Driving Service Delivery Innovation in a Large Business Process Outsourcer

Phil Newmoyer Senior Vice President, NCO Group, Inc.

Atlanta, GA 4/24/2007, 12:00 p.m. 1:00 p.m
Services Industries Theater 2

NCO Group Enterprise Transformation Enabling Innovation with ERP Services Innovation

NCO Group

Background

Founded in 1926 by our CEOs grandfather, NCO Group, Inc. provides business process outsourcing services, primarily focused on accounts receivable management and customer relationship management. With approximately $1.2 billion in revenue, NCO has 22,000 employees and 100 call centers globally.

Solutions We Provide
Finance & Accounting Accounts Receivable Management Portfolio Management Collections Customer Relationship Management Customer Care Technical Support Sales Back Office Order Processing Payment Services Litigation

Industries Served
Financial Services Healthcare Retail Cable Transportation / Logistics Education Government Utilities Commercial / B2B Insurance Technology Telecommunications

NCO Group

Global Operations

Canada
15 locations 8 ARM, 7 CRM

UK
2 locations ARM

United States
61 domestic locations 56 ARM 5 CRM

St. Kitts
1 location CRM

Philippines
Quezon City ARM & CRM

Puerto Rico
Hato Rey 2 ARM

Barbados
Bridgetown ARM & CRM

Panama
Panama City 4 locations CRM

Antigua
St. John ARM & CRM

India
Mumbai ARM

Australia
13 locations ARM

NCO Group Strategy: Position for Rapid Growth

$2 Billion

High Growth

$1.2B $1 Billion

$75,000

22,000 employees 50,000 clients 100 million consumer records Billions of calls and transactions Billions of $$ processed for clients 2006 2008

1986

NCO Group Enterprise Transformation Enabling Innovation with ERP Services Innovation

Enterprise Transformation
Vision for future direction Solutions Architecture Business Process focus Superior depth in functionality Cost Commitment to R&D Customer focus Technology

Why SAP?

Industry Focus

Intangibles

Functionality

Company Vision

Enterprise Transformation INFRASTRUCTURE INNOVATION ONE INTEGRATED PLATFORM

CEO Sets Strategy
Strategy for GROWTH

Why SAP?

SAP NetWeaver
PEOPLE INTEGRATION Multi channel access Composite Application Framework Portal Collaboration

SAP NetWeaver Ch s

ge an

INFORMATION INTEGRATION Life Cycle Mgmt Bus. Intelligence Knowledge Mgmt Master Data Mgmt PROCESS INTEGRATION Integration Broker Business Process Mgmt

s Bu

s Enables Change ine

Ability to EXECUTE

APPLICATION PLATFORM J2EE ABAP

Enterprise Services Arch. Enables Change

DB and OS Abstraction

Enterprise Transformation

ERP Objectives

Transforming the Enterprise Functions at NCO into Best of Breed

Data entry Manual Journal entries Manual Reconciliation Manual research functions Managers spend disproportionate time on processing activities

Tactical

Strategic
Strategic functions performed at the senior level Majority of staff are in the processing chain, not Thinking, planning, or strategizing

Leverage from transformation drives and funds innovation

Tactical
Data entered once every case without exception Automated transaction processing Special handling and exception handling are the manual processesbut supported with instant Decisioning image- based technology

Strategic
Forecasting and modeling by analysts Automated entries Treasury and Cash Management functions Straight - thru Processing of entries Managers spend 80% visioning, planning, and executing strategy Corporate Financial Research and Development

SAP AG 2007, SAPPHIRE / SLOT # / Speaker Name / 9

Enterprise Transformation

ERP Objectives

Improved Capacity to Run the Business Effectively Increased Data Reliability Seamless Process and System Integration Shorter Financial Close Cycle Enterprise-wide Business Process Standardization Customer/Placement Profitability Management Cost Reduction Improved Internal Controls and Risk Management

SAP AG 2007, SAPPHIRE / SLOT # / Speaker Name / 10

Enterprise Transformation
Mission, Vision & Objectives

ERP Objectives

NCO SAP Guiding Principles

Transparency
ST R VA ATE LU GI E C

Enterprise Information Reporting

Accountability Agility Spend Management Control Efficiency Foundation

Financial Process Reengineering Realization

Interfaces to Legacy Systems

DE SI GN

GL HR

AP Payroll

AR CRM

Journey to Benefits Realization

OP ER VA ATI LU ON E AL

Enterprise Transformation
GL Transactions & Entries Recording Client Statements Reporting

Growth Challenges
Revenue Disbursements Invoicing Paper Paper Outsourced Payroll

AccPac
Spreadsheets

Payroll Data

Revenue Systems

Information Islands

Enterprise Transformation
Financial Processes

Life Before SAP

HR Processes

Enterprise Transformation

Life With SAP

Difficult but rewarding challenges Created new teams across the enterprise Achievements and learning build confidence to raise the bar higher Greater ability to run the business Roadmap to create value ROI is cumulative each year builds on the past

NCO Group Enterprise Transformation Enabling Innovation with ERP Services Innovation

Enabling Innovation with ERP

Process driven approach w/ tech as enabling platform. Concentrates on key infrastructural process improvement

ERP Objectives
"Never innovate to compete, innovate to change the rules of the game. -- David O. Adeife

Strategy driven approach which aligns entire effort w/ strategy. Assess business direction, competitor positioning, etc.

