KPMG Target Operating Model

Smart approaches to functional business transformation

Although a target operating model might be regarded as a pure process optimization tool used by business analysts, we propose that Management should engage with the functional transformation at a strategic level. By implementing a strategic target operating model one can achieve organizational business optimization and fulfill stakeholder expectations.

The initial stages of your transformational journey can have the most profound impact on your ultimate outcome. It's during this stage that the big decisions are made and the future state is determined. That's where we can help empower you to move to a 'best in class' vision.

The Powered Enterprise transformation approach guides you through your end-to-end transformational journey. At the heart of it, the operating model shapes your business transformation and maps out the optimum way you can operate in the future and the potential consequences of the decisions made along the way.

Johan Steenstra

Partner, SAP Transformation

KPMG Switzerland

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Bart van Strijen

Partner, Microsoft Transformation

KPMG Switzerland

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How KPMG’s Target Operating Model differs from other models

Part of the difficulty with 'traditional' models is that they're often not comprehensive enough in scope. When focusing solely on the conventional relationship of process, people and technology, there's a risk of overlooking aspects such as the planning and execution of work, how it will be reported, and measured, and how it will be governed and controlled.

To overcome this weakness, the KPMG Target Operating Model includes not three, but six layers.

Across these layers KPMG member firms have preconfigured a deep asset base that incorporates leading practices and the significant experience with clients.

6 layers of the KPMG Target Operating Model

1. Functional process

What does it do for me: This frames your world. Everything that happens is part of the process.
What’s inside: Hundreds of predefined processes for Finance, HR, IT, Customer Operations, Procurement, Supply Chain, Cyber and Risk.

2. People

What does it do for me: It outlines who does what, reporting structures, necessary skills, roles, and responsibilities.
What’s inside: It contains organization and job definitions linked to processes.

3. Service delivery model

What does it do for me: It captures what needs to get done and where. Company-wide identification of what capabilities need to be delivered and how.
What’s inside: Shared service center, centers of excellence and outsourcing operating models, to optimize service delivery.

4. Technology

What does it do for me: Development and optimization of systems, applications, and integrations that help automate processes.
What’s inside: It consists of reference cloud architecture, pre-built integrations, pre-built conversions, and thousands of test scripts.

5. Performance insights & data

What does it do for me: Defines the information requirements, KPI framework to optimize decision-making and reporting efficiency.
What’s inside: KPI’s, process performance indicators and enhanced reporting, beyond the vendor supplied reports to satisfy your organization.

6. Governance

What does it do for me: Defines risks and controls for every process, and segregates duties, access rules and policies.
What’s inside: Risk and internal control frameworks for every process, including references for segregation of duties and identification of policies.

Understanding how all six component layers relate to each other is key to creating an integrated, optimizing and highly functional solution. They provide unparalleled visibility of each potential change and their corresponding consequence.

For a functional transformation to be successful, a change management process plays an important factor. There are significant change management benefits of using the KPMG Target Operating Model.

Programs continue to fail in managing the human factors of the change management process insufficiently. Considering company culture and employee experiences as an integral part will assure successful and sustainable implementation.

Turn your cloud implementation into dynamic business transformation

A goal of the Target Operating Model, in short, is to turn a potentially standard cloud implementation project into a dynamic functional transformation. The model provides a business-centric, output focused planning process based on a deep understanding of how transformation works within, and across, an enterprise.

Its power is to help you get to a better result by starting with a ‘model answer’ developed for you. It does this by building on the excellent work and the capability of the wider functional and specialist practices across our network of KPMG member firms.

With this collaborative effort we can assist you to envision your model, on your chosen cloud platform tailored to your business. This is why we - and you - can be confident of the outcome and the value potential it brings.

There’s no need to limit your ambitions.

Cloud platforms offer a level of support for functional and business processes that you can use to modernize and optimize operations, and if needed replace legacy systems to achieve significant cost savings.

Shape your transformation

A blueprint for rapid and sustainable functional transformation

KPMG’s Powered Enterprise transformation approach guides you through your end-to-end transformational journey. At the heart of it, the Target Operating Model shapes your business transformation and maps out the operational optimum.

Ensure you gain maximum benefit from your technology platform, simplify organizational challenges and choose the most efficient path to achieve your functional goals by using leading practice pre-configured on the platform of your choice.

Designed to help you succeed

There are many challenges during a functional transformation program - none more so than envisioning what you can achieve and validating that it will work for your organization.

We’ve helped our clients avoid the pitfalls of traditional transformation projects—like poor planning, misaligned objectives, and siloed technologies. We provide a market-tested, direct route that offers a toolkit which can be customized to your needs, so you get to value sustainable and faster.