gbs overview & trends across the shared services & outsourcing industry
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GBS Executive Advisory Program | 1 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Where are we now & where are we going? GBS overview & trends across the shared services & outsourcing industry 2012 Shared Services & Outsourcing Week 2012 14 May 2012, Amsterdam
Tom Bangemann Senior Vice President Business Transformation The Hackett Group
Statement of Confidentiality and Usage Restrictions This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group. Copyright © 2012 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.
GBS Executive Advisory Program | 3 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Priorities for 2012 look outward and inward for opportunities to grow top-line revenue and bottom-line profits
GBS Executive Advisory Program | 4 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Many GBS have moved beyond a single-function shared services model towards developing advanced capabilities
In good company? Maturity
Shared Services Global Business Services
Operational Excellence
6%
37%
57% Complexity Reduction
Stage
3 Stage
2 Stage
1 Function-
centric
Value-centric
Process-centric
Strategic Business Enablement
GBS Executive Advisory Program | 5 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Not only do most GBS now have a multi-function model, World-class GBS have twice as many functions in scope
2X
The number of functions in World-class GBS’ scope
compared to Peers
GBS Executive Advisory Program | 6 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
World-class GBS have moved more than half of their functional processes in IT and half of those in Finance and HR into GBS
Inside GBS Outside GBS
Human Resources (HR)
Finance
Information Technology (IT)
Procurement
52%
51%
34%
Service Placement – G&A Functions
GBS Executive Advisory Program | 7 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The cost of Finance is trending downwards again
Finance spending as a percent of revenue, 1994-2012
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The agility and lower cost levels achieved allow World-Class to re-invest in Planning & Strategy
Percent change in finance process cost by area, 2011-12
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GBS keep pushing the boundaries to include more value-adding finance processes and knowledge centric-activities
Service Placement – Finance processes
5 years ago today In 5 years
GBS Executive Advisory Program | 10 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Process split example: Best practice based budgeting process
GBS Executive Advisory Program | 11 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Process split example: Best practice based standard reporting
GBS Executive Advisory Program | 12 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Finance-led Talent Management Large gaps exist in general business skills required by Finance
Highlighted skills show the largest imbalance between importance and effectiveness
– Change management – Business acumen – Relationship
management – Problem solving skills
Balance of importance and effectiveness
Data analysis and modeling
Change mgt./process improvement
Business acumen
Rlshp mgt. Problem solving skills
Strategic thinking and analysis
Project/Program management
Vendor/outsourcing management
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 20% 40% 60% 80% 100%Importance
Effe
ctiv
enes
s
Source: 2011 Finance Talent Mgmt Study
GBS Executive Advisory Program | 13 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
All World-class GBS have global process owners reporting to Executive level sponsors
Reporting to
Global process owner
Global process owner
GBS leader 43% 50%
CEO 0% 25%
COO 3% 25%
CXO 3% 0%
Business leader 11% 0%
Not implemented 30% 0%
Other non-exec role 11% 0%
2/5 of Peer companies
have either not implemented global
process ownership or not established
sponsorship at senior executive level
Global process owner’s reporting relationship
Peer World-class
GBS Executive Advisory Program | 14 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
All World-class GBS have implemented process ownership, only half of own end-to-end process improvement as well
Decision responsibility
GB
S leader
Process ow
ner
Business
relationship m
gr.
Service m
anager
Not assigned
End-to-end process improvement (within
GBS)
End-to-end process improvement
(company wide)
1/2 Of World-class GBS have made global process owners
responsible for GBS and company-wide end-to-end process
improvement
Decision rights – end-to-end process improvement
Peer World-class
GBS Executive Advisory Program | 15 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Mature GBS with end-to-end focus provide a multitude of efficiency improvement opportunities (in addition to process cost)
Cross-functional savings in end-to-end processes for a typical $10 billion company
Working capital
improvements
Spend reduction improvements
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Ireland
United Kingdom
Netherlands
Belgium
Portugal Spain
Bulgaria
Romania
Poland
Czech Republic Slovakia
Hungary
Estonia Latvia
Lithuania
GBS Growth in Europe has been represented by a consistent migration Eastward
WAVE 1
British Isles 1980s
WAVE 2
Benelux Early 1990s
WAVE 3
Iberia 1995
WAVE 4
Central Eastern Europe 2000
WAVE 5
Baltics & Eastern Europe 2005
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Over 4.200 shared service centres operate globally
3147; 74%
1123; 26% 1603; 51%
696; 22%
392; 13%
57; 2% 39; 1%
360; 11%
Top 5 Global Destinations with BPOs Top 5 Global Destinations with SSCs
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Attrition remains one of the biggest challenges of offshore GBS centers
0-5% 16-20% >20% 6-10% 11-15%
0-5%
North America
Middle- & South America
11-15%
5-10%
Western Europe
11-15%
Eastern Europe
Asia
16-20%
Attrition rates by region
GBS Executive Advisory Program | 19 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Jobs have been under pressure for quite some time – with productivity and offshoring taking a heavy toll
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Recently established GBS are more prone to selectively outsource activities than older GBS
Outsourcing Technology leverage (automation) Continuous improvement
Likelihood to choose optimization strategies as GBS matures
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Companies with world-class GBS have high levels of enterprise-wide process standardization
Enterprise-wide Business Unit Within geographies No or limited standardization
Peer World-class
Level of process standardization – G&A Functions
World-GBS have almost
2X the level of enterprise-wide process standardization compared to Peers
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Automation remains the single largest optimization potential
Example: Accounts payable capabilities and outcomes
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Next to Focus on Data Management and Workflow, all Top Technology Investments in HR are into Self-Service
Which technology solutions have you implemented in your GBS?
Which solutions do you plan to invest in the most over the next three years?
» Self-service solutions are high on the list for initial investment in HR Shared Services as well as planned for as preferred future investment in technology
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Both World-class and Peers have invested in analytics software and workflow management, will cloud be next?
Implemented
9%
0%
4%
7%
22%
27%
Workflow management
Self-service analytics for reporting
Cloud technology
G&A enabling technologies
Peer World-class
(% of respondents indicating high or medium use of this type of technology)
Investment planned
GBS Executive Advisory Program | 25 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Contact Information
Amsterdam | Atlanta | Frankfurt | Hyderabad | London Miami | New York | Paris | Philadelphia | San Francisco | Sydney
Tom Bangemann Senior Vice President Business Transformation
+49 174 3469 974| Telephone [email protected] I Email
Corporate Headquarters 1001 Brickell Bay Drive 30th Floor Miami, Florida 33131 TEL: +1 305 375 8005 Amsterdam Camerastraat 25 1322 BB Almere Amsterdam TEL: + 31 36 535 00 82 Atlanta 1000 Abernathy Road NW Suite 1400 Atlanta, GA 30328 TEL: +1 770 225 3600 Chicago 525 W. Monroe Street Suite 1550 Chicago, IL 60661 TEL: +1 312 325 2900 Frankfurt Torhaus Westhafen Speicherstrasse 59 60327 Frankfurt am Main TEL: +49 69 900 217 0 Hyderabad 8-2-120/112/88&89 1st Floor, Aparna Crest Road #2, Banjara Hills Hyderabad 500034 TEL: +91 40 66544000
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GBS Executive Advisory Program | 27 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Statement of Confidentiality and Usage Restrictions
This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.
www.thehackettgroup.com