Gic conclave 2012_joel_roques_hackett

GOVERNANCE BEST PRACTICES OF WORLD-CLASS GLOBAL BUSINESS SERVICES (GBS) ORGANIZATIONS

Joel Roques, Managing Director Europe, Middle-East & Africa and Asia - Advisory Services

New Delhi, GIC Conclave March - 20th-21st March, 2012

Statement of Confidentiality and Usage Restrictions

This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the

disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or

redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited

without the prior written consent of The Hackett Group.

Copyright © 2012 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.

Contents Part 1 – Governance

Introductions

Trends in Global Business Services (GBS)

The Importance of effective GBS

Governance

A World-class GBS Governance Model

Part 2 – Service Management

GBS Evolution

The Importance of effective GBS Service

Management

A World-class GBS Service Management

Model

Contents

Introductions

Trends in Global Business

Services (GBS)


Governance

A World-class GBS Governance

Model

NASSCOM GIC Conclave | 5 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Speakers

Joel Roques

Managing Director Europe, Middle-East &

Africa and Asia − Advisory Services

Martijn Geerling

Director − Practice Leader Global Business

Services (GBS) Advisory Services,

Europe, Middle-East & Africa and Asia


The Hackett Group: intellectual capital and implementation expertise – accelerating time to sustainable benefits We are the global leader in operations improvement

strategies, proven best practices-based implementation,

and SG&A agility

We address both efficiency and effectiveness

improvements to enable strategic business objectives

Our insights are fact based, from over 5,000 benchmark

studies and consulting engagements

Our Best Practices Intelligence Center™ is a significant

differentiator and enabler. It contains:

– 20,000+ performance metrics updated annually

– 1,500+ best practices across 95 business processes

– 1,000+ best practice-based process maps, requirements and

configuration guides

– 1,000+ case studies, implementation examples and research

We deliver results through a global team of senior

practitioners using a consistent methodology and best

practice-based toolset

Hackett Value Grid™

Hackett defines and enables sustainable World-Class performance


97%

of the Dow Jones

Industrials

80%

of the

Fortune 100

88%

of the Dow Jones

Global Titans

We know how the best do it,

where they do it, and the benefit of doing it.

Contents

Introductions

Trends in Global Business

Services (GBS)


Governance

A World-class GBS Governance

Model

Trends in Global

Business Services

(GBS)

India’s current position

and outlook for the

domestic ‘market’

The global trends


Today, approximately 4,500 captive and BPO centers exist globally

Southeast Asia

East Europe

Captive BPO

>1,000

500-1,000

400-500

300-400

200-300

100-200

<100

Global distribution of captive and BPO centers

India

China

North America

Middle- & South

America

Africa

Western Europe

Northern Europe

Oceania

Source: The Hackett Group, 2012


India has a captured a large part of the BPO market, but only a small share of the captive ‘market’

82%

18%

BPO centers

Global India

95%

5%

Captive centers

Global India


Global distribution of captive and BPO centers – India‟s „share‟


Medium-term expect a decline in offshoring of jobs in Finance, IT and other key business services areas

3.5 3.4 3.4 3.5 3.5 3.6 3.6 3.6 3.4 3.4 3.3 3.3 3.4 3.4 3.4 3.5

4.7 4.6 4.4 4.2 4.0 3.8 3.5 3.2

2.6 2.3 2.1 1.8 1.6 1.4 1.2 1.0

0.2 0.3 0.4 0.5 0.6 0.7 0.9 1.0

1.2 1.4 1.5

1.7 1.8 2.0 2.1 2.3

Non Offshorable Remaining Offshorable Remaining Offshored

8.2 Million

North America,

Europe

Headquartered

Business

Services Jobs

4.5 Million North

America, Europe

Headquartered

Business

Services Jobs

2.3 Million

Offshored

1.6 Million

productivity gap

0.2 Million

Offshored

Productivity, growth and offshorable business services jobs (2011-2016)

Source: IMF World- Economic Outlook data, The Hackett Group proprietary data and publicly available company data, 2012


GBS are moving from shared services models towards Global Business Services Models

