
methodologies are available in Oracle Financial Services Pricing Management, and they can
generate transfer rate indications for both standard and custom products in real time. These
methodologies incorporate centrally defined transfer pricing yield curves and customized
prepayment expectations into the final transfer rate. Product characteristics are defined by
selecting predefined products from the drop-down list or by using the system default settings.
Scheduled Transfer Rate Calculations
Based on a set frequency specified by the Administrator, Oracle Financial Services Pricing
Management automatically calculates new transfer rates and option costs for standard

products. The transfer pricing engine used for calculations is the same engine employed by
Oracle Financial Services Funds Transfer Pricing, guaranteeing consistent results.
Integrated Architecture
Oracle’s Financial Services Analytical Applications are integrated solutions based on “industry
best practices” components. Solutions can be assembled with confidence, knowing that all the
pieces fit together: data, analytics, business rules, hierarchies, and reporting. Although the
solution was designed to be delivered on an integrated basis, each of these product
components can stand on its own as a best-of-breed solution. Be implemented in any order Be
implemented on either a simple or sophisticated basis, and support ongoing evolution of
analytical methodologies.
Oracle’s open, scalable architecture is also designed to take advantage of emerging
technologies. While using Oracle’s Financial Services Analytical Applications, IDBI can choose
where and when to process results, based on their combination of business processes, data
volumes, and technology infrastructure.
About Oracle Financial Services Analytical Applications
Oracle Financial Services Pricing Management, Transfer Pricing Component is part of Oracle
Financial Services Analytical Applications suite, an integrated suite of applications that sit on
top of a common account level relational data model. Oracle
Financial Services Analytical Applications enable IDBI to measure and manage risk-adjusted
performance, cultivate a risk management culture through transparency, and lower the costs
of compliance and regulation.
In addition, Oracle Transfer Pricing Online allows staff to view the transfer price for all
products as they are completing transactions.
ORACLE PROFITABILITY MANAGER
Traditional methods of measuring and managing profitability are no longer sufficient.
Shareholders and regulation demands increased understanding of business and more
importantly recognition that management has the same insight into the business. Analytical
tools cannot simply measure value; they must be active components in creating it. Analysis can
no longer be held closely by a few, centralized analysts. It must be deployed throughout an
organization so all users have access to information and analytical capability in order to make
both tactical as well as strategic decisions. Now more than ever, the ability to efficiently
manage, access, and analyze business information can make the difference between leading an
industry and being lost in the crowd.
Understand: determine what drives value
With Profitability Manager, managers are afforded insight into the true structure and purpose
of costs, as well as access to accurate profitability information by product, channel and
customer - or any other business segment. This wealth of information supports more effective

and forward-looking decisions. Profitability management quickly realizes a number of important
benefits, like being able to reduce costs, maximize process value and increase profitability.
Improving pricing practices and product rationalization, enhancing customer service and
supporting customer relationship management, and targeting and monitoring cost
improvements. Plus better product development, life cycle management, business planning and
capital investment decisions. It all adds up to a powerful value proposition for implementing an
active approach to profitability management.
Where once a spreadsheet model was often the tool of choice, Oracle Profitability Manager can
bring the disciplines necessary to provide credible results. With Oracle Profitability Manager,
enterprises are able to move beyond just being able to measure performance to being able to
improve it, by delivering improved profitability results as part of a continuous improvement
process. This includes security, centralized administration, auditing of processes and results,
and work flowed authorization of changes to business rules. In order to make the tough
decisions today’s business environment requires, you need to have 100% confidence in your
results, something spreadsheet and PC based applications simply cannot deliver.
Act: formulate and communicate
Perhaps the most important characteristic of the profitability measurement process is in the
ability to communicate and disseminate profitability information through an organization. Even
the best analysis and most comprehensive view of the company are of limited value, if it
remains in the hands of a limited few. Transparency is an often-used term in these days of
heightened competition, and increased regulatory pressures, but transparency doesn’t mean
simply a complete view of the business: it means a complete view of the business available to
the complete business.
Operational
A common convention for reporting is to separate ‘operational’ from ‘decision support’
information. Operational reports are required while decision support information is a ‘nice to
have’ that doesn’t require the same timeliness and accounting meticulousness. In today’s
regulatory environment, this traditional dichotomy has broken down. Profitability Manager
applies the same operational rigor to the development of performance information to deliver
timely and credible results. A key criterion of a profitability management application is the
dissemination of usable information throughout the organization.
Because it is based on Oracle’s Internet architecture, Oracle Profitability Manager is easily
deployed throughout the organization. Users access the application through web browsers so
whether an employee sits in Auckland or Zurich, access to powerful analysis is only a browser
screen away.
Deliver: measure and improve results
Oracle Profitability Manager gives IDBI a complete set of tools for developing profit and
performance measures at the level you require. Its multi-dimensional approach takes
advantage of the richness of detailed data. Oracle Profitability Manager helps to manage all the
significant facets of business. Armed with this information, IDBI was able to make solid,

