The (Much Needed and Elevated) Role of the GBS Executive

Stan Lepeak
Global Research Director, KPMG LLP

KPMG recently released the results of its quarterly, global 3Q14 Sourcing Advisory Pulse surveys. These Pulse surveys provide insights into trends and projections in end-user organizations’ usage of global business services (GBS). The learnings are gleaned from KPMG firms’ advisors, who are working closely with end-user organizations that are actively exploring or undertaking GBS initiatives, as well as from leading global business and IT service providers.

The third quarter edition of the Sourcing Advisory Pulse examined how organizations manage their GBS operations from the following three dimensions.

  • Where does GBS leadership typically report into in an organization?
  • How often does a single GBS leader exist and at what level in the organization?
  • Can a single GBS executive leader accelerate driving increased GBS maturity and greater GBS value and if so how and why?

Global business services, or the integrated management and shared services and outsourcing across the organization, has emerged over the past several years a predominate means for organizations to further drive cost out of back- and mid-office operations and increasingly for more progressive and aggressive firms a means to also drive business value above and beyond just cost savings. Yet most organizations that have adopted a GBS model and approach face many challenges in driving increased maturity and benefits beyond picking the initial low-hanging fruit of cost savings. These challenges are derived from fragmentation and duplication of efforts across functions, geographies and business units, weak governance, inadequate supporting technologies, and political and organization pushback against installing end-to-end process ownership.

One enabler to overcoming these challenges is to ensure that GBS organizations have a strategic “seat” at the table. The best means to enable this is to install a single, global GBS leader and elevate this role to a CXO-equivalent position. This GBS executive should focus on driving measurable business value above and beyond cost reduction and be measured against this goal. Organizations that have taken the initiative to develop a centralized GBS organization coupled with a GBS executive who is closely aligned with the rest of the C-suite have achieved marked success in areas such as the following:

  • Developing a clear(er) and holistic vision that is supported by the organization to ensure the initiatives of the GBS organization are aligned with the organization’s overall business goals
  • Spotting opportunities or problems that would have been missed by functions/units operating in isolation
  • Reducing overlaps and inefficiencies throughout the organization
  • Identifying impacts of business decisions of one function on other parts of the organization through centralized data & analytics
  • Changing procurement strategies to address customs and sales tax implications
  • Developing consistent standards across functions and geographies to reduce risk of regulatory compliance failure
  • Enhancing the culture of the organization aiding both requirement and retention of talent.
Very few organizations today, however, have or plan to elevate the GBS executive role to this level (see figure below*).

9271 Fig 1

Enabling this role is easier said than done. Among the many impediments are that there is no precedence for it in most firms, the career path or résumé is not is clear, few in the market have the required skills, and the role will usurp power from many existing executive and operational roles. But just as the role of the CFO, CIO, and CMO have evolved and become mainstream, for organizations embracing GBS and hoping to use it for more than just cutting costs, embarking on the journey to instill a chief GBS officer should start now.

(*Numbers may not total 100 percent due to rounding.)

“My Name is Nobody.” The Odyssey of Global Assignments and Talent Management

Achim Mossman
Principal, Global Mobility Advisory Services (GMAS)

The KPMG International 2014 Annual Review was recently released, which highlighted that more than 2,400 of the 162,000 member firm personnel took part in KPMG’s Global Opportunities (GO) global mobility program, taking on assignments in more than 95 countries across the KPMG network. This underscores that in today’s economy it is crucial to have a globally mobile workforce to support our client’s needs. At KPMG, we understand the importance of pre-assignment selection as well as repatriation planning in order to make an assignment successful. But is this true for all organizations?

If you have ever been an expat, working and living on foreign soil, you know the feeling all too well—out of sight, out of mind. It is a fact that companies often do lose track of good people whom they have sent on overseas assignments. So while some of the best talent learns much and becomes more valuable to the organization on their journey, for all practical purposes, they are lost. As Human Resources (HR) professionals, it is our job to be faithful to the organization, keeping the talent growing and intact as it moves across the globe.