Stage

3

Stage

2

Stage

1 Function-

centric

Process/ Service centric

Value-centric

Maturity

Strategic

Business

Enablement

Operating

Excellence

Complexity

Reduction

The three stages of Global Business Services evolution

Functionally Focused & Owned Platform

Transactional Standardization

Regional Shared Services Consolidation

Transactional Automation

Unit Cost Reduction Focus

Multiple Functions inside GBS Org

Service Management Implementation

Enterprise Standards

Performance Technology Improvement

Knowledge Centers of Excellence

BPO & Managed Services Outsourcing

Unit Cost Reduction + Service Value Focus

Service Oriented Standalone Entity

Service Placement Agility

Service Management Centric

Non-Traditional Knowledge Centers of Excellence

Innovation

Commercial Performance Profile

Unit Cost Reduction + Service Value + Business Value Focus

Shared Services Global Business Services


Few GBS have entered the most advanced stage of GBS development

In good company?

Maturity


Operational Excellence

6%

37%

57% Complexity Reduction

Stage

3

Stage

2

Stage

1 Function-

centric

Value-centric

Process-centric

Strategic Business Enablement


GBS form integrated global delivery networks, how should these be governed?

Company A - Global service delivery network

Captive Center location

Geographical scope

BPO Center location

Geographical scope

The Importance of

effective GBS

Governance

What is GBS Governance?

What is the tangible effect

of effective GBS

Governance?

A common

misconception

Governance is about

getting your service level

agreements, key

performance indicators

right…


GBS Governance and GBS service management are intertwined but not the same

GBS

Governance

GBS

Service Management

GBS

Service provisioning

Provide consistent management

guidance

Set cohesive policies and procedures

Assign effective decision-rights

Organizational capabilities enabling a

GBS to design, implement and

optimize a service

Services delivered to GBS

customers, based on good

governance and a well-defined

service management model


World-class GBS exceed expectations of business clients to support enterprise agility 6 times more than peers

(% of respondent answering ‘exceeded expectations’)

67%

75%

83%

14%

11%

14%

Improved service delivery

Cost reduction

Agility 6X The likelihood

World-class GBS

exceed

expectations to

contribute to

enterprise Agility

Strategic alignment – level of achievement

Peer World-class


Agility - Ability to respond to changes in the economic conditions and/or business strategy. An organization should be

able to rapidly reduce its overall support function cost structure to match a 10%-35% revenue reduction within a 6-24

month time frame, while maintaining acceptable service levels

A World-class GBS

Governance Model

Key components of a

World-class GBS

Governance Model

Challenges for a global

governance structure


Three building blocks of effective GBS Governance

Policies &

Procedures

Decision Rights

Roles,

Responsibilities &

Committees

Who does the GBS leader report to?

What other roles, responsibilities and committees

are required to govern the relationship between

GBS and clients?

With what frequency should various governing

bodies meet?

Which policies and procedures are required to

manage a GBS?

Who decides on:

− Budget allocations

− Service scope changes

− Service Pricing


Iss

ue

Es

ca

lati

on

Executive sponsorship

Strategic focus

Facilitates organizational buy-in

GBS budget approval

Global Business Services success is dependent on the guidance and support from the business

GBS Leadership Team

Executive G&A Governance Board

Customer Advisory Council

Global Process Owners

Strategic

Operational

End-to-End Process Control Councils

Change agent and partner

Sponsors improvement initiatives across the BU‟s

Assess & resolve cross organizational issues

Implement process improvement across the company

Supports dispute resolution process by identifying root

causes of issues

Provides feedback to the Customer Advisory Council

Aligns processes with Bus & GBS goals

Determines how to fulfil customer service requirements

Provides oversight to end-to-end processes

Supports transformation efforts

Builds partnerships across company

Manages activities via SLAs

Accountable for delivery of: financial, process, customer,

human capital & organizational targets


For both Peer and World-class GBS, the majority of GBS leaders report to the CFO

Reporting to

GBS Executive

leader

GBS Executive

leader

CFO 43% 42%

Not reporting to parent 9% 17%

CXO (HR, IT, Proc.) 15% 16%

CAO, COO 6% 16%

CEO 9% 8%

Business leader 19% 0%

2X More World-class

GBS operate semi-

commercial models

than Peers

GBS leader‟s reporting relationship

Peer World-class



Governance meetings need clear purpose and regular meetings to be effective

Governance body Meeting Agenda Frequency

Governance

Board

GBS Strategy and client

relations

Budget and investments

Demand management

Issues management

Bi-annually

Customer

Council

Operations review

SLA performance

Issue management

Quarterly

GBS Leadership

Ongoing operations review

– trending information

– customer satisfaction

survey

– projects and innovation

Issue management

Monthly


Effectiveness of different governance approaches for globalized business service delivery

