News
May 7, 2020
Multinational companies in various industries have pursued value creation opportunities by deploying these global business services (GBS) model to build a differentiator in the market.
The best companies today, know that the recipe for success in business has many crucial ingredients. Some of those attributes may be clear to customers, where they can see a clear superiority of quality as a visible difference in brands. Amongst rest, one essential component is the internal structure that allows them to create and celebrate the difference. To perform at their best, it is necessary that the companies create a framework that leaves customer-facing parts of the business free to concentrate on delivering quality and value to their customers. Clearly, this demands much higher process efficiency and technology optimisation, something the retail industry has recognised as an imperative over the last few years.
The evolution service strategies driven by process excellence
In the recent past, recognition of this strategy has resulted in companies adopting “offshoring”, “outsourcing” or building their very own “shared services”, which later evolved to “GIC” “GCC” and many more. One could go so far as to say that the biggest value addition that MNCs have provided, in fact, over the last three decades since their entry into the economy, is the evolution of simple outsourcing to “offshoring”. Will added process efficiencies, this became “Shared services”, and then grew to become a multifunctional “Global Business Services model” built on efficiency, adaptability, scalability and capability. This has been their most disruptive contribution to the Indian retail industry.
Multinational companies in various industries have pursued value creation opportunities by deploying these global business services (GBS) model to build a differentiator in the market. Traditional shared-services organisations focus on supporting tasks associated with a single function only. While a true, GBS, comprises of specialists from multiple functional domains—IT, finance, human resources, contract management, procurement, supplier management and so on. The biggest differentiator for a world-class GBS is the concept of owning end to end with the ability to thinking and behaving as a single office environment, namely from the back office to headquarters (mid-office) to the shop floors or front-line sales team (front office). Moreover, the fundamental GBS groups’ overarching mandate is to provide the business with a comprehensive set of services at a low cost, at agreed-upon levels of quality focusing on the business outcome rather than specific Service levels.
Today, many companies are re-examining—and, in some cases, backing away from—their commitment to GBS for several reasons. Some prefer to argue that the model has introduced greater organisational complexity but not necessary performance upgradation. Specifically, around value creation, cumbersome governance, speed of execution, leakage of talent, lack of agility and especially what I call “Watermelon syndrome” are few of the other key reasons. Like the go-between the green and red parts of the fruit, in this case, it signifies the gap between GBS organisation SLAs, which are the “green” and the organisation itself, which is “red”. This void is made of expectancy – where the organisation and its SLAs of GBS do not meet at all.
The next steps- Intelligent business services The single biggest reason why, in most of the cases, GBS fails to deliver value is because of the inability to have a vision and a clear strategy on how to execute a GBS model. In most cases, the reason is a lack of focus on strategic execution. While the model is still relevant, it is important to re-think and redefine the execution and operational process. With technology innovation appearing every day in the shared services space, it is critical to use these new technologies to build the next-generation business services that are digitally enabled and intelligent. An intelligent business services solution would enable far greater efficiencies and much higher service excellence. Here are my five principles for building one:
⦁ P&L benefit: GBS teams have to continue to deliver the same cost and productivity advantages they always have, but they must be conscious and aware of how to bank them successfully. The P&L upsides must be tracked, and it should be visible in the corporate P&L. This should be delivered through a meticulous focus on cost drivers and obsession to improve run-rate rather than a one-off.
⦁ Digitalisation: The rise of digitalisation enables GBS groups to provide benefits that go beyond cost. GBS teams can augment their resourcing through proper automation strategy, virtualisation, analytics, and other digital tools and capabilities into their existing operations. This step will help in standardising the processes to eliminate non-value-added touches, and thus develop and deploy more effective ways to support the business units. In this process, all incoming works are structured, validated and authenticated in a digital format (and remains digital), and are tracked by a digital workflow system. Only exceptions are passed into “human” operations which are augmented with RPA Bot (made smarter by AI) that can automatically accomplish the desired work on behalf of the operations team, creating “Hum-Bot” operations.
⦁ Hum-Bot operations: The uniqueness of Hum-Bot operations is that the BOTs carry out “rule-based tasks” while colleagues move up the value chain to perform more “intelligent” work. This connects the “dots” within the organisation by leveraging data science and data analytics and thus generating long term value as a true “Business Partner”.
⦁ Leveraging power of data: Most of the GBS have been unable to join horizontal processes like lead to cash, trouble to resolve and concept to market. Instead of which, they have focused traditionally on vertical capabilities like Finance, Payroll, procurement etc. without connecting the dots and using the “intelligence” of business services to create “un-tapped” value opportunities which are perpetual unknowns for an organisation.
⦁ Business continuity & security: Being an “intelligent” business services comes with a responsibility to deliver business continuity and security of data during disasters. During these dire times amidst Covid19, GBS leaders have the bent of unenviable battle to run their operations seamlessly and continue to master their business continuity plans while one country after another goes into the lockdown mode. Therefore, this “intelligence” needs to be converted from tacit to explicit knowledge, which requires knowledge management tools to ensure the business is process led rather than “human” led and data is secured and managed with the utmost respect for stakeholders.
The logical next step for the global business services model of tomorrow is intelligent, multifunctional, fully integrated, end-to-end process-oriented model, with the power to transform the Core of the enterprise.
It can no longer be a “subservient” offshore/nearshore location which “does what they are told”. Instead, this requires to be a horizontal organisation which creates “untapped value opportunities” for the organisation. It would also, additionally, make it possible for the rest of the enterprise to concentrate all its energy on a sustainable increase of revenue and even exploration of new opportunities and new markets.
For the days to come, this could well be the most vital ingredient in the recipe of growth.
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