Global business services innovation - optimizing the business model for competitiveness
Most large and many mid-sized companies have adopted and/or expanded their shared services models over the past decade. While this leveraged model has become the norm, most have approached change with a cost reduction mindset. Few have taken on the challenge of using shared services to fundamentally advance their business model, and fewer still have truly innovated their Global Business Services (GBS) platform to improve competitive positioning. Without dismissing the great strides organizations have taken to stand up their current models, the question remains, “what’s next?”
As GBS thinking matures and organizations seek a wider array of benefits, top of
mind are:
• Where are we versus leaders in the evolution of our shared services model?
• What benefits are leaders realizing that we have yet to explore?
• How do we learn from the best to accelerate our own organization’s journey?
To begin to address these questions, learn more about leading Global 500
organizations’ GBS efforts and identify key success factors and leading practices,
The KPMG Shared Services and Outsourcing Institute has undertaken an ongoing
research initiative in which it examines firms’ global services delivery efforts through
interviews with their GBS executive leadership. This research complements and
extends in-depth advisory work KPMG is performing with its clients across the globe.
Contents
Global Business Services Defined . . 2
Global Business Services Maturity Model . . . . . . . . . . . . . . . . . . 3
The Research Construct . . . . . . . . . . 5
Key Research Findings . . . . . . . . . . . . 6
Driving Global Business Services Maturity . . . . . . . . . . . . . . . . 7
Detailed Research Results . . . . . . . . 12
Conclusion . . . . . . . . . . . . . . . . . . . . . 15
Appendix 1: Measurement Criteria . . . . . . . . . . . 16
KPMG’s Enterprise Services Transformation (EST) Framework
The Enterprise Services Transformation (EST) framework is a multi-disciplinary
framework that leverages the full capabilities of KPMG’s Management
Consulting, Advisory and Tax practices to provide its clients with a holistic
capability to transform their business via a services model that advances
the corporate strategy. It provides not only a perspective on how services
should be structured, but also the methods, tools and people necessary to
transform the business.
www.equaterra.com 2
A key component of this research is assessing organizations’ global services delivery
maturity using components of KPMG’s Enterprise Services Transformation (EST)
framework, which organizations can utilize to understand where they are on their
GBS journey, the value of driving toward greater maturity, the required efforts and
investments, and how to accelerate and improve their GBS efforts.
To set the stage for a discussion on the findings of this research study, we must
first provide explanations of and insights on what KPMG means by Global Business
Services and the Global Business Services Maturity Model.
Global Business Services Defined
KPMG defines global business services (GBS) as the collective set of resources,
capabilities and systems to deliver support services such as finance and accounting
(F&A), human resources (HR), procurement and other business processes across
an organization. Implied in GBS is greater aggregation and leveraging of common
information technology (IT) and business processes, models and best practices to
deliver these services more efficiently and effectively than in the past. As the name
implies, this is often done on a global scale, using multiple service delivery models
including elements of shared services, outsourcing and, increasingly, cloud solutions.
Adopting, deploying and expanding GBS efforts is an ongoing journey. The initial
destination is usually strong cost savings achieved via elements of shared services
and/or outsourcing through traditional levers such as scale, standardization, wage
arbitrage, technology enablement and process re-engineering. The destination is a
moving target based on changing business needs and conditions, evolving corporate
strategy, and advancement in system platforms and leading practices.
For example, one GBS destination that goes far afield from narrow cost cutting is
brand equity enhancement, achieved by ensuring standard services experiences
and labor practices. Indeed, for some companies where 90 percent of their value is
intangible (e.g., entertainment, media, services, etc.) this is often the main goal of
GBS. Acquisition integration is another activity that GBS greatly accelerates. Revenue
benefits and competitive advantage are considerable when acquisitions can be up
and running optimally in a compressed timeframe. Both of these outcomes can
significantly outweigh cost savings for companies that take a more broad view of the
goals of GBS.
