14 min. de citit 18 aug. 2021
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Why the future of GBS is digital

Over 140 GBS organizations explain how they managed the COVID-19 crisis and what it will mean for their future plans.

The insights in this article and accompanying report were created in collaboration with Boston Consulting Group and SSON.
In brief
  • Digital-related topics, including process digitalization or data transparency and analytics, are the most pressing but capabilities are limited.
  • Value-adding services, such as advanced data insights and analytics, will see a strong push over the next three years.
  • Cost-consciousness remains an issue; 40% believe they have good capabilities here but this drops to 25% when it comes to using digital solutions.

Continuous cost pressure, increasing market volatility and globally connected value chains are forcing companies to further professionalize their support functions. The worst effects of the COVID-19 pandemic seem, hopefully, to be coming to an end, and the corresponding impacts on companies and their global business service (GBS) organizations. However, from very early on the pandemic accelerated market trends – particularly technology-driven market disruption – and triggered substantial changes in how GBS organizations will operate in future.

Historically, organizations transferred transactional, repetitive, process-based work to shared service centers, which have evolved into today’s Global Business Services (GBS). Their remit has remained as being the backbone of efficiency, driving standardization and cost gains – but for many organizations they are also the engines of transformation for the entire business. Functions come to GBS for help in exploring and delivering innovation, automation, advanced services and new ways of working.

Because the pandemic had unforeseen influences on the operating model for both organizations and their GBS, Boston Consulting Group, EY and SSON (the world's largest shared service and outsourcing network) consulted over 140 organizations in a global survey to understand how GBS organizations managed the crisis and how it affects their future. The findings are explored in this article and are further discussed in the report, The future of GBS is digital: GBS as a powerful transformation engine (pdf).

The results show that GBS strengthened its role as a key pillar of resilience during the recent crisis and has ambitions to further enhance its role to become more digital oriented, value focused and customer centric. However, there is also a clear need to build on core capabilities in order to advance its future position.

During the crisis caused by the COVID-19 pandemic, GBS has strengthened its role as a key pillar of organizational resilience. The ambition, now, must be to build on this and become more focused on digitalization, value and customer centricity. 

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Chapter 1

Crystallized: the future focus of GBS

GBS has proven itself to be a key pillar for the organization’s resilience.

Organizations across the globe saw massive disruption to their working norms during the COVID-19 pandemic. But this did not seem to affect GBS organizations negatively. Only 1% reported having found major issues with managing the impact of the pandemic, versus 13% of organizations with no GBS.

In fact, GBS organizations rose to the challenge and really came into their own: for nearly 50% of the survey respondents, productivity was unaffected, and for 38% productivity actually increased. One explanation is that employees worked longer hours in their home offices. But there are further key reasons why GBS contributed significantly: processes did not break despite being executed remotely because they are refined and uniform. Business continuity plans were tested and in place within GBS. Also, some GBS locations took over jobs from sites that were heavily affected by COVID-19, for example European sites supported ones in Asia during the first months of the pandemic – one advantage of truly global organizations.

Impact of COVID-19 pandemic

1%

only of GBS organizations reported having found major issues with managing the impact of the COVID-19 pandemic.

Even without the pandemic, the world is changing fast: global value chains, increasingly demanding customer expectations, accelerated introduction of new technologies and distributed working models are putting pressure on companies. GBS organizations will need to change their operating models to excel in this environment and, according to our study, GBS leaders envision four key characteristics that will shape its evolution:

  1. GBS will continue to focus on performance
  2. It will begin to shift radically to increased digitalization
  3. It will focus much more on delivering value
  4. And it will push forward the organization’s efforts to be more customer centric

However, these future priorities are shaped by GBS organizations’ footprints and experiences today. For example, more mature GBS entities, which are usually larger and host offshore locations, are likely to be more focused on customer centricity and value delivery than smaller ones. These smaller, usually less advanced GBS organizations, will still focus more on performance as a “table stake” priority.

Beyond these four future characteristics, comparatively few GBS identify their future role as either entrepreneurial or as true ecosystem orchestrators yet; there are some GBS organizations at the vanguard of these areas, but they have not yet reached the mainstream. 

Looking to the future, for more mature GBS entities, the focus is likely to be around customer centricity and value delivery. For smaller, less evolved GBS organizations, performance will, more likely, be the priority focus area. 

