5 Reasons GBS Adds Value to the Digital Enterprise

2020’s most popular target operating model



Barbara Hodge
02/19/2020

GBS

By Barbara Hodge, Principal Analyst and Global Digital Content Editor, SSON

Introduction

Shared Services’ imperative today is to support the enterprise in making the best decisions by leveraging agility, transparency, and the ability to act quickly. These three qualities define the digital enterprise and determine its success. Enterprise leaders, therefore, are breaking their heads in figuring out how to drag their traditional, legacy based, frequently siloed, and largely human-driven organizational model into the future digital space. And while startups tend to benefit from their digital native status (much as do millennials) that, nevertheless, leaves hundreds of thousands of organizations around the world battling the same problem.


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Those that have been tracking the trend have already galvanized into action: They are busy designing digitization roadmaps, pushing data management strategies, and developing a hybrid workforce.

While these initiatives can be approached piecemeal, the integrated nature of the digital enterprise means you cannot take such critical decisions in isolation. There needs to be a centralized control center that oversees opportunities, makes decisions, and rolls out new solutions.

This plays directly into Global Business Services’ space. No other team has the access to systems, data, solutions and business leaders, that together redefine and drive the modern digital enterprise.

According to SSON’s most recent industry survey (2020), GBS is the preferred target operating model for Shared Services leaders around the world, with a large segment already committed to the model, and another planning to move to GBS within the next five years.

So what is it that makes GBS so attractive? How does it drive value? And how do you get there?


Global Business Services emerge, year after year, as a ‘stretch-goal’ for multinational organizations operating worldwide. The actual definition varies, although there tend to be common elements. Some centers have a GBS sign above the door and define themselves as operating globally, across regions and operating units. Others focus on a mix of internal and external sourcing solutions. Some share a technology platform and determine this to be the defining characteristic. Still others list global process ownership and end-to-end process management as key. Even consultants usually don’t always agree.

However, within the context of organizational model, GBS is generally characterized by a common leadership (team, at least), common process ownership, and common practices delivered through multiple GBS centers across the world. These generally fall into major hub locations – Central or Latin America to support the Americas; Central and Eastern Europe or Ireland/the UK for EMEA; and any number of locations across Asia for APAC. We also see hub and spoke models emerging where GBS are complemented at a local level by in-country ‘spokes’ that provide more tailored, individualized services.


Here are five reasons GBS should be on your agenda to drive your future enterprise strategy.

1. ENGINE FOR DIGITAL TRANSFORMATION

As organizations move towards a future state of enterprise, decisions need to be made around where new capabilities sit, how new technology is best leveraged, how it interacts with the human workforce, and how to develop and implement new value-add services. GBS thinks and acts as one entity, no matter where it is deployed. As such, leveraging its infrastructure to deliver the benefits of RPA or cognitive intelligent automation solutions makes it an ideal vehicle for transformation.

What is driving GBS? (multiple choices selected)

  • Leverage automation/smart technology: 40%
  • Expand scope:   35%
  • Support enterprise digital change agenda: 24%
  • Drive agility of service delivery: 20%
  • Analytics: 16%
  • Talent strategy/development: 11%
  • Monetize GBS: 5%

Source: SSON Annual Survey 2020

In terms of optimizing talent, GBS can tap into necessary skills where these are plentiful and deliver them where needed through its integrated model. GBS, in other words, differentiates itself from fragmented, siloed operations where synergies are few and benefits tend to stay local, to deliver strategic and tactical benefits. Aligning leadership, approach, systems and processes globally drives the value-add for the enterprise, not just the business.


"We hear a lot about "Data being the new Oil" - but what good is oil without something for it to power? Data can fuel and feed the GBS engine, which is perfectly positioned within an organization to  mechanically leverage that oil fluidly to drive an evolutionary and revolutionary change in all directions across the company.
 
The power of harnessing the data, both master and transactional, can clearly come from the GBS organization, which sits on top of these transactional processes to able them enact digital change from top to bottom."
 
Chris Gunning, Shared Services/GBS lead/Finance Transformation

The current business landscape, defined as it is by the digital future, provides fertile ground for GBS to take the lead in developing a digital strategy. After all, digitally enabled processes, exciting though they are, are only game changers when they act in concert with other enterprise enablers like data and talent. An effective digital strategy must be driven and managed by a central team that owns the strategy, understands the data and can deploy the tools – as opposed to trying to do the same across a fragmented and largely siloed business services operation. GBS, acting as a centralized ‘brain’ that sees everything, knows everything, and does everything, is a critical advantage, some might even say prerequisite, for getting there.


"If we look at the Shared Services Industry, we can observe that existing and established operating models of the past are no longer suitable: Customer requirements are tremendously changing these days and therefore call for new service offerings.