As organizations gain GBS maturity, the pace of change quickens, and the alignment
of GBS strategy to further the C-suite agenda at the organization – be it greater
efficiency, compliance or growth – becomes stronger.
Learn more about service delivery strategies by reading this paper available from the KPMG Shared Services and Outsourcing Institute:
Rethinking Business Services
Models for Competitive
Advantage
www.equaterra.com 3
Global Business Services Maturity Model
Assessing the maturity and performance levels of an organization’s business services
capabilities has never been easy. This task has become more complicated as
organizations diversify their service delivery models, increasingly relying on shared
services and outsourcing to complement, extend or replace traditional models.
Organizations need to understand the maturity of their service delivery capabilities
so they can measure progress in improving them over time, and understand how
far and fast to push these improvement efforts. To attain this understanding,
organizations need a structured approach to measuring the performance of global
service delivery processes, systems, operating and governance models. Figure 1
below illustrates the KPMG model for measuring global business services maturity.
KPMG’s Global Business Services (GBS) Maturity Model
Val
ue
Cap
ture
an
d P
erfo
rman
ce S
ust
ain
abili
ty
The Journey . . . Development Stages . . . Time
Level 5 – DifferentiatedGlobally integrated services portfolio with aggressive use of
alternative and mixed delivery models
Level 4 – StrategicOptimized balance of internal and external delivery
capabilities, global sourcing with multifunction focus
Level 3 – OptimizedTraditional outsourcing relationships with global delivery;
non-integrated internal shared services capabilities
Level 2 – RationalizedSingle function shared services with tactical onshore or
offshore provider relationships
Level 1 – Sub-OptimizedDecentralized and duplicative functions; little central control
over business support services
Figure 1
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This model defines five levels of maturity, ranging from sub-optimized up through
differentiated. The assessment and measurement of service delivery maturity
should occur across a range of operating categories such as commercial orientation,
delivery models employed, global process ownership, governance and organizational
models, and degree of standardization. The following are characteristics of highly
mature GBS operations:
• Integrated services portfolio operating on a standard platform
• The use of services portfolio management supported by a strong business
intelligence capability and measured on business value
• Emphasis on end-to-end processes across functions in scope
• Focus on moving services up the value chain to support evolving business
needs
• Seamless integration of internal and external outsourcing and cloud service
providers via centers of excellence (COE)
• Common services architecture across functions and businesses.
It is important to balance the benefits of pursuing greater maturity against the
cost and complexity of doing so. The pursuit of “academic” maturity without a
strong business case is ill advised and unlikely to gain executive support in the
current market environment. Similarly, the desired maturity level must map to the
organization’s overall operating model. For example, a large multinational might
value high maturity in one or two regions, but find less or little value in higher levels
of maturity across all geographies. In this respect, a model such as this can add value
both as a means to assess current performance levels as well as to define a future
roadmap for improvement efforts.
It is important to balance the benefits of pursuing greater
maturity against the cost and complexity of doing so.
The desired maturity level
must map to the organization’s
overall operating model
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The Research Construct
In October and November 2011, KPMG conducted a series of in-depth interviews
with global business services executives across a mix of Fortune and Global
500 corporations in the U.S. and Europe. These executives were asked detailed
questions on global business services maturity, using the KPMG GBS maturity
model as a guide to evaluate each company. As part of the interview, respondents
were asked to rate the maturity of their organization on a 4 point scale per 22
questions focused on governance, commercial orientation, standardization,
organizational excellence, global process ownership and global scope.
The companies spanned a cross section of industries, including food and beverage
(4), IT (3), financial (3), media and entertainment (2), industrial (2), consumer
services (1), pharmaceutical (1), apparel (1) and CPG (1). Fourteen companies were
in the Global 500, three were in the Fortune 500 and one was in the Software
100. Four were Global 100 companies. The average age of their global business
services organizations is approximately six years.
