The concept of corporate Shared Services (SS) has been around a long time, with the private sector credited with starting this concept in the late 1980’s, and the public sector about a decade later. Personally, and not trying to date myself, I came across this business model at a former employer around 2005. Simply put, SS is an operating model that enables function-specific resources (i.e., HR, IT, Finance, etc.) to be leveraged across an entire organization, resulting in lower costs with agreed-upon customer-service levels. It’s utilization by both the private and public sector grew consistently over time, and then came the 2008/2009 recession. At that time, companies desired even greater efficiency, wider geographic reach, and broader scope coverage from its SS, to handle greater regulatory scrutiny for the same or even lower costs! These demands caused a bit of an inflection point, and the next stage in SS maturity started taking hold… Global Business Services (GBS). So, what is GBS?
GBS is an operating model defined slightly differently depending on which company or consultant you speak with, but they will all agree on the need for these five elements:
1) Multi-Functional – spans multiple functions, businesses, and locations across a common service delivery framework.
2) Operational Efficiency – offers greater cost savings, efficiency and compliance as compared to traditional SS.
3) End-to-End View – enables an end-to-end process view (i.e., Order-to-Cash) while driving significant end-to-end process improvements.
4) Service Delivery Excellence – focuses more on service delivery excellence, agility, scalability and innovation.
5) Client-Focused and Aligned – seeks to support business outcomes and delivers innovative capabilities to help businesses outperform competitors.
This sounds impressive, but the model clearly takes a bit of work to implement, with overall strategy and governance needing to be addressed and agreed to by all stakeholders up-front. If strategy and governance are not agreed to upfront, the transformation may move forward and even continue for some time, but will be at risk of falling short of achieving objectives or even be an outright failure.
Impressive adoption… but has the value been fully achieved yet?
Nonetheless, as a business model GBS is here to stay. The Hackett Group has been reporting for more than 10 years the percentage of SS that have moved to a GBS model. Since 2014, GBS organizations have outnumbered single-function SS organizations by a factor of three. In addition, in Deloitte’s 2015 Global Shared Services survey, approximately 60% of the 1,000 SS reporting were multi-function in nature, containing two or more functions. Even though the GBS adoption has continued to grow, not all the implementations have delivered the expected business value and outcomes. As a matter of fact, few companies (less than 10-15%) have reached the “holy grail” of GBS performance yet, except for companies like P&G and Unilever, who have been at it for well over a decade. So, as your company transitions from SS to GBS, are you delivering the expected value and outcomes to your business clients, and if not, where is your company on that journey?
If you are not sure, stay tuned for my next article on “Taking Your GBS to the Next Level.”
Art Anderson is a Senior Business Management Executive with 20+ years of experience