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Enterprise Services Governance: It's a Brave New World

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It’s a brave new world. In October 2014, KPMG hosted a Governance Roundtable in Chicago. A key group of practitioners met and exchanged insight related to the future of governance. It:

• Provided a window into the future of service governance
• Discussed insights and leading practices for addressing the future of governance
• Critically reviewed the role of talent, tools, process, location, and metrics in preparing for future success
• Provided a unique opportunity to share, collaborate, and explore strategies with other governance professionals.

Here are the findings

Published in: Business
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Enterprise Services Governance: It's a Brave New World

  1. 1. Enterprise Services Governance: It’s a Brave New World November 2014
  2. 2. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 2 It’s a brave new world In October 2014, KPMG hosted a Governance Roundtable in Chicago. A key group of practitioners met and exchanged insights related to the future of governance. The Governance Roundtable:  Provided a window into the future of services governance  Discussed insights and leading practices for addressing the future of governance  Critically reviewed the role of talent, tools, process, location, and metrics in preparing for future success  Provided a unique opportunity to share, collaborate, and explore strategies with other governance professionals. Here are the findings. -Liz Evans, KPMG Managing Director There’s an interesting DYNAMIC in the market. I think organizations are still leveraging THIRD PARTIES to govern and to provide advice and guidance on GOVERNANCE , but not so much in the old outsourcing context. They’re interested in what the new world looks like and how EXTERNAL PARTIES like KPMG have the capabilities and experience to SUPPORT them effectively.
  3. 3. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 3 What is driving the need for change in governance? Today’s leaders must prepare for a new era of services governance and a new set of strategic expectations.Looking at governance with the traditional segmented third-party focus will not bring the organizational value needed to stay viable. The services governance organization of the future will need to take on an enterprise role across all delivery channels. RegulatoryScrutiny Data & Analytics Talent SocialMedia Risk Global Business Services DisruptiveTechnologies(Robotics)
  4. 4. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 4 Where’s the value? Cost containment is no longer enough…innovation is required In the past, value was often interpreted solely from the vantage point of cost savings. Now, we’re seeing a shift toward more transformational objectives:leveraging analyticsto improve performance, accessing new technologies, establishing a portfolio management approach to managing services governance, increasing strategic value through location strategy, and focusing on global process governance as a primary enabler of large-scale end-to-end process transformation. COST SAVINGS THEN NOW VS
  5. 5. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 5 Yet innovation presents its own set of challenges in outsourcing… Two-thirds of outsourcing relationships fail to deliver innovation When we asked businesses: “How satisfied are you with your primary service providers’ performance to meet key outcomes?” we saw that as expectations around strategic innovation like technology, analytics, and cloudincreased, so did the potential for dissatisfaction. 18 % Unsatisfiedwithbetter transformed/ reconfigured processes 8 % Unsatisfiedwith better cloud- based delivery of services Unsatisfiedwith improved analytics to drive growth 14 % Unsatisfiedwith access to new technologies Unsatisfiedwith better automated processes 17 % 14 % Source: HfS and KPMG Webcast -How Global Business Services Governance is Ripping up the Old Rule Book 07,2014
  6. 6. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 6 The crucial technologies for improving outsourcing outcomes? Analytics and automation Emerging Technologies 12 % SOCIAL 49 % ANALYTICS 47 % AUTOMATION 30 % CLOUD 25 % MOBILE When asked about the role of emerging technologies in improving outsourcing outcomes, ANALYTICS and AUTOMATION led the pack with 49 % and 47. % Cloud, mobile, and social technologies followed at 30 % , 25 % , and % . 12 Source: HfS Research 2014. Note: n=189 Enterprise BPO Clients.
  7. 7. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 7 The game changer: Global Business Services (GBS) Today, hybrid delivery models are fast becoming best practice Plan to INCREASE adoption of hybrid outsourcing and shared services models 80 % Plan to INCREASE outsourcing initiatives 85 % Plan to INCREASE adoption of a shared services model 56 % Source: HfS Research 2013,n = 399 Buy-side Enterprises2013 State of Outsourcing Study
