from global business services to digital business … · from global business services to digital...
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From Global Business Services to Digital Business Services December 8, 2014
Architects of Global Business
Phil Fersht President & CEO
HfS Research
Cliff Justice Partner & U.S. Leader, Shared
Services and Outsourcing Advisory
KPMG
Lee Coulter CEO
Ascension Health Ministry Service
Center (MSC)
Rick Bertheaud
Principal, Shared Services and
Outsourcing Advisory LLP
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Today’s Cast of Characters
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Phil Fersht, President and CEO, HfS Research
Overview:
• Over 18 years’ business experience in the global outsourcing and shared services industry across US, Europe and Asia
• Acknowledged industry advisor, strategist, author, speaker, practitioner and blogger
• Author and creator of the most widely-read blog in the global services industry, entitled “Horses for Sources” and now entering its eighth year with over one million visits per year across the globe
• Advised on 100s of global IT & BPO engagements
• Named "Analyst of the Year 2011” by the Institute of Industry Analyst Relations (IIAR), winning the premier analyst award for a second successive year - the most coveted global award for industry analysts in technology and services industry.
Previous experience:
• Over 18 years’ business experience in the global outsourcing and shared services industry across US, Europe and Asia
• Acknowledged industry advisor, strategist, author, speaker, practitioner and blogger
• Author and creator of the most widely-read blog in the global services industry, entitled “Horses for Sources” and now entering its eighth year with over one million visits per year across the globe
• Advised on 100s of global IT & BPO engagements
• Named "Analyst of the Year 2011” by the Institute of Industry Analyst Relations (IIAR), winning the premier analyst award for a second successive year - the most coveted global award for industry analysts in technology and services industry.
Prior Career
• Regional Director, IDC Asia/Pacific
• Program Manager, European IT Markets Services, IDC Europe
Education:
• BS with Honors in European Business & Technology from Coventry University, United Kingdom
• Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble, France
• Diploma from the Market Research Society in the United Kingdom.
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Cliff Justice, U.S. Leader and KPMG Partner Shared Services and Outsourcing
Advisory
Overview:
• Cliff is a leading authority in global service delivery model design and sourcing with more than 20
years of experience in operations, outsourcing, offshoring and enterprise services transformation.
• He led the integration of EquaTerra into KPMG which created the world’s leading Shared Services
and Outsourcing Advisory firm.
Professional and Industry Experience:
• Cliff’s industry experience includes: Energy, Financial Services, Healthcare, Pharmaceuticals,
Manufacturing, Human Resources, Transportation, Consumer Products, Agribusiness, and
Technology.
• He has deep knowledge of the key global delivery markets, with significant delivery experience in
India, Philippines and Eastern Europe.
• Cliff has extensive outsourcing experience with most global service providers including: IBM, HP,
Accenture, Genpact, Capgemini, TCS, WNS, Wipro, Cognizant, Infosys, Satyam, HCL, and others.
• He has been a part of over 50 significant transformations, outsourcing transactions, cost
optimization and operational improvement initiatives since 1999.
• As the practice leader, Cliff serves on various client advisory boards and has an expansive view of
many KPMG engagements, client priorities and market trends.
• Prior to joining KPMG, Cliff was a Managing Director with EquaTerra, leading their globalization
advisory practice.
• Prior to EquaTerra, Cliff was a founding member and Managing Director of neoIT, where he helped
companies globalize and optimize their back office services.
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R. Lee Coulter, CEO - Ascension Health Ministry Service Center (MSC)
Overview:
• Lee joined Ascension Health in September 2010 and is currently leading shared services for the
Symphony transformation as CEO of the new Ministry Service Center based in Indianapolis.
• Lee Coulter is an internationally recognized expert and sought after speak in Shared Services,
Information Technology, Business Process Outsourcing (BPO) and Business Process
Transformation. Lee is an industry analyst with HfS Research, a senior advisor with Frontier
Strategy Group, and serves on the Global Steering Team of the Shared Services and Outsourcing
Network. He has consulted and advised many of today’s largest companies in shared services,
outsourcing, and business process transformation.
Previous experience:
• Lee has more than 25 years of experience in shared services. He spent 15 years as a commercial
service provider with General Electric in healthcare and hospital services as well as IT services. In
the last 8 years, he has built and led multi-function shared services internally for companies such
as AON and Kraft. Lee also has been deeply involved with the emerging market regions for more
than 15 years having lived in Asia and Latin America.
Education:
• Mr. Coulter holds a BS in Electronics Engineering from DeVry University and has completed all
course work for a BS in Electrical Engineering and a Masters Degree in Biomedical Engineering at
California State University at Long Beach.
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Rick Bertheaud, Principal, Shared Services and Outsourcing Advisory - KPMG
LLP
Overview:
• Rick Bertheaud is a principal in KPMG LLP's Shared Services & Outsourcing Advisory practice and leader
of its Strategy and Shared Services Competency.
