Global business services innovation


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The Hackett Group's 2012 Global Business Services (GBS) survey of SSON members confirms that organizations are accelerating the pace at which they are adopting GBS models - service organizations that integrate and consolidate multiple business functions as a means of improving internal services and delivering greater business value. While the adoption of global business services continues, the performance measurement capabilities still lag those of world-class organizations.

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Global business services innovation

  1. 1. Global business services innovation - optimizing thebusiness model for competitivenessContents Most large and many mid-sized companies have adopted and/or expanded their shared services models over theGlobal Business Services Defined. . . 2 past decade. While this leveraged model has becomeGlobal Business ServicesMaturity Model. . . . . . . . . . . . . . . . . . . 3 the norm, most have approached change with a cost reduction mindset. Few have taken on the challenge ofThe Research Construct . . . . . . . . . . . 5 using shared services to fundamentally advance theirKey Research Findings. . . . . . . . . . . . . 6 business model, and fewer still have truly innovatedDriving Global Business their Global Business Services (GBS) platform to improveServices Maturity . . . . . . . . . . . . . . . . . 7 competitive positioning. Without dismissing the greatDetailed Research Results . . . . . . . 12 . . strides organizations have taken to stand up their currentConclusion. . . . . . . . . . . . . . . . . . . . . . 15 models, the question remains, “what’s next?”Appendix 1:Measurement Criteria. . . . . . . . . . . . 16 As GBS thinking matures and organizations seek a wider array of benefits, top of mind are: • Where are we versus leaders in the evolution of our shared services model? • What benefits are leaders realizing that we have yet to explore? • How do we learn from the best to accelerate our own organization’s journey? To begin to address these questions, learn more about leading Global 500 organizations’ GBS efforts and identify key success factors and leading practices, The KPMG Shared Services and Outsourcing Institute has undertaken an ongoing research initiative in which it examines firms’ global services delivery efforts through interviews with their GBS executive leadership. This research complements and extends in-depth advisory work KPMG is performing with its clients across the globe. KPMG’s Enterprise Services Transformation (EST) Framework The Enterprise Services Transformation (EST) framework is a multi-disciplinary framework that leverages the full capabilities of KPMG’s Management Consulting, Advisory and Tax practices to provide its clients with a holistic capability to transform their business via a services model that advances the corporate strategy. It provides not only a perspective on how services should be structured, but also the methods, tools and people necessary to transform the business.
  2. 2. 2 A key component of this research is assessing organizations’ global services delivery Learn more about service maturity using components of KPMG’s Enterprise Services Transformation (EST) delivery strategies by reading framework, which organizations can utilize to understand where they are on their this paper available from the GBS journey, the value of driving toward greater maturity, the required efforts and KPMG Shared Services and investments, and how to accelerate and improve their GBS efforts. Outsourcing Institute: To set the stage for a discussion on the findings of this research study, we must Rethinking Business Services first provide explanations of and insights on what KPMG means by Global Business Models for Competitive Services and the Global Business Services Maturity Model. Advantage Global Business Services Defined KPMG defines global business services (GBS) as the collective set of resources, capabilities and systems to deliver support services such as finance and accounting (F&A), human resources (HR), procurement and other business processes across an organization. Implied in GBS is greater aggregation and leveraging of common information technology (IT) and business processes, models and best practices to deliver these services more efficiently and effectively than in the past. As the name implies, this is often done on a global scale, using multiple service delivery models including elements of shared services, outsourcing and, increasingly, cloud solutions. Adopting, deploying and expanding GBS efforts is an ongoing journey. The initial destination is usually strong cost savings achieved via elements of shared services and/or outsourcing through traditional levers such as scale, standardization, wage arbitrage, technology enablement and process re-engineering. The destination is a moving target based on changing business needs and conditions, evolving corporate strategy, and advancement in system platforms and leading practices. For example, one GBS destination that goes far afield from narrow cost cutting is brand equity enhancement, achieved by ensuring standard services experiences and labor practices. Indeed, for some companies where 90 percent of their value is intangible (e.g., entertainment, media, services, etc.) this is often the main goal of GBS. Acquisition integration is another activity that GBS greatly accelerates. Revenue benefits and competitive advantage are considerable when acquisitions can be up and running optimally in a compressed timeframe. Both of these outcomes can significantly outweigh cost savings for companies that take a more broad view of the goals of GBS. As organizations gain GBS maturity, the pace of change quickens, and the alignment of GBS strategy to further the C-suite agenda at the organization – be it greater efficiency, compliance or growth – becomes stronger.