The respondents were either heads of global shared services and outsourcing,
or managers of a specific functional area such as IT or F&A. In most cases, they
reported to the COO, CFO or CIO. Most have been in their present role for over
three years, and have more than 10 years of overall global business services
management experience.
Approximately two-thirds of the participating organizations started their global
business services deployment less than five years ago, and roughly a third started
seven to 10 years ago.
This research study had two goals. The first was to provide a baseline for GBS
maturity among large enterprises using the KPMG GBS maturity model. The
second was to examine the key cultural, organizational, financial and operational
factors that influence maturity. To achieve these goals, KPMG assessed participant
responses by:
• Examining the construct of the KPMG EST framework
• Analyzing how companies’ actual experiences match their progression
• Quantifying those factors that drive maturity.
This is the first in a series of research reports that will evaluate shared services
maturity among Global 500 companies, and the key levers and drivers of delivery
and organizational excellence.
www.equaterra.com 6
Key Research Findings
Overarching research findings show that many organizations are rapidly gaining
GBS maturity but at different levels across functions and geographies, and based
on different overall organizational operating models. Three factors stood out in
helping some organizations achieve greater GBS maturity – a strong linkage of GBS
strategy to the enterprise strategy, a rapidly maturing governance framework, and
a strong push toward commercial orientation in running and operating their GBS
organizations.
Key findings include:
• Moving up the maturity curve is hard. Companies often get “stuck”
below their desired level for a variety of reasons. Of the firms with which KPMG
spoke, about a third placed in the higher maturity Strategic or Differentiated
levels of the maturity model, and the other two-thirds placed at the
Rationalized or Optimized levels
• Mature GBS organizations use multiple elements in their service
delivery toolkits. These include multiple service delivery models including
outsourcing, offshoring and shared services (and increasingly, cloud), multiple
value levers including cost savings, innovation, business insights, etc., and more
sophisticated organizational models including stronger governance and end-
to-end process ownership
Related reading:
Clarity in the Cloud
Outsourcing Location Analysis 2011
Driving Outsourcing Innovation through Collaboration
• Breaking through maturity levels requires strong governance and a
commercial orientation. The strongest correlation to higher GBS maturity
was observed through the GBS organizations’ maturity on Governance and
their degree of Commercial Orientation. Strong governance is always required
when weaving together complex initiatives, but the need for a commercial
mindset is a bit less obvious (this point will be explored later in this paper)
Related Reading:
Nine Factors for Great Outsourcing Governance
Multi-vendor Sourcing: Stop the Value Leakage
• A longer-term vision is critical. One of the biggest areas of difference
between the most mature organizations and the rest was in Process
Improvement Sequencing. The more mature organizations deploy multiple
improvement strategies, and have well defined, long-term sequencing for
improvements. The less mature organizations are more opportunistic in their
improvement efforts
“Before the shared services
organization was established,
it would take eighteen months
to rollout a new process; with
shared services in place it takes
a quarter.”
(Global 100 IT industry
participant)
“SAP drove standardization
and eliminated inefficiencies
from the system – this was
a necessary first step to
implement shared services.”
(Global 500 Entertainment
industry participant)
www.equaterra.com 7
• The greatest hurdles to maturity are cross-functional and global
integration. Most organizations in KPMG’s research set, even the more
mature ones, do not have consistent maturity when it comes to the functional
and geographic slices of their GBS organizations – the finance and IT functions
tend to be more mature, as do their North American and European GBS
organizations. Cultural and organizational factors, e.g., level of ERP adoption
and standardization, are the other limitations to the levels of maturity to which
an organization strives and how quickly it moves along the maturity curve
• Show me the money! Cost savings are still the number one reason for
companies to advance their GBS maturity. They seek additional value drivers
not only to support but also to advance the business, and constantly evaluate
these value drivers against cost-benefits and returns on investment. The
more mature organizations are looking beyond simple cost savings. They
seek strategic benefits such as ability to support the growth agenda, e.g.,
integrating acquisitions, accelerating technology and policy deployment, and
enabling innovation into services and business processes. These strategic
benefits are weighed against the cost-benefit analysis specific to the
organization
• Maturity matters. Organizations with mature GBS models create greater
shareholder value. While likely not wholly attributable to the service delivery
model, organizations with mature GBS models have an average return on
equity (ROE) of 20.7 percent versus an average of 16.7 percent for the less
mature organizations. The ability of an organization to plan, implement and
improve its support infrastructure is a core competency that can provide a
competitive advantage while delivering greater financial performance.
