How GBS Supports Digitalization
Today’s imperative: organizational agility
Today’s imperative: organizational agility
One of the reasons GBS is so sought after is that it supports organizational agility. Today's enterprise needs to be able to react quickly to opportunities, threats, or economic changes. This often means changing direction, plunging into new products or markets, acquiring or being acquired, leveraging up or scaling down … the options are plentiful, but the ability to shift gears depends to a large extent on the ability of the ‘back office’ to provide the requisite services – be they HR, processing invoices, collecting payments, or managing cash. At the root of this evolving capability lies digitalization. Most enterprises have been quick to implement a digital strategy for the outside world, and their customers. What has not kept up in the digitalization of the operational model. Enter Global Business Services. The GBS model, through its global reach, process ownership, and standardization, is in a far better position than other Shared Services models to drive a digital agenda.
A flexible business services structure can respond quickly and, via a GBS framework, do so anywhere in the world by leveraging global operations, global talent and global technology.
A full shift towards digitization is enabled by GBS
While digitization has been bandied about for nearly a decade, its true meaning still eludes most organizations. However, driven by the promise of Intelligent Automation (often still referred to via the more limited ‘RPA’) digitization is suddenly coming into vogue again. Its success hinges on ‘globalized’ processes though. In other words: digitization and Global Business Services go hand in hand.
Although it is still early days – the number of organizations that are well and truly driving these kinds of strategies are probably still in the single digits –this approach marks the way of the future. Indeed, a recent survey by McKinsey & Company found that,
"Rapid changes in competition, demand, technology, and regulations have made it more important than ever for organizations to be able to respond and adapt quickly [but] the ability to quickly reconsider strategy, structure, processes, people, and technology toward value-creating and value-protecting opportunities is elusive for most."
In addition, many companies have not yet adopted agile ways of working, even though the advantages are clear (agile organizations are one and a half times more likely to report better financial performance relative to their peers, according to McKinsey.
Digitalization levers: resource flexibility, process improvement and technology
Through its global, integrated scope, GBS is able to drive transformational initiatives and own the kind of strategic projects that today, more often than not, involve robotic and digital solutions. Given the infrastructure, deep process understanding, quality of talent, cross-business relationships, and project management expertise that characterize GBS, it is a powerful enabler and driver of digital change. What GBS offers, in contrast to basic Shared Services, is the ability to target bigger prizes supported by global governance and a global framework whereby the value derives from delivering on the commercial side, rather than fixing a process. And this commercial side is highly vulnerable to competition, so supporting the enterprise in its quest for a more digital model becomes a key objective for GBS. There are a number of enablers that drive this.
First, GBS deploys and leverages the power of process experts who can add real value across key data points. Cash is a key metric for the enterprise, as it most obviously impacts shareholder value. The significance, therefore, of a GBS process expert being able to drive down Days Sales Outstanding (DSO) by even just a few days has a tremendous impact on cash flow. In doing so, GBS can tap into multiple digital solutions that now support and improve the movement of cash through the enterprise. The emergence of “process animals,” combined with Lean or Six Sigma thinking, leads to a step-change in value. For example, in the Source-to-Pay process, a GPO’s ability to look beyond Procurement’s focus on improving supplier deals, and instead look at how contracting could be improved, or how pushing out terms could drive positive cash flow, is the differentiator. New digital technologies are behind many of these solutions, and having an end-to-end view over a process provides the leverage required to drive success.
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Yet another value driver is discipline. Basic Shared Services models models don't filter up to operations as readily as GBS can – you need the true process expertise and discipline of GBS to uncover many of the opportunities that would simply not stand out without its broader framework. GBS also enforces disciplines across global operations, preventing individual regions from pushing ahead with duplicate processing activities.
With technology innovation today redefining the basic modus operandi of service delivery, it presents GBS with yet another lever to support the enterprise beyond cost-effective, ‘joined up’ service delivery.
Today's GBS service providers have to be digitally enabled partners or they are threatened with becoming obsolete. While labor arbitrage will remain a value proposition for the foreseeable future, its scope is shrinking dramatically. In its place we see Intelligent Automation and Artificial Intelligence, along with Data Analytics emerging as value propositions. Fast-thinking GBS models are setting up Centers of Expertise to develop a strong and deep knowledge base on many of these emerging capabilities. This expertise is an additional 'service' to be extended to business units, and GBS has the advantage of already running the infrastructure that is needed – in terms of process, change management, technology, and governance – to take advantage of emerging opportunities.
Reflecting the change in work being done, GBS leaders are already recruiting new skill sets for their teams. More data engineers are being sought today to replace the functional experts of old. Collaborative skills and capabilities are much in demand, as is building a work environment around parts of work rather than around traditional hierarchies.