The New Normal for Global Business Services: Digital Disruptors Drive an “As-a-Service” Capability
By Bob Cecil, Principal, Shared Services and Outsourcing Advisory, KPMG LLP
Today’s enterprises are moving to a higher level of value and performance for delivery of their business services. While they are still looking for traditional shared services and outsourcing objectives of reducing costs and maintaining service quality and control, they now need more comprehensive business value from their business services organizations.
The more advanced enterprises and forward-thinking business services organizations are using Global Business Services (GBS) delivery models with “As-a-Service” attributes to respond to the demands of their customers, and to address four digital disruptorsthat are driving significant transformation in how business services are delivered.
Robotics and cognitive automation are disrupting traditional offshore outsourcing and captive models by displacing cheap labor with even cheaper, service quality-improving software.
Example: A major telecom providerhas replaced more than 1,000 full-time employees (FTEs) with RPA software “robots” over a six-month trial period. Initial projections suggest that are each robot can perform activities equivalent to three FTEs.
Cloud and companion integration technologies are breaking apart the traditional on-premise ERP stack,and augmenting existing systems of record with cloud-based systems of engagement.
Cloud deployments can dramatically reduce the time to install, upgrade and customize processes and software, reducing overall operating expenses and enabling reinvestment of cost savings to support growth. Cloud also offers scalability, speed to market and centralization to coordinate and manage applications across various devices.
Example: through implementation of multiple cloud-based applications for membership subscription and sub-ledger tasks, a leading motor club in North America has significantly reduced finance and accounting costs, and decreased reliance on legacy platforms through solutions that are more easily configurable, support greater business process consistency, and ensure faster implementation timeframes.
Data and analytics provide improved services, insights, outcomes and solutions. This capability can alsobe used with business intelligence technology to develop virtual data warehouses, advanced visualizations and other services to meet increased competition and growing customer demands.
Example: A global financial services institution requires a quarter of its IT resources to focus on data issues, including running up to 30,000 experiments a year to test the success of new products and programs. This has resulted in an 87 percent reduction in customer retention costs and an 83 percent reduction in the cost of acquiring new customers.
Social and mobile technologies enhance an enterprise services organization’s engagement with its customers and partners, e.g., a digital storefront developed through design thinking to mimic the way customers increasingly use smart phone and tablets to conduct work.
Example: a computer storage and data management company has leveraged mobile applications and social media to completely revamp its employee onboarding process and create an improved mobile digital experience. This customizable solution has helped personalize the onboarding experience, removed silos between different functions such as IT and HR, and improved communication and services for new hires.
The impact of these disruptors will continue to grow, as each one is integrated and used in conjunction with the others. Services buyers are progressively waking up to the enhanced business services and services delivery benefits they enable. Providers that fail to keep pace, clinging to antiquated labor-based offshore and legacy technology models, will quickly become irrelevant.
Align Outsourced "Non-Core" Services with Your Core Business
By Tim Montgomery, President and CEO, TIMIT Solutions, LLC
Established in 2011, TIMIT Solutions the US based IT Services Company delivers business solutions including Responsive Web Design and Mobile Apps.
We hear so often that deciding what to outsource is simple. Outsource activities non-core to your business. So how do you do it? Outsourcing must be about leveraging your outsource partner’s core business that is not part of your core business efficiently and effectively.
The same metrics and measures used to track your business goals must be used for your partner. The reason to outsource is still largely to drive efficiencies: higher quality delivery, lower costs, and more responsive service. It’s also about effectiveness in terms of positive impact on your business; whether that is growth, market share or profit margins.
In addition to metrics and measures, your partner must also share in the risk as part of how they earn their reward. Gone are the days of “you save me this much on my labor costs and we’re good”. If your partner is not aligned and measurably able to prove they are helping you drive to your business goals then they are an old-school vendor, not a partner.
I envision an effective business-partner relationship as the partner “owning” -- being responsible for the piece of your pie that is not core to your business. An ineffective model would be letting them go off somewhere to eat your slice of pie at your expense!
To this end include these key elements in your business-partner model that many leave out:
• Partner Commitment – Insist on your partner putting “skin in the game”. Do this by defining all those great ideas you both think are given successes by the metrics and measures you defined for your business. Then share in the rewards and failures appropriately. There is no reason your business should feel all the pain if it fails. And sharing the rewards is a good ingredient to a long-term relationship.
• Low “Switching Cost” – I have always asked my partners to define a plan that will make it easy and low risk to switch from them to an alternative partner. That’s includes a Knowledge Transfer (KT) plan, copy of any of their documented/digital training materials, and commitment to participate throughout KT.
• Productivity – Think beyond the initial goals of cost reduction. If you can convince yourself, every year should not be better than the last then stop here. Otherwise set a year-over-year productivity target for your partner in terms of percentage or monetary unit. It will keep your partner innovative, energized and away from complacency.
• Working Relationship – OK, maybe you are the “Boss” in the relationship, but a smart person once told me “You can be right, or you can be in a relationship.” The relationship is best when transparent, focused on success of both parties, and where authority is used to get decisions made effectively; not simply to exercise hierarchical rule. If you trust your partner then leverage that trust for both your advantage.
These are concepts for sure. All the processes, SOPs, tools and models that can be used to help manage the delivery of outsourced services are already available. There is nothing strikingly new, except that advances in technology and social media have made them exponentially more effective and easy to use. My point is that it’s more about how you integrate the non-core you outsource to remain an effective and efficient part of what is core to operating your business.
Quote: “The relationship is best when transparent, focused on success of both parties, and where authority is used to get decisions made effectively; not simply to exercise hierarchical rule”