That means that we need to reconsider and reinvent our operating model of the past. The good news is Shared Service organizations are in an ideal situation to further drive and to actively shape digital process digitalization, in Shared Services, but also beyond. They have operations experience, they know how to optimize processes, and they have learned how to digitalize. With many positive and some negative lessons learned.

But it is not only this experience that counts, it is even more the capability that typically has grown on that basis: In Siemens Global Business Services we have developed an organizational culture that we can be proud of, incorporating behaviors and values that support change and innovation – our dynamic capabilities. This is maybe the most important basis to drive digital transformation."

Kai-Eberhard Lueg
Global Business Services Operations
Siemens AG



2. BUSINESS PARTNERSHIP & CUSTOMER EXPERIENCE

Customer experience is a leading item on executives’ agendas this year. As Shared Services meet their SLA obligations and transactional service delivery becomes table stakes, the focus has shifted to how well customers’ additional needs are being met. And while standardization is a key tenet of the Shared Services model, the widespread adoption of automation, conversely, makes it possible to offer more tailored services and thus improve the customer’s experience.

While this is not unique to Global Business Services – indeed, a regional Shared Services model can listen and react just as well – the ability of GBS to leverage its experience across multiple hubs to benchmark data and results offers a more valuable platform from which to provide business partnership.

New data analytics capabilities make GBS more valuable to a business that depends on the narrowest of margins to gain a competitive advantage. To this extent, GBS can leverage and add brand-new areas of service, for example driving top-line revenue growth, to support business customers. Tesco’s GBS, for example, has taken a leading role in designing its supermarkets to optimize business performance.

Truly knowing and understanding customers, and recognizing the business partnership opportunities these relationships entail – for example, in collaborating to create new services or to support change management – drives additional wins.

3. MAKING THE FUTURE OF WORK HAPPEN

The workforce is being re-defined in 2020. It’s taken a couple of years for the full potential of the digital workforce to sink in but the message has now been well and truly received, and organizations are striving to develop, manage, and optimize the hybrid workforce of the future. This means deploying robots where they fit best, and re-skilling humans to focus on higher value-add tasks.

The extent to which organizations are ‘future-ready’ will determine their success in the new digital arena. SSON data shows GBS clearly at an advantage: In our annual survey of global Shared Services leaders, roughly three-quarters of GBS confirm they are ready for the ‘people+robotics’-driven workforce of the future, compared to just over half of non-GBS Shared Services. This may yet prove to be the most valuable benefit of the GBS model.


Is your workforce ready for 'People+Robotics'?

  • GBS – Yes: 73%
  • Non-GBS – Yes: 56%

In addition, the entire workflow needs to be reassessed and redesigned to reflect the change in workforce. The HR function alone is only one part of this solution. Through a GBS model, HR gains the context and the capability that drives change. GBS models are founded on role definitions and work optimization. No other team is as well-equipped to understand the nature of work being done, consider the technologies (i.e. automation) driving the shift in workflow, and rethink the roles of the combined digital/human workforce. Few HR or strategy leaders truly understand the reality of operations. GBS can and should own the transition to the future of work, building on past experiences around offshoring and outsourcing that paved the way for resourcing decisions.


"When I think about GBS and what value it brings I am focused on business outcomes. When "we" (i.e., the industry) started the Shared Services journey we focused on labor arbitrage and economies of skill. As organizations climbed the value curve, we focused more on performance and productivity. Today, organizations are asking us to be business partners who contribute to business value. In my organization I am introducing KBOs this year (Key Business Outcomes) as a measure of our success. That said, we fully recognize that we don't operate as islands and that we are partners with our clients (internal customers) working towards mutual outcomes. These include satisfied and profitable customers, positive cash flow, maximized financial returns, engaged people, minimized inventory, etc.

If GBS is the enabler of an organization, we should enable both transaction outcomes and business outcomes. That is our new mission. When we take the robot out of the person and focus on value through insight, we can change the game of how GBS is seen. This starts with small steps but can have far-reaching impact. And for our people, this means smaller but more senior GBS organizations that are focused on value – not transaction execution only."

Rodney N. Bergman
Senior Vice President, Global Business Services (GBS)
Celestica


4. SMARTER DECISIONS THROUGH DATA

As highlighted earlier, today’s business imperative is to make better decisions by understanding data and acting quickly. The ability to do so determines success.


"One opportunity that digitalization is offering is analytics. A huge amount of data is processed in our centers every day – many say that data is the new petroleum… I agree.

It fuels optimization and creates possibilities: Using analytics enables us to identify areas of improvement which we can utilize to further adapt to customer needs and to create new problem-specific solutions that transfer into new service offerings for our customers.

Shared services have the best access to data – and the experience to interpret. At Siemens Global Business Services we are currently working on seven use cases such as optimizing slow moving inventory or a payment term optimizer that adds value for our customers."