• Rick has more than 25 years of experience in management consulting and senior financial management
positions, including roles as a corporate controller and chief financial officer. This mix provides Rick with the
analytical tools, practical know-how and executive perspective to help clients shape their finance transformation programs.
• Rick is sought after for global business services strategy, assessment, outsourcing advisory and governance. He has helped leading pharmaceutical and life sciences organizations model and leverage
services across business units and geographies. He has spoken and developed papers for Shared Services
and Outsourcing Network events, Executive Finance and Shared Services News, and Business Trends Quarterly.
• Rick's experience before joining KPMG includes a successful tenure as controller for a division of ARAMARK, corporate controller for OMNI Construction, CFO for Exxel Container, Inc. and client executive
for EquaTerra.
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Profile of Study Respondents
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About our 482 Global Respondents
GBS
Leaders 35%
Advisors
31%
Providers 33%
Equal Mix of Providers, Advisors and GBS Leaders
VP & above
35%
Director 33%
Manager
25%
Other 8%
16%
16%
16%
12%
10%
8%
7%
5%
5%
3%
2%
1%
1%
Manufacturing
Banking & Financial Services
Healthcare, Pharma & Life …
Insurance
Software & Telecom
Other
CPG
Entertainment, Media & …
Retail & Hospitality
Transportation & Logistics
Energy, Oil & Gas
Public Sector
Utilities
18%
8%
20%
14%
18%
23%
Less than $500M
Between $500M and $1B
Between $1B and $5B
Between $5B and $10B
Between $10B and $25B
Greater than $25B
26% <$1B
41% >$10B
34% $1B to $10B
Senior Stakeholders
Diverse Industry Backgrounds
Mostly Midsized or Larger Companies
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Key Study Findings
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C-Suite Priorities: Cost Reduction is Aggressively Back on the Agenda. End-
to-End Process Optimization and Analytics also Gaining Traction
52%
48%
29%
29%
26%
25%
24%
23%
21%
18%
16%
11%
9%
38%
41%
40%
31%
48%
35%
43%
34%
23%
30%
29%
23%
25%
7%
8%
19%
22%
21%
28%
24%
25%
23%
37%
26%
29%
26%
3%
12%
18%
5%
13%
10%
18%
32%
16%
29%
37%
40%
To drive down operating costs
Cost effective, flexible services
To better address risk and regulation
To accelerate speed to market with new products/services
End-to-end process optimization
Seamless brand experience across customers, employees and
partners
Real-time data-driven insights
To drive product innovation
To achieve hyper-growth in emerging markets
Access to improve the quality of operations talent
Seamless integration of acquisitions
To restrict the recruitment of labor where possible
Invest in process automation and robotics to reduce reliance on
labor
Mission Critical Increasingly Important Emerging Not a Directive
How critical are the following C-Suite priorities/directives, in terms of shifting from a Cost Focus to a Value Focus with your operating model?
Source: HfS Research, Base: 168
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C-Suite Priorities – Emerging Interest in Robotic Automation to Reduce Labor
Costs
25%
22%
13%
11%
4%
25%
11%
19%
22%
25%
33%
13%
50%
19%
33%
25%
13%
38%
17%
50%
33%
46%
53%
Consumer Packaged Goods
Healthcare, Pharma & Life Sciences
Banking & Financial
Software & Telecom
Manufacturing
Insurance
Intention to invest in process automation and robotics to reduce reliance on labor
Mission Critical Increasingly Important Emerging Not a Directive
How critical are the following C-Suite priorities/directives, in terms of shifting from a Cost Focus to a Value Focus with your operating model?
Source: HfS Research, Base: 168
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A third of major Enterprises aspire to adopt GBS in the medium-term, but
many do not expect to get there
Which shared services and/or outsourcing operating model is your organization ASPIRING to deploy in the next 2 years, and MOST LIKELY to be deploying in the next 2 years?