supportable decisions about customers, your products, and your business policies and
procedures.
Actionable
PM goes far beyond traditional cost allocation and allows companies to model the complexity
of all costs based on activities, materials, resources, and product or service components. Using
PM, organizations have the benefit of knowing the value added to the organization by each
activity and can easily perform detailed performance analysis to enable continues improvement
and competitive benchmarking.
Thorough
Oracle’s Profitability Management solution addresses the reality of today’s complex
organization, specifically including the support functions and indirect expenses that represent a
rising share of total enterprise cost.
Accurate
Traditionally businesses have measured profitability through the use of generalized cost data,
which is allocated across products based on subjective decisions. However, this measure of
profitability was not always accurate, since the costs were not related to the products, services
or customers that actually caused those costs to be incurred. It’s hard to make critical business
decisions when your data is suspect or based upon arbitrary assumptions. Profitability Manager
removes that hurdle so decisions can be made with confidence.
Oracle Profitability Manager is fully integrated with other Oracle Applications to provide
comprehensive, Internet based solutions for corporate performance management needs.
Using Oracle’s market leading technology, users can rapidly implement solutions that
integrate corporate information regardless of system or format, tailor functionality to meet
specific requirements and expand the system to keep pace with dynamic business evolution.
Being able to assess operating profit this way has far reaching benefits for performance
analysis and management at the product and business unit level.
Oracle Financial Services Profitability Analytics delivers profitability information to users over
the internet. Staff can analyze variances, trends, and rankings across products, geographies,
and lines of business.
Relationship managers and decision makers now have better access to critical information that
allows them to objectively evaluate the performance of their respective portfolios and areas of
responsibility on a regular basis,” said Ishwar Padhan, head of the balance sheet management
group at IDBI Bank. Armed with this information, they can make better business decisions and
ultimately make a larger contribution to the profitability of the bank.”
Ability to assess employee performance

The Oracle solution will soon provide building blocks to conduct performance assessments on
individual staff members. We will be able to assess employee performance at the group level,
which will allow us to develop an appropriate performance-based incentive and reward
system,” said R.K. Bansal, executive director and CFO at IDBI Bank. With this system in place,
we have better visibility on the contributions being made at different levels which is generating
a culture focused on customer service and creating more value.”
Why Oracle?
IDBI Bank chose Oracle due to the functionality offered by solution and Oracle’s success in
implementing similar infrastructure at other top-tier banks in India. The flexibility of the Oracle
system has to incorporate tailor-made configurations on various performance measurements,
and cost allocation principles of the bank, as well as the expertise of the Oracle implementation
team, convinced them to choose Oracle.
Implementation process
In March 2008, Oracle Consulting began rolling out the solution at IDBI Bank. The policy and
design principles were handled by a core team with domain expertise, while the system
integrated and technical tasks were managed by IDBI Intech, the technology subsidiary of IDBI
Bank.
In April 2008, a pilot project was conducted at 12 IDBI branches. Integration and user testing
was completed across the bank’s entire operations and branch network by September 2008.
“The project’s aggressive deadlines were met thanks to the dedicated resources and close co-
ordination between the Oracle implementation, user, and IT teams,” said Devendra Hedaoo,
associate consultant, IDBI Intech.
“The integration and testing went well because Oracle Consulting worked with the bank in the
past so they understood our infrastructure,” said Sanjay Sharma, IT advisor at IDBI Bank. All
teams made a concerted effort to complete the project in a timely manner.
The Benefits:
• IDBI Ltd is now virtually a universal bank. Total business size of around Rs.1,34,189 crore,
• It uses information technology (IT) platform to structure and deliver personalized banking
services and customized financial solutions to its clients.
• Pole position in the technological arena
- Card-to-Card Money Transfer
- Online tax payment
- Visa Off-us mobile recharge facility
- Air Ticketing through ATM etc.