It is also our job to help them make the transition to their next move or repatriate them to their home country. When expats come home, they often find that the home country business and people have changed tremendously. The people they knew have moved on, many aspects of the business have changed, and there may not be a defined job for them upon their return. This can either make them ripe for other companies’ recruiters or make them believe their time on the bench will make them a reduction-in-force target, so they leave.

HR Mobility is real, not virtual
When HR professionals, especially international HR professionals, speak of mobility, they are not talking about smartphones, Webinars, and communications technologies. Mobility in our business means developing broad-based business strategies to keep talent active and aligned. It is about finding the right resources to be deployed at the right place and at the right time. It also means helping the individual employee and family move and adjust to the new location, including things like finding the right schools, assisting with tax and immigration issues, and keeping track of their growing skills and talents.

Mobility has changed and the “rich” assignment packages, while they still exist, are becoming rare. The cost of an international assignee is often multiples of the cost of local employees. Today’s environment cannot support that, especially when, more often than not, businesses need to staff for special projects – let’s say 50 developers in Singapore. It makes much more sense to look around the region and deploy people from Hong Kong rather than from the United Kingdom or the United States.

infographic-blog-20141216 It takes talent to know talent 
I dare say that one of the most challenging areas of HR today is the slow adoption of strong HR Technology (HRT), and the ability of companies to collect, mine, report on, and analyze their people data. Even companies in high-tech markets have been slow to adopt HRT. But for those who do, while it may prove to be a challenge, it will likely also be a great point of opportunity—not only for the business itself, but also the people who make it happen.

Achim leads KPMG’s Mobility Consulting Services (MCS) and has more than 17 years of experience in domestic and international human resources in the U.S. and Europe. Learn more about issues related to HR, by visiting KPMG’s HR Center of Excellence and listening to the podcast Talent Management: The Next Generation.

Governance Talent Management: The Making of Governance Superstars [SlideShare]

Liz Evans
Managing Director, Shared Services and Outsourcing Advisory

As today’s organizations grow in size, complexity, and global reach, hybrid sourcing is becoming the best way to optimize the mix of human capital, service delivery models, process innovation, and technology.

The big problem, however, is that all this optimization doesn’t just happen by itself. Organizations need experienced professionals who can develop and implement strategic sourcing programs as well as managers on the front lines who know how to handle in-house resources, shared service operations, and other outsourcing efforts.

Worth their weight in gold
Governance professionals with a solid track record in successfully managing outsourcing relationships are worth their weight in gold. Many organizations dealing with IT outsourcing are well into their fifth or sixth generation of outsourcing models, and these models involve complex, multi-provider environments integrated with highly sophisticated tools and processes.

In the past, anyone with experience in vendor management could be considered for the job. Not so today. Organizations need governance specialists who can develop a clearly defined yet flexible sourcing structure that spans services, divisions, and business units, right down to the transactional level.

More specifically, organizations need professionals with strong consultative skills, including the ability to influence service delivery without having direct control of service providers.

Tips for recruiters
Many organizations are developing governance talent through:

  • Training programs that involve traditional areas like service level agreements but also negotiation skills, pricing structures, and data management
  • Refining the language they use in recruiting governance professionals since job descriptions and titles set expectations and influence the type of respondents
  • Establishing corporate access to professional networks and industry-specific networks, which can drive talent acquisition and retention.

The key is to keep in mind the importance of governance professionals in reducing risk involved with service providers while also increasing the quality, availability, reliability, and flexibility of service delivery for the organization.

We put together the SlideShare below to give practitioners a glimpse into the insights and leading practices for addressing the future of governance. In it, we discuss the next evolution of value, analytics and automation, and the roles of talent and technology to future success.

Interested in continuing the conversation? KPMG’s suite of Governance services helps provide clients peace of mind by giving them access to decades of governance experience and expertise, and the assurance that their outsourcing and shared services engagements will be well governed and achieve maximum value.

