Ask the Pro: The ins and outs of Global Business Services
Nick Prangnell, director, Deloitte UK, Finance Transformation practice
What makes Global Business Services different from Shared Services and Outsourcing?
For more than two decades, organizations around the world have been using shared services and outsourcing to improve service delivery and reduce costs within defined parts of their businesses. Now many businesses are turning to Global Business Services (GBS) which provides a consistency of delivery and integration of governance, locations, and business practices to the shared services and outsourcing activities across the enterprise. We have identified five essential characteristics that are required to drive a sustainable performance -improving GBS model.
An organization may have started its journey with a single function or business process, but true GBS organizations are multi-functional in scope – integrating or sharing across those functions. Common functions include finance, HR, IT, customer service, procurement, and operations – as well as those specific to an industry, such as claims processing in insurance.
Similarly, a shared services or outsourcing program may have begun supporting one region, but true GBS organizations support all regions of an organization, typically providing services in the Americas, Europe, and Asia-Pacific.
Shared services often start with multiple centers in each region for each function in an uncoordinated manner. GBS organizations take performance to the next level by consolidating that footprint to an optimized set of fewer locations. Organizations that are optimized are typically taking advantage of a mix of relatively few lower cost locations, regional centers and centers of excellence.
GBS organizations are increasingly agnostic when it comes to sourcing. Although some continue to rely exclusively on shared services or outsourcing, others are combining the two in whatever ways make sense for the business. Typically, transactional activities are being outsourced, with higher value advisory activities delivered through captive centers. The most mature organizations are holding GBS accountable for service levels, while letting GBS decide exactly how those services will be delivered.
Many large organizations have seen their shared services and outsourcing initiatives evolve out of a single business unit, often the largest one. In some cases, the internal political environment may create barriers to adoption by other business units, forcing them to go it alone. GBS organizations typically serve more than one business unit, applying leading, sophisticated practices to the organization. Large groups are now looking at taking this to the next level to cross distinct companies to service a whole group.
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