Business Analytics the way we do it
Operating Expense Analytics
Control and Reduce
Operating Expenses and
Gain Competitive
Advantage Over Peers
by:
•
•
•
•
Acquiring visibility at a
transactional level across
business units
Curbing financial leakage
Ensuring policy and
contract compliance
Equipping line managers
with tools to assume
ownership of their costs
Studies show that a 1%
decrease in operating expenses
can increase profitability by up
to ten times more than
corresponding increase in
revenue.
Enhancing Margins and Gaining Competitive Advantage
The business environment has seen drastic changes in recent times, with increasing
competition, complex tax regulations and more rigid compliance norms designated
by the government all having detrimental impact on companies’ bottom lines. This has
led to such corporations turning their attention to lowering operating costs within their
decentralized operations through strategic analytics.
Today, the businesses that substantially outperform the competition are five times
more likely to use analytics strategically in comparison to underperformers.
Controlling Operating Expenses: Typical Challenges for
the CFO
•
•
•
•
A lack of holistic reporting across expense category level(s) and BUs
Huge data sets with no tools for their analysis
Information failing to reach line managers for change implementation
Scarce financial resources in both the short- and long-term
Our Offer
Capgemini’s Analytics solution provides a holistic service with actionable insights at a transactional level. As a result our clients
gains granular visibility of each dollar of expense incurred by the organization and will be able to identify cost saving opportunities
with effective multidimensional drill down analysis. This, in turn, allows effective prioritization of action areas.
Capgemini Value Proposition
Value Chain
Actionable insight generation
Reduce and control operating
expense
Increase compliance
Prescriptive analytics
Analytics
Capgemini Advantages
Access to scarce, high quality
analytics resources and proven
methodology enabling limited
client involvement and expedited
implementation
Predictive analytics
Predict expenses for
forecasting and budgeting
Visualization
Improved visibility
Ensures an enterprise-wide
approach to data management
and analytics
KPIs, metrics, performance,
trends, correlations
Key metrics and trends
impacting operating
expense
Enhanced process excellence
and effectiveness of
decision making
Data prepared
for analysis
Indexed, organized
and optimized data
Containers and feeds
of heterogeneous data
Access to structured and
unstructured expense data:
travel, telephone, utility bills
Reporting
Data Preparation
Data Extraction
Reduction in internal costs through
leveraging the Center of Excellence
platform
Ability to handle huge
data sets
Methodology and Approach
Income and Loss Statement
Sales
Less Cost of Goods Sold
Gross Profit
Operating Expense
Sales & Marketing
Research & Developement
General & Administrative
Salaries and wages
Insurance
Depreciation
Our focus area is operating expense categories with high flexibility of
control such as travel, utilities, office supplies, telephone, maintenance and
repair, freight and logistics, power and fuel, and postage to identify easy
cost reduction opportunities.
Typical Reasons for High Expense in Certain Categories:
Travel
• Last minute booking
• Booking through agents
• Failure to use company-approved hotels
Commission
Rent
Telephone
Travel
• High usage per person
• Non-compliance with office policy
• Numerous service providers
Utilities
Office Supplies
Telephone
Maintenance and Repair
Freight and Logistics
Power & Fuel
Postage
Total Operating expense
Operating Income
Less: Non Operating Expense
Income (Loss) Before Taxes
Logistics
• Under-utilization of truck capacity
• Non-optimal route
Key Service Highlights
• Limited client involvement
• Holistic reporting and
analytics
• Detailed, consistent,
timely view of expenses
• Visualization through
common web portal
• Actionable insights for
reducing expense and
increasing compliance
• Easy access to relevant
information
Deliverables
As a strategic partner, Capgemini leverages its Analytics tools to enable companies
to improve visibility of underlying activities that perpetuate their operating expense
and provide line managers with actionable insights to instill ownership cost behavior
within their teams:
•
•
•
•
•
Increase policy compliance by employee
Enhance contract compliance by supplier
Dashboard Sample
Decrease transaction costs
Root cause analysis
This is a Sample of the OCM
Scorecard. Exact model
Decrease expense through
to be worked out once KPIs,
Analysis, data sources,
Score weights are finalized
improved negotiation
A control
dashboard
accompanies our
insights to improve
the visibility of
your company’s
operating expense
situation.
Dashboard Sample
How many events?
Were the cost effective?
Were they as per policy?
Is it within budget?
Was the alternate way
considered ?
