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The Global Business Services Evolution

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By Martin Conboy

global-business-servicesGlobal Business Services(GBS) is the holy grail of shared services. The Global Business Services model has taken root within the outsourcing and shared services industry in the last few years. It evolved out of the Shared Services model for delivering business services and processes. Rather than separate centres servicing particular regions or business functions, Global Business Services integrates and centralises support functions to deliver end-to-end processes that support an organisation’s operations across the globe. Global Business Services provides Cost- Effective Business Solutions for Information Technology and Business Processes.

According to to PWC, “In today’s business environment, nine out of every ten enterprises have shared services and 97 percent manage outsourcing relationships. However, the majority have yet to benefit from combining shared services and outsourcing into one integrated global business services framework”.

“A well-executed global business services strategy is distinctly different from the narrower focuses of shared services and outsourcing strategies. It identifies corporate objectives and encourages internal functions to collaborate with each other and third-party service providers to create breakthrough, strategic operational capabilities that drive business outcomes that can result in real marketplace differentiation and competitive advantage”.

Difference between Shared Services and Global Services

Shared services organisations first appeared in the US in the late 1980s and has quickly expanded across the globe. Many large corporations currently have shared services organisations in most of the regions of the world in which they do business.

“In today’s business environment, nine out of every ten enterprises have shared services and 97 percent manage outsourcing relationships. However, the majority have yet to benefit from combining shared services and outsourcing into one integrated global business services framework”.

GBS goes beyond the narrow focus of outsourcing and shared services, providing a more holistic and strategic approach to sourcing and managing end-to-end business processes.

These shared service centres are built around particular functions such as IT, finance or HR. These units have relatively little contact with each other, with their leaders reporting to C-level executives. Under this structure, the end-to-end improvement of processes and the ability to innovate is severely hampered.

In the evolution to GBS, the focus shifts from narrow business functions such as finance or IT, to delivering consistant, standardised, end-to-end support for business processes. Shared services functions are aligned across all regions and fall under the responsibility of a global business services head.

The provider of the individual services can be either internal or external but must be managed centrally by the global business services organisation. The GBS unit offers a unified face to internal customers and operates through a global service delivery network . The unit may comprise a number of regional centres to work different time zones and languages. (Follow the Sun)

The evolution to GBS

Evolving to GBS is complex and involves numerous and difficult challenges. Currently there is no blueprint for success with GBS and few corporations have completed the transition. Organisations such as KPMG, Deloitte, PWC and other operators in the outsourcing, shared services and consulting space are working with corporations to develop effective models.

The most appropriate model and design depends on the organisation’s culture, objectives and leadership. And considering the size and complexity of the organisations involved, the actual path for one corporation is likely to be very different to another

Your GBS framework needs to map out your internal functions and align them with your corporate objectives, encouraging collaboration between internal units and third party service providers. Get ready for the inevitable turf wars! GBS goes beyond the narrow focus of outsourcing and shared services, providing a more holistic and strategic approach to sourcing and managing end-to-end business processes.

Potential Benefits

The establishment of global business services aims to capture additional value through :

  • Economies of scale: savings driven by leverage/size of organization
  • Economies of scope: savings driven by leveraging management and expertise across multiple service offerings
  • Simplification: savings driven by removing (often unneeded) steps from a process
  • Standardization: savings from having one standard method or process
  • Visibility: value derived from having visibility across an enterprise (e.g., human resources knowing how many engineers there are in the company and where they are located)
  • Access to talent: value derived from the ability to harness the best talent pools in the world
  • Labour arbitrage: savings from lower-cost resources in different locations throughout the world
  • Skill arbitrage: value derived from access to higher-skilled labor (implied at lower costs/ economically feasible costs)
  • Pure arbitrage: value derived from the ability to shift work from one location to another to take advantage of shifts in the factors of production
http://www.ey.com/GL/en/Services/Advisory/Driving-performance-with-global-business-services-Making-multifunctional-shared-services-happen.

http://www.isg-one.com/knowledgecenter/whitepapers/private/papers/White_paper_-_Global_Business_Services.pdf
June 23, 2015
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