Kai-Eberhard Lueg
Global Business Services Operations
Siemens AG


Frontrunning GBS have already lined up resources, designed digitization roadmaps and implemented data management strategies. Again, GBS is in the advantage in terms of its ability to tap relevant resources – but even more so when we consider accessibility of the data that’s required to feed automated processes. Data is oil for the digital enterprise. Getting it into the right format and setting up structures that enable technology to access and act on this data is a key success driver. GBS are more evolved in overall data readiness: Forty per cent of GBS are either ‘advanced’ or ‘sufficiently competent’ as far as data analytics capabilities are concerned, compared to just 30% of non-GBS organizations.

5. BENEFITS BEYOND SERVICE DELIVERY

Hand-in-hand with the above points is the ability to drive benefits based on subject matter expertise, technology know-how, business intelligence, and a globally integrated deployment model that has been honed over years. While various improvement initiatives can be approached piecemeal, the integrated nature of a digital enterprise means you cannot take such critical decisions in isolation. There needs to be a centralized control center that oversees opportunities, makes decisions, and rolls out new solutions and services.


"Successfully cracking the back office transactional processing is almost table stakes these days for Shared Services and GBS organizations. Those GBS leaders who can harness the power of data and insights; embrace the rapid rate of advancement of technology, bots and AI; and, most importantly, clasp and grasp the future of work with our talent and people at the heart of everything that we do … will be the ones whose organizations are on the right path to making the magic happen at the core of our business front end, beyond the traditional service delivery of yore."

Chris Gunning, Shared Services / GBS lead, Finance Transformation


This plays directly into the GBS model’s strengths. No other organization has the access to systems, data, and business leaders that together drive and redefine modern business. This is illustrated by the obvious lead GBS has in terms of knowledge-based work: More than a third of GBS organizations are already providing predominantly knowledge-driven services support (defined by at least 50% of the workload being knowledge- as opposed to transaction-based).

SSON’s survey highlights GBS as driving higher performance targets, too: 14% are planning to hit >15% productivity improvements YOY compared to 7% of non-GBS. And GBS are more confident in their ability to leverage IA, workflow and CI strategies to meet these performance goals.


How do you plan to meet your annual productivity improvement targets?

GBS:
73% IA
72% workflow
46% CI

Non GBS:
57% IA
65% workflow
46% CI


GBS carries another winning card up its sleeve: the Center of Expertise, or CoE. Many Shared Services models have adopted a CoE as an innovative and effective means of providing value-add solutions and solving business customers’ pressing problems – predominantly by leveraging intelligent automation, continuous improvement, and subject matter expertise, according to the survey. Just over a third of non-GBS Shared Services currently operate a CoE compared to nearly three-quarters of GBS.

THE QUESTION THAT NEEDS TO BE ASKED: HOW SUSTAINABLE IS GBS?

While GBS represents the nirvana of Shared Services, the question being asked today is: How sustainable is the model? Given it has achieved its efficiency and effectiveness goals, says GBS expert Deborah Kops, it’s not that unimaginable that functional leadership might make a move to repatriate services back into their chain of command, arguing that integration and consolidation doesn’t add enough incremental value. The answer, says Deborah, is to shift away from the transactional play and towards areas where value creation means much more than better, faster, cheaper. Indeed, with most GBS leveraging Centers of Expertise, we are already seeing this strategy in play – for example in incubating unique and scarce capability, delivering previously unattainable business insights, or testing the potential of ‘next generation’ technologies.

SUMMARY

The start of the new decade offers incredible opportunities to evolve internal business services through previously unimaginable alliances and partnerships. As Deborah reminds us in her recent SSON column, GBS is not the end game. It actually opens up the door to the next stage in business services evolution—the management (not delivery) of ecosystems where who performs the work is irrelevant, but how it is orchestrated creates a new level of value.

“Think whitespace,” says Deborah. “If you control the space between processes and functions, you change the game.”


“I’ve spent most of my professional life in Global Business Services, across four companies so far. I see GBS leaders as company pioneers, whether in Lean/Six Sigma, as back in 2005-2010; or in Integrated Automation evolving to AI or Design Thinking, as we are seeing now. Most things typically start with us.

Many companies still struggle with data availability and integrity. We don’t, as P&L or Operational Performance transparency (based on smartly defined metrics) is delivered by default. Diversity and cultural differences are our daily reality, and I strongly believe that we have found the way to truly embrace and get the best out of these globally, across US, EMEA, APAC and LATAM.

Finally, when I look back at my past 19 years, I have one simple conclusion: We’ve always been at the heart of Transformation; the ones leading or enabling or supporting it. This is because our people love change … and this never-ending transformation is our primary employee value proposition.”

Maciej Piwowarczyk
Vice President, Global Business Services, Discovery Inc.


 

 

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