Portfolio assessment and optimization, with implementation plan
Portfolio assessment and optimization, with implementation plan
A large European retail bank with a vast portfolio of real estate assets in several countries had become fragmented in a number of ways. Its footprint was widely dispersed as a result of poorly integrated acquisitions and limited cross-business-unit occupation of buildings. Further, the geographic fragmentation mirrored an internal lack of coherence: The bank had a relatively fragmented supplier base for some important high-spend categories, business units used varying supplier models (some in-house, some outsourced), and the organization structure lacked clearly defined reporting lines. Finally, there was no overarching, group-wide vision for the properties or the services. The bank asked Strategy& to help improve the efficiency and effectiveness of the real estate function, including facilities management.
The Strategy& team began by setting up a program office to coordinate the project and ensure crucial buy-in from stakeholders and business units. To provide a holistic view of the total property spend, the team compiled detailed baselines for all business units and central functions. Using these baselines, they identified significant savings initiatives across the portfolio, the suppliers, and the operating model. They drafted a new operating model and detailed initiatives using a business case model. Once the initiatives were approved by the COO, the team developed implementation plans and managed each initiative.
The financial results were impressive. In a quick win, €35 million (US$39.7 million) of savings were due to be realized within the first year. Profit and loss savings in ongoing costs in excess of €75 million (US$85.1 million), equal to 10 percent of costs, were also identified, and plans were finalized for implementation of the needed changes. A more centralized operating model was put in place in order to increase effectiveness.
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