Driving Global Business Services Maturity
Most of the organizations in KPMG’s research tend to advance along a continuum of
strategic options that impact the maturity of their GBS organizations. While not all-
inclusive, the six areas on which KPMG focused during this research initiative included
location strategy, standardization focus, process orientation, commercial orientation,
pace of change and scope of service portfolio.
Three factors stood out in
helping some organizations
achieve greater GBS maturity –
a strong linkage of GBS strategy
to the enterprise strategy, a
rapidly maturing governance
framework, and a strong push
toward commercial orientation
in running and operating their
GBS organizations.
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Strategic options that impact GBS maturity
Location
Standardization
Process Orientation
Commercial Orientation
Pace of Change
Service Portfolio
Current Model
Future Aspiration
Proximate to BusinessMaintain staff in current location
IndependentSpecific to business units(BU), geographies, and functions
Functionally FocusedProcesses aligned and optimized within functionaltowers at BU level
Staff FunctionCost center focus withmodest measurement against metrics
MeasuredLow impact on people, culture; minimal investment
TransactionalTransactional services delivering economies of scale
Relocate FunctionsHeadquarter functions and related BU staff relocated to low cost geographies
IntegratedStandard solutions across business units, geographies, and functions
End-to-EndOrganized by process across BUs and geographies
Run It Like A BusinessService level measurement and accountability with transparent pricing
Rapid DeploymentWillingness to impact people,change culture and invest in long term strategy
Transactional & COECenters of scale and skill delivering transactional and analytical services
Figure 2
They expect to move faster and further to the right on the first four continuum
options of location, standardization, process orientation and commercial orientation.
The more mature GBS organizations continue to be very good at leveraging lower
cost locations, optimizing their location portfolios and seeking arbitrage benefits.
They are also better at creating a more integrated GBS solution that seamlessly
services multiple business and geographical units, and are adept at utilizing assets
across these organizational units. They have strong desire and ambition to drive
end-to-end process ownership and do away with process silos. They do this well
within functions, but struggle across functional silos. They are also good at running
GBS like a business with associated service mechanisms, accountability and price
transparency. Their drive to the right on this continuum is tempered by the pace
of change their organizations can absorb, and how rapidly they can integrate
knowledge processes into their GBS models. They are constantly expanding the
portfolio of service offerings available to their internal and external customers. A key
focus area for a number of the mature organizations is the use of technology to gain
better business insights. They are already the custodians of large amounts of the
enterprise data, and they are innovating on using technology to help the enterprise
use this data to drive better business decisions.
The greater use of flexible service delivery models has historically been driven, and
continues to largely be, by a desire to reduce administrative and overhead costs.
This is typically achieved by creating leverage across horizontal processes, gaining
economies of scale, utilizing lower cost global resources for transactional work, and
(ideally) simultaneously focusing retained resources on more core competencies and
work.
The greater use of flexible
service delivery models has
historically been driven, and
continues to largely be, by a
desire to reduce administrative
and overhead costs. This is
typically achieved by creating
leverage across horizontal
processes, gaining economies of
scale, utilizing lower cost global
resources for transactional work,
and (ideally) simultaneously
focusing retained resources on
more core competencies and
work.
www.equaterra.com 9
The characteristics, orientation and benefits of continuing to go up the maturity
curve are summarized below. These benefits are in addition to economic benefits,
such as cost savings. They are increasingly tied to the top-line benefits that
organizations achieve as they continue to push to the right on the maturity curve.
