Driving performance with global business services
Getting around roadblocks
It is unlikely any company will move directly from having no shared services experience to a multifunctional approach.
Companies today are subject to much greater scrutiny, yet the environment they operate in has never been more complex.
As businesses continue to transform themselves, there will be also more complex challenges than ever. Many underline the need for strong governance and good performance monitoring.
Taking people with you
Most companies with multifunctional shared services say they would not have been able to implement without C-level support. C-suite support may help overcome internal opposition, but even low-level resistance to change is destructive.
“I think in every company it’s the same. Nobody loves shared services,” says the shared services leader at one large international business. “Each area that has their own responsibility wants to keep it and to stay independent. So if you come to them to talk about shared services, you do not have so many friends at the beginning.”
To break down this resistance, at whatever level of the company, the global business services unit has to work hard at communication – to convince the rest of the business that it is performing well where change has already been implemented.
The move to multifunctional shared services will not always be straightforward. It is not always possible to follow business plans to the letter.
Achieving standardization, especially in the harmonization of ERP and legacy IT applications, sometimes proves harder than expected. Technology does not always deliver what it promises in the beginning.
It is also important not to set expectation levels too high. Even in a multifunctional shared services environment, there will still be a need to do some work locally or within the retained business locations.
Those organizations that do not accept this will be disappointed or, worse, unable to cope.
“There can sometimes be an overstatement of shared services’ benefits – and an underestimate or dishonesty about the amount of reprocessing that happens closer to the business,” argues Paul Wood, Advisory Partner and specialist in shared services and outsourcing at EY.
Business needs change over time too, Wood points out, which can be difficult to cope with through rigid service level agreements. IT is a good example, he says.
“For a time, the IT infrastructure network was static, but then it flipped into something that is much more dynamic. With cloud computing and mobile, we have people walking around their businesses with tablets and smart phones who want to access material in a remote way, and not carry a laptop or have a mainframe terminal that’s wired into a network.”
The gains of flexible governance
“Difficulties are almost always traceable back to governance problems,” argues EY’s Graeme Butterworth, Outsourcing Center of Excellence leader for Europe, Middle East, India and Africa (EMEIA), EY. “Joint governance needs to be setup from day 1 to manage these arrangements. “
Our Growing Beyond research highlights how high performers consistently focus on stakeholder engagement. It is critical that organizations tell their performance story effectively and consistently to the investment community, regulators, commentators and customers.
Equally, organizations must engage internal stakeholders. The Growing Beyond research showed that a primary driver of differential performance is how companies deploy and develop talent.
Making the transition work
Companies will confront problems in different ways, but those that follow some basic rules in implementing a multifunctional approach will find the transition more straightforward and effective.
- Make sure the scope really is multifunctional
Companies that continue to focus on individual functions will miss out on many of the benefits that global business services can deliver.
- Concentrate on process
By looking at end-to-end processes rather than types of transaction, companies break down barriers between functions.
- Own the technology
Global business services organizations work best when they take control of their IT architecture, rather than buying it in.
- Be open-minded about delivery
Some services will be delivered better by an outsourcing firm, while others are best sourced from captives. The key is not to be dogmatic about either approach.
- Run the organization as a business
Global business services is a business within a business — it needs to treat the rest of the organization as clients.
- Focus on consistency
Where services are delivered in different ways — in different parts of the world, for example — the organization misses out on standardization benefits.
- Prioritize business intelligence
Global business services units that operate centers of excellence and provide high-quality business analytics will be valued and accepted by the rest of the organization.
- Sell the value proposition
A global business service organization must constantly explain its value to its clients, just as any other business would.