Global business services drive more value with C-level exec at the wheel: KPMG survey

Wednesday, 7 January 2015 00:05 - - {{hitsCtrl.values.hits}}

Within the next three years, most global companies are expected to take up the massive project of centralising their shared services and outsourcing operations within a single global business services (GBS) organisation.

But surprisingly few companies plan to put a single senior executive in charge to manage the change, according to a KPMG International survey. With no one at the wheel globally, companies are unlikely to realise anywhere near the full value that GBS transformation can bring. “Bringing GBS services into one organisation helps maximise efficiency and effectiveness and drive business value,” says David Brown, KPMG’s Global Lead for its Shared Services and Outsourcing Advisory Practice. “Most GBS organisations are still organised and managed by function or geography, but the trend toward greater centralisation is clear.” Brown says that a well-managed GBS organisation can drive measurable business value above and beyond cost reduction by:

increasing the effectiveness of services delivered
providing a better customer experience
expanding and synthesising data analysis to support decision making
improving overall supply/service chain efficiency and effectiveness
reinforcing overall firm regulatory compliance.

In response to a survey of leading business and IT service providers and sourcing advisory professionals with KPMG International’s member firms, only a minority of respondents surveyed say globally organised and managed GBS management models are common today. However, a strong majority says such models will be common and very common in three years. Despite this trend, functional and geographic GBS leaders report to a single global GBS executive in only a few organisations. And few companies have a global GBS executive in place now or plan to install one in the next three years. “As globally managed GBS organisations grow more common, the fragmented nature of GBS operational and executive leadership and its relatively diminished stature compared to CXO level roles will continue to impede efforts to drive to high levels of GBS maturity,” says Brown. “GBS leadership is needed to set the vision for the organisation and to get buy-in and alignment across the functions.” Getting buy-in and alignment from other functional leaders can be a GBS leader’s biggest challenge. Senior executives of other functions can be reluctant to cede control over aspects of their responsibilities. They may feel threatened or believe that only they can do the job well. One of the few people to occupy a C-level GBS executive role – Lee Coulter, Chief Executive Officer, Ascension Health Ministry Service Centre – says that elevating GBS leadership to the management suite is crucial. “Consolidating and running GBS services in a single organisation is hugely complex. Our organisation delivers about 25 separate services, from procurement to HR to IT. The person in charge needs to have the clout to drive decisions across the global GBS organisation and the internal clients that it serves.” “Clients of the GBS organisation need to believe it is the best alternative for meeting their service needs,” says Coulter. “And becoming provider of choice means that the GBS organisation needs to create a culture distinct from the host organisation. GBS needs to operate as a business within a business and provide the best customer experience possible.” That’s why Coulter says it’s important for GBS executives to have experience running a business. “For the GBS organisation to evolve beyond a backroom, cost-cutting role, it needs to be run on the same profit-oriented, customer-focused basis as any other successful service business.” In terms of the development and spread of a single, CXO-level GBS executive role, the market is in its early stages. The role is new and relatively rare, so finding someone with the right experience and skills can be a challenge. The politics of creating such a new role are significant, and the company’s leadership may need persuading to see GBS as more than a vehicle to cut costs – but as an asset to be nurtured, grown and integrated across functions and geographies. Organisations that overcome these challenges and move early to define a higher level and more influential role for the GBS executive stand to drive the value of their GBS organisation to new heights and win long-term competitive advantage.