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Does The Global Business Services Model Still Matter
Does The Global Business Services Model Still Matter
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Over the past two decades, companies specialists from multiple functional areas—IT,
in various industries have pursued shared- finance, human resources, and the like. They
services opportunities by deploying a global handle a range of end-to-end tasks, such
business services (GBS) model. GBS groups as procurement-to-payment and employee
focus on managing many of the general and onboarding. GBS groups’ overarching
administrative tasks that happen on the back mandate is to provide the business with a
end of a transaction, leaving the business comprehensive set of services at a low cost
units more time to focus on customer- or and at agreed-upon levels of quality.
product-specific activities. Traditional shared-
services organizations focus on supporting However, for a number of reasons, many
tasks associated with a single function companies are reexamining—and, in some
only. By contrast, GBS groups comprise cases, backing away from—their commitment
to GBS. Some argue that the model has GBS models are generally lower than
introduced greater organizational complexity those in peers without GBS. Many of these
but not necessarily better performance. companies have reduced their costs between
Specifically, we’ve heard the following 20 percent and 30 percent while increasing
from executives: their productivity through the use of lean and
agile approaches to process and demand
• The value that GBS groups create management. But aside from gaining near-
for organizations has not been clearly term cost benefits—still a big draw, according
established, so some companies are left to our research—why should companies go
wondering whether their investments in through the trouble of building or maintaining a
new technologies and processes will really GBS group?
pay off.
Because the model still matters. GBS teams
• Governance of GBS groups remains can deliver the same cost and productivity
cumbersome, and team outcomes are advantages they always have, but the rise of
not well tracked. As a result, in some digitization enables GBS groups to provide
companies, GBS teams are perceived benefits that go beyond cost. GBS teams can
as unresponsive, neither addressing incorporate automation, virtualization, analytics,
the current needs of the business nor and other digital tools and capabilities into
introducing innovations. their existing operations and develop and
deploy more effective ways to support the
• GBS teams are not attracting the right business units. These innovations can enable
talent; it can be difficult to find staffers who significant organizational growth (Exhibit 1). A
have both the required functional expertise core challenge for business executives and
and a strong focus on customer service. GBS leaders, however, is reimagining what
general and administrative support services
• Digital technologies such as process should look like in a digital era. In this article,
automation, robotics, and machine learning we suggest a path forward.
allow companies to address their business
units’ service requirements quickly and Building the case—and
efficiently without having to go through capabilities—for GBS
the arduous work of implementing a Who is deploying GBS? About 30 percent
GBS structure. of global companies in the Fortune 50 are
pursuing some level of migration to a GBS
• Companies are under increasing pressure model, according to published studies. The
to be more agile, and senior leaders are average size of the typical GBS organization
questioning whether GBS groups can be varies based on the size of the parent company
responsive enough. but can be as large as several thousand team
members (Exhibit 2). In our own survey of
Given these trends and concerns, it is certainly companies deploying GBS models, most
worth asking if GBS models are still relevant. respondents said they plan to increase
According to our research, administrative the scope of their programs, incorporating
expenses in companies that have implemented complex functions like legal tasks and strategic
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EXHIBIT 1 Companies can achieve significant benefits from their use of the global
business services model.
Source: 2016 McKinsey survey on the scope of global business services programs (we surveyed 28 companies from a range of
industries, including energy and materials, banking, pharmaceuticals and medical devices, and consumer goods)
planning into the mix (see sidebar, “The future managed by the GBS team. Many companies
of GBS: McKinsey survey results”). And about are encumbered by disconnected IT systems
70 percent are seeing early benefits from that can thwart GBS groups’ ability to integrate
deploying automation technologies within processes, simplify transactions, and bring
the traditional GBS structure—for instance, innovative services to their customers. And,
reduced errors and improved service-delivery as many executives told us, GBS groups are
times because of no-touch order entry. experiencing a significant shortage of talent.
Our research also shows, however, that For GBS programs to thrive in this era, we
building and maintaining a successful GBS believe companies need to pay attention to
program in an era of digitization is not an five critical factors relating to the makeup
easy task. Moving to a global business and management of their global business
services model can raise questions about services groups. Specifically, they need to
organizational structure, technology design global business services with more of a
capabilities, process ownership, and overall focus on customers, allow GBS teams to lead
governance. For instance, some business from the center, embrace a culture of agility
users get frustrated when they can’t retain and change, design global business services
control over tasks that are important in their for the long term, and aggressively manage
day-to-day work—for instance, accounts talent development. By emphasizing these
receivable—that are now being centrally five points, companies and their GBS teams
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EXHIBIT 2 Most of our survey respondents are relatively far along in their global
business services journey.
