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 findingsTRANSCRIPT
Enterprise Services Governance: It’s a Brave New World
November 2014
© 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
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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 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 DYNAMICin the market. I think organizationsare still leveraging THIRDPARTIES to
govern and to provide advice and guidance
on GOVERNANCE, but not so muchin the old outsourcing context. They’re interested
in what the new world looks like and how
EXTERNAL PARTIES like KPMGhave the capabilities and experience to
SUPPORT them effectively.
© 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
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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 ServicesDisruptive
Technologies(Robotics)
© 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
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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 analytics to 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.
COSTSAVINGS
THEN NOWVS
© 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
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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 cloud increased, so did the potential for dissatisfaction.
18% Unsatisfied with bettertransformed/ reconfiguredprocesses
8% Unsatisfied with better cloud-based delivery of services
Unsatisfied with improved analyticsto drive growth
14% Unsatisfied with accessto new technologies
Unsatisfied with betterautomated processes17% 14%
Source: HfS and KPMG Webcast - How Global Business Services Governance is Ripping up the Old Rule Book 07,2014
© 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
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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 ofemerging technologies in improvingoutsourcing outcomes, ANALYTICS and AUTOMATION led the pack with
49 % and 47.%Cloud, mobile, and socialtechnologies followed at
30%, 25%, and%.12
Source: HfS Research 2014. Note: n=189 Enterprise BPO Clients.
© 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
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The game changer: Global Business Services (GBS)Today, hybrid delivery models are fast becoming best practice
Plan to INCREASE adoption of hybridoutsourcing and shared services models80%
Plan to INCREASE outsourcing initiatives85%
Plan to INCREASE adoption of a sharedservices model56%
Source: HfS Research 2013, n = 399 Buy-side Enterprises 2013 State of Outsourcing Study
© 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
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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 solutionsValue capture and performance sustainability occurs over time
BUSINESSSERVICESMATURITY
© 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
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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
OPERATIONALOPERATIONAL
EXCELLENCEEXCELLENCE
Delivery and sourcing strategy
Delivery and sourcing strategy
Service portfolioService portfolio
Talent managementTalent management
Enabling technologyEnabling technology
Commercial perspectiveCommercial perspective
Enterprise services governance
Enterprise services governance
Process excellenceProcess excellence
Data and analyticsData and analytics
Tax and risk optimizationTax and risk optimization
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
© 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
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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 America alone, we estimate that by 2020 there will be a shortage of 400,000 data scientists a year whereas there will be a surplus of 900,000office support executives.
2020
© 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
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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-driven solution 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.
© 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
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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 billion Smartphone users, with potential to use automated digital assistance apps
400+ million Increase in number of users of intelligent digital assistants like Siri and Google Now in past five years
AutomationKnowledge Work
170% Growth in sales of industrial robots, 2009–11
250 million annual major surgeries could be impacted by utilization of advanced robotics in world of healthcare
AdvancedRobotics
300,000+ Miles driven by Google’s autonomous cars with only 1 accident (which was human-caused) There are 1 billion
cars and trucks globally that could be impacted Along with 450,000
civilian, military, and general aviation aircraft
AutonomousVehicles
© 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
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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
+1 (312) 953-4891
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© 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
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