  3. 3. 3 Global Business Services Maturity Model Assessing the maturity and performance levels of an organization’s business services capabilities has never been easy. This task has become more complicated as organizations diversify their service delivery models, increasingly relying on shared services and outsourcing to complement, extend or replace traditional models. Organizations need to understand the maturity of their service delivery capabilities so they can measure progress in improving them over time, and understand how far and fast to push these improvement efforts. To attain this understanding, organizations need a structured approach to measuring the performance of global service delivery processes, systems, operating and governance models. Figure 1 below illustrates the KPMG model for measuring global business services maturity. KPMG’s Global Business Services (GBS) Maturity Model Level 5 – Differentiated Globally integrated services portfolio with aggressive use of Value Capture and Performance Sustainability alternative and mixed delivery models Level 4 – Strategic Optimized balance of internal and external delivery capabilities, global sourcing with multifunction focus Level 3 – Optimized Traditional outsourcing relationships with global delivery; non-integrated internal shared services capabilities Level 2 – Rationalized Single function shared services with tactical onshore or offshore provider relationships Level 1 – Sub-Optimized Decentralized and duplicative functions; little central control over business support services The Journey . . . Development Stages . . . Time Figure 1
  4. 4. 4 This model defines five levels of maturity, ranging from sub-optimized up through differentiated. The assessment and measurement of service delivery maturity should occur across a range of operating categories such as commercial orientation, delivery models employed, global process ownership, governance and organizational models, and degree of standardization. The following are characteristics of highly mature GBS operations:The desired maturity level • Integrated services portfolio operating on a standard platformmust map to the organization’s • The use of services portfolio management supported by a strong businessoverall operating model intelligence capability and measured on business value • Emphasis on end-to-end processes across functions in scope • Focus on moving services up the value chain to support evolving business needs • Seamless integration of internal and external outsourcing and cloud service providers via centers of excellence (COE) • Common services architecture across functions and businesses. It is important to balance the benefits of pursuing greater maturity against the cost and complexity of doing so. The pursuit of “academic” maturity without a strong business case is ill advised and unlikely to gain executive support in the current market environment. Similarly, the desired maturity level must map to the organization’s overall operating model. For example, a large multinational might value high maturity in one or two regions, but find less or little value in higher levels of maturity across all geographies. In this respect, a model such as this can add value both as a means to assess current performance levels as well as to define a future roadmap for improvement efforts. It is important to balance the benefits of pursuing greater maturity against the cost and complexity of doing so.
  5. 5. 5 The Research Construct In October and November 2011, KPMG conducted a series of in-depth interviews with global business services executives across a mix of Fortune and Global 500 corporations in the U.S. and Europe. These executives were asked detailed questions on global business services maturity, using the KPMG GBS maturity model as a guide to evaluate each company. As part of the interview, respondents were asked to rate the maturity of their organization on a 4 point scale per 22 questions focused on governance, commercial orientation, standardization, organizational excellence, global process ownership and global scope. The companies spanned a cross section of industries, including food and beverage (4), IT (3), financial (3), media and entertainment (2), industrial (2), consumer services (1), pharmaceutical (1), apparel (1) and CPG (1). Fourteen companies were in the Global 500, three were in the Fortune 500 and one was in the Software 100. Four were Global 100 companies. The average age of their global business services organizations is approximately six years. The respondents were either heads of global shared services and outsourcing, or managers of a specific functional area such as IT or F&A. In most cases, they reported to the COO, CFO or CIO. Most have been in their present role for over three years, and have more than 10 years of overall global business services management experience. Approximately two-thirds of the participating organizations started their global business services deployment less than five years ago, and roughly a third started seven to 10 years ago. This research study had two goals. The first was to provide a baseline for GBS maturity among large enterprises using the KPMG GBS maturity model. The second was to examine the key cultural, organizational, financial and operational factors that influence maturity. To achieve these goals, KPMG assessed participant responses by: • Examining the construct of the KPMG EST framework • Analyzing how companies’ actual experiences match their progression • Quantifying those factors that drive maturity. This is the first in a series of research reports that will evaluate shared services maturity among Global 500 companies, and the key levers and drivers of delivery and organizational excellence.