Read more: To help organizations ensure consistency in outsourcing governance, KPMG developed nine critical factors to keep in mind to help ensure outsourcing success.

Workday Rising 2014 Recap: Predictive Analytics Take Center Stage as Workday’s Pace of Innovation Accelerates

 KeithMattioli015 Keith Mattioli,
Principal, Advisory, Enterprise Solutions

​Last week I attended Workday Rising, the annual forum that brings together Workday executives, customers, prospects, and partners to celebrate the past year’s client successes and share Workday’s vision and direction. Now that a week has passed, I have a few post-event observations.

First, the atmosphere at Workday Rising 2014 felt very different than a typical software conference. Even with 5,000 attendees—which certainly isn’t huge by Dreamforce and Oracle OpenWorld standards—Workday Rising seemed much more like a users group meeting than a vendor event, and in fact, it’s billed on the Workday Web site as “a community for customers to meet each other and share ideas.” It felt like a bunch of like-minded people getting together to share ideas and have fun.

The rate of innovation from Workday is accelerating. We heard about a slew of new products and features, including, notably:

  •  

    Mobile isn’t the only area where Workday is refusing to rest on its laurels. 

    A new mobile experience for Workday for iPad and Workday for iPhone. Already a leading user interface for mobile devices, Workday definitely isn’t being complacent—the company continues to innovate. Workday’s “elegant, personal, and efficient” applications have added animations to bring the design foundation to life and create a familiar and intuitive feel. Users can also personalize their mobile experience. Over time, their search results, prompts, and menus will improve based on how they use the product. Workday Rising attendees could upgrade to the new UI on the spot on an opt-in basis.
  • Updates to the look and feel of Workday HCM. Mobile isn’t the only area where Workday is refusing to rest on its laurels. The company continues to improve its core applications with improvements to some of the main HCM components—such as a consumer-grade user experience. This was also made available immediately to customers outside of the standard Workday update cycle. No reason to keep the users waiting!
  • Continued innovation with the core applications. In addition to the improvements to Workday HCM, Workday is making “standard” enhancements to its core products, including HCM, Workday Financial Management, and the integration cloud platform, with a focus on providing real-time information to business users.
  • Predictive analytics and big data took center stage. The big news at Workday Rising was the unveiling of Workday Insight Applications. This is a new suite of applications that uses advanced data science and machine learning algorithms to help customers address different business scenarios. This was the big splash for Workday. It showcases the value of a consolidated enterprise platform that contains all of an organization’s data in one place, easily accessible, with the ability to do true predictive analysis versus just reporting. It’s a powerful tool. Integrated into the solution, it allows business users to not just see what happened last month and last quarter, but to start to look ahead.

During the first day’s keynote, Dan Beck, vice president of technology products, and Adeyemi Ajao, vice president of technology strategy, gave a great example around employee retention. They showed how Workday can display the top performers who are most likely to leave based on internal (years in position) and external (job searches) data. Managers can then be proactive in recommending job changes for each person, each change ranked by its impact on retention risk. Powerful!

  • Accelerating technical change. One of the other key areas that Workday continues to improve upon is its core infrastructure support—not the traditional “ping, power, and pipe,” but rather how Workday manages the application within that environment. Workday updated nearly 700 tenants (production customers) to Workday 23 in six hours. Their goal was 12 hours. That’s amazing. How long did it take you to upgrade your legacy platform? It probably wasn’t measured in hours. Multiply upgrade time by the number of legacy platforms out there, and you get a huge productivity loss across enterprises. Maybe we should come up with a metric—there’s already one that estimates lost productivity due to the time we spend sitting in traffic.

    How long did it take you to upgrade your legacy platform? It probably wasn’t measured in hours. 

