IS OPERATING MODEL FRAMEWORK DESIGN Global IS Transformation

IS OPERATING MODEL FRAMEWORK DESIGN Global IS Transformation Business Case Summary 25 th June 2014 www. britishcouncil. org 1

The future organisation SUMMARY OF CHANGE www. britishcouncil. org 2

The future Information Systems operating model will continue to balance delivery of services with local needs. Global – Centrally Managed & Coordinated Fully Centralised IS Global CIO as Broker, Cost Reduction Focus Alignment of IS to SBUs Global CIO as Advisor Cost Containment Focus IS Strategy Platforms Fully De-Centralised IS is in the Business Speed to Market Focus IS Strategy Application Devolved to the Business Application IS Strategy Key Reporting Lines Closest Alignment to Corporate Strategy Application Allocation of scarce resources, detached from local needs www. britishcouncil. org Accountability for shared service delivery, balancing local needs with Global Platforms Application “Reinventing the wheel” Divergent strategic decisions, poor control 3

It will tackle the underlying issues of inadequate control, accountabilities, complexity and non-standard solutions. To-Be Global IS Characteristics As-Is ITS Characteristics • Limited visibility and understanding of the purpose and vision of the teams. • Provide clear accountability for end-to-end service delivery ‘one throat to choke’ • Limited ability to collaborate and manage ITS as an integrated whole to country level. • • Lack of transparency over what ITS services are delivered where outside of Global Deliver to the business an effective, outcome driven service with agreed SLAs / OLAs and fully transparent, benchmarked costs • • Basic Service Management and Delivery capability and best endeavour Supplier relationship management Deliver an industry standard IS capability that represents a step-change over today’s capability • • Limited ability to set and define standards and policy and rollout globally leading to nonstandardisation Deliver a service that scales against changing business requirements – a flexible cost and resource base able to quickly deploy on demand • Optimise 3 rd party spending to get more value from strategic suppliers and reduce the sprawl of contracts • Variation where there should be ubiquity and utility reducing cost efficiency and distracting resources. • Focus British Council resources on higher value activity, leveraging supplier best practices for commodity style functions • Lack of trust and understanding on compliance issues. • Provide more cost effective services through utilising economies of scale, automation and optimising asset management, getting the balance between utility and innovation right • Provide better decision making and prioritisation through more effective governance and clearer organisation structures www. britishcouncil. org 4

It will do this by getting the basics right – improving delivery of Change and Run services… Business Customers and End-Users “Change Services” “Run Services” Execute as efficiently as possible Drive additional business value Target Operating Model • Provide day to day delivery and support of reliable services for the business • Define and agree the target Information Services in line with the business direction • Plan and prioritise new functionality projects based on business value • Planning change to those services • Delivery through integrated releases • Delivery / Operations Team based • Fixed, Commodity Cost • Project and Programme based 3 rd Party Suppliers www. britishcouncil. org 5

…through delivering 6 key shared Global IS standardised capabilities… ITIL v 3 / CO BIT v Align 5 ed Business Customers and Consumers “Change Services” “Run Services” BUSINESS / CUSTOMER RELATIONSHIP MANAGEMENT Understands the business priorities, supports strategic & innovative thinking through clear articulation of Information capabilities, filters customer demand manages expectations on development and delivery of Information Services SERVICE STRATEGY Aligns Information Architecture components with the business priorities and ensures that our resources are deployed appropriately to fulfil approved demand. SERVICE DESIGN & DEVELOPMENT Develops Information services that provide sustainable value to the business by maximising benefits and minimising oneoff and ongoing delivery risk SERVICE DELIVERY Delivers reliable Information Services to the business while improving quality and efficiency through external comparison and an unrelenting focus on continuous improvement INFO SEC, SECURITY & GOV Enables delivery of commitments to the business by ensuring that data, information and knowledge assets and critical IS services and platforms are adequately protected. SUPPLIER RELATIONSHIP MANAGEMENT Builds trusting relationships with 3 rd party providers that enable seamless working relationships and drives cost effectiveness and high performance throughout the contract lifecycle 3 rd Party Suppliers www. britishcouncil. org 6

…and delivering a sourcing model that balances internal capability with the benefits a prime supplier can bring. SBUs Local IS Support Regional IS - Retained Local IS Support SLAs, Charging, Reporting, change Global IS Shared Services - Retained Business Relationship Management Strategy, Architecture & Standards Portfolio & Demand Management Change Oversight Service Management & Delivery Oversight Vendor Relationship Management Info Security & Governance OLA’s, Services, Charging, Reporting, change Global IS Shared Services – Supplier(s) Service Management inc Global Service Desk Applications Data Centre End User Networks & Voice Development Service Delivery Maintenance Service Support www. britishcouncil. org 7

