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.
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.)