• Gained insights into the performance of products at many levels, allowing the bank to devise
strategies to improve profitability
• Enabled managers to analyze the true contribution of customers, products, and branches to the
bank’s bottom line
• Provided objective assessments of performance at account level to facilitate better decision
making
• Allowed regular monitoring of actual financial performance against budgets
• Provided the potential to conduct detailed performance assessments on employees working at
bank branches
• Positive impact on the Bank’s overall cost of funds and facilitates lending at more competitive
rates to its clients.
• Highest standards - corporate governance (operations)
• IDBI would continue – Products and services as part of its development finance role and an
array of wholesale and retail banking products, for specific cash flow requirements of corporate
and individuals.
Core income growth
The provision coverage to the tune of 97% of gross NPAs is by far the highest in the
sector.

Strong Investment Portfolio
Name Listed/Unlisted % Holding
IDBI Capital Unlisted 100.00
IDBI Homefinance Unlisted 100.00
IDBI Gilts Unlisted 100.00
IDBI Fortis Unlisted 48.00
ARCIL Unlisted 19.95
CARE Unlisted 26.75
CCIL Unlisted 6.50
NSDL Unlisted 30.00
NSE Unlisted 5.00
STCI Unlisted 7.28
SIDBI Unlisted 19.21
SHCIL Unlisted 16.96
IDFC Listed 1.79
IFCI Listed 5.01

851
501
864
502
871
504
0
100
200
300
400
500
600
700
800
900
1000
ATM's No. of Branches
Q1
08-09
Q2
08-09
Q3
08-09

Network & delivery channels
(Current Scenario)
• 504 branches, 496 counters
• 871 ATMs
• Presence in 316 important commercial centers in India
• Presence in 100 cities
• Internet banking
• Retail customer base: 5 million +
• Corporate customers: 3000 +
Achievements
 Awards Won during the year
 IT Team of the Year(2007) Award of IBA5
 Best IT Security Practices Award of NASSCOM
 Best CTO Award of Cyber Media
 Won two special awards, for “Best Payments Initiative” and “Outstanding Achiever of
the Year" (2007)
 Key Projects
 Airline ticketing through ATMs
 Setup of Data Center and Disaster Recovery Center
 Internet Banking Enabled Multi-Functional KIOSK
 Kolkata and Haldia Port Trust Internet Banking Payment and MIS Modules
 Online Payment of Central Excise & Service Tax
New Business Initiatives
 IDBI completed the reorganization of its business into separate verticals focused on SME, Agri-
business, Personal Banking, Mid Corporate, Large Corporate and Infrastructure.
• IDBI Fortis Life Insurance
• IDBI Gilts
• Bank will also open branches in Singapore, Dubai and Shanghai, with either the Dubai or
Singapore branch opening likely by the end of March
• Steps initiated for mortgage guarantee business
• Took another initiative in reaching out to the smaller clients by introducing facility of
online application for educational loan.
• Bank introduced a new product for encashment/sale of Foreign Currency by NRI Clients
and encashment of Travelers Cheques by Bank’s existing NRI customers.

CASE STUDY – 3
THE PROCTER & GAMBLE COMPANY
Background
• Established in 1837, The Procter & Gamble Company began as a small, family operated soap
and candle company in Cincinnati, Ohio, USA.
• The Procter & Gamble Company (P&G) is one of the world’s premier consumer product
companies, with one of the largest and strongest portfolios of trusted brands. Three billion
times a day, P&G brands touch the lives of people around the world.
• Today, Procter & Gamble is a recognized leader in the development, distribution and marketing
of superior Fabric & Home Care, Baby Care, Feminine Care, Family Care, Beauty Care, Health
Care, and Snacks & Beverages products.
• P&G markets nearly 300 brands - including Pampers, Tide, Ariel, Always, Whisper, Pantene,
Bounty, Pringles, Folgers, Charmin, Downy, Lenor, Iams, Crest, Actonel, Olay and Clairol – to
more than 5 billion consumers in almost 160 countries around the world.
• Procter & Gamble's corporate tradition is rooted in the principles of personal integrity,
respect for the individual and doing what's right for the long-term. Nearly 102,000 people in

