I was lucky to recently to attend a site visit of a leading Global Business Services ‘GBS’ organisation with one of my client teams. The visit made me pause and consider what lessons Australian businesses learn as they progress towards Business Services or extending their shared service operations. I’m excited about advising, implementing and optimising these models across the Australian business landscape to deliver shareholder value. Some key takeaways emerged:
Shared Services/GBS is a journey, and there is no ‘one size fits all model.
No matter what the starting point, shared services or GBS is likely to be a multi-year journey. Along the way there may be some false starts and periods of change but moving to a fully formed GBS model would be a massive change for many ANZ businesses, and like an elephant may need to be eaten in many little chunks.
Many of the leading GBS case studies highlight that changes and model optimization take year often, not just months, and businesses need to be brought along and buy-into the journey. Organisations such as Shell, BP, DHL, Siemens, Proctor & Gamble and Nestle are engaged in a relentless journey to optimise their business service function, improve business support and develop competitive advantage within their GBS team.
Shift of focus towards economic value added
Many shared services and GBS businesses are built initially on a cost-reduction platform. Over time, leading GBS organisations shift that focus towards economic value added/delivered – whether measured in cost, working capital, revenue or EBIT terms. Its not just a pure cost play, leading GBS organisations align their actions to group strategic direction and actively measure their ‘value add’.
Opportunities lie way beyond transactional back-office activity
Many Australian businesses still have a deep rooted mindset that shared services teams undertake transactional activity whether that be Finance, HR administration or IT. Leading GBS businesses are at the forefront of pushing the envelope further up and down ‘end to end’ process value chains and engaging in activity that in some organisations might be considered ‘front office’. Examples include:
- Customer service
- Sales, marketing support and outbound telesales
- Logistical support
- Analytical insight e.g. customer or product insight
A common theme remains however of the business retaining its accountability for judgement based activity where proximity to a business unit is essential.
Enhancing the scope of GBS may unlock scale benefits for many Australian clients
The average ASX 200 company may only have a finance team of ~100 full time equivalents. Any shared service built in that functional pillar will have limited scale, footprint and be challenged to put in place adequate career pathing and cross training
A GBS organisation, taking on multiple end-to-end value chain segments is likely to create greater scope and organisation scale. Scale ultimately will be critical for many Australian businesses to put professional management structures, drive a GBS culture and effectively share GBS foundational initiatives across multiple service streams.
GBS when effectively delivered flips traditional functional structures on their heads
Deloitte global surveys suggest upwards of 60% of traditional functions activities are delivered via Shared Services or Centres of Excellence. My recent site visit confirmed this and in this major GBS organisation the activity split was even starker:
- The strategic finance business partnering being delivered by a lean CFO and business performance analyst team, responsible for judgment call type decisions / activities made up ~25% of total finance headcount
- The business service team for Finance (~75% of total finance headcount) effectively closed the books, processed transactional accounting and journals and preparing any back-ward looking reporting, and populating trending forecasts for the consideration of the retained finance organisation.
As Australian businesses move in this direction, this will have a profound effect upon career planning, leadership development and succession planning in many functions of Australia’s businesses.
People and Service are at the core of success
GBS teams really are dependent upon their people, leadership and service culture. Leading GBS teams successful create a lasting ’employee value proposition’ that makes employee’s ‘stick’ for reasons other than purely for their monthly pay-check. Increasingly we are seeing flexible working, outcomes based performance management and in-house and external customer and employee satisfaction as key levers to attract, retain and focus personnel upon exceptional service.
Supporting the people agenda in major GBS organisations is a strong focus on individual performance, celebrating successes and focusing upon making customer service part of the team’s DNA.
Increasingly the stigma of shared services personnel being ‘second class’ citizens is being overcome in major organisations as they begin to recognise their GBS team’s professional expertise in driving processes, continuous improvement and efficiency and effectiveness
Many aspects of developing the people and service culture are scalable beyond the traditional functional shared service boundaries that exist in many Australian businesses, e.g. core service training is equally applicable for IT shared service team members as it is for call centre and finance teams.
GBS leadership may be a ‘right of passage’ for future Finance, HR and Operations leaders
Back office career paths are changing in major corporates. The traditional growth vertically through the ranks in a function will be challenged. Indeed some major global organisations with GBS teams, see a stint in leadership within GBS as as prerequisite for top-jobs in the C-suite. Indeed, in many cases GBS will provide the opportunity for executives to experiencing manage large teams – this will become increasing more difficult in the retained organisation as these team become more aligned to strategic matters and not process delivery excellence.
So if you’re wanting to become a CFO, COO, CPO or a CHRO, a stint in shared services or a GBS team may actually be a plus on your resume.
If you have any queries or would like to discuss Global Business Service concepts in more detail, please don’t hesitate to contact me at firstname.lastname@example.org