CFO Insights 2022 January has been saved
CFO Insights 2022 January
Unlocking e2e (end-to-end) Organizational Transformation through GBS.
CFO Insights is a monthly publication to deliver an easily digestible and regular stream of perspectives on the challenges confronting CFOs. This article introduces "GBS", which is Global Business Service that defined business unit that applies common processes, tools, and best practices to deliver services more effectively and efficiently to operating units.
- Introduction of GBS
- Approach to GBS - Definition of TOM, necessary for GBS
- Beneficial Impact of GBS
Introduction of GBS
Current organizations most dominant internal constraints are linked to the organization structure, siloed behaviour, culture, poor communication, and overall inefficiency. This mainly translates into difficulty to get an end-to-end view, inefficient internal communication and collaboration and overall siloed work.
e2e transformation is critical nowadays as it allows the organization to:
- Make significant efficiency gains
- Eliminate duplicated tasks
- Deliver high value-added service continuous improvement
- Be more responsive to the business needs
- Identify levers for cost reductions and investment
- Enable to deploy automation like RPA for the transactional and reporting processes
Most of these organizations have already implemented a Shared Service Centre (SSC) that involved removing work activities from existing business units and consolidating them into a single centre. This enables the business unit to focus on its core competence, whilst the overall enterprise also benefits from improved service efficiencies and economies of scale in key support functions.
Pioneering companies have moved to Integrated Business Services (IBS), that provides all the traditional services and innovating front to and middle-office services for end-to-end business solutions, while leveraging shared services and outsourcing across multiple functions and regions in a consistent manner, and in some cases into a single organization. This operating model is called Global Business Services (GBS).
GBS is a defined business unit that applies common processes, tools, and best practices to deliver services more effectively and efficiently to operating units. Services are delivered on a global scale, using specialist centers, captive shared services and outsourcing to optimize scale and capabilities across all functions. Many multinationals are turning GBS into a competitive strength, having matured their approach over many years.
Other key characteristics of GBS:
- Multi-function: Multi-functional with significant integration across functions (IT, HR, finance, procurement, customer service, ops)
- Process alignment: Processes aligned by end-to-end process for performance improvement
- Multi-sourced: Transactional activities are outsourced, while higher value/ judgmental activities are delivered through captive centers.
- Multi-location: Consolidates to fewer locations: regional delivery model vs. hub-and-spoke approach
Approach to GBS - Definition of TOM, necesary for GBS
It is important to note that we do not start any e2e transformation plan by deciding to breakdown traditional silos and increase collaboration. It is a double promise that is complex to implement. The goal to become a Business Partner and a Process/Digital driven organization enabled by cross functional e2e business construction requires rethinking working methods, exchange methods and the transversal nature of collaborative modes.
A Service Delivery Model that cuts through organizational silos enables the next generation GBS to add value via insights and analytics. It is what we call a Cross-silo Delivery Model.
In the context of shaping the SSC model per function to a GBS organization leading all e2e back office processes to drive economies of scale and enable operational excellence, we intervene to define a target operating model for the organization and offer personalized scenarios and solutions according to the challenges and key priorities for the client.
To building blocks of the new Target Operating Model (TOM), it is necessary to:
1. Understand the current processes, organization, and IT landscape.
- Feasibility assessment – Understand as-is landscape across processes; identify transactional activities which can be transitioned, efficient processing, conduct process splits and scenario analysis on captive vs outsourcing
2. Draw the art of possible using methodological tools like Deloitte’s Design Thinking Framework to drive the customer end-to-end experience
- Design - Identify optimization and standardization levers; define operating model and re-design org structure – recommended a Hybrid model comprising of an internal GBS and outsourcing service provider, designed a detailed operating model, organization structure, assisted in recruitment planning and site selection, development of To-be purchase process flow; prepare operating model, governance mechanism SOPs and SLAs; transition readiness assessment, strategy, planning
3. Define and implement the target TOM with cross functional e2e business processes
- Implementation - Transition support and assist in pilot launch, design and implementation of a multi-tower GBS and outsourcing of select processes (HR, Finance and IT), program managed end-to-end center setup through recruitment, transition management, facility build and IT infrastructure setup
Business processes we commonly find in every organization are order-to-cash (O2C), Purchase-to-Pay (P2P), Source-to-Pay (S2P), Close Consolidate Report (CCR), Financial Planning & Analysis (FP&A), Hire to Retire (H2R) and they are often rolled-out in priority with RPA/Digital enablers.
We often find leaders at the top of each process: Business Process Owners (BPOs) who are responsible for each e2e process. BPOs oversee leading the entire e2e value chain and often report directly to CxO levels.
Beneficial Impact of GBS
With GBS as operating model, more time is dedicated to business partnering through improving tooling for data analytics and insights and automating operational processes as much as possible.
GBS as a Service Delivery Model has the core of an SSC and has a Global beneficial impact for the organization:
- Overarching organization: One enterprise organization that drives collaboration and sharing to improve delivery efficiency, effectiveness, and business outcomes.
- Global footprint: Common infrastructure and governance to deliver business support services across geographies, business units, functions, and business processes.
- Multi-functional: Multi-functional organization, with multiple delivery models with shared leadership, methods, culture, and values.
The specific criteria of the GBS is that it is a strategic partner with e2e process-oriented organization. The strategic partnership main characteristics are as follows:
- Mission: Improvement in operational effectiveness and high value-added service (knowledge-based)
- Operations: End-to-end process oriented
- Service Delivery: Deliver high value-added services continuous improvement, service management and process owners
- HR capability: Capability development at the heart of the model for wider job opportunities for employees
Through the clients we support worldwide, we have observed that most organization were still very much “in silos” with multiple siloed internal initiatives difficult to connect with each other’s.
The high-stakes nature of today's digital and economic environment is driving organizations to reinvent their operating model to meet new business needs, integrate technologies and operate efficiently with agility. To achieve this, leaders must shift their focus from function-oriented organization to a process-oriented one to become a Business Partner and a Process/Digital driven organization.
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