  6. 6. 6 Key Research Findings“Before the shared services Overarching research findings show that many organizations are rapidly gainingorganization was established, GBS maturity but at different levels across functions and geographies, and basedit would take eighteen months on different overall organizational operating models. Three factors stood out into rollout a new process; with helping some organizations achieve greater GBS maturity – a strong linkage of GBS strategy to the enterprise strategy, a rapidly maturing governance framework, andshared services in place it takes a strong push toward commercial orientation in running and operating their GBSa quarter.” organizations.(Global 100 IT industry Key findings include:participant) • Moving up the maturity curve is hard. Companies often get “stuck” below their desired level for a variety of reasons. Of the firms with which KPMG“SAP drove standardization spoke, about a third placed in the higher maturity Strategic or Differentiatedand eliminated inefficiencies levels of the maturity model, and the other two-thirds placed at thefrom the system – this was Rationalized or Optimized levelsa necessary first step to • Mature GBS organizations use multiple elements in their service delivery toolkits. These include multiple service delivery models includingimplement shared services.” outsourcing, offshoring and shared services (and increasingly, cloud), multiple(Global 500 Entertainment value levers including cost savings, innovation, business insights, etc., and moreindustry participant) sophisticated organizational models including stronger governance and end- to-end process ownership Related reading: Clarity in the Cloud Outsourcing Location Analysis 2011 Driving Outsourcing Innovation through Collaboration • Breaking through maturity levels requires strong governance and a commercial orientation. The strongest correlation to higher GBS maturity was observed through the GBS organizations’ maturity on Governance and their degree of Commercial Orientation. Strong governance is always required when weaving together complex initiatives, but the need for a commercial mindset is a bit less obvious (this point will be explored later in this paper) Related Reading: Nine Factors for Great Outsourcing Governance Multi-vendor Sourcing: Stop the Value Leakage • A longer-term vision is critical. One of the biggest areas of difference between the most mature organizations and the rest was in Process Improvement Sequencing. The more mature organizations deploy multiple improvement strategies, and have well defined, long-term sequencing for improvements. The less mature organizations are more opportunistic in their improvement efforts
  7. 7. 7 • The greatest hurdles to maturity are cross-functional and globalThree factors stood out in integration. Most organizations in KPMG’s research set, even the morehelping some organizations mature ones, do not have consistent maturity when it comes to the functional and geographic slices of their GBS organizations – the finance and IT functionsachieve greater GBS maturity – tend to be more mature, as do their North American and European GBSa strong linkage of GBS strategy organizations. Cultural and organizational factors, e.g., level of ERP adoptionto the enterprise strategy, a and standardization, are the other limitations to the levels of maturity to whichrapidly maturing governance an organization strives and how quickly it moves along the maturity curveframework, and a strong push • Show me the money! Cost savings are still the number one reason fortoward commercial orientation companies to advance their GBS maturity. They seek additional value drivers not only to support but also to advance the business, and constantly evaluatein running and operating their these value drivers against cost-benefits and returns on investment. TheGBS organizations. more mature organizations are looking beyond simple cost savings. They seek strategic benefits such as ability to support the growth agenda, e.g., integrating acquisitions, accelerating technology and policy deployment, and enabling innovation into services and business processes. These strategic benefits are weighed against the cost-benefit analysis specific to the organization • Maturity matters. Organizations with mature GBS models create greater shareholder value. While likely not wholly attributable to the service delivery model, organizations with mature GBS models have an average return on equity (ROE) of 20.7 percent versus an average of 16.7 percent for the less mature organizations. The ability of an organization to plan, implement and improve its support infrastructure is a core competency that can provide a competitive advantage while delivering greater financial performance. Driving Global Business Services Maturity Most of the organizations in KPMG’s research tend to advance along a continuum of strategic options that impact the maturity of their GBS organizations. While not all- inclusive, the six areas on which KPMG focused during this research initiative included location strategy, standardization focus, process orientation, commercial orientation, pace of change and scope of service portfolio.