Intra Europe Travel booked
within 14 days
% Out of Policy
15%
15%
47.0
41.0
48.0
47.0
35.0
37.0
42.0
30.0
41.0
40.0
39.0
14%
17%
16%
14%
5%
44.0
Spend Q1,Q2 2012% Out of Policy
0%
January
March
May
July
Spend Q2 2012
Spend
Q2
2012
O11 N11
D11 J12
F12
M12 A12 M12
J12
J12
A12 S12
O12
% Out of Policy
Split by Booking Type
by volume
84.0
73.0
65.0 65.0
by value
67.0
59.0
71.0
50.0
69.0 68.0
73.0
Printed Pages
68.0 61.0
75.0
58.0
N11
D11 J12
F12
M12 A12
M12
6.5
76.0
3.1
60.0
6.6
4.6
4.2
4.1
68.0
J12
J12
A12 S12
BW
63.0
2.5
1.7
O12
O11
N11
D11 J12
1.7
F12
M12 A12
M12
J12
134
248
3.9
3.1
193
113
J12
A12 S12
O12
221
223
184
60.0
2.0
0.3
O11
In Count
Color
Online
69.0
80.0
71.0 70.0 72.0
Quaterly % Spend Vs Policy
Mobile Bills above
policy limit
58.0
Outcome: Helped Leading CPG company Reduce
Their Operating Expense by 8%
Spend Q1,Q2 2012% Unknown
84%
Spend Q12012
74.0
Success Stories
Spend Q1,Q2 2012% of in Policy
15%
10%
10%
47.0
Hotel Spend as per Policy
1%
18%
20%
106
225
903
738 1097 768
530
566
O11
N11
F12
M12 A12
D11 J12
104
240
963
247
221
414 1247 474
687 1271 537
M12
A12 S12
J12
J12
O12
T&E Expense Analytics and Construction
of Centralized Web Portal Executed for
Leading European Paper Company
Challenges Faced by the Client:
• Limited alignment across teams on inputs or outputs
• Suboptimal use of scarce financial resources
• No “common approach” - risk of inaccurate/duplicated
data
• Information continuously failing to reach line manager level
Challenges:
Approach and Solution
Approach and Solution
• Analysis of operating expenses like travel, telephone,
stationary, conference, logistics, based on nonfinancial data.
• Analysts provided actionable insights:
–– Top employees and teams driving policy noncompliance
and high expense across various categories
–– Existence of expenses with scope for reduction in
particular BUs
–– Savings achieved by using video conference vs. traveling
to other locations
–– Savings lost due to policy noncompliance (e.g. staying in
a hotel above budget, last minute bookings)
–– Comparison of team average spend with overall
average spend
• Drill down of travel expenses into: cars, lodging, business
conferences, business meals, travel agency fees, fuel
etc., across EMEA regions to help identify outliers/high
expense areas
• Visibility of actual vs. budgeted expense on a monthly basis
for each category across regions to identify variances
• Profiling of T&E expense by employee for monthly expenses
and actual vs. budgeted expense to drive policy compliance
• Limited visibility of T&E expense across different
EMEA regions
• Frequently exceeding budget and absence of proactive tool
and analytics for tracking.
Major CPG Company Benefits from Reduced
Logistics Costs, Reversing Previous Stagnation
Approach and Solution
• Capgemini identified the following key levers: (1) buy
smart; (2) source locally (3) optimize resources; (4) increase
utilization; (5) avoid waste (6) travel less
• Reduced logistics costs achieved through: improved truck
utilization, transition from buffer movements, optimum
regionalization, cross border movement avoidance, and
direct dispatch push.
Business Analytics the way we do it
The Capgemini Experience
Our teams are led by senior practitioners and are recognized as specialists
in their respective fields. The Operating Expense Analytics team has a
strong analytical background comprising MBAs, finance graduates, Masters
in Statistics, with experience in strategy, consulting and finance.
Our clients get lasting value because we engage directly and meaningfully with
stakeholders at each level of the enterprise – from boardroom to shop floor
and warehouse.
Analytical Tools and
Capabilities
• Huge data sets handled by our SQL
data warehouses
• Efficiently analyzed using statistical
tools like
Our Other Analytics Offerings
Revenue Assurance
Analytics
to reduce leakage
from order
to cash
process
Expense Analytics
to help reduce
wastage and
improve
margin
• Visualization-focused business
intelligence
For more details contact:
Terry Sandiford
[email protected]
Working
Capital Analytics
to help improve
Cash Flow
Control
Analytics
to help reduce
business risk
The key components of the CFO Analytics solution include:
Revenue Assurance Analytics: • Improved customer query to order conversion
• Enhanced credit and collection performance
• Reduced billing leakage and more sell-ons Expenses and Payables Analytics:
• Recovery of erroneous or duplicate payments
• Increased compliance with procurement policy
• Informed views of global spend
Control Analytics:
• Dynamic real-time monitoring of key controls
• Predictive leading indicators to prevent failures
• Lower cost of better, broader risk mitigation
Working Capital Analytics:
• Optimized treasury performance
• Reduced write off of stock and bad debt
• Effective use of discounts and promotions
The information contained in this document is proprietary. ©2013 Capgemini.
All rights reserved. Rightshore ® is a trademark belonging to Capgemini.
About
Capgemini
With more than 125,000 people
in 44 countries, Capgemini is one
of the world’s foremost providers
of consulting, technology and
outsourcing services. The Group
reported 2012 global revenues of
EUR 10.3 billion.
Together with its clients,
Capgemini creates and delivers
business and technology solutions
that fit their needs and drive the
results they want.
A deeply multicultural organization,
Capgemini has developed its own
way of working, the Collaborative
Business Experience™, and draws
on Rightshore ®, its worldwide
delivery model.
Learn more about us at
www.capgemini.com