Global
Business
Services
July 2018
www.pwc.com.au
Our Point of View
Organisations are increasingly adopting a Global Business Services model
Pre-80’s
Decentralised
Late 80’s - Late 90’s
Sub-regional centralisation
and/or out-tasking
Late 90’s - Present
Regional Shared Services
and/or Outsourcing
Operational benefits
50+%
Late 90’s - Present
Global Shared Services and/or Outsourcing
BPO/Offshore
capture labour
arbitrage
20-40%
Shared Services
In-House
10-20%
5-10%
Finance,
HR, IT
Coordinated
In-House Practices
Decentralised
Operations,
Monolithic Systems
Present – Future
Global Business Services
Enterprise Business Services
Optimisation (EBSO)
Multi-functional
Integration &
Optimisation
(Finance+HR+IT)
Traditionally
Finance
& HR SSC
Increased cost reduction / variable structure, scalability, and agility,
Decentralised functional
sites in multiple locations
with no process
coordination or
standardisation
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Limited centralisation of
some processes within
regions; some supporting
tasks may be outsourced
Regional sourcing
model where one or
more processes are
performed by SSC(s)
and/or OS provider(s)
within a region; no
process coordination
within a region
Global sourcing model where multiple
processes are performed by SSC(s)
and/or OS provider(s) to support global
operations; specific processes optimised
Fully integrated, multi-functional Global
Business Services operating standardised,
end-to-end global processes. Leads to
improved customer experience and
satisfaction, significant cost savings,
improved global flexibility and enhanced
business innovation
2
There are some trends that have been observed in the shared services
and outsourcing market
The majority of organisations are growing their Shared Services/BPO
Increase of scope within each function as the Shared Service Centre
model is proved to work and becomes more established
86%
of companies are expanding existing
SSCs/BPO arrangement
Moving from single to multi-function organisations. Organisations
are increasingly setting up multi-function Shared Services from the
start
Trend towards full GBS organisations as multi-functional operations
are adopted
Outsourcing is providing the greatest cost reductions, whilst Shared
Services creates better outcomes towards other objectives
Hybrid models combining internal and external delivery are the
dominant choice across all industries
PwC
54%
of companies surveyed run multifunction SSCs
• 100% run Finance
• 46% run HR
• 43% run Procurement
3
Many organisations are now moving towards Global Business Services.
GBS - A new approach to managing global sourcing
Many organisation have shared services
and manage outsourcing relationships in
today’s business environment. But most of
them are yet to benefit from combining
shared services and outsourcing into one
integrated business services framework.
A well executed global business services strategy
is distinctly different from shared services’ and
outsourcing strategies’ narrower focus.
How is it different?
The result
It identifies corporate objectives and
encourages internal functions to
collaborate with each other and also with
third party service providers to create
breakthrough, strategic operational
capabilities for reaching the desired
outcomes.
•
Standing out in the market
•
Competitive advantage
As more organisations leverage global business service strategies to align business objectives and get
economies of scale, outsourcing is an important tool in acceleration and complementing shared
services strategies. But executives should be wary of relying too heavily on uncoordinated hybrid
strategies. The goal of a global business services strategy is not only to source globally but also to
leverage shared services, outsourcing and third party investments in the best interests of the
organisation.
It is a new approach to managing global sourcing.
PwC
4
What does the move to GBS mean to the shape of the business
Functional Shared Services
1
Process Based Global
Business Services (GBS)
Multi-Functional Shared
Services
2
3
CEO
CEO
CFO
CHRO
CIO
Finance
Shared
Services
HR
Shared
Services
ITC
Shared
O
Services
O
CFO
CHRO
CEO
CIO
Businesses
Head of
GBS
Businesses
Markets
Functional
Leaders
(IT/HR/Fin)
Procure to Pay
Head of Shared
Services
Quote to Cash
Markets
Businesses
Hire to Retire
Finance
Shared
Services
Markets
Description
Incremental
Savings
PwC
• Shared services organised by function
and owned by functional leaders
• Objective is to achieve lower cost
within the function
30-40%
HR
Shared
Services
IT
Shared
Services
• Functional shared services integrated
under one shared services leader
• Drive synergies across functions
5- 10%
Business Intelligence
• Process based shared services
orientation taking over both functional
and operational processes from
businesses and markets
• Drive better business outcomes
7-10%
5
GBS changes the nature of the relationship between GBS and the rest of
the organisation
Entry
Maturing
Global Business Services
Relationship
• Sub-contractor
• Trusted with low value
information
• Customer manager directs and
instructs
• Service provider
• Trusted with high value
information
• Autonomy provided SLAs met.
