Global Research Director, KPMG LLP
KPMG recently released the results of its quarterly, global 2Q15 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 information technology (IT) service providers.
One of the topic sets examined in this edition of the Pulse survey was what are the top drivers, challenges, and benefits sought by organizations in their GBS improvement efforts. KPMG defines GBS as the collective set of resources, capabilities, and systems to deliver enterprise-wide, multifunctional business services such as finance and accounting (F&A), human resources (HR), procurement, and other business processes across an organization. Implied in GBS is greater aggregation and leveraging of common IT and business processes, models, and leading practices to deliver these services more efficiently and effectively than in the past. As the name implies, this is often done on a global scale, using multiple service delivery models including elements of shared services, outsourcing and, increasingly, cloud solutions.
Driving cost savings from GBS efforts remains a baseline requirement and goal (see Figure 1), with greater emphasis being placed on improving global delivery capabilities, improving process performance, and supporting global growth efforts. Saving money is a requirement for all GBS organizations, but success—and the longevity both of the GBS organization and its executives—rests on delivering measurable business value above and beyond cost savings. Supporting and enabling organizational growth, for example via faster and more successful mergers, acquisitions, and divestitures, has emerged as one critical GBS value-add and strategic driver for investment and expansion. Organizations are taking a more methodical and structured approach to drive GBS change and improve maturity, are more focused on weighing costs against benefits, as well as mapping GBS strategic direction against corporate strategies and operating models. For the most mature GBS organizations, GBS capabilities are viewed as a strategic corporate weapon, not just a means to save money.
Figure 1 – Top Drivers for GBS Improvement Efforts
Challenges to improving GBS capabilities remain formidable, but not necessarily new or different from past major change efforts (see Figure 2). Retained organization, transition, and governance challenges remain the perennial challenges, along with weak change management capabilities. These have been the top perennial challenges since KPMG began conducting this polling. It is not the case, however, that organizations are not getting better at addressing these challenges, rather that the challenges become more complex as GBS efforts expand and their goals shift from just cost savings to delivering more strategic corporate value.
Figure 2 – Top Challenges to Improving GBS Capabilities
Finally, the top priorities (see Figure 3) in GBS and service delivery improvement efforts are enabling end-to-end process ownership and better integrating GBS efforts across functions, geographies, and business units to create a more holistic and portfolio-based approach to managing service delivery. The nature of these goals in part point to why the challenges listed above are perennial. Enabling end-to-end process ownership is really hard to do and involves among other things huge change management efforts, and the scope of the services being integrated—across multiple functions, geographies, and business units often using both shared services and outsourcing—is daunting as well.
Figure 3 – Top Priorities in GBS Improvement Efforts
Overall, many organizations, especially larger global ones, are successfully advancing the maturity of their GBS efforts. But the hill gets steeper near the top and there are some notable failures of organizations that pulled the proverbial plug on their GBS operations when unable to successfully move beyond cost savings to enabling measureable business value.