Making the Move to Vietnam:GE Promotes Hub & Spoke"
SSON: Rodrigo, describe GE’s strategy with regards to its global operations and shared services.
Rodrigo Martins: GE is a 130 year old, 180+ billion multinational company, with a presence in more than 100 countries. Businesses are grouped into four strategic segments: technology infrastructure, energy infrastructure, finance and media. The concept of shared services is not new to GE, having taken advantage of the specialization and scale benefits of shared services decades ago. From the common Employee Services to the more innovative Research & Development centers of technologies, the idea of sharing specialized resources throughout GE businesses is very well established in our organization and is, in fact, a source of competitive advantage.
Global Business Services, as the shared services organization is known, covers several processes: employee services, financial & accounting services, travel, global mobility services and customs, amongst others. We supply services to more than 90 countries, supporting the growth of our businesses in all these international markets.
SSON: How do you go about adding in a new country to the GBS portfolio?
Rodrigo Martins: GBS follows standard procedure when setting up in a new country: we develop a general business infrastructure to provide the business with an operating framework that supports their growth in the market. We generally start GBS operations by setting up a legal entity framework and by preparing all the accounting and financial processes to support that entity. Strong controllership processes and compliance rigor are of the utmost importance in everything GBS and GE do, so all our activities in any country have to match the same high standards of controllership and compliance that GE operates worldwide. We have very well developed training and development procedures and a strong oversight structure that guarantees the GE culture of compliance and controllership works well in any country.
We usually establish finance & accounting and employee services first. Our global employee services group headquartered in the US works closely with each new center around the world to guarantee that the payroll and employee benefits in that country follow established high standards of quality. The Employee Service group has been in operation for years, and is able to provide best in class expertise to new centers on all fronts: from day-to-day administration of payroll and benefits plans to the management and coordination of outsourced suppliers.
Travel & Living is another center of excellence that GBS operates globally. Headquartered in the US but with operations around the world, our T&L center provides the new GE location with everything from the tools to manage online travel expense processing and reporting to the administration of T&L cards programs.
SSON: Can you explain how you balance global operations and therefore global services delivery with servicing the specifics of local markets?
Rodrigo Martins: GE’s approach to shared services takes into consideration the scale and scope of the company and its operations. As I explained earlier, GE operates in many countries, but the size of the centers and the range of services offered locally varies based on local needs and whether the center is serving only that particular location, a region or the globe.
A few years ago, GBS leadership redefined a service delivery model strategy, driving greater simplification and improving quality through specialization without losing the benefits of having a local presence. We called this our "Hub & Spoke" strategy.
All our processes were analyzed and classified based on a matrix of country and GE business specialization requirements; generic processes without country specific requirements were primary candidates for consolidation (or "Hub" candidates), such as Travel & Living processes. Other processes, such as Statutory Accounting, for example, were too country specific and therefore better suited to be managed by a local team (or "Spoke" candidates). So we classified all our main processes into Hub or Spoke candidates.
Hubs are regional Centers of Excellence (CoE), built to support regional or global operations with proper scale, standardization and specialization of processes from a people expertise and IT platform standpoint. Examples of such centers are Travel & Living, some Employee Service processes and a few others in the F&A area, such as fixed assets management and accounts reconciliations. The preferred locations for our regional hubs, at least in Asia, are India, China, and The Philippines, which are traditional markets for shared services operations. Additionally, other countries in the Americas and EMEA are strong candidates and already have sizeable operations as well.
The Spokes are local centers that GBS has in every country we operate in. At those centers we manage local processes such as statutory accounting, and most importantly local relationships with GE businesses and the business community in general.
Some of the benefits that a Hub & Spoke delivery model generates are:
- Strengthening of controllership with specialized teams supporting centralized operations
- Simplification through standardization of processes and policies
- Productivity through economies of scale from centralized operations
- Improvement in customer service through proximity with business partners
About Rodrigo Martins
Rodrigo Martins has held the position of General Manager of GE’s Global Business Services (GBS) unit in the Asia Pacific region, since October 2007. GBS is a captive provider of shared services to GE businesses in the areas of Finance & Accounting, Travel and Employee Services. He joined GE in July of 2006 as the Chief Financial Officer for GBS based out of Fairfield, Connecticut. While in this role, Rodrigo was responsible for all aspects related to financial reporting and analysis, and controllership for GBS around the globe. Rodrigo also helped to develop the Financial IT roadmap for GBS.