more than 80 countries worldwide work every day to provide products of superior quality
and value to the world's consumers.
Key Challenges
• Improve productivity for all involved in sales order–related processes
• Create a tailored cockpit for resolving sales order issues
• Make cockpit extensible for future enhancements in order management
• Avoid custom development and retain standard SAP maintenance contract coverage
• Improve understanding of how to benefit from enterprise services
• Make connections and leverage shared knowledge with peers facing similar efficiency
challenges
Understanding customers needs
Supply chains are made up of multiple companies, working both competitively and
cooperatively to produce, transport, and sell products to the consumer. Today’s supply chains
have an order of magnitude more “links” or business relationship contact points than those in
the past, and this density will continue to increase as e-commerce advances into the B2B arena.
These supply chains look more like a dense web of relationships than a narrow distribution
pipeline. As the density of webs increases, there is a corresponding change in the performance
of the systems that operate in these topologies. Optimization techniques that work well for a
distribution pipeline, or within discrete portions of a supply chain, are no longer as effective
and can be significantly outperformed by newer, non-linear approaches.
Using state-of-the-art supply chain management techniques, Procter & Gamble had identified
means of reducing both cycle time and inventory by 50% throughout its supply system.
Like any other company, P&G considers the processes surrounding sales orders vital to
maintaining customer satisfaction and strong revenues. But sales order processing is complex.
Before committing to delivery dates, users may face availability-to-promise and allocation
issues. Expediting order delivery while maintaining efficient logistics often requires finding
products in the distribution network, checking customer credit limits, obtaining sales approvals,
moving materials to new locations as a mass change, and much more. To improve productivity
for everyone involved in sales order–related processes, P&G conceived the notion of a sales
order cockpit – a single monitor that supports the everyday activities related to sales orders.
P&G wanted to create such a tool and tailor it to the company’s precise needs without
performing custom application development. So P&G approached SAP to find a way to
accomplish this while retaining coverage under its standard SAP maintenance contract and
without incurring substantial costs. SAP explained the concept of its Enterprise Services
Community (ES Community) program, a gathering of customers and partners that together
comprise a force capable of helping firms like P&G achieve their goals. Through a forum called a

community definition group (CDG), customer ES Community members contribute their
extensive experience to aid in requirements definition for an application, such as the sales
order cockpit, while partners provide their SAP-certified applications that fulfill roles in its
construction.
Finally, SAP provides the key ingredients: a set of enterprise services that glue together SAP
software and partner applications to form the ultimate composite application. Since all these
contributions are built using standard SAP software, the final solution is fully compliant with the
provisions of standard SAP maintenance contracts, relieving customers like P&G from concern
about ongoing support. P&G was excited about the idea and allied in forming CDGs to turn the
sales order cockpit concept into a reality. Together, the companies recruited five other
consumer products firms with needs similar to P&G’s, along with three software suppliers with
relevant SAP certified offerings to provide important functionality.
Implementation process & realization of value

Unique Implications for Supply
The Organizational Performance Model is applied to the supply organization differently from
how it is applied to most other functions. This difference relates to the fact that the supply
organization is, by definition, a boundary function. Its role is to link the company's business
needs with the capabilities of external suppliers. For this linkage to provide real value supply
must be able to interface with two very different worlds—the external world of the
marketplace and suppliers and the internal world of business units, projects, and functions. At
P&G, for example, use a unit of volume called a "statistical case" to compare wide range of
consumer packaged goods products. This internal language means absolutely nothing,
however, to suppliers, who count in tons, kilograms, thousands of units, hours of service, and
so on.
Design Element 1: Tasks

When designing an organization, most managers leap directly to the structure of the group—
boxes, reporting lines, and responsibilities. But that puts the "cart before the horse." The place
to start is with tasks—what people in the organization actually do. In supply, two sets of tasks
quickly emerge:
1. Commercially linking with external suppliers and markets to deliver value to the company, its
products, and customers/consumers. These are the external-facing tasks.
2. Operationally linking with internal customers to understand business needs in order to
accurately present those needs to suppliers and to provide internal functions with external
supply market intelligence and actionable opportunities. These are the internal-facing tasks.
External-facing tasks form the core focus of a purchasing or supply organization: commodity
management, industry interaction, and supplier relationship management.
Internal-facing tasks enable the purchasing organization to communicate corporate needs to
external partners and to survive within the company's internal structure, which is often
configured quite differently than the outside world. There are two types of internal tasks:
business process management and organizational management. The first is the supply
organization's version - Tasks, Responsibilities, and Practices: price, cost, and profit forecasting;
project and new product launch processes; cross-functional team formation; budgeting; change
management; and operational collaboration.
The second set of tasks include: recruitment and staffing, coaching and people development,
salary management, coordination of the supply organization, and clarification and deployment
of the deluge of demands and information from the corporate center.
Successfully carrying out these internal and external facing tasks is only one aspect of the tasks
element as it applies to supply organizations. A second dimension is how tasks are bundled
within and across the organization to deliver needed results. This bundling depends on the
business situation and strategy. For example, P&G's realized that sourcing/commodity trading,
logistics, and coffee tasting/quality were all intimately connected. This realization led to
broaden the supply organization to include people and tasks that previously had resided in
manufacturing and product development organizations. At the other extreme, when P&G
acquired Giorgio Cosmetics, it was found that their supply group was focused on complex
logistics flows rather than sourcing. The pressure of day-to-day product replenishment require
dividing the tasks between a small cadre that could focus on strategic sourcing and supplier
relationship and a larger group that stayed focused on the critical logistics flow.
Design Element 2: People
From the "what" of tasks, now turn to the "whom" of people. "People" includes not only
individuals, their abilities, aptitudes, and skills but also the processes that acquire, retain,
develop, and sometimes terminate individuals (through firing) or groups (through outsourcing).
The people element also, includes the aggregation of individual skills into organizational
strengths and weaknesses. At the organizational level, this element represents the sum of the

