gbs the future of sourcing
TRANSCRIPT
Global Business Services (GBS):The Future of Sourcing
Helping Clients Leverage Global Services & Sourcing
Advisory | Supply Monitoring | Governance Support
www.NeoGroup.com | www.SupplyWisdom.com
www.NeoGroup.com | www.SupplyWisdom.com
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Introduction
Global Business Services (GBS) is gaining
a lot of traction among the Global 2000
enterprises as the next transformative
upgrade to their global sourcing models. As
with all new strategies and ideas, different
organizations define GBS differently and
have different expectations from this model.
This paper attempts to define GBS in a
comprehensive manner, as well as discuss
how the model evolves and must meet
different expectations at each level of its
maturity.
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GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Global sourcing models are ever evolving to accommodate the growing complexities within
global enterprises and new challenges. While Shared Services Centers (SSC) and 3rd
party Independent Software Vendors (ISVs) paved the way for the early sourcers to
leverage global talent for the IT organizations, their wide acceptance triggered
development of offshore centers within globally dispersed enterprises, called captives or
Global In-house Centers (GICs). The adoption of captives/ GICs have been rapid in the
past decade and there are currently over 2000 GICs globally. Over half these global
captive centers serve US based companies, and about 55% of all GICs are based in India.
As enterprises grow in complexity and geographic diversity, it becomes imperative to adopt
evolved sourcing strategies which are better aligned to the overall enterprise business
strategy and can comprehensively address the sourcing needs of the enterprise. Many
sourcing models in the industry like 3rd party managed services, SSCs or GICs are mostly
an either/or model, which does little to integrate the efficiencies of both the 3rd party
vendors as well as internal sourcing capabilities.
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INTRODUCTION
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved. 4
For the most mature globalizers, it was the search for such transformative and integrated
multi-sourcing models that resulted in the evolution of Global Business Services. Most
companies that have adopted the GIC model have now achieved maturity, and GBS has
become the natural way forward for these organizations. The consumer services industry
began successfully experimenting with GBS in the early 2000s. P&G owes savings of over
$800 million to their successful GBS organization. While companies like P&G have been
vested in GBS for over a decade, other global enterprises have recently begun to
increasingly adopt GBS strategies for their sourcing needs.
INTRODUCTION
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Defining GBS
The proven success of the GBS model in
large global organizations has caught the
interest of global organizations of all sizes
and this aspirational model has been
established in different organizations with
varying degrees of success. Global
Business Services has also meant different
things to different organizations, which
makes it important for us to define GBS in
the right context for the purpose of our
discussion in this paper.
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GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved. 6
By consolidating multi-functions services
and delivery models under a single
organization, GBS has the potential to
realize far more value than the ‘sum of the
parts’.
Definition
Global Business Services (GBS) is an autonomous
business organization within an enterprise that is
responsible for the delivery of end-to-end business
processes using integrated services from internal
and 3rd party sources, across locations and business
units.
DEFINING GBS
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
How does GBS
Compare?
A GBS model differs from traditional
‘captive’ sourcing strategies such as
Global In-house Centers (GICs) and
Shared Services (SS), and also from
traditional 3rd Party outsourcing
models including Staff Augmentation
and Managed Services.
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GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
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GBS COMPARISON
Attributes GBS Traditional GIC/SS Traditional Outsourcing
Executive
SponsorshipCEO/COO CFO or Function Head
Function Head or CPO or
Sourcing
CharterAligned with corporate
business objectives
Aligned with business
functions
Aligned with projects or
discrete functions
AutonomyGBS manages its own
budget
Budget controlled by CFO
or Function
Budget controlled by
Functions
Metrics &
Success Factors
Measured by corporate
outcomes
Measured by process
outcomes
Measured by SLAs and
cost efficiency
Services
Combination of internal IT
& business services and
externally sourced
services
Internal IT services and/
or functional processing
services
3rd. Party ITO/ BPO/ KPO
Managed Services
Delivery Integrated Function based Task based
ProcessesStandardized global
processes
Different levels of
standardization across
functions
Largely optimized for cost
efficiency at task level
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
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GBS COMPARISON
Attributes GBS Traditional GIC/SS Traditional Outsourcing
Resources Internal and external Internal External
Demand
Management
Demand consolidation at
Enterprise level – multi-
function, across all
engagement/ delivery
models
Demand consolidation at
functional level; No
3rd.party leverage
No demand consolidation;
Complete dependence on
3rd. party services
providers
Vendor
Management
Global VMO manages all
vendor relations and
reports up to the GBS
No vendors involved, so
no VMO
Procurement manages
vendor relations; in some
cases VMO exists but
siloed
IP, Knowledge &
Best Practices
Enterprise-wide repository
of IP, Knowledge-base
and best practices;
Promote cross-functional
sharing
Retained internally but in
silos
Potential risk of IP
leakage; Limited
opportunity to leverage
vendor’s knowledge or
learn best practices
Analytics
Comprehensive
enterprise-wide data
available for analysis
Limited Analytics; Data
availability inconsistent
across functions
Minimal or no analytics
available as processes
are managed externally
Career Path
Multiple career growth
opportunities, across
regions and functions
Career growth limited to
specific functions and
regions
No growth path for internal
employees and limited
career growth options for
3rd. party resources
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
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GBS COMPARISON
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
GBS Evolution Model
Different organizations approach GBS
enablement differently, but they all aspire to
achieve an advanced, mature and well-
organized GBS sourcing structure. GBS
adoption, like other sourcing models, traverses
through various levels of maturity and growth. It
is critical for organizations to track their
performance against the various GBS related
strategies implemented in their organization to
help acknowledge what they are doing right and
identify areas for improvement.