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Chapter 2

Making the future real: five key capabilities to build

In order to evolve, GBS organizations say they need technology enablers and new ways of working.

We asked what capabilities GBS organizations need to help evolve their future roles. Five major topic clusters emerged: technology enablers, advanced service offerings, new ways of working, a future-oriented setup, and how GBS can respond to cost challenges.

We particularly wanted to understand how GBS professionals perceived their current strengths compared to the future relevance along these clusters and underlying topics. And while not all topics had the same relevance and capability foundation, there was one key theme that united the most pressing ones: digitalization.

Those topics that were digital-related — from the technology core to operating model enablers — will require the most attention in the near term. This is due to digitalization’s pronounced future relevance but very limited perceived capabilities, as our research results reveal.

Other topics may require less attention. For example, while remote ways of working are considered highly relevant in the future, respondents feel much more confident in the capabilities they have already created to support this. Other topics in this field are reflected by both limited relevance and a corresponding lack of investment in current capabilities. This includes, for example, offshoring efforts or extending a GBS’s own ecosystem. 

The future of GDS is driven by digital

1. Technology enablers

One of the main factors that makes digitalization the overarching priority for GBS organizations is the extremely high upcoming relevance that survey participants attributed to technology enablers.

Approximately 90% of all participants see an increasing demand for digital E2E processes, for sophisticated digital tools and solutions employing, for example, machine learning or artificial intelligence, and for transparent and harmonized data. But corporate capabilities across all three of these areas are currently perceived to be surprisingly low – despite digitalization efforts across industries over the last few years.

This is especially true for data transparency and harmonization: a striking 72% of respondents highlighted a high to very high future relevance, but a very low to mere mediocre capability profile in this field. Companies are under increased scrutiny from stakeholders ranging from customers and competitors to social influencers, but many organizations are struggling to harmonize and access increasing amounts of data from diverse internal and external sources.

2. Advanced service offering

To enhance the future role of GBS toward stronger value and customer focus, a more sophisticated and advanced service offering is key: 86% of all respondents rated this topic as highly relevant in the future, but only 21% feel confident about their own offering and capabilities today.

Insights and analytics capabilities

57%

of respondents plan to build out these capabilities over the next three years.

Typical transactional services, such as payroll or accounts payables, have been a staple of GBS for years and still are for 87% of the survey respondents. However, there is a strong push expected in the next three years toward freeing up capacity to deliver more value-adding services. This includes offering more business partnering (40%), taking a more prominent role in steering digital initiatives (38%), and covering more advanced conceptual activities such as, for example, recruiting (32%). But the most significant action is to double down on data, with 57% of respondents planning to build on capabilities in company-wide insights and analytics in the next three years.

Business partnering

40%

of respondents plan to free up capacity to offer more business partnering.

Digital initiatives

38%

of respondents plan to take a more prominent role in steering digital initiatives.

This underlines, again, the fact that data is key. It is becoming more and more relevant as it is the foundation for fact-based decision-making that can deliver a competitive advantage for the wider organization. 

GDS service offering will change over the next few years

3. Future-oriented setup

Another pillar of the future GBS operating model will rely on building and orchestrating a global structure that facilitates collaboration. This includes pushing forward an orchestration unit for all future transformation activities such as a Digital and Innovation Center of Excellence (CoE). Close to 90% of the survey respondents gave this especially high future relevance – but only 20% feel ready.

Another relevant factor is the building and coordination of an international network of own hubs. Two-thirds of all respondents deem this topic to be important in the future. But here too, the capabilities are still very limited – again only 20% feel prepared to establish or run such a network effectively.

Leveraging external ecosystems seems still to have a somehow lower priority. Only half of the respondents acknowledges a high future relevance in this area. However, companies might focus on enhancing their capabilities inhouse first and leverage external partners as a second step.

Globally integrated networks are incredibly valuable to strengthen organizational resilience and to optimize how support functions partner with a global business across different legal, economic and social scenarios. Leveraging them effectively in a post-COVID world relies, however, on adopting new ways of working and finding the best talent.

There is general recognition of the importance of building a global structure that is rooted in effective collaboration. Yet, while two-thirds of all respondents consider having an international network of hubs is important for the future, only 20% feel ready to put this into practice.

4. New ways of working

Given the immediate effects of the 2020 pandemic, and the resilience of GBS throughout it, our respondents understandably perceive remote working to be highly relevant in the future but also felt relatively confident about their own future capabilities.