Return on Investment

Software driven approach w/ process improvement only related to tech-enabled processes

Innovation
Competitive Advantage Business Transformation
Market Share Supplier of Choice Strategic Alignment Customer Satisfaction Profits Operating Expenses Procurement Costs Contract Costs Global Integration

Technology Implementation
New Technology Visibility of Business Processes & information

Resources (People, Time, Cost)

Enabling Innovation with ERP

ERP Objectives

The Value of ERP & Enterprise Integration

Demand Operations Planning Mgmt

Resources

Expense Customer Management

Customers Suppliers

Enterprise Resource Planning

Production Reporting & P&L Payroll Client Profitability Procurement Accounts & AP Receivable

Business Intelligence

Finance and Accounting Human Resources

Enabling Innovation with ERP

SAP Integration

Integrated Enterprise Transparency

Decision Support Framework
Drill down Modeling & Forecasting Dashboards P&L

Financial

HR

Customer

Operations

Sales

Others

HR/Payroll

GL

Fixed AP Assets Image based

Financial Data Stores
Finance

AR

Treasury

Budget

Reporting

P&L

Client Processing

Enterprise Data Stores

Operations Customer Employee Location

Legacy Systems External Sources

Banks Business Partners Compliance

Internal Sources

Enabling Innovation with ERP

2003
ERP Selection

The Roadmap
2007
Time Platform

2004
GL AP AR Financial Reports

2005

2006

2008
Integrated Time Capture Org Design Build

CRM GL Account Reengineering Vendor/Customer

Budgets & P&L Financials Reengineering US Payroll Canada Payroll Image AP Business Warehouse Metrics Portal ESS/MSS

Client Data

Master Data Management Process

Enabling Innovation with ERP

Deployed at 10 Locations Faster cycle time to clients

Customer Value
Eliminated paper and manual work Reporting

Reengineering in AR, Billing, Treasury, Lockbox Processing, Finance and IT

17 Customer Interfaces
Client Invoices and Remittance Debtor Refund Client Refund Monitoring Cockpit

Clients

CRS

Split Checks Collection Expenses Void and Reissue Check Agency Expenses Attorney Expenses Deposit and NSFs

SAP
Bank Recon

FACS

Cost Process Legal/Licensing Disbursement Probate Fees Mortgage Fees Offline Revenue - Canada HR Payroll Refunds Issue Check and ACH/Wire Payments

Banks

NCO Group Enterprise Transformation Enabling Innovation with ERP Services Innovation

Services Innovation
Recruit & Hire
Selection science approach Applicant testing Personality Qualifications Line of Business specific Role specific Background check Experience verification Retention High producers Attendance

Changing The Rules

Measure
Adjustments

Performance
Client Performance Indicators Revenue per employee % of customer goal Growth Demonstrated value with predictive modeling

Employee Performance Indicators Profit per employee Productivity Calls per hour Most productive hours $ produced/Incentives earned Turnover Management Intelligence Trend and Patterns

Employee Profile
Predictive Measures

Customer Profile
Success Characteristics

Time Collection

Employee & Customer Metrics SAP

NCO Operations

Services Innovation

Profitability Intelligence

Business Process Outsourcing Making Performance Based Decisions

Margin driven business efficiency is essential Optimization of labor drives results Customer quality cannot be sacrificed for efficiency Clients expect performance but select NCO as innovators for value and growth Make informed decisions with detailed profitability by: Customer ABC Bank $50M 123 Bank $40M Employee ABC Bank $50M Healthcare $30 123 Bank $40M ABC Bank ABC Bank $50M $50M Line of Business Healthcare $30 123 Bank $40M 123 Bank $40M Bank $50M ABC ABC Bank $50M Employee & Healthcare $30 Healthcare 123 Bank $40M $30 123 Bank $40M Managers ABC $50M $50M Bank ABC Bank Healthcare $30 Healthcare $30 Customer Metrics 123 Bank $40M 123 Bank $40M Bank $50M ABC ABC Bank $50M Location Healthcare $30 Healthcare 123 Bank $40M $30 123 Bank $40M ABC Bank $50M Healthcare $30 Healthcare $30 123 Bank $40M Model(Offshore) ABC Bank $50M Healthcare $30 123 Bank $40M Services Healthcare $30

Attributes of Performance and non performance for: Pricing RFPs/Bidding Accept/Reject Business

Services Innovation

Closing Thoughts

BPO Services is people and labor driven metrics are critical create intelligence through predictive modeling Integration-driven Innovation in services has exponential value:
Intelligence & key measures Profitability on all levels Expense reduction Customer value Cycle time Growth & Scale Information integrity Sales/pipeline Pricing Service quality Position for growth Thought leadership with customers Industry leader

Rapid growth requires that innovators keep pace with the needs of the overall business strategy and direction speed counts ERP enables innovative means to measure and run the business ERP energizes a transformation culture where Innovators become more effective and new innovators emerge

THANK YOU FOR YOUR ATTENTION !