Operating models for global business services
Operating Characteristics
• Work performed by BU for BU
• Centralized functional departments
• New entity that sells services back to BUs
• Global footprint
• Multifunctional
• Rational balance of internal and external service delivery capabilities
• Outcome focus
• End-to-end
• Broad set of end-to-end solution oriented services, both scale- and skill-based across IT and business processes
Service Orientation
• Perform process • Perform process consistently and with scale
• Deliver consistent services against agreed service levels
• Drive efficiency and effectiveness across service portfolio
• Change how the business operates
Benefits • Autonomy & ownership
• Responsiveness
• Flexibility to BU needs
• Economies of scale
• Standardization
• Central control
• Scale & standardization
• Responsiveness
• Central control
• Flexibility to corporate change
• Global scale &standardization
• Economies of place
• Flexibility to global corporate change (e.g. ability to drive quicker integration / synergies from acquisitions)
• Balanced enterprise cost,service, risk, and outcome-based measurement
• Tighter correlation to business strategy (e.g. ability to facilitate growth in emerging markets with global delivery platform)
Sub-optimized Rationalized Optimized Strategic Differentiated
Level One Level Two Level Three Level Four Level Five
Figure 3
While organizations that reported successfully transitioning up the maturity curve
also reported greater benefits, they highlighted the increasing challenges of making
that transition. Their challenges can be summarized into two categories:
• Economic Challenges – as the first wave of labor arbitrage and process
improvement benefits are realized, organizations need to seek additional
value levers to sustain and continue to build on the economic benefits of
GBS. Continued cost savings come from additional levers such as process
standardization, integration of technology, and improvement of capital
structures. However, many of the more mature organizations also seek to help
improve the enterprise top line through integration of more complex activities
into the GBS portfolio, and use of technology and business intelligence to
advance business decision making. These additional benefits come with
additional effort and costs, and require evaluation against the organization’s
investment thresholds
• Cultural and Organizational Challenges – here, the issue is having to
continually convince the key stakeholders to allow the GBS organization to
run a larger, more complex portfolio of services, to think beyond transaction
processes, and in many cases to layer the GBS structure against a highly
regional or business unit-focused structure. As one GBS leader put it, “I know
we’ll be successful when we shift from having to sell the next great idea, to
creating an environment where innovation is expected by our customers.”
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Figure 4 below illustrates the benefits organizations can achieve through improving
GBS capabilities across major support processes. GBS success in this new model
depends on the ability to dynamically assemble a variety of capabilities – regardless
of where those capabilities reside geographically or functionally in the organization –
into a seamless end-to-end process that is focused on specific business outcomes.
Related reading:
A Route to Optimizing Your Outsourcing Relationship
How GBS drive competitive advantage
Figure 4
In terms of operating models, KPMG observed that the following two are associated
with higher levels of global business services maturity. In the Global Business model,
processes are aligned to specific functions and delivered to business units. In KPMG’s
research, this is the most common delivery model in more mature organizations. A
more business-aligned approach is the Multifunctional GBS model in which processes
are shared across functional areas, and all of these are coordinated within one
organization. While this model provides the most scale and efficiency, it is also the
most difficult to implement because of the high degree of process and functional
integration, as well as the larger organizational and cultural change required. This is
the desired state for many organizations in KPMG’s research.
www.equaterra.com 11
Higher maturity GBS operating models
Global Business Multifunctional GBS
BU – Business UnitP1 – Process 1P2 – Process 2P3 – Process 3P4 – Process 4
Corporate
Global Business Services
Finance, IT, HR, etc.
