Shared Services as the Digital Transformation Engine

Over the course of four days last week in Lisbon, practitioners from across Europe joined workshops, discussed their challenges and listened to some of the most ambitious and successful shared services organizations (SSOs) around, to gain tips and learn from mistakes und better understand digital transformation. Keep reading to find out my key takeaways!

Customer experience remains a key objective, and perhaps also a challenge, and technology in the shape of automation is still the silver bullet for performance.

But it is still, or maybe again, all about the people. Innovative thinking, new skills, and new sources from which to recruit were all topics we spent a lot of time discussing.”

"Digitalization has helped to drastically improve controls in terms of speed and quality."
Conference speaker/SSO Week Europe 2019

The big topics of the day won’t be surprising. Innovative thinking, new skills, and new sources from which to recruit, were all topics we spent a lot of time discussing.

At the same time, leaders are trying to understand exactly how and where their new role positions them in the modern-day digital enterprise. With "cheap transactions" no longer the issue, intelligence in all shapes and forms is raising its head.

It's true, Shared Services can potentially play a highly strategic and influential role if lucky enough to have a voice – if not a seat – close to the C-suite, and we heard from plenty of SSO leaders who have been both successful and privileged enough to enjoy such influence (e.g., Tesco and Mondélez).

On the other hand, many are still struggling with a branding problem, and there is a movement afoot to remove the term "services" from the name entirely, and thereby eliminate once and for all the master/servant element of the relationship. Being taken seriously is still a challenge for too many.

"With globally connected devices, concerns around cyber security are what keep GBS leaders up at night, as you can never be protected enough. But partnering with third-party organizations that truly have made security design and development critical to their own business models is an effective strategy."
Conference Speaker/SSO Week Europe 2019

The conference was expertly and reassuringly chaired by Sandy Khanna, MD of Business Services at BT, who connected the dots, summarized the highlights, and otherwise proved tremendously engaging. The key topics he listed over the course of the week included that leaders need to have the nerve to reset or adjust their model; the importance of refreshing your leadership talent from the outside; using outsourcers as true partners in the ecosystem; not confusing machine learning with deep learning; personalized scale; customer experience as a priority; technology is fragile; ethical AI is cheaper in the long run; and AI needs to be human centered by incorporating human’s positive values (and a switch off button!).

Global Business Services

The opening session set the tone for the week: Envisioning digitally empowered, demand-driven services for the 2020s and beyond! This was presented by Alexander von Thielmann, part of Siemens’ GBS management team, whose long career at Siemens has culminated in a lead role in driving technology and transformation across the enterprise in an entrepreneurial, market-driven spirit. It's not just about RPA, he explained, but about other new technologies too, including workflow automation, cognitive computing, and data analytics. The key point is that digitization drives customization and that business models are changing.

Consider that, since 2000, half of the F500 companies have disappeared off the list. The imperative to “change or else” is clear.

At Siemens, GBS exists as a separate service company within a decentralized organizational structure. The organization has taken a far-reaching view of end-to-end, for example by defining opportunity-to-cash as opposed to order-to-cash, reflecting that the process starts way before the "order" stage. The role and branding of GBS is changing too – from a service factory to embracing digital transformation and promoting itself as partner of choice rather than service provider.

“The value of GBS is in the ecosystem.”
Conference speaker/SSO Week Europe 2019

Sumit Mitra, CEO of Tesco GBS, also provided inspiration on how to deliver complex business change through leadership and value. Tesco's GBS is fairly new but has already been highly effective in removing unnecessary work that distracts employees from the company’s main goal: serving the customer. Sumit outlined the challenges in setting up a target operating model for a FTSE 100 organization and painted a picture of the "future state" of operations.

The key challenge GBS leaders like Sumit face today include finding new talent for the digital world and building a seamless service delivery enterprise. Digital innovation supports seamless practices – but before you send out a bullet train you need to ensure the tracks are in order, he reminded us. That means before you can launch GBS your culture and process need to be set. The culture should target creating players, not the walking dead, he added. In other words combining high attitude with high energy.

One of the star presenters this year was Angela Mangiapane, President of Mars’ GBS. As a private company, Mars values "freedom" to act, and "mutuality" across its ecosystem – both characteristics that may not fly quite so high in public enterprise. At Mars, the driver behind GBS (Mars Global Services) was not just cost, Angela explained – “or you could simply outsource everything!” True value is the opportunity beyond cost, she told a packed hall, and that is what MGS is all about. Creating value across everything it does via unique skills.

