Once an innovative organization within many companies, Global Business Services (GBS) is now at a crossroads. Many of his GBS functions, established in the 1990s to centralize transactional tasks for finance, human resources, and other internal departments, have reached a strategic tipping point, leaving corporate leaders uncertain about the future of their GBS organizations. Important decisions need to be made.
A recent BCG survey showed that only 41% of companies believe GBS creates value. With that in mind, these support function leaders must step up at a time when companies around the world are facing unprecedented challenges to their business operations. Marginal adjustments to GBS strategies are no longer sufficient.
As the limitations of traditional models become clearer, GBS will need to move from a purely operational role to a more strategic one. Global business services organizations have always been at the forefront of change, but now they must reinvent themselves to build more resilient, flexible, and scalable support and enablement capabilities. . They also need to expand their charters to offer more value-added activities, such as collections and payments, customer management, and even sales functions.
Next-generation GBS capabilities are becoming more intertwined with enterprise success, with the GBS model taking center stage as a key driver of change and seeking to create value beyond its traditional contributions. GBS can lead transformations in areas such as customer experience, operations, and employee training. This requires companies to adopt a new way of thinking and a new framework that we call 'Beyond GBS'.
A bold vision for global business services
In the traditional GBS model, executives and GBS executives alike are focused on consolidating tasks, maximizing transaction processing efficiency, and minimizing costs by bundling resources and operating from low-cost locations around the world. The main focus has been on
But traditional models may have reached their limits. From 2009 to 2021, overhead expenses measured in selling, general and administrative increased by 35% more than overall corporate profits, creating the so-called “GBS value dilemma.”
This imposes three obligations on GBS organizations:
- To further strengthen ownership of end-to-end outcomes
- How to run GBS like a business in terms of performance, cost and service levels
- How to get more attention from executives
The “Beyond GBS” model puts these imperatives into practice. It provides a bold vision, strategy, mandate and governance structure that aligns with the company's strategic direction and initiatives and is driven by group, business and divisional leadership. “Beyond GBS” organizations lead digitalization efforts, using consistent structures and processes to extend best practices internally and globally, and to develop new value-added services adjacent to their core offering. Offers.
Take your support capabilities to the next level
'Beyond GBS' is the highest of five levels of support function initiatives. The first, or lowest, level includes approximately 15% of companies that either do not have GBS capabilities or have standalone centers siled in multiple regions. Companies at this level are the hardest hit. One company we studied had 72,000 employees, 117,000 accounting cost centers, 150 reporting lines between shared services and supporting business units, and was well positioned to optimize costs compared to its peers. There was a difference of $5 billion.
The second level is the organizations that account for 40% of the enterprises and still operate multifunctional service factories. The third and fourth tiers each represent an additional 20% of the enterprise and consist of organizations with integrated global support functions.
The fifth and highest level comprises approximately 5% of all companies above GBS. These companies have digitized their trading activities and developed effective platform offerings and end-to-end solutions. All this while seamlessly rebalancing workloads across global worksite locations.
Reaching this top level remains a challenge for many companies. In our experience, GBS organizations achieve around 80% of their potential benefits, or low-hanging fruit, by relying on worker arbitrage, streamlining processes, and digitizing processes first. Masu. Despite the complexity and high cost of most GBS initiatives, GBS teams tend to plateau early and incremental improvements tend to be small. This is especially true for the lagging GBS sector, which accounts for approximately two-thirds of all organizations.
The success of GBS organizations is primarily limited by top management's weak alignment of GBS priorities and unaligned vision of objectives, followed by very strict governance and ineffective operation of the GBS model. . Given the lack of synchronized implementation across the organization, the leap from a less mature to a more advanced GBS model has only proven successful in individual cases. Therefore, companies need to completely rethink and redesign their GBS capabilities, rather than focusing on incremental improvements to traditional practices that add value to just 10% of companies.
how to start
Before implementing best practices of the “Beyond GBS” model, business leaders must ensure that a solid foundation is in place. It starts with an enhanced digital and data backbone with the latest technology solutions, followed by three components:
- Agile internal customer front line Bringing GBS closer to customers, facilitating faster service delivery and rapid iteration of new services.
- Highly effective distribution platform Drive operational excellence, focus on value-added activities, and attract high-quality employees
- Digital Innovation Center We continually deliver new features and technologies and enable continuous improvements to the GBS unit interface and delivery platform.
Once organizations are sure that a solid foundation is in place, they can begin implementing the Beyond GBS model.5 steps companies should take To maximize business value, you need to:
1. Build valuable partnerships within your company. This step repositions the GBS team from a siled transaction processing unit to a partner who can help other business units optimize processes and create enterprise-wide value through results- and impact-based solutions. .
2. Be bold and reconsider the scope of your mission. Leaders need to move beyond the transaction-centric thinking of the past and consider a bolder, broader, and more fundamental vision of what GBS can offer. Indeed, transaction processing cannot be ignored. However, by embracing AI and analytics, GBS can play a valuable role in his ESG and compliance reporting, as well as user experience design, all of which have a clear impact on overall strategy and business outcomes. is tied to. Once the foundation is secured, the GBS leader will have the opportunity to pitch her CEO and executive team on the broader charter.
3. Expand access to talent and talent. To extend beyond the extended workbench idea, Vibrant functional hubs and global functional teams delivering non-classical GBS services, including research and development and other core expertise activities. This move will allow these services to be located where they have the best combination of cost and talent. At the same time, attracting and retaining the best talent remains a priority and can be enhanced through upskilling and cross-skilling initiatives. This approach puts more emphasis on expertise and digital capabilities.
4. Rethink global working. This important step allows teams to move beyond mandatory, if not mandatory, functions and align across departments and organizations into a new model that fosters organized global ownership. . This includes globally organized missions and the formation of decentralized teams that cover the world. The goal is to maximize the contribution of her members to the global team. GBS leaders can play a key role in fostering global functional ownership that enhances the contributions of these global teams.
5. Build scale and resilience. The optimal setup for a “Beyond GBS” approach is a platform-based one that provides agility, flexibility, and healthy redundancy for globalized and localized services along with a multi-functional hub infrastructure that leverages external partners. operational and technology model. His three key components of this model are a customer-centric interface, an agile (and digital) “center of competency” and a global network of shared delivery platforms managed by GBS teams and vendors as needed. This setup ensures global resiliency for enterprises as they scale, allowing them to continually rebalance workloads based on the geopolitical climate.
The 'Beyond GB' model is a vibrant service hub built around a globally consistent, modular approach that enables new 'plug and play' services. This approach also allows non-core GBS functionality to be placed in hubs to leverage the infrastructure costs and capabilities of GBS in the broader organizational ecosystem.
Of course, the main objective is to attract and retain the best talent while operating at the lowest cost. Additionally, even more value is created by building core process standards on top of a digital and data backbone based on the latest technology solutions. Leading these efforts will be GBS's Global Process Owners, who will shape global service operations and lead process optimization and digitalization efforts.
The evolution of traditional GBS functions into more strategic business units creates new and significant opportunities for companies. By expanding beyond traditional back-office roles, GBS teams can deliver real value and increase impact, rather than maintaining rigid structures and services. Solutions will be innovative and highly customized. And most importantly, “beyond GBS.” Each department operates as a business-like entity, actively managed by talented people and measured on clear outcomes.
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