35%
38%
19%
8%
19%
38%
38%
50%
27%
19%
33%
38%
$1B to $5B
$5B to $10B
$10B to $25B
>$25B
Shared Services / Outsourcing
Global Shared Services / Outsourcing
GBS
27%
38%
19%
18%
32%
38%
62%
68%
14%
14%
10%
11%
$1B to $5B
$5B to $10B
$10B to $25B
>$25B
Shared Services / Outsourcing
Global Shared Services / Outsourcing
GBS
LIKELY OPERATING MODEL ASPIRATIONAL OPERATING MODEL
Source: HfS Research, Base: 167
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Business Services models are evolving to meet these complex demands
Level 01
FRAGMENTED
Decentralized service
delivery model
Duplicative functions,
processes, and
technology
Little central control and
governance over
business support
services
Level 02
SUB-SCALED
Consolidated delivery
model
Leverage economies of
scale for highly
transactional services
Shared services or
outsourcing typically on
a single-function,
regional basis
Level 03
SCALED
Global business services
Multi-function, silo’d
transactional business
service model
Variation around the
inclusion and level of
processes, technology,
and governance
standardization
Level 04
INTEGRATED
Global business services
Enterprise wide multi-
functional transactional
and specialist business
service model
Coordinated processes,
technology, governance,
and multi-channel delivery
for scale and adaptability
Level 05
STRATEGIC
Global business solutions
Multi-functional, multi-
channel business service
model
Provides transactional,
expert, and analytic services
Managed through integrated,
outcome-oriented
governance
Synced end-to-end business
solutions
14% 3% 2%
20% 12% 13%
31% 30% 26%
26% 46% 34%
9% 10% 25%
Current Model
Likely Model Aspirational
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GBS Adopters Getting Value from BPaaS, Mobility and Analytics
27%
18%
18%
9%
9%
9%
9%
36%
55%
64%
9%
18%
36%
46%
27%
27%
9%
46%
55%
36%
27%
55%
46%
9%
0
9%
27%
9%
18%
18%
36%
27%
9%
9%
9%
27%
Business Process-as-a-service
Mobility solutions
Business intelligence/Analytics tools
Robotic process automation
Advanced competencies in data science to support
mgmt decision-making
Social media and collaborative technologies
Cloud Services
Cognitive computing/artificial intelligence
Next generation supply chain advancements
A Great Extent Some Extent Limited Extent Still Investigating Don't Know
To what extent are the following technology advancements enabling value within your GBS organization?
Source: HfS Research
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9 out of 10 Buyers See GBS as Shifting Focus from Cost to Value and Proving
Career Direction for Governance Execs
35%
35%
28%
27%
25%
12%
5%
53%
55%
51%
64%
56%
43%
36%
10%
7%
20%
8%
16%
34%
45%
2%
4%
2%
2%
3%
12%
15%
GBS changes the focus from one of mere cost containment to
one of higher value contributions from operations
The GBS roadmap provides more rewarding career
opportunities for operations and governance executives
GBS adds a completely new dimension to the aging shared
services model
GBS provides the most comprehensive framework for
ambitious global business to follow
GBS enables operations executives to get the best out of their
outsourcing relationships
GBS is consulting jargon and will be replaced by something
else in a year or two
GBS is a flashy new term for shared services with little
substantive impact
Agree Strongly Agree Somewhat Disagree Somewhat Disagree Strongly
To what extent do you agree/disagree with the following statements about GBS?
Source: HfS Research, Base: 168
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Enterprises Really Struggling with Talent, Analytics, Change Management and
Technology Enablement
In terms of the performance and maturity of your current operating model: (a) How well is your current operating model performing against the following measures? (b) Has this performance level been improving, staying the same, or deteriorating over the last year?
Buyers = Senior Level Enterprise Buyers (> $10B Revenues and VP+)
58%
42%
33%
33%
33%
25%
25%
17%
17%
46%
82%
36%
55%
55%
55%
27%
46%
55%
Service portfolio
Change and Program Management
Risk and Compliance Management
Commercial Orientation
Delivery and Sourcing Strategy
Enterprise Service Governance
Enabling technology
Talent Management
Data and Analytics
Current Performance: % Performing Excellent / Quite Well
Improvement over Last Year: % Improving Significantly / Some
Current Performance
Improvement over
Last Year
Source: HfS Research, Base: 164
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Technology, Talent and C-Suite Commitment are Critical
To which extent would the following methods/actions (in your opinion) help better align your business operations governance with your corporate goals and directives – and drive more value across your organization? Buyers = Senior Level Enterprise Buyers (> $10B Revenues and VP+)
15%
15%
23%
25%
31%
31%
31%
31%
46%
62%
39%
31%
46%
42%
54%
46%
31%
15%
15%
15%
39%
31%
15%
25%
8%
15%
31%
46%
31%
8%
8%
23%
15%
8%
8%
8%
8%
8%
8%
15%
Formal management and staff training to manage in a
centralized/GBS environment
Hire new leadership from outside to bring fresh ideas/drive
new initiatives
A formal change management program to reorient existing
talent
Reorienting our outsourcing relationships to be priced on
services outcomes, as opposed to fixed labor costs
More collaboration with our service providers
Providing a more simplified operating structure which gives
greater scope for innovation across the business
Hire new talent that can work with the business units to
create value
De-cluttering operational agendas to allow key staff to
spend more time on market support and value-creation …
Better IT systems
Stronger commitment to a centralized and empowered
services governance function from our C-suite
A Great Extent Some Extent Little Extent Not At All
Source: HfS Research, Base: 168
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Buyers want Providers to Invest in Automation and Analytics
2.46
2.54
3.00
3.46
4.77
4.77
Process automation tools
Operational Excellence
Analytics/BI tools
SaaS business platforms
Analytical talent acquisition and training
Geographic expansion of delivery center
footprint
Please rank in importance, where 1 is the most important, the following areas where you would like to see IT Services/BPO service providers invest to add “value beyond cost” to your organization.