70%

66%

28%

50%

58%

29%

Governance board

End-to-end process owners

Customer council

Processes provided through captive

Processes provided through BPO


Percentage of companies indicating the approach is

“moderately” or “highly” effective


Global Business Services success requires clear decision authority

GBS Operating Decision

Decision Authority

End-to-End

Process

Control

Councils

GBS Leadership

Team

Customer

Advisory

Council

Executive G&A

Governance

Board

Annual operating budget C R C A

Annual capital budget C R C A

Required capital expenditure (ex.

technology I R C A

Significant project commitment I R C A

SLA performance levels I R C A

Process changes across Bus I R C A

Service pricing levels I R C A

Fundamental changes in GBS scope - R C A

Additional headcount (within budget) - R C A

Dispute resolutions (with BU / PG / Corp) - R C A

Example RACI – decision matrix

R – Responsible A – Accountable C – Consulted I - Informed


World-class GBS have devolved more budget authority to GBS leaders than Peers

Decision

responsibility

Su

perio

r of

GB

S le

ad

er

GB

S L

ead

er

Go

vern

an

ce

Bo

ard

Cu

sto

mer

Co

un

cil

Oth

er

Allocate operational

budget

Allocate capital

budget

46% 33% 10% 3% 7%

33% 50% 17% 0% 0%

1/2 Of World-class GBS

have enabled GBS

leaders with

operational budget

authority 43% 32% 12% 0% 13%

33% 42% 25% 0% 0% 2/5

Of World-class GBS

have enabled GBS

leaders with capital

budget authority

Decision rights – operational and capital budget allocation

Peer World-class


Example - Governance Structure for a GBS

Customer Council

Governance Board

Functional

Customers

(HR)

Zones Product

Groups

Finance

CFO

HR

CHRO

IT

CIO GBS Head

Global Business Services (GBS)

SSC

(CESPs)

Global E2E

Process

Owner

BPO (ACS)

Business Performance

Project

Team

Responsibilities:

Monitor GBS

performance

Issue resolution

Negotiate Service

Agreement

Responsibilities:

• Manage budget and

scope of SSO

• Maintain Master SLA

Responsibilities:

Setting SSO strategy and scope

Approve operational and capital budget

EPM CoE

(Planning)

Contractual

partners by

signed Service

Agreement

PROC.

CPO …

Responsibilities:

Design and implement

End-to-End process

standards and

improvements

Responsibilities:

Deliver according to Service

Agreement

1

2

3

4


Challenges for a global governance structure

Physical distance vs. proximity through an integrated

center network

Cultural distance vs. ‘one company’

philosophy

Offshore transaction center vs. globally

leveraged model

QUESTIONS?

GOVERNANCE BEST PRACTICES OF WORLD-CLASS GLOBAL BUSINESS SERVICES (GBS) ORGANIZATIONS

New Delhi, GIC Conclave March - 20th-21st March, 2012

Director – Practice leader, Global Business Services (GBS) program,

Europe, Middle-East (EMEA) and Asia

Contents

GBS Evolution


Service Management

A World-class GBS Service

Management Model


GBS service management is a prime enabler to advance from stage to stage 2 and beyond

GBS

Governance

GBS

Service Management

GBS

Service provisioning

Provide consistent management

guidance

Set cohesive policies and procedures

Assign effective decision-rights

Organizational capabilities enabling a

GBS to design, implement and

optimize a service

Services delivered to GBS

customers, based on good

governance and a well-defined

service management model


Service Management is a key enabler to move from a function-centric to a value-centric GBS model

Stage

1 Function-

centric

Stage

2 Process/Service-

centric

Stage

3 Value-centric

Complexity

Reduction

Maturity

Operating

Excellence

Service Management

Integration


Rudimentary

Service Management Complexity

Reduction

Strategic

Business

Enablement

Service Oriented Independent Platform

Service Catalog Centric


Does GBS Service Management matter?

Q: How important is GBS Service Management in enabling your GBS

to positively impact overall company performance?