>2,500 4 9 1 1
1 4 1
1,000–2,500
500–1,000 2 1
100–500 2
<100 1 1
can realize not just the required cost savings but This approach marks a definite shift for most
also faster delivery of services, higher customer GBS and business leaders. There are tools and
satisfaction, and greater organizational flexibility. technologies that can help them adapt, however.
GBS teams must, at a minimum, conduct
Focusing on customers regular outreach and surveys to ensure that they
Centralizing multiple functions under a GBS capture customers’ requirements. They must
model will save companies money. For many develop a focused set of customer-satisfaction
customers of GBS, however, this benefit is metrics and incorporate them into their work
largely invisible. What matters more to them, plans. GBS leaders should conduct regular
particularly in a digital-business era, is quality check-ins with the functions they support and
and speed. GBS leaders are used to measuring communicate the results to team members.
their teams’ performance based on cost savings Team members can use this information to
and efficiencies achieved; what’s required gauge their performance and raise the bar on
instead is a greater focus on improving customer the levels of service they provide as they strive to
satisfaction and creating innovative services that attain the highest customer-satisfaction scores
meet customers’ emerging needs. Indeed, GBS for the month or quarter. Frequent monitoring
teams must treat their customers as strategic can allow GBS teams to react more quickly to
partners rather than simply end users. In turn, changing customer needs.
the heads of the business units and functional
groups need to see GBS as a source of value Increasingly, GBS teams are using cloud-based
creation rather than simply a cost center. case-management platforms, cognitive-
processing technologies, and enhanced
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The future of GBS: McKinsey survey results
In 2016, we asked 28 companies across several sectors about the scope of their GBS programs, the effect of
robotics or other emerging digital technologies on their programs, their governance models, and their talent
concerns. We saw some regional differences in the rollout and governance of GBS programs, but overall
GBS remained an attractive model to this cohort of users.
The respondents in our survey reported that their general and administrative costs had dropped between
30 percent and 40 percent through the use of the GBS model. Most said they plan to increase the scope of
their GBS programs; the most attractive functions are still finance and HR. And some respondents said they
are hoping to expand GBS into more complex functions, such as legal tasks and strategic planning.
They shared the following responses relating to services, automation, and governance:
• Services. Most survey respondents noted there was a clear plan to move beyond just transactional
services; more than 60 percent said they wanted to increase their use of data analytics. Generally,
companies said they were satisfied with the quality of GBS services, but they identified flawed technology
systems as a main obstacle to increasing that satisfaction. Additionally, company strategy and the
misalignment between GBS and business units both stood out as critical obstacles to improving end
users’ satisfaction with GBS.
• Automation. Survey respondents said their use of emerging technologies is delivering varying results,
but approximately half of companies report gains of more than 10 percent and a third have made gains
between 20 percent and 40 percent. Respondents said they generally favored easily deployed solutions,
such as robotic process automation.
• Governance. Few GBS teams see themselves as strategic partners, but they want to move in this
direction; defining the governance model, aligning GBS and business goals, and stronger functional
integration and collaboration seem to be the key steps for the future.
analytics to streamline customers’ interactions can offer end users personalized, interactive
and track performance. One company, for service experiences.
instance, has created an internal service
“storefront”—an intranet site featuring service Leading from the center
catalogs, knowledge-sharing databases, and Global business service groups own or interact
real-time information on the status of open with three of a company’s most important
requests and service trends. Other GBS assets. They manage tasks associated with
teams are experimenting with still-nascent many of the processes and IT systems that run
technologies such as artificial intelligence and the company. They handle much of the core
machine learning to create “chat bots” that data executives need to make critical business
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decisions. And they constantly come into performing analyses and drawing insights from
contact with much of the company’s workforce. the data. Critical financial-planning information
GBS groups are in a naturally privileged is now stored centrally, produced in a more
position, then, in terms of both expertise and cost-effective manner, and easily accessible to
access, to have a profound impact on all of those with appropriate permissions. And GBS
these assets. Therefore, they must be actively team members are leading a critical function
involved in any critical growth and change that offers significant value to the company’s
initiatives involving these assets. executive-leadership team.
