Global IS Transformation Business Case Summary 25 th June 2014 IS OPERATING MODEL FRAMEWORK DESIGN

SUMMARY OF CHANGE The future organisation

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

It will tackle the underlying issues of inadequate control, accountabilities, complexity and non-standard solutions. Limited visibility and understanding of the purpose and vision of the teams. 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 Basic Service Management and Delivery capability and best endeavour Supplier relationship management Limited ability to set and define standards and policy and rollout globally leading to non- standardisation Variation where there should be ubiquity and utility reducing cost efficiency and distracting resources. Lack of trust and understanding on compliance issues. Provide clear accountability for end-to-end service delivery ‘one throat to choke’ Deliver to the business an effective, outcome driven service with agreed SLAs / OLAs and fully transparent, benchmarked costs Deliver an industry standard IS capability that represents a step-change over today’s capability 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 Focus British Council resources on higher value activity, leveraging supplier best practices for commodity style functions 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 As-Is ITS Characteristics To-Be Global IS Characteristics

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

…through delivering 6 key shared Global IS standardised capabilities… “Run Services”“Change Services” Business Customers and Consumers 3rd Party Suppliers BUSINESS / CUSTOMER RELATIONSHIP MANAGEMENT Understands the business priorities, supports strategic & innovative thinking through clear articulation of Information capabilities, filters customer demand and manages expectations on development and delivery of Information Services 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 SERVICE STRATEGY SERVICE DELIVERY SERVICE DESIGN & DEVELOPMENT INFO SEC, SECURITY & GOV Aligns Information Architecture components with the business priorities and ensures that our resources are deployed appropriately to fulfil approved demand. Develops Information services that provide sustainable value to the business by maximising benefits and minimising one- off and ongoing delivery risk Delivers reliable Information Services to the business while improving quality and efficiency through external comparison and an unrelenting focus on continuous improvement Enables delivery of commitments to the business by ensuring that data, information and knowledge assets and critical IS services and platforms are adequately protected. ITIL v3 / COBIT v5 Aligned

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

2016/ / Transition to L3 (PB-08, 07 and below) organisation including regional organisation Manage change inc addressing process gaps, governance, training Move to continuous improvement on operating model and processes Transition to new L1 / L2 Organisation Design / Op Model (PB- 08/09/10) L3 (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 roll- out Complete design for L3 following L1/L2 appointments to ensure input to the final shape and sizing of teams Transition execution to Day 1 of Supplier delivery of services Step change in capability 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 Phase I - Optimise Phase II – Transform Optimise the Global IS organisation for effective, efficient, standardised operation and to enable Transformation 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. Benefits delivery Apr The delivery of transformation will be phased. The aim is to complete the change by 2017.

Potential Benefits Savings are expected from the following: 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. Deliver effective prioritisation of IS demand and supply to ensure IS best supports the needs of the business, and IS can balance the supply chain. Provide close business partnering, raise capability and up-skill where required to deliver more effective IS services delivered to a business outcome. Maximising on Supplier capability to deliver core Design, Development, Service Management and Service Delivery capability 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 Key Assumptions Year 1 is assumed to be FY14/15 when transfer of service takes place Figure assumes cash position of £44m p.a. Potential Savings (£m) Net annual savings projection over 5 years Initial estimates are that delivering the standardised capabilities and optimising the sourcing model could deliver benefits of £2.4m - £4.2m p.a. on current operational expenditure over 5 years (5-10%)

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 Source: Income as at 2012/13 Annual Report - £781m, ITS spending at £44m p.a. ILLUSTRATIVE Global IS efficiency ratios improving (IS Cost Income ratio of 17% today)

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

RiskMitigation The business will not accept full adoption of the federalised operating model, assuming that Global will not be as responsive to local needs. 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. The transformation is a major change with risks that need to be acknowledged and managed.

RiskMitigation 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 design includes capabilities not today part of IS, such as Business Relationship Management and IS Portfolio Management. This is contentious and may result in the design being changed. The IS design includes all components the IS function requires to operate effectively and efficiently in the future. The dependencies and interfaces between IS and other corporate functions and any potential overlaps need to be dealt with as part of the GOF programme of work. There are also risks that need to be acknowledged and managed around how the Transformation is delivered.