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GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
A periodic assessment of the status of GBS evolution within an organization creates
opportunities to benchmark against the market trends and adopt new practices,
methodologies and tools to further evolve and grow the model. GBS organizations have
higher visibility and impact on the overall business strategy, and hence their performance
or the lack thereof, could result in deeper impact to the overall performance of the
enterprise.
An evolution assessment must focus on measuring risks and opportunities in different
layers of the GBS organization. It must help clarify what responsibilities lie with the GBS
and what areas could leverage a robust GBS program. The evolution index (a calibration of
the current stage in the evolutionary journey) contributes to set expectations from a GBS at
that specific stage of growth.
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GBS EVOLUTION
MODEL
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
The value of an evolution index is in being able to evaluate what level of GBS is ideal for
the enterprise at a given point in time and understanding key elements that contribute to
that level of performance. This helps in developing a scorecard for the organization against
which ongoing performance can be tracked.
When it comes to long term strategic goal-setting for the GBS organizations, the GBS
Evolution Index can be leveraged as a reference map to identify what areas to focus on or
avoid depending on the overall enterprise’s maturity forecasts and thus develop a long
term GBS strategy that closely aligns with the enterprise business goals.
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GBS EVOLUTION
MODEL
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Neo’s GBS Evolution Model classifies GBS evolution into 5 succeeding steps of maturity.
The journey to an efficient GBS governance structure can be tracked through milestones
for each stage. These steps help an organization classify their GBS performance under
either of the 5 stages and also be able to learn what level of transformation is required to
graduate to the level.
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GBS EVOLUTION
MODEL
5 Stages of the GBS Evolution Model
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
I. Basic:
Organizations that are beginning to focus
on GBS as a strategic option to manage
their offshore capabilities and sourcing
arrangements fall in this Basic level of
evolution. These are global enterprises
that have successfully established
offshore delivery centers or have a well-
established managed services capability.
At the Basic stage of the GBS evolution,
sourcing processes are still fairly
decentralized and there is no clear GBS
leader identified. At this exploratory stage,
GBS could just be a new name for a
bigger, better and improved Centralized
Shared Services (CSS) that is already in
place.
II. Evolving:
Enterprises that have already established
a GBS strategy and have begun exploring
ways to transform into a GBS led
sourcing organization are in the Evolving
stage. Though the business departments
are still reluctant to commit resources to
the changing structure, GBS must begin
to differentiate its purpose from that of the
main enterprise and establish
relationships with partners both external
and internal. At the evolving stage, GBS
organization would typically include at
least a CSS and remote Global In-House
Center (GICs) for a single function.
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GBS EVOLUTION
MODEL
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
III. Mature:
In an enterprise with a Mature GBS
organization, business leaders commit
resources to the GBS strategy. The GBS
now has roles and responsibilities defined
to engage better at the functional levels
and it also owns the overall sourcing
strategy. At the mature stage, a GBS
must at least include SSO, GIC and 3rd
Party Dedicated Centers for a single
function.
IV. Advanced:
An Advanced stage of the GBS would
see increased commitments from
business groups towards initiatives with
strong business plans, while the
corporate leadership makes it a priority to
frequently review the GBS operations and
provide inputs. At this stage of the
evolution, the GBS organization fully
owns the sourcing strategy and develops
it in alignment with the overall enterprise
business strategy. An Advanced GBS
would now include multi-function sourcing
operations (ITO & BPO) and all operating
models.