individuals, the resources that support them, and the relationships both inside the
purchasing/supply organization itself and across other functions in the company and suppliers.
Just as with tasks, sourcing organization design must consider both those aspects of the people
element that are necessary for interacting externally with suppliers and those aspects that are
necessary for successfully interacting internally.
External-facing people factors are those skills, resources, and processes that are necessary for
interacting successfully with groups outside one's own company. They include the skills your
people need to successfully collaborate, negotiate, and communicate with these groups.
Internal-facing people factors are the resources and support required to enable your sourcing
people to improve and effectively perform their key tasks. At the organizational level, we are
also talking about hands-on coaching and peer skill support throughout the organization.
P&G purchases to redesign its organization to respond to changes in the external and internal
business environment. For many years, Purchases was a "functionally pure" organization. Today
the organization has a blend of functional backgrounds at nearly all levels up to director and
vice president. The corporate "promote from within" culture continued, while the mix,
capability, and diversity of talent all expanded.
Design Element 3: Information
For supply, information is the raw material from which sourcing is fabricated; without
information, sourcing professionals will make flawed decisions with catastrophic business

results. As the building block of sourcing, information is a critical design element.
Organizational structure needs to consider where information comes from, where it goes,
where it resides, and how it is controlled.
There are several different types of information: transactional information (such as
specifications, prices, and purchase orders), business management information (volume and
cost plans, exception management, and new product introductions), and market information
(commodity supply and demand and industry and supplier analytics). All of this information
flashes through, across, and within the supply organization to internal and external parties
(see Exhibit 2).
There are also three main flows of information. They are: (1) external flows between
companies (such as information about markets, suppliers, economics, and currencies), (2)
internal flows across internal boundaries (such as information about cost, volume,
availability, and demand); and (3) intra flows within the supply organization itself (for
example about budgets and staffing).To design an effective supply organization, it is needed
to know what information flows run through organization and to envision how these flows
interface. It is also needed to understand how the information would be used in practice. For
example, sourcing managers do not need information about strategy development in real
time, but they may need daily management information available in real time. Performing
this mental hook-up will help you gain a more overarching analysis of your information
needs, requirements, and uses.
Design Element 4: Decision Making
How decisions are made is a key design element—one that can make or break an organization.
Supply organization design needs to consider both the internal and the external sides of the
decision-making process. The internal piece involves ensuring cross-functional alignment, or
getting all of the company's functions on the same page.
Decision making should be an interactive process between the external and internal sides—
neither should be addressed in isolation. Who must agree, who actually decides, and how the
internal/external iterations are sequenced all matter. Pity the buyer who cuts a deal and then
must sell it to the internal stakeholders whose input was ignored or never gathered.
Getting internal cross-functional alignment is often the toughest part of the process. Before
attempting a market intervention with suppliers, it is needed to understand who the internal
players are. The loss of credibility and level of embarrassment when a commitment is
overturned internally can undermine the ability to get best value—both "this time" and in the
future. The supply organization must be able to paint the broader strategic and market pictures
to the internal players while also understanding their needs. The organizational design must
truly map out this interaction so that the supply organization can successfully create the right
internal connections and expectations to get strong executable decisions.