While 70% feel right about their capabilities when it comes to remote working, other new ways of working will require more attention. Around 40% feel ready to cope with agile ways of working, and the same is true for leading people in a more virtual, digital-focused environment.

Overall, new ways of working is a critical enabler in a more digitized world. While the remote-work aspect is one of the core strengths of GBS organizations to build on, strengthening agile capabilities and leadership skills should also be an ongoing area of focus.

5. Responding to cost challenges

In well-established territory, respondents acknowledge the continuing high relevance of cost-consciousness for GBS organizations. But out of the four efficiency enablers we assessed, only leveraging digital and the evergreen lean setup were ranked as highly important (80%). However, while over 40% believe their capabilities are, at least, on a good level when it comes to managing a lean setup, a concerningly low 25% think the same when it comes to controlling costs with digital solutions. Again, the need to focus on digital capabilities is also obvious when it comes to cost.

Lean setup

40%

believe they have a good level of capabilities to manage a lean setup.

Other analyzed areas are of a lower relevance. Only about half of the respondents acknowledge the future importance of a scalable organization and leveraging offshoring resources. This number rises to 75% in relation to companies that are already orchestrating a global network of hubs. However, capabilities to leverage their global GBS network accordingly stay surprisingly low at around 30%. This is the case even for those companies experienced in this area.

Cost consciousness

25%

believe they have a good level of capabilities to control costs with digital solutions; this is concerningly low.

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Chapter 3

What GBS leaders need to do now

With increased confidence and positive shifts in self-perception, GBS leaders now need to play to their strengths.

The impressive way that GBS organizations have remained strong throughout lockdown and beyond suggests that this has not only reinforced GBS’s strengths but increased its confidence and shifted its self-perception.

GBS leaders now need to play to their strengths, but simultaneously recognize and address the areas where their capabilities do not match up to future relevance: building a strong digital foundation and its correspondent enablers, with a strong focus on data transparency, advanced services, and a supporting organizational setup.

GBS maturity assessment tool

Assess your GBS organization’s maturity to help identify strengths, weaknesses and improvement opportunities.

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Drive digitalization to find further efficiency and support the overall corporate transformation

GBS has been driving a digital agenda to varying extents for several years. Some organizations have transformed their GBS to empower it to drive company-wide transformations and lead efforts in innovation and digitalization. Others are more slowly evolving its role from high-volume transactional and cost-saving activities. Unsurprisingly, in a world that is becoming increasingly reliant on technology, digitalization is at the top of the agenda. To really take a big step forward, GBS organizations should focus on process automation, deploy leading edge technology (by collaborating with start-ups, for example) and work toward deep dives into advanced data analytics based on AI. Data transparency and analytics is a central pillar for enterprise governance in the future, and converting data to insights, and insights to decisions, is key.

Strengthen capabilities to support new advanced service offerings

Building new service offerings requires attracting the right talent. This has always been a limiting factor for GBS, but now it seems to be more difficult than ever. Talent hotspots continue to move from typical GBS locations toward new innovative zones. But as remote and distributed work becomes the norm, GBS organizations will need to look beyond permanent roles and should look to new talent sources such as shared talent pools with other GBS organizations, freelancers and gig workers and, last but not least, outsourcing providers. GBS organizations also should take the lead in developing their people’s skillsets in analytics, data science and digital technologies, for example by investing in creating inhouse academies and training programs

Continue to build a flexible, resilient global GBS network to keep pace with changing demands

GBS organizations should invest in a dedicated CoE to steer their digitalization and innovation efforts. GBS leaders should also continue to build a global network of hubs with smart redundancies to increase resilience and flexibility at the same time. They should also try new sourcing models, including third-party engagements and collaborations, to create a global ecosystem that further stimulates innovation. Examples might include joint ventures for the development of advanced analytics frameworks or further means to reach truly automated processes without the requirement for human intervention.

Rezumat

A recent report identifies five main areas that GBS organizations are prioritizing as they strengthen their position as a key player in the drive for business resilience, following the COVID-19 crisis. The five areas are: technology enablers, advanced service offerings, a future-oriented setup, new ways of working, and responding to cost challenges. There was one clear overriding theme: digitalization. This is clearly an area that is going to be focusing attention, at least, in the near term if not longer.

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