Arm's length
• Integrated partner
• Trusted advisor at Executive
level
• Outsourcer part of management
team
Service
• Input orientated– eg job
descriptions
• Output based Services & SLAs
• Value outcome orientated
Payment
• FTE
• Transaction throughput
• Outcome
(cost/revenue/provide/NPS)
Performance
incentives
• Limited SLAs and little supplier
risk
• No gain share
• Significant supplier revenue at
risk to performance
• Supplier risk "baked" into prices
• Gain and pain share. Innovation
investment incentivized
Change
• All changes need change
request, and negotiation
• Changes supported by contract
eg volume changes dealt with as
part of business as usual
mechanisms
• Delegation of most changes with
controls
PwC
6
However the challenges are many and varied…
Tackling complexity
What began as a small initiative has grown
to multiple (frequently inter-related)
processes, requiring more disciplined
management.
Tackling an increasingly globalised environment
Expanding geography, more providers and more delivery
centres increase the number of diverse stakeholders that
governance teams must manage. The simpler days of
managing a stand-alone shared service centre are long over.
Tackling a deficiency in management skills: Organisations
realise that hybrid (blend of shared services and
outsourcing) and shared service models outperform
outsourcing on a number of criteria, but managing them
requires broader skills
Our research has settled the debate on comparative outcomes
created by shared services and outsourcing initiatives. Outsourcing
programmes ensure the best savings because of offshore labour and
forced internal stakeholder compliance with contract minimums. In
all other areas, shared service programmes provide better results,
particularly in terms of quality and innovation. But governance
teams who are used to ordering service providers to comply with
their contracts or building consensus among internal business units
on a standardised service catalogue find managing both
simultaneously considerably more challenging. Getting service
providers and shared service centres to focus on collaboration and
delivering end-to-end processes is a challenge.
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Escaping from a singular focus on
short-term cost reduction
The cost impact is only part of the long-term
solution, so you must look elsewhere for
value. Whether it was the economies of scale
brought about by functional centralisation or
the offshore-based labour arbitrage, cost was
king because most early successes were borne
by cost-reduction initiatives. But focusing
purely on cost has limitations. So to add value,
you must emphasise on improving insight or
enhancing revenue.
Tackling underutilised shared services
and outsourcing efforts
With such a large proportion of processes still
outside shared services and outsourcing, the
vast majority of organisations have the
opportunity to add significant scope and scale.
7
There are some essential items that need to be done to achieve
successful Global Business Services
1. Appointing a single, global end-to-end process owner provides leadership and common
vision to a process. The process owner is responsible for all process and technology investment
decisions for the process.
2. Develop and implement standardised processes, policies and procedures. Whether a
process is used by different business units or regions, the methodology should remain the same.
3. Build a culture of process efficiency and quality improvements, both through ways of
working but also defined approaches, tools, policies
4. Focus on both GBS productivity but also on demand drivers. How can GBS work with the
business to eliminate demand.
5. Use analytics to inform and educate the business. GBS needs to make data readily
available to its internal customers to drive performance and improvement conversations.
PwC
8
www.pwc.com.au
Paul Jasniach
Director, PwC
0429 071 255
Chris Matthews
Partner, PwC
0424 305 210
© 2017 PricewaterhouseCoopers. All rights reserved.
PwC refers to the Australia member firm, and may sometimes refer to the PwC network. Each member
firm is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2018 PricewaterhouseCoopers. All rights reserved.
This content is for general information purposes only, and should not be used as a substitute for
PwC refers to the Australia member firm, and may sometimes refer to the PwC network. Each member firm
consultation with professional advisors.
is a separate legal entity. Please see www.pwc.com/structure for further details.
Liability limited by a scheme approved under Professional Standards Legislation.
This content is for general information purposes only, and should not be used as a substitute for
At PwC Australia our purpose is to build trust in society and solve important problems. We’re a network of
consultation
with professional
advisors.
firms
in 157 countries
with more than
223,000 people who are committed to delivering quality in
assurance,
advisory
and
tax
services.
Find out
moreProfessional
and tell us what
matters toLegislation.
you by visiting us at
Liability limited by a scheme approved
under
Standards
www.pwc.com.au.
At PwC Australia our purpose is to build trust in society and solve important problems. We’re a network of
firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance,
advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.au.
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