Global business services in the digital age
I recently keynoted to an EMEA-wide gathering of Global Business Services (GBS) leaders. GBS can be considered the child of shared services and the grandchild of outsourcing. Outsourcing to a third-party was once very fashionable. What could be better that dumping your boring ‘non-critical’ functions onto a provider who conversely saw them as critical to their success, and who could deliver them cheaper through economies of scale?
Missing you already
The problem arose when service buyers not only outsourced their non-critical activities, but also waved goodbye to their associated expertise, and in turn adios-ed control. Thus, access to the heart of your business was only available via a commercial contract; one designed to deliver to as low a standard as legally possible, because anything above that simply ate into the vendor’s profit.
The IT function proved particularly problematic what with its trail of undocumented and patchworked legacy systems.
The paying end of an outsourcing contract was a bad place to be should you have needed to change your business model or acquire an organisation.
Shared services were the natural response. Pull the non-critical services back inside the factory gate and set them up such that the organisation now has an internal service provider that meets the needs of multiple departments. Typically, the shared service was monofunctional – eg. IT.
GBS – Getting Better Services?
GBS offered a more holistic approach in that it is focused on providing general back office services across multiple disciplines, for example finance, IT and HR. Such a global approach enabled the organisation to physically locate the services where it had access to best-value personnel, ie. capable and relatively cheap. Given the large head count of a typical GBS operation relative to the organisation it serves, it was well placed to refine the associated process flows and implement RPA (Robotic Process Automation) to continue the relentless drive to cut costs.
But there are issues with this model.
- Customer-indifference – It potentially decouples GBS staff from the organisation’s customers. This can lead to customer indifference or even a poor customer experience. GBS staff may feel justified in enforcing certain rules or be comfortable in not rushing to process a ticket, even though a minor deviation from policy / the service level agreement could make the difference between winning or losing a major contract.
- Talent-hostile – Who wants to work for a function whose sole aim appears to be to eliminate its people? Increased mobility and connectivity means that cheap and smart people will naturally gravitate to where they can become wealthy and smart. The only counter to that is salary inflation or enslavement.
- Behind the times – GBS is underpinned by the industrial era notion of certainty. Thus, GBS becomes an exercise in continuous refinement of the factory so to speak. This approach is not aligned with the uncertainty and increasing clock-speed of the digital age. Industrial era service provision will lead to a major organisational fault-line.
So, should we revert to outsourcing? I would give a qualified yes, if there was a provider that could offer a truly integrated enterprise app store comprising easy to use automated business services.
The future history of GBS
My reason for giving a qualified yes is because GBS has the potential to become much more than a home for the unambitious. The history of shared services and GBS is as follows:
- Chapter 1 – De-humanation: Make people do inhuman work. Process work can be mind-numbing, whether it takes place along a conveyor belt or deep inside a spreadsheet.
- Chapter 2 – Automation: Automate the work. In many respects this was / is a form of human emancipation. Though there are often economic consequences for the ‘liberated’.
I think there are another couple of chapters that if rolled out fairly quickly could move GBS to the forefront of the business. So:
- Chapter 3 – Re-humanation: Reintroduce people into GBS, but not as process cogs, but as free-thinking advisors who provide value adding consulting services to the wider business and even to the organisation’s customers. Keep in mind that service is the new sales as the world moves to a ‘pay per X’ approach to consumption. The customer is king again.
- Chapter 4 – Augmentation: GBS becomes the driver of boosting staff productivity through the intelligent use of new technologies such as AI and analytics. This could be considered HR department on steroids. Or is it the IT department on steroids? The future of business will be based on the extent to which cognitive capacity is managed, having IT and HR under one roof so to speak will accelerate the union between these two traditional silos.
- Chapter 5 – Experimentation: Businesses that only have one business model in the digital age are at risk. The number of business model experiments an organisation has running at any given time is a measure of its long-term prospects. The industrial era factory model doesn’t have a natural home for this. Why not make it a GBS function?
Chapters 3 to 5 might feasibly run in parallel.
What does Nature tell us?
GBS represents an opportunity to reinvent your industrial era organisation from the inside out. But it needs both leadership competence and will.
Perhaps GBS is the organisational butterfly that will enable your organisation to break away from its industrial era confines?
Nature gives us many examples of transformation, perhaps we should take the hint?