  • Workday really listens to its customers’ suggestions. Workday Brainstorm is the mechanism Workday uses to solicit product enhancements. The community of Workday customers then votes on the ones they think will have the most impact. It’s an interesting process in which a lot of lobbying goes on. Workday incorporated more than 100 of these customer-suggested enhancements into the latest release—which represents a significant percentage of new features!

This customer involvement just reiterates how different the Workday community is from those of other traditional solutions. The level of collaborative customer engagement—in which ideas and artifacts (integrations, reports, etc.) are openly shared—creates an environment where companies receive broader value because they’re all on the same version of the solution, so each improvement benefits the entire community.

As a leading provider of Financial Management and Human Capital Management services, KPMG draws upon extensive industry knowledge and experience to help transform business using enterprise technology.

Providers Being Held to a MUCH Higher Standard

justice Cliff Justice,
U.S. Leader
Shared Services & Outsourcing Advisory
Brown David J. Brown,
Global Leader
Shared Services & Outsourcing Advisory

Clients are rapidly losing patience with service providers that aren’t working proactively to provide more value than the basic terms of the original outsourcing contract. Many clients are actively looking to fire their provider if they cannot get past operational teething issues and begin the process of transforming the way they do things.  Outsourcing is no longer about achieving significant cost reduction targets and getting basic tactical operations functional – it’s about moving clients into a future state that is much more effective than the current one. Simply running client engagements as cheaply as possible with limited investment is a sure route to failure.

25% of clients are actively looking to fire their provider.

Less focus on the deal, more on the relationship.  Providers are frequently forced to say what they need to win the deal, as opposed to offering a strategic partnership that can add more skill, technology, and analytical capability to clients.  Some clients are beginning to doubt their current provider actually has the skills or acumen that they were promised during the early courting days, prior to contract signing. Our research shows that close to a quarter of clients will actively seek to eject their current provider if they have not effectively helped them standardize, automate, and transform their processes within the next two years.


Related Reading

The Future is Here: Enterprise Services Governance
Gain the essential perspectives and tools needed to build and grow an enterprise services governance organization.

Managing Risk in Global Business Services Operations
Anshul Varma explains risk from a three-dimensional view as it relates to GBS operations.

Executive Report: The State of Services and Outsourcing in 2014
Gain insight from 1079 enterprises, outsourcing service providers and industry consultants on where the services and outsourcing industry is heading in the near and long-term future.

2014 Research Finding – Cloud is Already Replacing Legacy Outsourcing

justice Cliff Justice,
U.S. Leader
Shared Services & Outsourcing Advisory
Brown David J. Brown,
Global Leader
Shared Services & Outsourcing Advisory

Ambitious and sophisticated clients are now seeing the huge benefits of shifting from on-premise to “As-a-Service” delivery. This isn’t something that is occurring in a few years, it’s already happening as our latest research shows close to one-in-three enterprises already using (or about to use) BPaaS/cloud as an alternative to legacy outsourcing in areas such as HR, industry-specific operations, finance and accounting and procurement.

Having a provider that understands and can implement a cloud platform, support the transformation and provide the necessary services that add real value to the front-office is the Holy Grail for many buyers. With half of today’s outsourcing contracts potentially up for grabs, those providers with genuine platform plays are in position to pick off legacy outsourcing contracts that have stalled in finding future value.

The successful providers will be those that can bridge the divide between cloud/infrastructure and process delivery. Most buyers will tell you that having to deal with the technology and operations divisions of providers is akin to dealing with two separate companies. There is often very little synergy – and very different cultures – between those that deliver business processes and those who design, develop, and maintain technology solutions. When providers separate process delivery and operations from technology, it nearly always makes it challenging to get the right access to funds, align the stakeholders that matter, and make meaningful, credible business cases. Having operations and infrastructure in the same unit creates a greater opportunity for transformational thinking at the solution-architect level in operations, by increasing awareness of – and exposure to – emerging technologies.

chart-20141030


Related Reading

The Future is Here: Enterprise Services Governance
Gain the essential perspectives and tools needed to build and grow an enterprise services governance organization.