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GBS EVOLUTION
MODEL
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
V. Leadership:
At the top end of the evolution curve, the
Leadership stage, the GBS is essentially
functioning as an independent business
unit headed by a GBS head who is part of
the corporate executive council.
Operational groups like the VMO,
Demand Management, Intellectual
Capital Management, Resource
Management and Infrastructure
Management now report to the GBS
head. At the Leadership stage the GBS
would have evolved into an entity with an
integrated governance model that
oversees full GBS scope: multi-function,
multi-shore and all operating models
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GBS EVOLUTION
MODEL
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Neo Group’s GBS
Evolution Assessment
The GBS Evolution Assessment performed
by Neo Group is a review-based process
through which we calibrate the evolution of
a GBS organization across a number of
related categories. The assessment could
be administered either as an advisor-led
interview process or a cloud based self-
evaluation exercise.
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GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
The assessment is driven by gathering responses to a specific set of questions pertaining
to different elements of a typical GBS organization and its governance. These questions
are typically addressed to various leaders in the GBS or sourcing organization, though
some questions may require additional information gathering from respective stakeholders
across the enterprise.
Responses are calibrated on a scale of 1 through 5, across the following 10 categories to
quantify the GBS Evolution Index.
1. Strategic Alignment
2. Relationship Management
3. Demand Management
4. Supply-side GTM Strategy
5. Intellectual Capital Management
6. Human Capital Management
7. Performance Management
8. Legal & Financial Management
9. Risk Management
10.Infrastructure Management
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The assessment is better served if administered across multiple GBS centers within the
enterprise to develop a comparative mapping of the GBS evolution across different
centers. This helps identify gaps as well as better performing areas in each center and
assesses how they contribute to the overall enterprise GBS Evolution Index.
GBS EVOLUTION
ASSESSMENT
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Conclusion
The GBS Evolution Index provides a score that
helps in the identification of the stage of
evolution of the GBS organization and does not
in any way signify the success of the GBS
itself. The score must only be read as
analogous to a standards certification process
like the CMMI.
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GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
The evolution index helps a GBS organization evaluate if the GBS is at a certain stage of
maturity as intended by the strategy put in place. Each organization might aspire to be at a
certain level of evolution depending on several aspects like the type of enterprise, their
strategic outlook, their functional strategy and operating model, amongst other things.
The index is designed to help the GBS measure their success against the expectations
from the specific level of maturity that the organization has planned to achieve. While the
Neo Group GBS Evolution Index helps the organization identify gaps in their achieved
status across different categories, it also helps the organization to learn in which areas
they excel. In short, it helps objectively assess the strengths and weaknesses in the GBS
operations.
As different sourcing models converge into the GBS operating model, it is important to
ensure that this does not just develop into a syncretic juxtaposition of several sourcing
models under a single umbrella called GBS, instead the overall sourcing strategy must be
transformative so as to evolve into an integrated sourcing model that champions the
sourcing needs of the enterprise.
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CONCLUSION
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Neo Group Can Help
The global sourcing landscape is constantly evolving. For a deeper discussion on planning and executing
a successful globalization strategy, contact one of our lead advisors.
Adolfo Masini Brad Pickar Hemant Puthli
Partner & SVP Partner & SVP Partner & SVP
[email protected] [email protected] [email protected]
Kevin English Pankaj Sharma Vikram Naaidu
Partner & SVP Partner & SVP Partner & SVP
[email protected] [email protected] [email protected]
About the Authors
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Hemant Puthli is a Partner and Senior Vice
President at Neo Group, where he is responsible
for assisting clients in the development of their
outsourcing strategies and governance models.
Hemant brings over 25 years of experience in
Management Consulting and IT Services, having
served several clients in North America and
India.
Vivek Pappu is a manager with the advisory
services team at Neo Group. He focuses on
engagements related to global sourcing
transformation, vendor management, services
offshoring and procurement strategies. He has
been advising clients in the Media, Publishing,
Internet, High-Tech and BFSI industries, across
Asia and the Americas, for over 8 years.
GLOBAL BUSINESS SERVICES (GBS) – THE FUTURE OF SOURCING
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
About Neo Group
Founded in 1999, Neo Group helps organizations meet business objectives and address business
challenges by leveraging global services and sourcing. To learn more about Neo Group, please visit
www.NeoGroup.com.
About Supply WisdomSM
Supply WisdomSM is a unique cloud-based service that provides data and intelligence for sourcing risk
and opportunity monitoring of global countries, cities and suppliers. To learn more about Supply
WisdomSM, please visit www.SupplyWisdom.com.
No part of this report may be reprinted/reproduced without prior permission from Neo Group.
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