  8. 8. 8 Strategic options that impact GBS maturityThe greater use of flexible Proximate to Business Relocate Functionsservice delivery models has Maintain staff in current location Location Headquarter functions and related BU staff relocated to low cost geographieshistorically been driven, and Independent Integrated Specific to business units Standard solutions across Standardizationcontinues to largely be, by a (BU), geographies, and functions business units, geographies, and functionsdesire to reduce administrative Functionally Focused Processes aligned and End-to-End Organized by process optimized within functional Process Orientation across BUs andand overhead costs. This is towers at BU level geographies Staff Function Run It Like A Businesstypically achieved by creating Cost center focus with modest measurement Commercial Orientation Service level measurement and accountability with against metrics transparent pricingleverage across horizontal Measured Rapid Deployment Low impact on Willingness to impact people,processes, gaining economies of people, culture; minimal investment Pace of Change change culture and invest in long term strategyscale, utilizing lower cost global Transactional Transactional services Transactional & COE Centers of scale and skill delivering economies Service Portfolio delivering transactionalresources for transactional work, of scale and analytical servicesand (ideally) simultaneously Current Modelfocusing retained resources on Future Aspirationmore core competencies and Figure 2work. They expect to move faster and further to the right on the first four continuum options of location, standardization, process orientation and commercial orientation. The more mature GBS organizations continue to be very good at leveraging lower cost locations, optimizing their location portfolios and seeking arbitrage benefits. They are also better at creating a more integrated GBS solution that seamlessly services multiple business and geographical units, and are adept at utilizing assets across these organizational units. They have strong desire and ambition to drive end-to-end process ownership and do away with process silos. They do this well within functions, but struggle across functional silos. They are also good at running GBS like a business with associated service mechanisms, accountability and price transparency. Their drive to the right on this continuum is tempered by the pace of change their organizations can absorb, and how rapidly they can integrate knowledge processes into their GBS models. They are constantly expanding the portfolio of service offerings available to their internal and external customers. A key focus area for a number of the mature organizations is the use of technology to gain better business insights. They are already the custodians of large amounts of the enterprise data, and they are innovating on using technology to help the enterprise use this data to drive better business decisions. The greater use of flexible service delivery models has historically been driven, and continues to largely be, by a desire to reduce administrative and overhead costs. This is typically achieved by creating leverage across horizontal processes, gaining economies of scale, utilizing lower cost global resources for transactional work, and (ideally) simultaneously focusing retained resources on more core competencies and work.
  9. 9. 9 The characteristics, orientation and benefits of continuing to go up the maturity curve are summarized below. These benefits are in addition to economic benefits, such as cost savings. They are increasingly tied to the top-line benefits that organizations achieve as they continue to push to the right on the maturity curve. Operating models for global business services Level One Level Two Level Three Level Four Level Five Sub-optimized Rationalized Optimized Strategic Differentiated Operating • Work performed • Centralized • New entity that • Global footprint • Outcome focus Characteristics by BU for BU functional sells services back • Multifunctional • End-to-end departments to BUs • Rational balance • Broad set of end- of internal and to-end solution external service oriented services, delivery both scale- and capabilities skill-based across IT and business processes Service • Perform process • Perform process • Deliver consistent • Drive efficiency • Change how the Orientation consistently and services against and effectiveness business operates with scale agreed service across service levels portfolio Benefits • Autonomy & • Economies of scale • Scale & • Global scale & • Balanced ownership standardization standardization enterprise cost, • Standardization service, risk, and • Responsiveness • Responsiveness • Economies of • Central control outcome-based place • Flexibility to BU • Central control measurement needs • Flexibility to • Flexibility to • Tighter correlation global corporate corporate change to business change (e.g. ability strategy (e.g. to drive quicker ability to facilitate integration / growth in synergies from emerging markets acquisitions) with global delivery platform) Figure 3 While organizations that reported successfully transitioning up the maturity curve also reported greater benefits, they highlighted the increasing challenges of making that transition. Their challenges can be summarized into two categories: • Economic Challenges – as the first wave of labor arbitrage and process improvement benefits are realized, organizations need to seek additional value levers to sustain and continue to build on the economic benefits of GBS. Continued cost savings come from additional levers such as process standardization, integration of technology, and improvement of capital structures. However, many of the more mature organizations also seek to help improve the enterprise top line through integration of more complex activities into the GBS portfolio, and use of technology and business intelligence to advance business decision making. These additional benefits come with additional effort and costs, and require evaluation against the organization’s investment thresholds • Cultural and Organizational Challenges – here, the issue is having to continually convince the key stakeholders to allow the GBS organization to run a larger, more complex portfolio of services, to think beyond transaction processes, and in many cases to layer the GBS structure against a highly regional or business unit-focused structure. As one GBS leader put it, “I know we’ll be successful when we shift from having to sell the next great idea, to creating an environment where innovation is expected by our customers.”