1 = Most Important
6 = Least Important
Buyers = Senior Level Enterprise Buyers (> $10B Revenues and VP+)
Source: HfS Research, Base: 168
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But Only 1/3 of Enterprises see Providers as Delivering Real Value Beyond
Cost
A vital partner that plugs critical gaps in terms of
skills, global scale, domain
knowledge and technology
34%
A lever to drive down costs and
improve efficiencies
49%
Provision of access to cheap labor, but little
value beyond that
17%
So what do you really think of service providers today?
Source: HfS Research, Base: 164
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Indian-heritage providers are face a talent crunch
73%
69%
67%
62%
53%
48%
48%
40%
38%
70%
67%
89%
78%
44%
57%
46%
41%
56%
Clients looking to move away from the FTE commercial
model of the past
Clients reducing spend on IT/BPO services
Training existing account managers with the technology
and business skills to support increasingly complex …
Hiring new account managers with the technology and
business skills to support increasingly complex client …
New services firms entering the services market with
disruptive offerings
Low-cost competitors strategy to "buy" deals
Lack of quality research/data from industry analysts
BPaaS / IaaS models driving down our profit margins
Clients investing in captives and trying to do more
themselves
Western-based Indian-centric
How significantly are the following challenges impacting your business? (% Increasing Significantly / Somewhat)
Source: HfS Research
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Wrap-up and Key Observations
Cost reduction is aggressively back at the top of the C-Suite agenda, with particular emphasis in Life
Sciences
Very strong C-suite interest in end-to-end process optimization, analytics, robotic process automation and
other technology enablement to achieve sustainable improvement
While only a third of outsourcing buyers see current relationships delivering significant value, the vast
majority of these buyers view service provider collaboration, integration and accountability as a means to
drive significant value
GBS executives also recognize the need to overcome current challenges with talent, change
management, and commercial orientation
The model for GBS organizations is continuing to evolve, with more than half respondents aspiring for
significant levels of maturity
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Appendix
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About HfS Research
HfS Research is the leading analyst authority and knowledge
community for business services strategies
Dedicated analyst team across the United States, Europe, and
Asia/Pacific, headquartered in Boston
Distinct focus on business services and global operations with
technology as an enabler
Facilitates the HfS Sourcing Executive Council, the highest quality
network of enterprise buy-side executives leading sourcing initiatives
Industry-leading Governance Proficiency Certification Program (GPCP)
is designed to help today’s sourcing executives approach service
provider relationships and governance strategy with a sophisticated and
pragmatic approach
Acclaimed research focus on demand-side trends, market landscapes, supplier evaluations (“blueprints”), pricing dynamics,
market sizing, and forecasting
Leverages the vast HfS community of sourcing professionals to deliver rapid insights on global sourcing industry trends and
developments, surveying the opinions and dynamics of 20,000 organizations in 2011–13
The largest Web and social media presence in the sourcing industry with 145,000 research subscribers and the leading
blog in the industry (horsesforsources.com)
A well-regarded new generation media outlet qualified as a Google news source and regularly quoted on services trends in
the Wall Street Journal, The Economist, CIO Magazine, and BusinessWeek
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About KPMG’s Shared Services and Outsourcing Advisory practice
The world’s largest independent third-party sourcing advisor with
hundreds of dedicated sourcing professionals in Europe, Asia Pacific,
and North America
Capabilities stretching across the full life cycle of strategy to optimization
Extensive global business services strategy, design, and implementation
experience
Our advisors have deep functional knowledge in all the major business
support functions including technology sourcing, finance & accounting,
human resources, procurement, customer contact, and facilities
management
The global reach of KPMG’s Advisory member firm network – with
30,000 professionals across the Americas, Europe, the Middle East, and
Asia Pacific
Our advisors are supported by a broad set of intellectual property, tools,
and industry-leading research, including our quarterly Sourcing Advisory
Global Pulse Survey—providing insights into trends in end-user
organizations’ usage of Global Business Services (GBS) costs
Active relationships with all Tier 1 and 2 vendors meaning we
understand their business, capabilities (and limitations), strengths and
weaknesses, and who the decision makers really are
Our independence from vendor or technology means we can be trusted
to provide unbiased advice to clients, serving their interests rather than
our own
Access to KPMG International’s broader set of global member firm
capabilities in risk, transactions, tax, and compliance
© 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
© 2014 HfS Research Ltd. NDPPS 302785
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