Global Business Services (GBS) or Multifunctional Shared Services?
“With Global Business Services (GBS) popularity at an all-time high, is GBS truly the Holy Grail of service delivery performance? Or can multifunctional Shared Services do just as well? What are the pros and cons?”
“Shared services” as a defined operating model for the delivery of back office, and more recently middle and even front office, functions and services to the business has been around for a long time now. Since the mid 1980s really. So that’s coming on for nearly 40 years! During that time it has been through quite a number of necessary evolutions and upgrades, with numerous trends including expansion of scope, moving up the value chain, move to multifunctional, offshoring, business process outsourcing, Global Business Services, Intelligent Automation, and, more recently, digitalization, the move to “OneOffice” (Connecting the front, middle, and back offices to create a touchless and frictionless digital experience, as described by HfS Research), and, of course, remote working/virtual Shared Services, which has been accelerated by the current COVID-19 global pandemic.
Over the years, the Global Business Services (GBS) model has started to really gain popularity and achieve scale. However, I have often been asked “With Global Business Services (GBS) popularity at an all-time high, is GBS truly the Holy Grail of service delivery performance? Or can multi-functional Shared Services do just as well? What are the pros and cons?”
That is an interesting and valuable question. As I mentioned above, Shared Services has been through quite a number of necessary evolutions and upgrades over the years. One of these has been the move from functional to multifunctional. Whilst GBS is often (but not necessarily always) characterized by being multifunctional in nature, GBS as an operating model is a lot more than just “traditional” Shared Services – whether that traditional model is single functional or multifunctional.
Key elements of Global Business Services
There are a number of elements of a proper GBS model (and I emphasize the word “proper”) that make it different from more traditional functional or indeed multifunctional Shared Services. These include:
- Governance – including coordinated, executive level leadership
- End-to-end process understanding and approach – without this there are likely to be multiple handoffs and potential “break points,” especially along and between functions and business units.
- Proper and robust documentation – of processes and controls, as well as technology touchpoints. This is fundamental to enable cross-training, redundancy planning, automation, process improvement, and resource/load planning.
- Well defined, operated and reported performance management framework – including input, operational, and output KPIs. This is critical to understanding performance impacts, monitoring progress, and pulling levers.
- Data management, distribution and analysis – these are significant drivers of high-performing GBS models.
- Use of the latest in digitalization and intelligent automation
- Comprehensive Business Continuity Plan
Global Business Services is a much more evolved version of the traditional Shared Services model. It is characterized by an integrated and consistent service portfolio, delivered across the entire enterprise. Usually covering multiple regions/locations, operating units and functions/service lines. With global leadership, a mix of internal and outsourced service provision, core ERP and technology enablement and global process ownership. Often reporting directly into a CXO. Compared to more traditional Shared Services, GBS is a more integrated model, providing consistent governance, processes, service levels and quality. It offers more expertise to deliver higher value “professional and technical” services, such as data analytics, and organization-wide decision-making support, than simply “transactional and administrative” support.
Multifunctional Shared Services can exhibit some or indeed quite a number of these characteristics and realize many of the benefits that can accrue, but the main difference is that the possibilities and level of benefits that can be achieved are more restricted and more limited.
Challenges of moving to GBS
On the flip side, it is also important to point out that moving forward with a GBS operating model as opposed to a functional or multifunctional model will likely involve a significant change effort and face more opposition at the functional and middle management levels. Therefore, to be successful with GBS requires visible, vocal and proactive senior level support across the enterprise, and not just within the function or functions. For some enterprises this might not be possible, at least in the early stages of development of the shared services model, in which case a functional or “simple” multifunctional model may fit better.
GBS isn't the 'holy grail', BUT...
I wouldn’t say that Global Business Services is the “holy grail” because it is likely that once you get there you may have missed a turn or two! But it does exhibit many of the characteristics of the world’s leading business support organizations, which benchmark in what is referred to as the “top quartile”. But just be careful to stay up to date with all the very latest trends and evolutions, to make sure that Global Business Services itself adapts and changes as it needs to do, to stay at the forefront of business support operating models, and stays relevant and focused on supporting the host enterprise’s goals.
[Note: this blog is an expanded commentary to that which can be found in SSON’s report "The State of Shared Services & Outsourcing Industry 2021 Global Report” co-sponsored by Chazey Partners. Download the full report here].
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