gbs overview & trends across the shared services & outsourcing industry

GBS Executive Advisory Program | 1 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Where are we now & where are we going? GBS overview & trends across the shared services & outsourcing industry 2012 Shared Services & Outsourcing Week 2012 14 May 2012, Amsterdam

Tom Bangemann Senior Vice President Business Transformation The Hackett Group

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.


Priorities for 2012 look outward and inward for opportunities to grow top-line revenue and bottom-line profits


Many GBS have moved beyond a single-function shared services model towards developing advanced capabilities

In good company? Maturity

Shared Services Global Business Services

Operational Excellence

6%

37%

57% Complexity Reduction

Stage

3 Stage

2 Stage

1 Function-

centric

Value-centric

Process-centric

Strategic Business Enablement


Not only do most GBS now have a multi-function model, World-class GBS have twice as many functions in scope

2X

The number of functions in World-class GBS’ scope

compared to Peers


World-class GBS have moved more than half of their functional processes in IT and half of those in Finance and HR into GBS

Inside GBS Outside GBS

Human Resources (HR)

Finance

Information Technology (IT)

Procurement

52%

51%

34%

Service Placement – G&A Functions


The cost of Finance is trending downwards again

Finance spending as a percent of revenue, 1994-2012


The agility and lower cost levels achieved allow World-Class to re-invest in Planning & Strategy

Percent change in finance process cost by area, 2011-12


GBS keep pushing the boundaries to include more value-adding finance processes and knowledge centric-activities

Service Placement – Finance processes

5 years ago today In 5 years


Process split example: Best practice based budgeting process


Process split example: Best practice based standard reporting


Finance-led Talent Management Large gaps exist in general business skills required by Finance

Highlighted skills show the largest imbalance between importance and effectiveness

– Change management – Business acumen – Relationship

management – Problem solving skills

Balance of importance and effectiveness

Data analysis and modeling

Change mgt./process improvement

Business acumen

Rlshp mgt. Problem solving skills

Strategic thinking and analysis

Project/Program management

Vendor/outsourcing management

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 20% 40% 60% 80% 100%Importance

Effe

ctiv

enes

s

Source: 2011 Finance Talent Mgmt Study


All World-class GBS have global process owners reporting to Executive level sponsors

Reporting to

Global process owner

Global process owner

GBS leader 43% 50%

CEO 0% 25%

COO 3% 25%

CXO 3% 0%

Business leader 11% 0%

Not implemented 30% 0%

Other non-exec role 11% 0%

2/5 of Peer companies

have either not implemented global

process ownership or not established

sponsorship at senior executive level

Global process owner’s reporting relationship

Peer World-class


All World-class GBS have implemented process ownership, only half of own end-to-end process improvement as well

Decision responsibility

GB

S leader

Process ow

ner

Business

relationship m

gr.

Service m

anager

Not assigned

End-to-end process improvement (within

GBS)

End-to-end process improvement

(company wide)

1/2 Of World-class GBS have made global process owners

responsible for GBS and company-wide end-to-end process

improvement

Decision rights – end-to-end process improvement

Peer World-class


Mature GBS with end-to-end focus provide a multitude of efficiency improvement opportunities (in addition to process cost)

Cross-functional savings in end-to-end processes for a typical $10 billion company

Working capital

improvements

Spend reduction improvements


Ireland

United Kingdom

Netherlands

Belgium

Portugal Spain

Bulgaria

Romania

Poland

Czech Republic Slovakia

Hungary

Estonia Latvia

Lithuania

GBS Growth in Europe has been represented by a consistent migration Eastward

WAVE 1

British Isles 1980s

WAVE 2

Benelux Early 1990s

WAVE 3

Iberia 1995

WAVE 4

Central Eastern Europe 2000

WAVE 5

Baltics & Eastern Europe 2005


Over 4.200 shared service centres operate globally

3147; 74%

1123; 26% 1603; 51%

696; 22%

392; 13%

57; 2% 39; 1%

360; 11%

Top 5 Global Destinations with BPOs Top 5 Global Destinations with SSCs


Attrition remains one of the biggest challenges of offshore GBS centers

0-5% 16-20% >20% 6-10% 11-15%

0-5%

North America

Middle- & South America

11-15%

5-10%

Western Europe

11-15%

Eastern Europe

Asia

16-20%

Attrition rates by region


Jobs have been under pressure for quite some time – with productivity and offshoring taking a heavy toll


Recently established GBS are more prone to selectively outsource activities than older GBS

Outsourcing Technology leverage (automation) Continuous improvement

Likelihood to choose optimization strategies as GBS matures


Companies with world-class GBS have high levels of enterprise-wide process standardization

Enterprise-wide Business Unit Within geographies No or limited standardization

Peer World-class

Level of process standardization – G&A Functions

World-GBS have almost

2X the level of enterprise-wide process standardization compared to Peers


Automation remains the single largest optimization potential

Example: Accounts payable capabilities and outcomes


Next to Focus on Data Management and Workflow, all Top Technology Investments in HR are into Self-Service

Which technology solutions have you implemented in your GBS?

Which solutions do you plan to invest in the most over the next three years?

» Self-service solutions are high on the list for initial investment in HR Shared Services as well as planned for as preferred future investment in technology


Both World-class and Peers have invested in analytics software and workflow management, will cloud be next?

Implemented

9%

0%

4%

7%

22%

27%

Workflow management

Self-service analytics for reporting

Cloud technology

G&A enabling technologies

Peer World-class

(% of respondents indicating high or medium use of this type of technology)

Investment planned

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