33% 67%

Top Performer

of Top

performers

think its critical VS

66%

34%

Peer

of Peers

think its

critical


The Importance of

effective GBS Service

Management

What is effective GBS

Service Management?

What is the tangible effect

of effective GBS Service

Management?

A common

misconception

Service Management is

about meeting your

service level agreements,

and key performance

indicators…


Quality of service delivery evolves through five phases in the service management framework

Capability to identify a services portfolio that meets

internal customer expectations demand in a cost effective

manner

Service

Strategy

Service

Design

Service

Transition

Service

Operation

Continual

Service

Improvement

Lifecycle Phase

Capability to design and deliver services that meet

internal customer expectations demand in a cost effective

manner

Capability to transition a service from business unit to

GBS causing minimal business disruption

Capability to manage customer interaction and GBS

support functions to deliver services with consistent

quality

Capability to continuously improve service quality and

operational effectiveness

GBS Service Management lifecycle


Each phase of the lifecycle contains several processes detailing these capabilities further

Process

Demand

management

Service

portfolio

management

Financial

management

Supply

management

Service

catalogue

management

Supplier

management

Service

migration

management

Change

management

Contact

center

management

Infrastructure

management

Service

continuity

management

Quality

Improvement

Knowledge

management

Lifecycle Phase

Service

Strategy

Service

Design

Service

Transition

Service

Operation

Continual

Service

Improvement

GBS Service Management framework


World-class GBS concur, Service Management is key to deliver World-class performance

Do you think it

matters?

of Top performers think

GBS Service management

critical to the success of

their GBS 67%

What matters

most?

The score of Top

performers (scale 0-4) on

Financial Management

capability; which equates

to Leading capabilities in

this area of competence

3.8

Does it actually

matter?

Top performers realize

twice the level of service

quality improvements

year-on-year compared

to peers 2x

Can you achieve

top performance?

The percentage of GBS

that participated in the

study demonstrating first

quartile capabilities in GBS

Service management 17%


World-class GBS deliver higher levels of customer service and productivity gains compared to peer

2%

38%

11%

43%

26%

14%

59%

3% 4%

Peer Top Performer

Productivity improvements achieved against baseline

(past 12 months)

2%

58%

29%

30%

7%

44%

4%

19%

7%

Peer Top Performer

Customer service improvements achieved against baseline (past 12

months)

70%

11% 17%

63%

Deterioration No change 1% - 10% 11% - 20% 21% - 40% 41% - 60% >60%

Customer service and productivity improvements over 10%


A World-class GBS

Service Management

Framework

Key components of a

World-class GBS Service

Management Framework

Challenges for a global

Service Management

model


Managing supply & demand successfully is pivotal for a World-class GBS

Supply Legal

GBS Infrastructure

Assets

Demand

Service Strategy

Service Design

Service Transition

Service Operation

Continual Service Improvement

GBS Service Management Taxonomy

Experts Consulting Projects Transactions

Glo

bal

Pro

ces

s O

wn

ers

/ B

Us

/ F

un

cti

on

s

Bu

sin

es

s R

ela

tio

nsh

ip M

an

ag

ers

Call / Self Service / Email / Chat

BUs BUs Func. Func.


Service Catalogue Management connects Supply and Demand Management

Demand

Management

Service

Catalogue

Management

Supply

Management

Customer

1

Customer

2

Customer

3

Service A

Service B

Service C

Process 1

Process 2

Process 3

A customer perceives the service not the

process…


Through demand planning the GBS can understand, plan and influence customer demand…

Demand

Quantity

Determine client

demand

Translate

demand to

services portfolio

Develop capacity

plan

Develop service

delivery plan Develop service

pricing

Manage plan-actual

deviations

Customer GBS

Supply

Price


Getting it wrong, a GBS is either resource constrained or over-staffed

Supply

Demand

Price

Quantity

Determine client

demand

Translate

demand to

services portfolio

Develop capacity

plan

Develop service

delivery plan Develop service

pricing

Manage plan-actual

deviations

Customer GBS

Resource

constrained overstaffed

Demand > Supply Demand < Supply


Top Performers are significantly better at forecasting service demand than Peers

13%

33% 22%

33%

9% 9%

11%

2% 4%

42% 22%

Peer Top Peformer

+/- 5% +/- 10%

+/- 15% +/- 20%

+/- 25% More than +/- 25%

We do not measure this variance

2.6x


Level of accuracy in forecasting service demand


GBS Financial management aims to align company and GBS objectives

1

Annual GBS plan

& budget

Demand

planning

2

Demand & Financial

Forecasting

3

Perfor-

mance

Measure

ment

4

5


Top Performers have implemented positions which support execution of key GBS service management capabilities

