3 Megatrends from the 2015 Shared Service Summit Melbourne: Economic Imperative!, Global Business Services has arrived and Untapped Value!

I was lucky enough to participate in this years Shared Service and Outsourcing Network Summit in Melbourne this week.   I came away intrigued and inspired at the further opportunities for ANZ businesses to deliver tangible value from shared services and take steps towards integrated Global Business Service Models.  I saw three megatrends:

1) Economic imperative: the current economic and competitive climate makes optimising shared and Business Services essential

An excellent presentation by Huw McKay (Senior International Economist, Westpac) highlighted the challenges the Australian economy faces in the coming years.  to adapt Driving further value from shared/business services will be an important part of cost optimisation in Australian business.  In my opinion, this cost pressure will also drive an increased focus on offshoring / outsourcing and ensure clients drive a hard bargain with their vendors!

Some of the key economic point I took away included (and there were many more in this excellent session):

  •  The Australian Dollar is likely to lose value against the US Dollar and only be worth $0.73-$0.76 in 15/16.  Clients looking to lock in/renegotiate existing contracts will follow fluctuations with interest!
  • Forecast Capital expenditure in the Australian economy is trending downwards toward 2016, with Services (which form the majority of our economy) switching from growth to contraction.  A clear bellweather of sentiment in the economy!
  • Across the Asia Pacific Huw highlighted some interesting insights relating to India.  Indian inflation and wage increases have been lower than many other offshoring destinations.  The market has reacted favourably to the appointment of VR Iyer as head of the Bank of India.  Indeed Wipro, Infosys and TCS have been holding wage increases for their staff to 2% – a signal that India will remain a cost competitive destination for the forsee-able future!

Global Business Services models are becoming the logical next step for Australian organisations regardless of scale

I chaired an expert panel with representatives from BP, ANZ Bank, Rio Tinto and MMG to evaluate the relevance of Global Business Service models for Australian businesses.

The largest organisations in Australia, which include RIO, BP and ANZ have all established multi-tower business service models providing a range of support and customer facing functions.  They are continuing to evolve these organisations and due to competitive and economic pressures are expecting to seek further ways to deliver value, not just from efficiency gains, but from effectiveness and delivering  value-added insight for the business.  Some key points made that I found interesting:

  • Ken Jefferd (BP’s Leader of GBS ANZ) and Marcantonio Maglione (Global Process Champion Finance from Rio Tinto) highlighted the “hybrid” nature of their business service models with services delivered by onshore, offshore and outsourced teams.  They stressed the importance of effectively communicating, collaborating and continuously working with remote/offshored teams to maximise value and relationships.  Marc also highlighted the importance of ensuring that work is appropriately allocated across BPO vendors and they stick to their defined scope.
  • But scale is not a barrier to GBS!  Lara Higson (GM Business Services) from MMG demonstrated how an Australian business can make a Global Business Service model work with as little as 100 FTE across 4 global locations.  Key factors in this success include Executive sponsorship, alignment to company strategy and common governance/oversight to ensure that each shared service acts in a coordinated way.
  • All of the speakers in the panel discussion highlighted that GBS was an ongoing journey and additional business value continuously needs to be found.
  • David Cecil (Group General Manager GBS at ANZ) highlighted the importance of the alignment of GBS vision, strategy and execution to the overall business strategy.
  • Ken Jefferd made an important distinction.  BP look at internal stakeholders within business units as partners, not customers – for them this is an incredibly important distinction and permeates in the nature of relationship that they have with the business.
  • The speakers highlighted that each of their businesses were working towards delivering further value from GBS – through provision of greater analysis, insight and more value-add activities – there was agreement that there is a lot of further opportunity to do this.  All are moving up the value curves across each of the functional areas in scope.
  • Marc Maglione from Rio Tinto highlighted the importance of Global Process Ownership and the importance of organisations shifting their focus to  process to gain maximum value from Business Services.

Untapped value: opportunities abound for Australian shared service organisations to improve.  Some great pointers on on future direction were on display

What really struck me walking around the conference was how much latent value organisations in Australia can extract from shared services.  Below, a few factors that reinforced this sentiment:

  •  Only 9% of the attendees at the conference considered their organisation to be ‘top quartile’ in terms of operational excellence.  Whilst there may be a few harsh markers… this says it all.
  • Shared Service first generation stalwarts such as Accounts Payable automation remains a major topic of interest for attendees at the conference. Mark Spazani (Finance Manager Shared Services for Victoria Police) and Cynthia Singh Head of Business Services at Downer EDI, and previously Arrium) highlighted the value that can be optained by moving away from paper, increasing EDI and developing an optimal AP transactional framework to ensure invoices are treated appropriately (EDI, P-Card, Three Way Match etc).
  • Clare Lezaja (Finance Director Retail products at Telstra) highlighted the importance of an effective shared service centre as part of enabling Telstra’s redefined operating model.  Without an effective and efficient shared service group (a hybrid onshore/offshore/outsourced team), Telstra will be unable to shift the majority of the focus of their finance function from value preservation to value creation.  Telstra are currently building their finance business partner capability to capitalise on the value creation opportunity.
  • I loved the vision that Morag Eyles (Head of HR Shared Services, ANZ) and team have painted for their team.  With a key factor being helping the business predict the future. For me, predictive analytics and insight will be key factors in all successful Business Services teams delivering value as we move forward.
  • ANZ also demonstrated that Recruitment process offshoring can work.  With Australian based staff coordinating the process with end customers with  Philippines (search/screening) and Indian Based teams (checking e.g. references, financials, and contract completion).  Whilst ANZ are on a continuing journey, significant value and customer satisfaction has been delivered thus far in delivering their more than 17,000 annual positoons.
  • And finally… Robotic Process Automation, its coming!  It was great to hear from Nigel Clarke (Assoicate Director – Global Accounts at Tyco) that Tyco and their outsourced partner IBM are evaluation Blue Prism’s robotics solutions for use in their business services organisation.  I’m excited about the possibilities of Robotic Process Automation (RPA) and can’t wait to see the results.

All in all, I think the future of shared and Business services in ANZ is both challenging, exciting and critical for ongoing business competitiveness.  Watch this space!

If you have insights, takeaways, thoughts from the conference or just alternative perspectives I’d love to hear about them at eanevans@deloitte.com.au .

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