As a side note, Angele cited as inspiration a story she had heard on 84-year-old Flo Meiler who took on the challenge of becoming a world-record pole-vaulter at age 80! For a shot in the arm, watch this:

Angela needed something to “pole vault” Mars services from what it had been to what she knew it could become. “I needed something to get us over the bar”, she explained. “Something better than just ‘work smarter’.”

What transpired was a massive restart from the leadership level, partnering with third parties who became part of the solution, and agility. Today MGS is using digital technologies to launch analytics, automation, and design thinking. In the course of this transition MGS has moved from the back office to “one office”, 25% of senior leaders are now recruited from the outside, and the new objective is "zero distance to the customer".

"Today everyone wants to hire data scientists, and everyone suddenly “is” a data scientist. Data scientists can state their own salary. Because of this, places like Bangalore might be the worst place to base your analytics hub, because of the huge salary hikes its competitive market drives." (See also SSON Analytics’ City Cube data that reflects talent, salary and more data points across nearly 4000 cities around the world).
Conference Speaker/SSO Week Europe 2019

One thing Angela emphasized is that digitizing is not just about using technology but about optimizing user-centricity through technology. “We ask ourselves what the problem is, she explained, then we look for the data. Then we automate it.”

GBS was given a fresh review by Deborah Kops, also a member of the SSON Advisory Board. It’s a great sandbox for ideation, she told the leaders in the room, and to develop a future of work strategy, as no one understands work better than GBS. However, there is an imperative to change as too many models are still focused on what the "parent" wants them to do. Service positioning must be overcome, she warned. In addition, location strategy just doesn't matter anymore, as talent is now accessible everywhere and anytime in today's world.

Maciej Piwowarczyk, VP of GBS at Discovery, carried on the theme of innovative “build out” of Value Add oriented operations by outlining the last 4-5 years of GBS transformation at his company. Continuing his 2017 story (a presentation two years ago in Budapest), he emphasized that it's a very exciting time for the media industry as it is evolving big time, moving more and more into the digital space. Additionally, Discovery’s GBS is very much part of this digitization journey.

Starting in 2014, the GBS went through a series of phases starting with understanding the importance of its services and rebuilding customer trust, to enhanced capabilities along with global coverage. The 2018 Scripps integration combined with a new CFO leader, heralded a new emphasis on knowledge workers (“people are at the core”) along with an increased expectation to be far more relevant & agile towards customers, while still protecting foundations. Looking forward to 2020 and beyond, with trust already Discovery’s “secret sauce”, knowledge workers will become even more important, Maciej explained, and intelligent automation integrated with business excellence will be Discovery GBS' way to improvement and, most importantly, the people agenda.

Maciej also talked about a traditional GBS build-out model turned upside down, so that instead of the traditional pyramid, with foundations at the bottom, advanced capabilities in the middle, and value-add at top, Discovery's GBS journey placed the pyramid on its head, with value at the bottom, and foundations at top.

Discovery's way required lower investments with Value Add being delivered very fast, he explained, but risk is far bigger with this approach, and requires very hands on, emphatic leadership to make it work. In addition, there was a phased approach to scope absorption (i.e. starting with the lowest complexity processes like PTP and finishing with the most complex, e.g. Controllership or RTR or Revenue Accounting).

No doubt, this innovative Discovery GBS build out created an environment for the talents of tomorrow who love change, who don’t want he regulated 99% by process documentatio,n and who like to be trusted – not controlled - to do the right thing.

Maciej highly recommends this innovative approach to GBS build out for small to medium sized companies vs. the traditional approach, which takes far longer and is far more expensive.

Artificial Intelligence

While 2019 is the year of the COE, 2020 will be the year of artificial (or augmented) intelligence. The US has taken a lead in investing in AI, and knowledge intensive solutions are being actively encouraged in many other countries, like the UK. What is causing concern is regulation, or lack thereof. No country wants to open the door to unregulated artificial intelligence, but at the same time no one wants to be left behind.

As much as we believe data security is highly complex within Shared Services, the defense industry has a significantly higher risk factor! Nevertheless, compliance is a lawsuit waiting to happen as most countries’ compliance regulations are still too lax.
Conference Speaker/SSO Week Europe 2019

The question most delegates wanted answered is: Do you have to implement RPA first in order to move to AI? And the answer, according to level global’s Founder and CEO Simon Robinson, is no. But it's important to understand the nuances of IA, he adds: RPA is effectively about systems that do – sequential processing of macro driven scripts, for example, and repetitive keystroke-driven task automation. Cognitive solutions (systems that think) simulate human thought and decision-making but use programmed AI. Machine Learning (systems that learn) is one step beyond cognitive because it contains an algorithm that is capable of self-learning, so the solution constantly improves itself based on data. (Many core technologies are now adding Machine Learning capabilities to their offerings, however, it’s not the right solution when consistency and compliance is important.) Implementing Cognitive and Machine Learning applications represents a quantum leap for organizations wishing to move beyond RPA.

