"What’s really preventing lights out services delivery?
While we’ve been talking about shared services for nearly two decades now, the concept is still very much evolving, and nobody has – as of yet – come up with a credible "end state." On the contrary, today’s models demonstrate an enviable ability to shape-shift, combining the best of inhouse shared services practice with the advantages of third party "outsource" providers; leveraging the cost advantages of Latin America and Asia against the "knowledge" services offered closer to home; and adopting innovative technology solutions into their delivery models faster than you can say "transformation."
"Now, as before, the holy grail remains the ‘lights-out’ model,"says Susan Hogan, a principal of Deloitte Consulting LLP, who leads the Service Delivery Transformation practice. But while lights-out discussions have been taking place for more than 10 years, the concept may have been "a step ahead of its time" back in 2001, she concedes. Today, says Hogan, "We are a whole lot closer to it being a reality."
What’s really preventing lights-out from actually emerging, however, is the reality of competing priorities for operational investment dollars."If the question is one of investing, say, $10 million in the automation of enabling processes, or updating retail stores -- operations will still win the day," she explains.
So, if we are not much closer to a lights-out model ––where, exactly, are we today?
Deloitte recently published the sixth edition of its biennial Shared Servicessurvey, which originated in 1999. The comparative data that spans 12 years offers useful insights to corporate policy towards service delivery models.
Hogan highlights one significant development emerging from this year’s data: there has been a definite shift in the balance of service delivery options. "Corporations today are more open-minded regarding the menu of options available to them as part of a service delivery strategy," she says. "Whereas 10 years ago most clients operated either a shared services,oran outsourcing, model -- and would never have considered the other option – today we’re seeing a gratifying open-mindedness with regard to hybrid alternatives."
Partly, this is due to the fact that business models have been changing, with many holding companies moving to more of an integrated operating company model, thus changing the definition of what can and what cannot be outsourced. The benefit of this transition is increased operational agility, or flexibility – a must-have to succeed in the global markets of the 21st century.
What’s really fascinating, says Hogan, is the number of organizations that are recognizing their shared services as a strategic assetand are thinking about their service delivery model at a strategic level. Only a few years ago, she says, clients were still wrestling with "how do I set up a Shared Services Center in Asia?" Today, more and more organizations (according to the survey more than a third) are focused on balancing their global service delivery models across what Deloitte describes as a "hub and spoke" model.What this means is that corporations are increasingly comfortable with a model that balances centralized transactional service delivery with a more customer-focused, local, "center of expertise" approach, more often than not based on knowledge services.
In fact, it goes a step further. Gina Schaefer, Specialist Leader, Deloitte Consulting LLP, in the Service Delivery Transformation practice, emphasizes the link to global process ownership, as organizations move from offering services in a traditional regional silo to adding functions and working across centers in a portfolio approach. "To achieve global collaboration you need a forum that manages the decision rights and allocation of resources. This is where global process ownership intersects with, and supports, the evolution of the hub and spoke model," she explains.
Schaefer pinpoints the impact of "process ownership" – whether global or regional – as supporting the move to global service delivery. "So many of the issues that arise today rely on one source of the truth to fully understand the opportunities, and require one source for their resolution. Decision-making is becoming increasingly complex as organizations evolve globally and multi-functionally, so you need to keep an eye on the end-to-end process to prevent a break down, which would limit global growth."
"Organizations are now realizing the importance of having the right shared services talent in place in order to support the business objectives that Gina mentioned" states Candace Rogers, a Senior Manager in the Service Delivery Transformation practice. "In order to achieve global collaboration, your talent needs to be able to understand multiple cultures, different languages and the impacts it has on the service delivery model in order to consult to the business."
Though we cannot truly foresee the shape and form that business services will take in the future, the data points to an encouraging trend towards organizational competence – meaning leveraginginternal and external opportunities to consolidate support services across a myriad of functions. The emergence of hybrid models supporting global deployment, and thus the ability to pick from the best of global talent, is a step in the right direction.
To read the full 2011 Deloitte report: Global Shared Services: from "If" to "How", download it here.
Susan Hogan, Principal, Deloitte Consulting LLP, leads Deloitte’sService Delivery Transformation practice and heads up Deloitte’s Shared Services Market Offering and Infrastructure Operations Service Line, which includes Shared Services, Outsourcing Advisory, Real Estate and Location Strategy, and Contact Center capabilities.
Gina Schaefer, Specialist Leader, Deloitte Consulting LLP in the Service Delivery Transformation practice, focuses on full-cycle shared services transformation and service delivery model development engagements from concept and business case through implementation and optimization. She has led multiple full-cycle engagements, integrating change management, technology as well as process, and multi-functional execution.
Candace Rogers, Senior Manager, Deloitte Consulting LLP,, focuses on leading and transforming global HR organizations. She specializes in HR Strategy, Global HR Process Design, Shared Service Center Design and Implementation, and Shared Service Center Technology.