Managing Risk in Global Business Services Operations
Anshul Varma explains risk from a three-dimensional view as it relates to GBS operations.

Executive Report: The State of Services and Outsourcing in 2014
Gain insight from 1079 enterprises, outsourcing service providers and industry consultants on where the services and outsourcing industry is heading in the near and long-term future.

The Internet of Everything – Riding the New Wave of Business Opportunity [SlideShare]

Hoss_Justin Justin Hoss,
Principal, CIO Advisory
pull-quote4

We are now at the beginning of a new technology wave that will become a tsunami as wearable devices (fitness bands, watches, eyeglasses), automobiles, appliances, and sensors of all kinds connect to the Internet. It’s called the Internet of Everything (IoE). Whereas the Internet of Things (IoT) connects physical devices to the Internet, the IoE enables connected devices to take autonomous actions based on real-time data, processes, and information.

$19 trillion up for grabs

Other than lots of connected devices, what does all this mean? For businesses, it can mean quite a lot — up to $19 trillion of value (net profit) over the next decade for private sector businesses globally, according to Cisco.

In fact, the IoE has the potential to transform how we do business with real time insights, richer experiences, new products, more flexible service delivery, autonomous behavior, and greater revenues.Already, IoE early adopters include —

  • Manufacturers using smart factory and supply chain applications
  • Utilities deploying smart grid applications
  • Retailers implementing customer optimization applications
  • Healthcare providers using telemedicine for remote monitoring and remote delivery or services.

Key questions

For CIOs and CTOs, key questions about the IoE don’t involve “if” but “how, what and when.”

  • How will the IoE change the way our organization deploys connectivity and technology?
  • What should we be doing to remain agile and keep up with this new wave?
  • When can we capture some of the business value that the IoE is already creating?
IoE3

What’s holding you back?

Despite the new wave of business opportunities, many organizations still struggle with the idea of testing the IoE waters. In our KPMG white paper The Internet of Everything is Now,we identify major barriers to entry for IoE, ranging from “Separating the signal from the noise” to “How should I eat the elephant?” It also presents a multi-layer framework to help decision makers think through issues and begin to capture value by operationalizing the IoE for their organization.

Learn more about the IoE and how it is likely to impact you, your competitors, and your industry.

Harnessing The Power of Analytics

dipan Dipan Karumsi, Managing Director,
KPMG Procurement Advisory Services
gnome-mime-application-xhtml+xml KPMG’s Procurement Advisory services focus
on delivering enhanced business performance and
driving bottom-line savings. Let us help you transform
the way you source and manage your supply base.

In our last post we talked about spend analytics, the danger of the “other” category, and how it can easily lead to unreliable data. Today we’ll talk about how a standardized taxonomy can create dependable analytics.

analytics For many organizations, the United Nations Standard Products and Services Code (UNSPSC®), a standard product taxonomy that’s on the market, can be a good starting point for building or cleaning up categories. It provides standardized reporting, but it can also be overwhelming for some enterprises because of the level of detail it contains. This can end up creating more confusion, depending on the skill and experience of the people using the system.

You can edit the UNSPSC® down or roll some things up into larger categories, keeping organizational fit and alignment in mind. If you have too many categories and the distinctions are too fine, you’ll get the same item showing up in different categories. Then you’ll start to get those, “Where did my spend go?” types of questions which quickly lead to data distrust. On the other hand, if you decrease the categories available to the end user, sometimes they just won’t have what they need.

Every organization is different, and you have to identify what makes sense for your situation. Your taxonomy has to strike a balance between providing the visibility and data you need to manage effectively, while simultaneously not being too onerous for end users to adopt easily.

One key note: Taxonomy development should not be done in a bubble. Creating a spend taxonomy should be a collaborative process that includes a broad group of stakeholders. The more input you receive, the greater the buy-in will be on utilization and self-service reporting. pull-quote4

While some organizations opt to refine their taxonomy as they mature, I recommend they clearly define and deploy it up front. Constant changes in the way users see the taxonomy can cause confusion. In addition, spend reporting will be impacted if categories are removed, edited, or added, and alignment of workflow approvals to categories will need to be updated each time it is changed.