22%

56%

67%

67%

78%

78%

100%

23%

40%

42%

60%

36%

30%

66%

GBS Sourcing Manager

GBS Service Manager

GBS Strategy Manager

GBS HR Manager

GBS IT Manager

GBS Business Relationship Manager

GBS Financial Manager

Peer Top Performer

Q: Which positions have you implemented?


Capability Maturity Levels explained

GBS Service Management capability maturity levels, increasing capabilities lead to outperformance

Lagging

Significantly lagging

in performance

Leading

Setting new boundaries

of excellence

Achieving

Performing at

Peer/ industry Levels

Exceeding

Exceeding Peer/

industry Performance

Pushing the outer

boundaries of effectiveness

Increasing focus on

value Delivered


> 2 years 2-5 years 6-8 years 9-11 years > 12 years

Service Management is a key enabler to develop an advanced GBS model

Lagging

Achieving

Leading

Exceeding 9

Years it takes

World-class GBS

to achieve

advanced GBS

Service

management

capabilities

Overall Source: The Hackett Group, 2012

GBS Service Management maturity


Changing a shared services model to a GBS model requires change to all aspects of the service delivery model

Governance

for how

decisions are

made;

organizational

entities,

structure and

reporting lines

Decision

making

effectiveness

Top

management

participation

Responsible,

accountable,

consulted,

informed

(RACI)

Skills needed

to deliver and

successfully

transform and

execute

services

Skills in

business

functions and

business

operations

Formal

training and

skill

development

opportunities

• Retention of

top

performers

Architecture of

the technology

platforms

required to

support service

delivery

Automation

Online self-

service

access

IT and

systems

integration

Data

standards,

report design,

score cards,

KPIs, master

data elements,

and

repositories of

unstructured

information

Decision

making

frameworks

Single

version of the

truth

Global

master data

standards

Specification of

which and

processes are

to take place

where

Transactional

COEs

Knowledge

COEs

Work done at

BU level

How and

where

processes and

sub processes

are sourced

In-house Vs.

outsource

Onshore Vs.

offshore

Processes, exception-handling

rules, mappings, etc.,

associated with functional roles

and responsibilities

BU-level standards

Enterprise-wide standards

SERVICE

DELIVERY

MODEL

INFORMATION

SERVICE

PLACEMENT

PROCESS

SOURCING

PROCESS

DESIGN

ENABLING

TECHNOLOGY

SKILLS &

TALENT

GOVERNANCE

&

ORGANIZATION


Challenges for a global Service Management model

‘Silo’-ed vs. boundary-less service delivery

Center-led vs. GBS-led standardization

Process vs. Value-centric mindset

QUESTIONS?

The Hackett Group

Corporate Headquarters

1001 Brickell Bay Drive

30th Floor

Miami, Florida 33131

TEL: +1 305 375 8005

London

Martin House

5 Martin Lane

London EC4R 0DP

TEL: +44 207 398 9100

Hyderabad

8-2-120/112/88&89

1st Floor, Aparna Crest

Road #2, Banjara Hills

Hyderabad 500034

TEL: +91 40 66544000

Melbourne

Suite 122B & 122C, Level 1

530 Little Collins Street

Melbourne

Vic 3000

TEL: +61 3 99097657

FAX: +61 3 99097788

EXECUTIVE ADVISORY PROGRAM

On-Demand Access to World-Class Performance Metrics and Best Practice Advice

Associate Names:

Joel Roques

Managing Director – Advisory Services, Europe

Africa & Middle-East (EMEA) and Asia

Phone: +44 207 398 9067

Mobile: +44 771 469 7179

[email protected]

Martijn Geerling

Director – Practice leader, Global Business

Services (GBS) program, Europe Africa & Middle-

East (EMEA) and Asia

Phone: +44 207 398 9100

Mobile: +44 78 2519 0927

[email protected]

mailto:[email protected]

mailto:[email protected]

Gic conclave 2012_joel_roques_hackett

Business

Transcript of Gic conclave 2012_joel_roques_hackett