  10. 10. 10 Figure 4 below illustrates the benefits organizations can achieve through improving GBS capabilities across major support processes. GBS success in this new model depends on the ability to dynamically assemble a variety of capabilities – regardless of where those capabilities reside geographically or functionally in the organization – into a seamless end-to-end process that is focused on specific business outcomes. Related reading: A Route to Optimizing Your Outsourcing Relationship How GBS drive competitive advantage Figure 4 In terms of operating models, KPMG observed that the following two are associated with higher levels of global business services maturity. In the Global Business model, processes are aligned to specific functions and delivered to business units. In KPMG’s research, this is the most common delivery model in more mature organizations. A more business-aligned approach is the Multifunctional GBS model in which processes are shared across functional areas, and all of these are coordinated within one organization. While this model provides the most scale and efficiency, it is also the most difficult to implement because of the high degree of process and functional integration, as well as the larger organizational and cultural change required. This is the desired state for many organizations in KPMG’s research.
  11. 11. 11 Higher maturity GBS operating models Global Business Multifunctional GBS Corporate Corporate Business Services Entity Global Business Services P1 P2 P3 P4 Finance, IT, HR, etc. P1, P2, P3 BU – Business Unit P1 – Process 1 P2 – Process 2 Int’l Int’l P3 – Process 3 BU BU BU P4 – Process 4 BU BU BU Figure 5 KPMG uses these concepts of delivery and organization as a foundation for its GBS maturity model. Organizations KPMG studied through this research project deploy these elements across multiple functional and process areas to different degrees. The more mature organizations cover a wider range of elements across more functional and geographic areas. KPMG’s GBS Maturity Assessment Framework Elements Strategy Technology Deployment Demand Management Business Relationship Management Leading Practices & Vision & Alignment Portfolio Management Brand Management Operations Service Delivery Change Management - Operating Model Process Operations Customers Customers Cost, Productivity and Service Talent Management Asset Management Stakeholder Management Level Benchmarking Governance Service Quality & Change Management - Performance Management Governance Contract Management Process Risk & Compliance Management Financial Management Figure 6 As organizations apply these elements to their GBS strategies, most progress through stages of maturity (although there are examples of organizations starting at the optimized or even strategic levels of the maturity curve). Those organizations that have been able to accelerate their movement along the maturity curve displayed specific characteristics: • They were developing their GBS service strategy in conjunction with their technology strategy, and used GBS as a major enabler to realize and/or hasten returns from their technology investments • They were successful in securing senior management sponsorship early in their journeys, and used this to create more independent GBS organizations and a top down push to adopt GBS service delivery models • They maintained an external focus, learning from others that went before them and applying those lessons to their own GBS design and deployment.
