Case Overview:
Unilever Europe and IBM shook hands in 2005 to create a centralized ”One Unilever” finance organization using intelligent technology, instrument asset based process solutions and global delivery capabilities that it possessed. The motive behind optimizing the finance process was to simplify, standardize, unify and ultimately transform the global operations of organizations like software outsourcing companies. This solution enhanced the quality and control and access to information for Unilever Europe which contributed to an amount of EUR 700 million annual savings.
About Unilever:
Unilever with operations in about 100 countries spanning five continents is considered to one of the world’s most respected and recognized brands generating an annual revenue of more than EUR 44 billion. Unilever manages 500 individual brands across 14 categories employing more than 167,000 people. Unilever Europe has 32% of Unilever’s global business employing 32,000 staff. The company’s motive has always been to help people feel good, look good adding vitality to their lives.
Why Outsourcing?
Unilever Europe needed to make operational changes as it was facing soft top-line revenues and an elevated cost structure. Unilever Europe had become a loose federation of business groups operating across 24 countries as all of them were using multiple ERP systems. This impeded their growth as there were many different finance and accounting processes.
In 2005, the leadership team made a decision to integrate these different business units into a single, unified Pan –European organization. To achieve this, it needed to implement the systems and framework.
Aspects considered while Outsourcing:
The diversity of cultures, policies and languages across Europe was a challenge which could make the process complex and even the varying levels of technologies that existed in the business units ranging from advanced to outmoded paper-based systems for these outsourcing companies. The company went ahead with a bold move implementing a total business transformational initiative called “One Unilever” and set an aggressive timeline of two years. As the company needed to implement all components at the same time and not sequentially, a road map was developed for each activity that would be carried out over this period.
How did they implement?
With the initiative in place, the company began looking for a right service provider. As the company wanted to complete the work on a strict timeline, it decided to go for an outsourcing model than taking a “stepping-stone” approach. Their leadership team believed that this would present less risk than in-sourcing and they started to look out for partners like software outsourcing companies in India that had track record of helping large companies transforming business as this would help them achieve the expected results quicker. Most importantly, they were looking for a partner which had a like-minded culture as this would make the transformation process smoother.
Unilever Europe believed that IBM could provide the required expertise, experience and technology which the project required. IBM came up with a rigorous methodology towards project management and a “one team “transition strategy which played a factor in achieving the company’s trust and this helped them in getting a 7-year contract.
Result:
Both companies collaborated to establish standardized financial processes and systems and integrating these processes into company’s single ERP which would allow them gaining more control and transparency in its operations.
The benefits from this partnership were as follows:
• Improved efficiency in finance processes
• Business processes got standardized with a common ERP across Europe
• Significant cost and operating savings
• Pan- European service management gave access to high quality information for decision making and continuous improvement
• More focus on its core competencies helping them make brand and growth initiative
• Faster and more direct access to benefits related to economies of scale
Success Factors:
IBM developed an intelligent finance strategy which was broad in scope, scale and speed. It developed business cases country by country which called for rigorous management of individual situations and the costs associated with it. IBM rolled out business process services on a three-tier delivery model from its facilities from different locations in Poland, Portugal, Bangalore and Manila in Philippines.
The company started implementing this in small number of countries and with the successful implementation transferred it to a larger number. Both parties made adjustments with the progress of the processes by ensuring buy-in by various business groups which included the mid-level and upper level IT managers and the management. Key stakeholders were asked to visit the Poland and Bangalore centers where a video would help them understand the advantages of the project. This helped Unilever Europe understand that transformation of its financial processes and outsourcing this to a software outsourcing company was critical to the success of the larger initiative.
Collaborating with Unilever Europe, IBM implemented innovative and intelligent technology to enable a more globally integrated enterprise. This outsourcing agreement between these and the outsourcing company empowered Unilever Europe to meet its goals for the “One Unilever” initiative on an aggressive timeline. The company transformed itself into a more responsive, globally integrated enterprise with enhanced channels designed for better and faster decision making as well as continuous performance and cost improvements.
Thus, IT plays a strategic role in the business performance of an organization such as a software outsourcing company. However deployment of strategic IT systems involves a high degree of risk and outsourcing such services further increases the risk. Using a case study approach, the success factors that are involved in outsourcing will be identified.
Courtesy: Bhavesh Bulchandani
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