P1, P2, P3
BU BUInt’lBU
Corporate
Business Services Entity
P1 P2 P3 P4
BU BUInt’lBU
Figure 5
KPMG uses these concepts of delivery and organization as a foundation for its GBS
maturity model. Organizations KPMG studied through this research project deploy
these elements across multiple functional and process areas to different degrees.
The more mature organizations cover a wider range of elements across more
functional and geographic areas.
KPMG’s GBS Maturity Assessment Framework Elements
Strategy
Operations
Operating Model Change Management -OperationsProcess
Governance
Talent Management
Bu
sin
ess
Rel
atio
nsh
ip M
anag
emen
t
Stak
ehol
der
Man
agem
ent
Dem
and
Man
agem
ent
Vision & Alignment Brand ManagementPortfolio Management
Asset Management
Service Quality & Performance Management Contract ManagementChange Management -
Governance
Process Risk & Compliance Management Financial Management
Serv
ice
Del
iver
y
Cos
t, P
rodu
ctiv
ity
and
Serv
ice
Leve
l Ben
chm
arki
ngLe
adin
g Pr
acti
ces
&
Tech
nolo
gy D
eplo
ymen
t
Cu
sto
mer
s
Cu
sto
mer
s
Figure 6
As organizations apply these elements to their GBS strategies, most progress
through stages of maturity (although there are examples of organizations starting
at the optimized or even strategic levels of the maturity curve). Those organizations
that have been able to accelerate their movement along the maturity curve
displayed specific characteristics:
• They were developing their GBS service strategy in conjunction with their
technology strategy, and used GBS as a major enabler to realize and/or hasten
returns from their technology investments
• They were successful in securing senior management sponsorship early in their
journeys, and used this to create more independent GBS organizations and a
top down push to adopt GBS service delivery models
• They maintained an external focus, learning from others that went before
them and applying those lessons to their own GBS design and deployment.
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Detailed Research Results
KPMG evaluated each participant organization on a set of specific questions in eight
categories.
Category Description
Delta between
lower and higher
maturity GBS
organizations
Commercial
Orientation
GBS discretion over choice of services,
strategic planning and budgeting,
growth and value initiatives and
organizational planning.
Low
Alternative
Delivery Models
Exploration and incorporation of
service delivery model alternatives,
and demand-consumption model
options.
Medium
Organizational
Excellence
Use of formal improvement programs
and their impact, alignment to
business requirements, and use
of formal internal and external
comparator analyses.
Low
Standardization Adoption of standard services,
processes, tools and policies.
Low
Global Process
Ownership
End-to-end process ownership, first
within and then across functions .
Medium
Improvement
Sequencing
Use of multiple short- and long-term
improvement methods, link to ERP
implementations.
High
Global, Multi-
Scope
Multi-functional, multi-geographic
and multi-business coverage of GBS
services.
Low
Governance Use of active steering committees,
strong line of sight from GBS to
organization executives, sophistication
of governance processes and metrics.
High
Generally, more mature GBS organizations have high scores across all of these
factors. Indeed, the highest scoring company in KPMG’s research study was an
international food and beverage firm with an overall score of 3.7 on a scale of 4.
Organizations at the lower end of the maturity scale had an overall score of roughly
2.7, placing them at or below the average on many of these measures.
Most GBS organizations tend to focus well on being Global, Multi-functional, focused
on Organizational Excellence, and striving toward greater Commercial Orientation.
The differences between the more mature organizations and the others in KPMG’s
www.equaterra.com 13
research were more pronounced in factors such as use of Alternative Delivery Models
and Process Ownership. The more mature organizations deliberately create greater
flexibility in their delivery models by using multiple service delivery options: shared
services, outsourcing and cloud. They have become adept at managing demand and
consumption of services across these delivery model options by drawing up or down
on them as their business requirements change.
