5 minute read 1 Jun 2018
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How Global Business Services is key to survival

By

Christian Mertin

EY Global Advisory Solutions Leader – Global Business Services and EY Global Client Service Partner, Ernst & Young – Germany

Transformation leader in Global Business Services with deep knowledge in finance, shared services and other back-office functions. Strong capabilities in supporting technologies and digitalization.

5 minute read 1 Jun 2018
Related topics Advisory Digital Strategy Finance

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An evolved Global Business Services (GBS) can help organizations navigate disruption by acting as an engine of transformation.

Digital disruption threatens traditional business models with extinction. But GBS can become more specialist, skilled and technology-savvy, and move up the value curve to help the wider organization transform.

GBS can take advantage of technology and talent and help deliver greater agility, higher speed and more digital competence.

Historically, 90% of the focus for shared services and GBS has been on efficiency. The future GBS will be turned upside down: from low-cost transactions to deeper skills and higher salaries.
Weston Jones
EY Advisory, Global and Americas Robotic and Intelligent Automation Leader

What is transformation?

The first and most urgent transformation is digitalization: removing paper from processes so they can become automated and increasingly end-to-end. Around a third of basic robotic process automation (RPA) projects fail, possibly because they do not have a digitalized starting point.

But once digitalization has been achieved, GBS can help the organization move quickly to much more significant and valuable transformations:

  • Intelligent automation or cognitive automation: using unstructured data through machine learning and natural language processing
  • Intelligent chatbots: directly interacting with internal and external customers
  • Artificial intelligence: data analytics, insight and decision-making

In an age of disruption, many organizations are choosing to transform through mergers and acquisitions (M&A). Highly acquisitive organizations can use GBS to deliver carve-out and integration activities quickly, enabling the company to drag and drop business units from the service portfolio. GBS will use the latest technologies to bridge multiple source systems, and consolidate enterprise resource planning (ERP) figures into one system for planning and budgeting as well as internal and external accounting.

But the biggest transformation will be on the organization’s overall business model. To become fit for the Transformative Age, organizations need to continuously innovate and experiment with new business models alongside the core business – effectively managing a portfolio of bets. This demands new ways of engineering processes, leveraging data and insights and rethinking operations.

Now is a great opportunity to look back at the evolution of GBS and shared services, in order to shape the future. The introduction of technology including RPA, IA, and VR indicates that we are on the threshold of a potentially immense increase in the efficiency and scope of GBS. This challenges us to make the leap from cutting costs and bundling process-based activities together, to enabling GBS to take a lead role in an organization-wide digital transformation. In short, GBS is becoming a global value organization, driving stronger customer experiences, and handling end-to-end global processes.

The evolution of GBS

What makes GBS capable?

Any kind of transformation is dependent on technology, but also the organizational foundation it builds on: GBS has the agile and flexible setup needed to deliver and scale any kind of transformation. Because continuous innovation is in the DNA of many GBS organizations (not least because GBS employees are keen to upskill), it can naturally deploy an agile approach to help transformations move quickly in sprints. And its inherent global structure, its ownership or stewardship of data across regions and functions and its deep knowledge of processes means that it is the obvious candidate for multi-geography transformations.

While organizations with a mature GBS are in a good position to harness this innovative, technology-led transformation engine, there is no need to assume that new entrants to GBS are locked out. Organizations who are new to GBS will be able to leapfrog over the traditional journey from outsourcing to shared services to GBS, and go directly to a model in which GBS is an ecosystem manager, often consisting of small units governed by functions with outcome-based pricing.

How can GBS address today’s challenges?

In today’s challenging environment, GBS can even step in and take over some of the organization’s mission-critical activities.

End-to-end processes

Companies have been struggling with siloes for 25 years, and end-to-end (E2E) processes that efficiently cut across functions have long been a promise that’s yet to be delivered. Today, with automation GBS is getting much closer to convert this promise into reality.

Governance

As GBS takes more activity away from functions, questions arise over how processes – and the GBS organization – are governed. Who does GBS report to? Who is representing GBS on the board? Who decides what extra powers to give to GBS?

A new generation of leaders see E2E process-based organizations as a given – they will take control away from functions, with process governance switching to GBS. For some organizations, however (especially in EU) the trend is moving away from large GBS organizations to much slimmer Centers of Expertise, managed by functions – then having an even more strategic dimension.

Automation

At the current rate, robotic process automation (RPA) will be applied universally in GBS and shared services within the next three years. If not, there will be nasty questions – now functional leaders have bot builds in their target agreements because it’s such an obvious source of savings.

However, RPA implementations can fail. This might be because digitalization is a necessary starting point, and very few organizations are broadly digitalized – but GBS can help address this.

Innovation

Businesses cannot rely on just one model any more. To become fit for the Transformative Age they need to continuously innovate and experiment. Agility is the mindset, and in the very DNA, of GBS – so it can drive a polymodal business model, effectively managing a portfolio of bets.

How to move forward with GBS?

An evolved, agile and capable GBS can become a key pillar of a company’s digital strategy and perform as a transformation engine.

But there is more to the future GBS picture, and organizations will also need to consider critical questions about GBS structure and operating model, the talent it relies on, how to attract and retain it – and what that talent actually does in a highly automated environment.

And with GBS increasingly being given the mandate to reengineer processes end-to-end, organizations need to consider how they can deliver the frictionless, value-adding services that will delight customers and create competitive advantage.

So where are you on your transformation journey?

Summary

GBS has the agile and flexible setup needed to deliver and scale any kind of transformation. But there is more to the future GBS picture. Organizations will also need to consider critical questions about GBS structure, operating model, and the talent it relies on.

About this article

By

Christian Mertin

EY Global Advisory Solutions Leader – Global Business Services and EY Global Client Service Partner, Ernst & Young – Germany

Transformation leader in Global Business Services with deep knowledge in finance, shared services and other back-office functions. Strong capabilities in supporting technologies and digitalization.

Related topics Advisory Digital Strategy Finance