One of the great discussion topics coming out of the recent Blueprint 3.0 sessions in New York was centered on how enterprise operations can progress beyond the "ordinary" and avoid fading into the netherworld of corporate insignificance. Or, as one member profoundly stated, "We really need to stop being really good at irrelevant stuff". So let's take a look at how they can start to do just that...
It's all about shifting the whole foci of operations from yesterday's fragmented immaturity to tomorrow's mature model
Let's examine the six maturity leaps we identified during our recent GBS study of major enterprises with KPMG:
- Location leap: from high-cost to low-cost locales; Do we really need to process those insurance claims in New Jersey?
- Standardization leap: from independent standards tied to BUs and geos to enterprise-wide standard solutions; Why do we have 14 instances of ERP, when we can rollout multi-tenant cloud solutions and kill the dysfunction and poor data integration?
- Process Orientation leap: from siloed processes within BUs to business-wide process alignment across geographies and broad functions; Why do we need 153 different ways to pay suppliers and process invoices?
- Commercial Orientation leap: from operating like a cost center to being measured as a business service center; Why wouldn't we want to have centralized operations servicing our enterprise with the skill, scale and efficiency of a professional services firm, than some back office cube-farm which constantly gets beaten up for cost and quality, which the BUs barely use in any case?
- Pace of Change leap: from low-impact change to a genuine willingness to impact people and invest in long-term strategies; Rolling out a "Big Data" roadmap takes enterprises 5-10 years - how can you be serious about a strategic roadmap when every action is reactive and short-term in nature?
- Service Portfolio leap: from being merely transactional to delivering both transactional skills and analytical services at scale. Transactional process are ultimately automated, or outsourced (or both) - especially if these are delivered inefficiently, which means operations teams need to deliver business value and analysis if they want to thrive in today's business environment.
The Bottom-line: In 2014, ambitious operations leaders must begin achieve a certain degree of maturity across their operations before they can really address achieving their desired outcomes
Our research has clearly shown that enterprises can't achieve anything near their desired levels of cost-reduction, analytics quality or innovation, if their operations and processes are fragmented and poorly aligned with the corporate goals of the business. Outsourcing and shared services can provide levers to access expertise (often at lower cost) and standard ways of managing process flows. However, it is the job of the governance organization to take oversight control of end-to-end processes and work with their BU leaders to map out a long-term roadmap to get better access to data and achieve consistent, ongoing cost efficiencies.
Global Business Services isn't just about managing a few provider contracts and beating up on poorly performing shared service centers - it's about re-aligning the enter operations function (the old "COO's office") to support the business with a commercial orientation. A GBS operation needs to operate like a consultative service provider that can deliver ongoing expertise, processing capability and analytical services in a scalable fashion. GBS executives needs to pull together both the internal and external resources to make this happen. Smart service providers will (and some already are) positioning themselves as partners to support their clients' GBS strategies, while smart sourcing advisors know they need to address the broader GBS transformation needs of their clients, or face being relegated to supporting contract procurement.
Stay tuned for Part II of our 2014 outlook, we will analyze the performance of enterprises against their desired business outcomes, based on their maturity levels.
Readers can also access our complimentary new report, "The Global Business Services Industry Study", produced in conjunction with KPMG LLP, where we interviewed 416 enterprises across a cross section of regions and industries about their GBS activities, priorities, drivers, constraints, and plans.