Flexibility in the service delivery model is a competency with these more mature
GBS organizations, measuring and looking for ways to improve it. Similarly, process
ownership of global end-to-end processes is a key goal for the more mature
GBS organizations. They seek to build, manage, operate and improve horizontal
processes cutting across functional lines. They believe this way they can drive
even greater cost and performance improvement, integration of technology,
standardization and insight into these processes. Most mature GBS organizations
have been successful within functional silos but continue to look to cut across
functional silos to have truly cross-functional, global, end-to-end processes.
The differences between the more mature firms and the others were highest in
the areas of Governance and Improvement Sequencing. Significantly, one of the
areas in which most of the organizations scored lowest was Governance. Many of
the participants observed the lack of a sophisticated governance model to help
them manage the increasingly complex GBS portfolio and requirements. They cited
elements of steering committee, decision making, budgeting and service level
management on multiple value dimensions as being the most challenging elements
of Governance.
For the most part, all GBS organizations in KPMG’s study address multiple functional
requirements – IT, F&A, procurement and HR, to name a few. In many cases, KPMG
saw that certain functional areas of services delivery were at higher levels of maturity
than the GBS organization as a whole. Driving this functional area maturity is process
optimization and standardization, strong functional management support and use
of multiple service delivery model options. Indeed, the majority of companies KPMG
interviewed had the common response that F&A or IT are at a strategic (Level 4)
level, but the organization as a whole remains at the rationalized or optimized state
(Levels 2 and 3).
The following two quotes from a leading international financial services firm and a
consumer packaged goods company sum up the situation of many companies.
“Each of the functional areas are not aligned to each other – we try
to optimize each area separately.” (Financial industry participant)
“We don't want to lose customer focus by institutionalizing process
ownership – we would rather keep it flexible either regionally or
within parts of the tower.” (IT industry participant)
Learn more about Governance
Nine Factors for Great
Outsourcing Governance
Multi-vendor Sourcing: Stop the
Value Leakage
www.equaterra.com 14
Following is a brief case history of one of the more mature GBS organizations in
KPMG’s study.
Background:
A major, multibillion dollar IT company has had a long and successful global
shared services experience that benefits the organization not only through
significantly reduced operating costs but also via support of its most strategic
goals.
Operations:
Multifunctional shared services across 13 functional areas (F&A, HR, IT, etc.),
with more than 18,000 staff. Twelve delivery hubs support all regions around
the world. There is a head of global shared services. Outsourcing is selective.
End-to-end process enablement on a global basis is the norm.
History:
Shared services started in 2000 with a focus on F&A. The goal was to quickly
move to the use of standardization and quality measures that the lines of
business found difficult to implement.
Differentiation:
Process ownership is regional or functional in order to keep service focus
close to customers. However, the company uses a process—not a functional—
vocabulary when talking about shared services deployment.
Benefits:
New processes are rolled out in less than one quarter (versus 18 months
before global shared services took hold); major acquisitions are integrated into
the organization in less than one year, providing a major strategic advantage;
over $200 million in savings each year due to reduction of service delivery
costs; and over $2 billion in acceleration of revenue or deferral of payments
due to better financial management.
Future:
The company is at an optimized level on KPMG’s global shared services
maturity curve. The goal is to move to a fully integrated organization in
the next one to two years. The two major areas of improvement are global
process management with an eye to maintaining regional delivery excellence,
and creation of centers of excellence.
www.equaterra.com 15
Conclusion
While shared services and outsourcing have become the norm in the past decade,
the folding of these service delivery strategies into GBS is allowing organizations the
unique opportunity to leverage GBS as a strategic asset to further the C-suite agenda
– to drive greater efficiencies, enable business growth and support global standards
and compliance. Our discussions through this research showed that the more mature
GBS organizations are doing this in many different ways:
• Better analyzing the rich data sources they manage in the GBS, and predicting
business and customer requirements
• Enabling a significant change in the business model by assuming responsibility
for increasingly more non-core business activities, and allowing their business
units to be more market focused
• Driving considerable process efficiencies, control and standards through cross-
functional process design and ownership, cutting through functional silos, and
fundamentally changing the functional organizational models
• Supporting the business strategy by integrating mergers and acquisitions faster,
and penetrating new and emerging markets more quickly and efficiently.