Most important of all, do not create a category called “other” (or “miscellaneous” or “uncategorized”.) Getting real time visibility into spend is one of the big goals here. Allowing this kind of category automatically introduces the need for a manual process, which causes delays and inaccuracy.

If “other” is not an option, end users will learn to find the right category. Procurement can provide information and training to help. Since most requesters concentrate on a handful of 10-15 categories, they’ll be very effective at selecting the right ones once they learn them.

An up front investment in creating a thoughtful taxonomy is going to give everyone across the enterprise the ability to run accurate, real-time ad hoc reports in the eProcurement application. This is the power of analytics, and once people experience it and see how much easier it makes their jobs, having no “other” will be no issue.

For Spend Analytics You Can Trust, There Can Be No “Other”

dipan Dipan Karumsi, Managing Director,
KPMG Procurement Advisory Services
gnome-mime-application-xhtml+xml KPMG’s Procurement Advisory services focus on delivering enhanced business performance and driving bottom-line savings. Visit us on the Advisory Institutes to learn more about how we combine thought leadership and global perspectives to help you transform the way you source and manage your supply base.

In my last post, I talked about how timely access to data can help procurement organizations avoid embarrassing moments with suppliers. Now let’s turn our attention to getting quality data downstream.

analytics This requires not only having broad adoption of the eProcurement tool, but also having a well-defined category taxonomy and making sure people know how to use it accurately. The taxonomy is where many organizations fall down; they simply don’t put enough time and thought into developing it, and thus create continuous challenges in getting access to quality spend data.
Developing a well-defined taxonomy takes discipline and thought. Yet, in the rush to deploy the system, organizations may create a bare minimum of categories without the appropriate levels, leave the category field optional, or even skip this step altogether, which then creates a rush to create this information at the time of go-live. pull-quote-1

Or, they may create a category called “other.” If you want analytics you can trust, you need a category for everything. There can be no “other.” “Other” gives people who don’t want to think too hard an easy way out. Before you know it, you’ve got “other” showing up as 20% of your overall spend, which requires a significant re-categorization effort and can cause considerable data distrust.

An unorganized taxonomy also creates a lot of churn downstream. If you have transactions being routed by category to the buying organization, they’re going to have to research and identify the correct categories, adding time and manual effort into the process. The most efficient way to get quality data out of your analytics system is to make sure your taxonomy and process is defined across the entire value chain from the start. Think of it as pre-analytics.

One of the first things we do when we work with an organization on sourcing or procure-to-pay is look at the spend taxonomy to see how it’s organized and understand how well the organization aligns around it. Is everything in alignment, or are there a number of unmanaged categories that have significant areas of spend? Is there a lot of spending in an “other” category?

Insight into this information brings us to the topic of taxonomy development and how it can unleash the power of analytics, which is where we’ll pick up in the next post.

Digital “Haves” and “Have Nots” [Video]

By Lee Ann Moore, Director, Industries and Marketing

In the video below, KPMG’s Dave Wolf and John McCarthy of Forrester Research discuss how organizations need to rethink their approach to technology to support a digital-enabled business model – one that is both customer- and employee-centric. It requires agility and an iterative process, often quite different from historic approaches to technology implementation and upgrades. Historic approaches, typically managed by static organizations, took an inside-out view as opposed to the customer-centered, dynamic outside-in perspective expected today. This shift may require a digital transformation, or at least a planned journey toward digital enablement. Without embracing these changes, organizations risk becoming “Digital Have Nots” and falling further behind in today’s increasingly dynamic and competitive marketplace.

Cynergy Video

For further information or ideas on a customer-centric approach to digital transformation, contact David Wolf or Lee Ann Moore.