The external side of decision making spans not only reviewing the final supplier and terms of
purchase but also determining what levels of review and involvement are required from
sourcing management. At P&G, typical criteria used to make such choices include:
• Size, implications, length, and risk of the business to be awarded.
• Skill, experience, and knowledge of the people closest to the work.
• Accountability for results. (Who is responsible, and how comfortable are they with the choice?)
An important concern here is the balance between a decision-maker's accountability, specific
operational knowledge, and ability to apply general expertise to a particular situation.
Design Element 5: Rewards
Organizational design should ensure that it encourages and rewards actions that meet the
business's needs and are in line with corporate strategy.
When P&G began global sourcing, it rewarded its global teams based on three criteria:
• Strong overall corporate results or the global aggregate result.
• No single region having to take a huge loss so that others would gain. This avoids competitively
disadvantaging one region.
• No single region consistently losing over time. This avoids incrementally creating a competitive
disadvantage for a region in the long run.
The rewards had elements of both global and regional priorities, and supply
chain/finance/purchases recognition was included in the overall reward system.
Organizational design needs to ensure that rewards are relevant to the individuals as well. For
the short term, that typically means money and recognition. Longer term, however, rewards
must come in the form of career development and growth.
Design Element 6: Structure
Form follows function and must align with business strategy, culture, and rewards as well as the
structures of other internal organizations. For supplier-facing organizations, this requires a
three-part structural design.
1. An "extra" design or the structure that interfaces with the outside world of suppliers and
markets. "Extra" here means focusing outside the company.
2. The "inter" design, or the structure that interfaces with internal units, sites, and projects.
"Inter" here means interdepartmental across the company.
3. The "intra" design, or the structure inside the supply organization that translates, coordinates,
and integrates the extra and inter designs. "Intra" here mean within the supply organization.

The success of these designs depends on how compatible they are with the other five elements
as well as the ability of people to maintain both internal and external viewpoints when doing
their work.
Conceptually, "structure" should represent the summary of the design process. In 2000, some
P&G businesses created purchasing subunits to focus on new types of products with
components that had never bought before—such as Swiffer implements and electric batteries
for the Crest Spinbrush. These new P&G products also needed materials from traditional
spends with existing commodity structures, like packaging or chemicals, but at extremely small
volumes that could be lost in a larger aggregated requirement.
The use of the Organizational Performance Model allowed P&G to embed these "inter-
designed" subgroups within the existing commodity-based organization. The new-product
subgroup's shadow structure linked to the primary group's visible commodity structure, and the
larger commodity structure's shadow organization linked to the visible new product group's
internal business structure. This design allowed the new-product people to focus on new
spends and coordinate the smaller "old" spends, while the primary group focused on our large
existing businesses. P&G's experiences show that using a holistic design model, like OP model,
helps organizations recognize that structural success depends on nonstructural systems—in
other words, those first five design elements. For a design to be successful and deliver results,
all of these elements need to be incorporated.
Results
Over the course of 15 months, the team launched and completed seven CDGs that employed
more than 20 enterprise services built on the SAP ERP and SAP Supply Chain Management
applications to create the sales order cockpit. The solution can be readily extended by P&G for
additional purposes, such as truck load optimization. Other end users can tailor it for
differences in their own environments. P&G and others in the CDGs plan to begin pilot
production use shortly and are already planning further business innovations to take advantage
of SAP collaboration platforms and the SAP partner ecosystem that contributed so much on the
sales order cockpit.
Benefits
Improved user productivity by integrating functionality that required many scattered
transactions into a single cockpit. Avoided the cost impact of custom development. Remained
compliant with provisions of SAP maintenance contracts. Created connection to peers and
leveraged shared knowledge to improve productivity
Through iterative simulations, the agents within the simulation tool began to "learn" optimal
behavior. The supply network was capable of self-organization and adaptation to the evolving
connected economy. Goods, relevant information, and services flowed smoothly through the
supply network, around obstacles, and in a way that maximized network yield-laminar flow
through an ever-changing environment. Through this approach, the company was able to

identify the additional 50% savings in cycle time and inventory. As a result of these findings,
Procter & Gamble has undertaken field trials, which have confirmed the effectiveness of all the
policies for which field trials have been completed. Procter & Gamble is preparing to roll out
the internal changes recommended, as well as investigating ways of affecting external policies.
Lessons Learned
Use enterprise services and Community Definition Group to achieve the benefits normally
associated with custom development without its disadvantages. Tap the Enterprise Community
to find motivated peers at customer companies with similar needs and software solution
partners with the technologies to address them. Use SAP® Developer Network to obtain
answers to specific questions and obtain valued insight via online collaboration.

Management of information systems

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