  8. 8. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 8 GBS: The next evolution of valueAs companies mature, incentives strengthen, and focus changes Level 01 FRAGMENTED  Decentralized service delivery model  Duplicative functions, processes, and technology  Little central control and governance over business support services Level 02 SUB-SCALED  Consolidated delivery model  Leverage economies of scale for highly transactional services  Shared services or outsourcing typically on a single-function, regional basis Level 03 SCALED  Global business services  Multi-function, siloed transactional business service model  Variation around the inclusion and level of processes, technology, and governance standardization . Level 04 INTEGRATED  Global business services  Enterprise-wide multi- functional transactional and specialist business service model  Coordinated processes, technology, governance, and multi-channel delivery for scale and adaptability Level 05 STRATEGIC  Global business solutions  Multi-functional, multi-channel business service model  Provides transactional, expert, and analytic services  Managed through integrated, outcome-oriented governance  Synced end-to-end business solutions Value capture and performance sustainability occurs over time BUSINESS SERVICES MATURITY
  9. 9. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 9 Enterprise Services Governance is a critical component of GBSAnd half of clients today are actively interested in or are already using governance tools Governance takes on an Enterprise role across delivery channels Integration is the new challenge, to drive business value Risk mitigation and monitoring remain a core tenant of governance Expansion of the traditional governance framework is needed Adaptability to govern new delivery technologies is critical Outcomes and value delivery will be a focus for the business OPERATIONAL EXCELLENCE Delivery and sourcing strategy Service portfolio Talent management Enabling technology Commercial perspective Enterprise services governance Process excellence Data and analytics Tax and risk optimization
  10. 10. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 10 Future success and the role of talent Oh Talent, Where Art Thou? -400,000 +900,000 We hear from our clients that there is uncertainty around where to find strategic talent that enables analytics, automation, and creative thinking. In North Americaalone, we estimate that by 2020there will be a shortageof 400,000data scientists a year whereas there will be a surplusof 900,000office support executives. 2020
  11. 11. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 11 Future success and the role of technology NOW IN 2 YEARS 28% 49% In the past, technology functioned as both an opportunity and an impediment. Yet clients are beginning to look more to a technology-drivensolution for many services and as change happens, it will be rapid. In two years’ time, nearly 50% of companies expect a wide-scale transformation of business processes enabled by new technologytools.
  12. 12. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 12 Future success and the next revolution: Robotics The smart machine era will likely be the most disruptive in the history of IT. New systems that begin to fulfill some of the earliest visions for what information technologies might accomplish—doing what we thought only people could do and machines could not—are now finally emerging.  1.1 billionSmartphone users, with potential to use automated digital assistance apps  400+ millionIncrease in number of users of intelligent digital assistants like Siri and Google Now in past five years Automation Knowledge Work  170%Growth in sales of industrial robots, 2009–11  250 millionannual major surgeries could be impacted by utilization of advanced robotics in world of healthcare Advanced Robotics  300,000+Miles driven by Google’s autonomous cars with only 1 accident (which was human-caused)  There are 1 billioncars and trucks globally that could be impacted  Along with 450,000civilian, military, and general aviation aircraft Autonomous Vehicles
  13. 13. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 299724 13 Want to learn more? Check out KPMG’s thought leadership Scan or click to learn more about our governance offerings and research. Governance: Enhance the Value of Your Portfolio of Vendor Relationships The Outsourcer's Guide to Success: Nice Factors for Great Governance Nestle` Case Study: Leading Governance Practices for Global Business Services Liz EvansManaging Director, KPMG Shared Services and Outsourcing Advisory erevans@kpmg.com +1 (312) 953-4891 Contact us:
  14. 14. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. NDPPS 290359 The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

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