All of the more mature organizations with which KPMG spoke are using GBS to
better align their operating model for efficiency and effectiveness, optimize and
enable their global footprint, help create traction in emerging markets, optimize
capital investments in technology, and help manage global risk and compliance. The
value of greater maturity in GBS goes well beyond the traditional benefits of shared
services and outsourcing.
To learn more on this and related topics, visit the KPMG Shared Services and
Outsourcing Institute at http://www.kpmginstitutes.com/shared-services-
outsourcing-institute/.
View the companion Webcast to this paper, Assessing Global Shared Services
and Outsourcing Maturity
To learn more about global business services, please contact:
Rick BertheaudManagement Consulting, Shared Services & Outsourcing AdvisoryPrincipal T: +1 413 427 9952 E: [email protected]
Bob CecilManagement Consulting, Shared Services & Outsourcing AdvisoryPrincipal T: +1 703 965 8863 E: [email protected]
Cliff JusticeShared Services & Outsourcing AdvisoryU.S. Leader T: +1 713 319 2781 E: [email protected]
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Appendix 1: Measurement Criteria
The following are the criteria KPMG used to rank the companies’ global shared
services maturity.
Criteria Category
Which statement best describes your internal
customer choice for services provided by the
Business Services?
Commercial Orientation
Which statement best describes strategic
planning for the Business Services?Commercial Orientation
Which statement best describes where you intend
to focus growth initiatives over the next year?Commercial Orientation
Is human resource development/succession
planning a part of your overall annual planning
process?
Commercial Orientation
How closely does service pricing methodology
link demand and consumption to cost and fees?Alternative Delivery Models
How aggressively have alternative delivery
models, such as offshoring and/or outsourcing,
been explored and deployed?
Alternative Delivery Models
Do you have enterprise-wide process owners? Global Process Ownership
Which statement best describes the functional
coverage within Business Services?Global, Multi Scope
Which statement best describes your business
unit coverage?Global, Multi Scope
Which statement best describes your geographic
coverage?Global, Multi Scope
Using the latest processes migrated into the
Business Services as a basis, which statement best
describes your process migration philosophy?
Improvement Sequencing
Which statement best describes how your
service strategy and direction is established (e.g.,
goals and objectives, functional scope, delivery
mechanisms, service center location, etc.)?
Governance
To whom does the head of Business Services
report? Governance
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Criteria Category
Which statement best describes the development
and approval of the Business Services operating
budget?
Governance
Which statement best describes how service
levels are set?Governance
Do you benchmark regularly to identify costs
and productivity gaps and identify new best
practices?
Organizational Excellence
Which statement best describes your approach to
process improvement?Organizational Excellence
Which structure best describes the geographic
layout of functional services and service centers? Organizational Excellence
Which of the following best describes the
compliance policies associated with the
standardization of processes and tools used to
deliver this function?
Standardization
Which of the following best describes the impact
of the standardization of the processes and tools
used to deliver this function?
Standardization
Which of the following best describes the
standardization of the services delivered by this
function (i.e., the actual 'product' delivered to the
business unit)?
Standardization
3166_Jan2012
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For information and research on outsourcing, shared services and internal improvement, visit the KPMG Shared Services and Outsourcing Institute at http://www.kpmginstitutes.com/shared-services-outsourcing-institute/.
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About EquaTerra
EquaTerra was founded upon the principle of helping clients achieve sustainable value in their IT and business processes through internal transformation, shared services and outsourcing. On February 18, 2011 the business of sourcing advisory firm EquaTerra, Inc. and its subsidiaries was acquired by KPMG LLP (US), KPMG Holdings Limited (UK) and KPMG International.