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product owner on the agile team focus the checks, enrollment in the company’s benefits
group’s efforts and decide whether there was plans, scheduling of orientation and training,
a sufficient business case for moving forward and processing security tasks like generating
with further development of the product. access badges and email permissions.
The GBS team could help streamline the
Designing GBS for the long term onboarding processes for different cohorts of
In our experience, many GBS programs do employees—for instance, temporary workers,
not have the impact they could, because they senior executives, and line managers—based
were designed to deliver immediate results on factors such as the volume of hires and
or address a short-term need. Senior leaders business functions involved. The team could
often start out pursuing a GBS model with a also help determine where self-service options
focus on costs; they outsource or offshore make sense and where manual processes are
some services, then consolidate or otherwise still relevant.
reorganize what’s left without actually
considering other advantages they may gain Aggressively managing talent
from the model beyond cost. development
Many GBS teams struggle with talent gaps
A more effective approach is to define a target and high turnover, which can make it difficult
vision for what centralized service delivery to retain institutional knowledge and ensure
would look like at the company and work the viability of GBS programs long-term.
backward. In this era of digitization, GBS Employees with the right combination of
leaders and business-unit heads must come functional expertise and customer-service
to a shared understanding of which processes mind-set are in short supply. Finance experts
could be automated or otherwise technology- who join GBS, for instance, may tire quickly of
enabled and which processes and critical the churn associated with customer service,
business decisions still require primarily human while employees with great service capabilities
intervention. GBS leaders should work with may not have the deep insights required to
function and business-unit heads to take meet the needs of finance customers.
inventory of all the processes and work flows
that affect customers’ transactions with the GBS teams, like other organizational groups,
GBS group. Armed with this information, GBS must therefore invest heavily in talent
leaders can seize opportunities to improve acquisition, management, and development.
the experience by introducing new digital Some companies have created three- or six-
technologies and capabilities in a streamlined, month opportunities for GBS staffers to rotate
end-to-end manner. into roles in other groups—in some cases,
to learn more about new technologies or
Consider the example of employee onboarding. management approaches. Other companies
With a comprehensive planning approach, encourage business-unit leaders to experience
GBS groups can reimagine and improve upon life in GBS through a formal rotation in the
the tasks required to welcome a new employee group or through informal town-hall meetings
to the company—for instance, automating and “day in the life” presentations. Such role-
the full process from data entry of personal switching opportunities are critical for creating
information, performance of background a culture in which employees’ time spent
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in GBS becomes an important part of their and experiences, we believe GBS still
natural career progression. matters—and in many ways can be a critical
differentiator for companies trying to compete
To broaden the pool of talent, GBS leaders in an era of increased digitization. But we
will need to look for help not just among also understand that the governance and
university recruits but among experienced management of GBS teams must change
hires. The GBS team also needs to work with the times. GBS leaders and business-unit
with HR to develop team-specific training heads must acknowledge that the world of
programs aimed at building functional and service provision is growing more complicated,
leadership skills. These should include that digital technologies are changing both the
sessions on “soft skills” relating to customer content and the purpose of GBS teams’ work,
service, such as problem identification and and that customers’ service expectations
resolution. Or they may ask subject-matter are increasing.
experts within the GBS team to educate
their colleagues about emerging practices To thrive in this environment, GBS teams need
in their respective fields. HR should also help to move beyond their traditional focus on
GBS leaders define clear career paths within efficiency. They must incorporate the voice of
the GBS group to expand opportunities for the customer into their operations and focus
employees coming from more traditional on delighting end users. They must alter their
functional organizations and to improve operating models so they can provide end-to-
retention rates. end services and respond quickly to changes in
the business environment. They must build new
digital platforms and take better advantage of
existing ones to enhance their services and
Many companies struggle with GBS play a critical role in broader business changes.
programs for very practical reasons, and And they must embrace talent development as
there is increasing pressure to prove the a true source of distinctiveness.
value of the model. Based on our research
Matthias Daub is a partner in McKinsey’s Berlin office, Andreas Ess is an associate partner in the
Zurich office, Jonathan Silver is a partner in the New York office, and Samir Singh is a senior expert
in the Stamford office.
The authors wish to thank Michael Bloch and Allison Watson Pugh for their contributions to this article.
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July 2017
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