The delivery of transformation will be phased. The aim is to complete the change by 2017. Benefits delivery Apr Phase II – Transform Phase I - Optimise 2014 Apr 2015/2016 • Transition to new L 1 / L 2 Organisation Design / Op Model (PB 08/09/10) • Transition to L 3 (PB-08, 07 and below) organisation including regional organisation • L 3 (PB-07 or below) quick-win changes, eg some changes in reporting lines or accountabilities including move of some roles outside of IS, governance, key process gaps addressed and training inc SFIA rollout • Manage change inc addressing process gaps, governance, training • Move to continuous improvement on operating model and processes 2016/2017 Optimise the Global IS organisation for effective, efficient, standardised operation and to enable Transformation • Complete design for L 3 following L 1/L 2 appointments to ensure input to the final shape and sizing of teams Transform through single sourcing (prime contracting) a group of services, along with scope of legacy strategic contracts. Optimise remaining 3 rd party supplier contracts to gain further efficiencies. www. britishcouncil. org • Begin work to optimise global IS contract portfolio • Complete IS contract portfolio consolidation / rationalisation • Complete sourcing design based on sourcing strategy to single source (prime) • Prepare for Supplier engagement through tender • Engage with Suppliers and execute tender process • Complete tender process – downselect Supplier • Negotiate and complete contract • Transition execution to Day 1 of Supplier delivery of services • Step change in capability 8

Initial estimates are that delivering the standardised capabilities and optimising the sourcing model could deliver benefits of £ 2. 4 m - £ 4. 2 m p. a. on current operational expenditure over 5 years (5 -10%). Potential Savings (£m) Millions Net annual savings projection over 5 years Potential Benefits 4. 5 Savings are expected from the following: 4. 0 4. 2 3. 5 4. 2 • Re-structuring Global IS around 6 required standardised capabilities, ensuring clear accountabilities and responsibilities across the IS workforce • Deliver greater standardisation of IS processes and services to deliver a repeatable, manufacturing style IS service, that represents value for money and delivers the platform for innovation the business needs. 3. 0 2. 5 2. 36 2. 0 2. 36 1. 5 1. 9 • Provide close business partnering, raise capability and up-skill where required to deliver more effective IS services delivered to a business outcome. 0. 81 • Maximising on Supplier capability to deliver core Design, Development, Service Management and Service Delivery capability 1. 0 0. 5 0. 0 • Deliver effective prioritisation of IS demand supply to ensure IS best supports the needs of the business, and IS can balance the supply chain. 0. 0 Key Assumptions • Year 1 is assumed to be FY 14/15 when transfer of service takes place • Maximising on value from 3 rd party spending across the globe by wholesale review of existing 3 rd party spending on IS and ensuring the business is getting the best value from strategic suppliers • Figure assumes cash position of £ 44 m p. a. www. britishcouncil. org 9

The benefits will likely be greater however. Transforming presents the opportunity for IS to deliver much greater efficiency over time. Global IS Cost / British Council Income Global IS efficiency ratios improving (IS Cost Income ratio of 17% today) ILLUSTRATIVE Source: Income as at 2012/13 Annual Report - £ 781 m, ITS spending at £ 44 m p. a. www. britishcouncil. org 10

The impact of the transformation will be visible through success measures. Improved Communication ILLUST RATIVE – KPI v subject alues to furth er valid ation Improve relationships and understanding of the business 80% satisfaction on effectiveness of IS comms drive Enhanced Customer Focus Satisfy customers by delivering services which meet expectations 50% improvement in request fulfilment / OLAs Empowered People Enable workforce to have the necessary skills and confidence to succeed Global deployment of SFIA 10% improvement in employee engagement Better value Understand our costs to maximise on value for spend Customer Satisfaction Score / Cost Ratio – 20% Improved stability Implement end-to-end service ownership, and clarity of accountability to reduce downtime and risk Reduce unplanned work by 25% www. britishcouncil. org 11

The transformation is a major change with risks that need to be acknowledged and managed. Risk The business will not accept full adoption of the federalised operating model, assuming that Global will not be as responsive to local needs. Mitigation This is addressed through having ‘decisions within a framework’ and local IS services remaining in situ to give business the sense they have sufficient local influence and control to influence. Optimisation will result in the loss of staff which may affect IS ability to maintain service and respond to requests and needs. The risk will be appraised, key capabilities identified and mitigation will be put in place to reduce impact. Some staff savings are expected and these have been factored into the financial business case. Global standards will limit the freedom of the business to implement bespoke “non standard” solutions – they will not be adopted as perception is they will not serve regional or local needs. Addressing IS complexity means that standardisation is required. The governance approach for IS decisions will explicitly ensure business input to set IS standards and direction and specify an escalation procedure which will potentially include authorisation of standards deviation where this can be justified by business need. Greater adoption of Global shared services will increase sharing and risks associated with service outages. The transformation programme will explicitly address risks and propose backup and disaster recovery options where appropriate for any shared services inscope. www. britishcouncil. org 12

There also risks that need to be acknowledged and managed around how the Transformation is delivered. Risk Mitigation The volume and pace of change may be too significant for IS to handle as well as provide a service if a dedicated project team is not in place IS must provide the platforms and services the British Council require to operate day to day, and cannot do this as well as deliver significant change without a dedicated project team in place to drive and manage change. As such the transformation case assumes a dedicated project team mixed with staff from within the IS line where required to supplement change activity. Coupling the investment approvals for IS change with GOF investment approval may result in delay or diluted impact in event GOF investment is reshaped Phase I breaks out the most urgent and pressing changes and it is assumed that once with EB approval, the work required can go ahead under own business case if necessary. The IS design includes all components the IS function requires to The design includes capabilities not today part of IS, operate effectively and efficiently in the future. The dependencies such as Business Relationship Management and IS and interfaces between IS and other corporate functions and any Portfolio Management. This is contentious and may potential overlaps need to be dealt with as part of the GOF result in the design being changed. programme of work. www. britishcouncil. org 13