  12. 12. 12 Detailed Research Results KPMG evaluated each participant organization on a set of specific questions in eight categories. Delta between lower and higher Category Description maturity GBS organizations Commercial GBS discretion over choice of services, Low Orientation strategic planning and budgeting, growth and value initiatives and organizational planning. Alternative Exploration and incorporation of Medium Delivery Models service delivery model alternatives, and demand-consumption model options. Organizational Use of formal improvement programs Low Excellence and their impact, alignment to business requirements, and use of formal internal and external comparator analyses. Standardization Adoption of standard services, Low processes, tools and policies. Global Process End-to-end process ownership, first Medium Ownership within and then across functions . Improvement Use of multiple short- and long-term High Sequencing improvement methods, link to ERP implementations. Global, Multi- Multi-functional, multi-geographic Low Scope and multi-business coverage of GBS services. Governance Use of active steering committees, High strong line of sight from GBS to organization executives, sophistication of governance processes and metrics. Generally, more mature GBS organizations have high scores across all of these factors. Indeed, the highest scoring company in KPMG’s research study was an international food and beverage firm with an overall score of 3.7 on a scale of 4. Organizations at the lower end of the maturity scale had an overall score of roughly 2.7, placing them at or below the average on many of these measures. Most GBS organizations tend to focus well on being Global, Multi-functional, focused on Organizational Excellence, and striving toward greater Commercial Orientation. The differences between the more mature organizations and the others in KPMG’s
  13. 13. 13 research were more pronounced in factors such as use of Alternative Delivery Models Learn more about and Process Ownership. The more mature organizations deliberately create greater Governance flexibility in their delivery models by using multiple service delivery options: shared Nine Factors for Great services, outsourcing and cloud. They have become adept at managing demand and Outsourcing Governance consumption of services across these delivery model options by drawing up or down on them as their business requirements change. Multi-vendor Sourcing: Stop the Value Leakage Flexibility in the service delivery model is a competency with these more mature GBS organizations, measuring and looking for ways to improve it. Similarly, process ownership of global end-to-end processes is a key goal for the more mature GBS organizations. They seek to build, manage, operate and improve horizontal processes cutting across functional lines. They believe this way they can drive even greater cost and performance improvement, integration of technology, standardization and insight into these processes. Most mature GBS organizations have been successful within functional silos but continue to look to cut across functional silos to have truly cross-functional, global, end-to-end processes. The differences between the more mature firms and the others were highest in the areas of Governance and Improvement Sequencing. Significantly, one of the areas in which most of the organizations scored lowest was Governance. Many of the participants observed the lack of a sophisticated governance model to help them manage the increasingly complex GBS portfolio and requirements. They cited elements of steering committee, decision making, budgeting and service level management on multiple value dimensions as being the most challenging elements of Governance. For the most part, all GBS organizations in KPMG’s study address multiple functional requirements – IT, F&A, procurement and HR, to name a few. In many cases, KPMG saw that certain functional areas of services delivery were at higher levels of maturity than the GBS organization as a whole. Driving this functional area maturity is process optimization and standardization, strong functional management support and use of multiple service delivery model options. Indeed, the majority of companies KPMG interviewed had the common response that F&A or IT are at a strategic (Level 4) level, but the organization as a whole remains at the rationalized or optimized state (Levels 2 and 3). The following two quotes from a leading international financial services firm and a consumer packaged goods company sum up the situation of many companies. “Each of the functional areas are not aligned to each other – we try to optimize each area separately.” (Financial industry participant) “We dont want to lose customer focus by institutionalizing process ownership – we would rather keep it flexible either regionally or within parts of the tower.” (IT industry participant)
  14. 14. 14 Following is a brief case history of one of the more mature GBS organizations in KPMG’s study. Background: A major, multibillion dollar IT company has had a long and successful global shared services experience that benefits the organization not only through significantly reduced operating costs but also via support of its most strategic goals. Operations: Multifunctional shared services across 13 functional areas (F&A, HR, IT, etc.), with more than 18,000 staff. Twelve delivery hubs support all regions around the world. There is a head of global shared services. Outsourcing is selective. End-to-end process enablement on a global basis is the norm. History: Shared services started in 2000 with a focus on F&A. The goal was to quickly move to the use of standardization and quality measures that the lines of business found difficult to implement. Differentiation: Process ownership is regional or functional in order to keep service focus close to customers. However, the company uses a process—not a functional— vocabulary when talking about shared services deployment. Benefits: New processes are rolled out in less than one quarter (versus 18 months before global shared services took hold); major acquisitions are integrated into the organization in less than one year, providing a major strategic advantage; over $200 million in savings each year due to reduction of service delivery costs; and over $2 billion in acceleration of revenue or deferral of payments due to better financial management. Future: The company is at an optimized level on KPMG’s global shared services maturity curve. The goal is to move to a fully integrated organization in the next one to two years. The two major areas of improvement are global process management with an eye to maintaining regional delivery excellence, and creation of centers of excellence.