Level global is one of the newly emerging companies in this space, and introduced AI-powered decision-making in one of the workshops, reflecting the interest identified in SSON’s 2019 market report. Simon Robinson discussed the key criteria business services leaders need to establish in order to kickstart an AI program, which include ensuring AI is driven by the business rather than IT; seeing unattended AI as an operating model change, beware getting locked into license deals, starting a data task force, and managing implementations slowly (how to boil a frog!). He also pointed out the significant differences between using AI to enable core technologies as opposed to leveraging an AI-based platform.

The groundbreaking opportunity AI presents is to decentralize knowledge and think about the workforce in an entirely different way, Simon said. It offers significant applications for dealing with thousands of staff appraisals, for example, and by building existing knowledge and policies into applications, AI can present managers with pre-canned decisions.

It makes sense to take a low-key approach to transformation, suggested Simon – like boiling a frog by heating the water slowly rather than throwing it into boiling water! (I hate that analogy, but I get it.) Technology is a means of disrupting businesses, Simon explained, and AI should be embraced as such – but carefully!

Beth Loudon, Head of Procurement Development and Sourcing at NHS Shared Business Services, added some practical insights to this decision. With growth starting to flatline, her team was challenged with needing to grow revenue, improve customer experience, and manage costs. Traditional procurement framework agreements did not support the customer process of awarding contracts against them, she explained, so customer insights became a priority to drive productivity. An AI-based new approach allowed the team to design framework agreement implementation plans for different personas, making it easier to differentiate the services from competitors. A key lesson she shared was to get finance and commercial colleagues involved early, and to run things in parallel with different customers, as not each customer is ready to adopt a different approach at the same speed.

HR and Talent

HR came under question, too, with automation impacting its service delivery. Is the Ulrich Model even relevant today?, asked a delegate in a roundtable discussion. Or does today require a far more agile model? Good question.

Our annual survey tells us that there is a significant skills shortage around innovative thinking, automation and data analytics – and in Lisbon, critical thinking was highlighted as a key capability to link myriad emerging opportunities. In the past, explained one speaker, you went to specific companies to learn about new things. Today, all of this innovation exists outside companies, across the broader ecosystem. It’s up to you to tap into it and incorporate or adopt it.

Talent is a constant challenge not just in terms of finding the skills to drive automation and analytics, but also to reflect the diversity that defines today's enterprise. Alyona Konstantinova who heads the MGS HR Services Center (MyP&O) program in Europe explained she had reaped great returns by tapping unusual, nontraditional areas to recruit new associates, as employees are called at Mars (we ate lots of candy in the Mars session!). To reflect the diversity of thought in the broader ecosystem, sources like reddit have proved a great pool. For example, when cyber security skills were needed, MGS found the right people in the appropriate reddit groups, alongside leveraging google ads and specially created microsites. The job advert – using various online channels – got more than 1 million hits and 10 times the number of usual applicants, Alyona explained. So, as SSOs reach out to recruit the kind of people they don't normally recruit, in areas that are new to them, innovative strategies will be key.

Modern-day SSO models frequently find themselves in the position of enabling business transformation but need the skills to drive this. The tobacco industry, for example, offers little creativity in terms of cigarettes, explained a speaker from Philip Morris. However, with new growth markets like IQOS (basically, a new tobacco heating system) emerging, Shared Services offer the critical capability of managing and analyzing the digital consumer experience. Although the skills gap right now is still “massive,” figuring out “the science” in customer care is what Shared Services can do very well.

You don’t get bigger and better than … Mandy Hickson

Finally, these events always include "big idea" speakers and amongst the three we heard from, my hands-down favorite was Mandy Hickson, one of the UK's first female fighter pilots. She is a motivational speaker that stands high above others (and not just physically). At times entertaining, at times awe-inspiring, her presentation shared the highs and lows of her unusual career, and the life and death importance of leadership in a war zone. "If we believe we will be successful we program our brain accordingly," she explained. “The military needs transformational leaders – not transactional leaders paid to do the job," is another quote that resonates (and keeps on resonating – right?).

Leadership is all in the action and not in the title, Mandy reminded us. I loved her summary of a military debrief funnel, as it applies to everything: what (facts); why (cause); and how (cure).

Here are two other priceless nuggets: “Any loss of confidence equates to waiting for failure, which will come”; and “motivational feedback builds confidence, constructive feedback builds competence.”