Business Transformation of Back Office Functions Ben Paul PricewaterhouseCoopers UK

Transcription

1 Business Transformation of Back Office Functions Ben Paul PricewaterhouseCoopers UK

2 INTRODUCTION BEN PAUL Airline experience in Middle East, Africa, US & Europe Global Transformation Director Ben Paul PwC (London) UK PwC Airline Leader Expert in developing & implementing new operating models Delivers multifunctional, complex

3 THE MEGATRENDS IS OUR WAY OF UNDERSTANDING THE CHANGING WORLD & THE WAY WE DO BUSINESS PwC have identified five global megatrends that are: having a major influence on the economic & commercial landscape; permeate across all sectors of the economy & society; & fundamentally disrupt our industry & the way we do business.

4 AIRLINES ARE FACING CHALLENGES FROM MULTIPLE ANGLES Industry Challenges PwC Global Airline CEO Survey 2014 Dynamic global markets Digital age with disruptive technologies Increasing customer demands Fuel price environment Refining business models 74% of airline CEOs are extremely concerned by the threat of volatile energy costs to growth prospects, compared with 19% of all CEOs % Airline CEOs focus in their next big change strategies: 38% Data & analytics 34% Tech investment 33% R&D & innovation Future of alliances & consolidation 18% of airline CEOs see JVs or strategic alliances as their main growth opportunity twice as many as all CEOs

5 AND ARE RESPONDING TO THESE CHALLENGES BY Being agile Becoming more customer-centric Reinventing themselves to be more resilient Changing their organizational structure Back Office functions need to be ready for this change. Driving synergies out of 38% investments Data & analytics & alliances 34% Tech investment 33% R&D & innovation

6 HOWEVER, MOST BACK OFFICE FUNCTIONS ARE NOT ABLE TO RESPOND IN THE SAME WAY AS THE REST OF THE AIRLINE Functions working as siloes Core back office systems neither fit for purpose nor easily integrated with multiple partners Reputational & financial risks from broadening tax exposure Staff lack the skills to respond & adapt The wider value chain has sensitive processes & changing risk profiles Piecemeal investment creates a patchwork of infrastructure 38% Data & analytics 34% Tech investment 33% R&D & innovation yet airlines are not the only organisations to face these challenges

7 HOW BACK OFFICE TRANSFORMATION CAN ADDRESS THESE ISSUES IN PRACTICE

8 AIRLINES ARE LOOKING AT THE WIDER MARKET FOR BEST PRACTICES IN TRANSFORMING BACK OFFICE FUNCTIONS... to achieve the right balance between Insight, Compliance & Efficiency

9 AIR TO MEET THE CHALLENGES AIRLINES FACE, BACK OFFICE FUNCTIONS NEED TO REINVENT THEMSELVES Risk control & compliance are automated Improves controls Reduces cost Standardise & automate lowvalue transactional processes in service centres Teams have the right skillsets & are highly motivated Builds competencies People Organisation Technology Creates agility Create flexibility to challenges & disruption at minimal cost Individuals dedicate more time to value creating activities Promotes valueadded effort Drives profitable growth Optimise processes & utilising data to guide business decisions so airlines are having to and must transform their Back Office functions.

10 THESE TRANSFORMATIONS NEED TO GET THE BASICS RIGHT Leadership buy in Strong change communications Stakeholder management Phased transition plan for systems Essential governance but airlines will also need to consider A forward looking approach to talent management Retaining customer oriented culture Breaking down siloed mentality & ways of working Rewarding talent & promoting good behaviours Tax implications of back office reorganisation Involving internal audit in setting up the end to end process transition Challenging norms Realising & tracking benefits early on to manage & mitigate the risk

11 AND MUST DELIVER VALUE FOR AIRLINES 1. Focus on E2E processes across the whole value chain 2. Build on process improvement & embed it in everything you do 3. Change the culture to be customer-focused & driving continued value creation 4. Get the right governance structure 5. Remove complexity Procurement & Supply Chain Finance HR IT Customer Service Co-locate strategic procurement Centre of excellence for strategic activities Contract compliance automation Data analytics 3 rd Parties delivering services Linked with front & middle office Predictive analytics Business case support Flight Route Profitability integrated Improvements & performance trackers Right job families & capabilities Future recruitment & training Recognise & reward skills & behaviours Self-service & cloudbased solutions Flexible systems & technology platform Processes standardised across partners & architectures Wider business transformation, not technology refresh Predictive passenger analytics Daily KPI focus on customer & continuous improvement Controls to tackle disruptive volume peaks Proactively anticipate & prevent escalation Airlines need a business strategy for a digital age underpinning the transformation

12 WHAT IS THE ROLE OF INTERNAL AUDIT IN SUPPORTING BACK OFFICE FUNCTIONS ACHIEVE THE VALUE OF THAT TRANSFORMATION? Involvement at key strategic places to quality assure those transformation programmes Review of control matrices and processes prior to implementation Placed on the programme board Portfolio and programme management Review of compliance contract Be at the heart of supporting decision-making Use data analytics and internal audit tools to show internal controls effectiveness in managing risk, trends and problem areas across the value chain Ensures internal contracts meet risk profile requirements of the whole value chain Understand and act upon shortfalls in resilience before they impact the business Be the single point that makes the end-to-end process efficient and eliminates siloed ways of working Review of the associated value chain for appropriate risk management

13 QUESTIONS AND ANSWERS