  15. 15. 15To learn more about global Conclusionbusiness services, please contact: While shared services and outsourcing have become the norm in the past decade,Rick Bertheaud the folding of these service delivery strategies into GBS is allowing organizations theManagement Consulting, unique opportunity to leverage GBS as a strategic asset to further the C-suite agendaShared Services & – to drive greater efficiencies, enable business growth and support global standardsOutsourcing Advisory and compliance. Our discussions through this research showed that the more maturePrincipalT: +1 413 427 9952 GBS organizations are doing this in many different ways:E: • Better analyzing the rich data sources they manage in the GBS, and predictingBob Cecil business and customer requirementsManagement Consulting,Shared Services & • Enabling a significant change in the business model by assuming responsibilityOutsourcing Advisory for increasingly more non-core business activities, and allowing their businessPrincipal units to be more market focusedT: +1 703 965 8863E: • Driving considerable process efficiencies, control and standards through cross- functional process design and ownership, cutting through functional silos, andCliff Justice fundamentally changing the functional organizational modelsShared Services &Outsourcing Advisory • Supporting the business strategy by integrating mergers and acquisitions faster,U.S. Leader and penetrating new and emerging markets more quickly and efficiently.T: +1 713 319 2781E: All of the more mature organizations with which KPMG spoke are using GBS to better align their operating model for efficiency and effectiveness, optimize and enable their global footprint, help create traction in emerging markets, optimize capital investments in technology, and help manage global risk and compliance. The value of greater maturity in GBS goes well beyond the traditional benefits of shared services and outsourcing. To learn more on this and related topics, visit the KPMG Shared Services and Outsourcing Institute at outsourcing-institute/. View the companion Webcast to this paper, Assessing Global Shared Services and Outsourcing Maturity
  16. 16. 16 Appendix 1: Measurement Criteria The following are the criteria KPMG used to rank the companies’ global shared services maturity. Criteria Category Which statement best describes your internal customer choice for services provided by the Commercial Orientation Business Services? Which statement best describes strategic Commercial Orientation planning for the Business Services? Which statement best describes where you intend Commercial Orientation to focus growth initiatives over the next year? Is human resource development/succession planning a part of your overall annual planning Commercial Orientation process? How closely does service pricing methodology Alternative Delivery Models link demand and consumption to cost and fees? How aggressively have alternative delivery models, such as offshoring and/or outsourcing, Alternative Delivery Models been explored and deployed? Do you have enterprise-wide process owners? Global Process Ownership Which statement best describes the functional Global, Multi Scope coverage within Business Services? Which statement best describes your business Global, Multi Scope unit coverage? Which statement best describes your geographic Global, Multi Scope coverage? Using the latest processes migrated into the Business Services as a basis, which statement best Improvement Sequencing describes your process migration philosophy? Which statement best describes how your service strategy and direction is established (e.g., Governance goals and objectives, functional scope, delivery mechanisms, service center location, etc.)? To whom does the head of Business Services Governance report?
  17. 17. 17 Criteria Category Which statement best describes the development and approval of the Business Services operating Governance budget? Which statement best describes how service Governance levels are set? Do you benchmark regularly to identify costs and productivity gaps and identify new best Organizational Excellence practices? Which statement best describes your approach to Organizational Excellence process improvement? Which structure best describes the geographic Organizational Excellence layout of functional services and service centers? Which of the following best describes the compliance policies associated with the Standardization standardization of processes and tools used to deliver this function? Which of the following best describes the impact of the standardization of the processes and tools Standardization used to deliver this function? Which of the following best describes the standardization of the services delivered by this Standardization function (i.e., the actual product delivered to the business unit)?
  18. 18. Contact us About KPMGAmericas KPMG is a global network of professional firms providing Audit, Tax and AdvisoryHouston services. We operate in 152 countries and have 145,000 people working in memberTel: 1 713 319 2000 firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.Europe, Middle East and Africa, Each KPMG firm is a legally distinct and separate entity and describes itself as such.Asia PacificLondon About EquaTerraTel: (020) 7311 1000 EquaTerra was founded upon the principle of helping clients achieve sustainableFor country, industry and service- value in their IT and business processes through internal transformation, sharedspecific contacts, please visit: services and outsourcing. On February 18, 2011 the business of sourcing firm EquaTerra, Inc. and its subsidiaries was acquired by KPMG LLP (US), KPMGcontactus.aspx Holdings Limited (UK) and KPMG International.For information and researchon outsourcing, shared servicesand internal improvement, visitthe KPMG Shared Services andOutsourcing Institute at© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliatedwith KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International orany other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). TheEquaTerra name and logo are trademarks of KPMG International.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 endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it isreceived or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after athorough examination of the particular situation. 3166_Jan2012