Global Business Services (GBS) Performance Study 2012

GLOBAL BUSINESS SERVICES (GBS) PERFORMANCE STUDY 2012 The Anatomy of a World-Class

GBS Organization

The Hackett Group ─ Global Business Services Advisory Program

April, 2012

10th Annual Global Business Services Performance Study

2003-2012

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.

GBS Executive Advisory Program | 3 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Who do we work for? Detailed performance insights from over 3,000 leading global companies!

97%

of the

Dow Jones Industrials

73%

of the

Fortune 100

88%

of the

Dow Jones Global Titans

73%

of the

DAX 30

45%

of the

FTSE 100

35%

of the

CAC 40

http://www.summtech.com/logo/bayer_logo_wf.gif

http://www.google.com/imgres?imgurl=http://theallseeingeye.tv/chevron_logo.jpg&imgrefurl=http://theallseeingeye.tv/Masonic_Symbolism_In_Corporate_Logos.html&h=368&w=342&sz=23&tbnid=vm-1L5PiIee4RM::&tbnh=122&tbnw=113&prev=/images?q=chevron+logo&usg=__T6vP1vNt9sRVLYiqOAbhLEsxOBs=&ei=SwO1SYa0H4-EtgfL75nqDA&sa=X&oi=image_result&resnum=3&ct=image&cd=1

http://www.google.com/imgres?imgurl=http://wwwp.medtronic.com/newsroom/content/1100120607874.low_resolution.jpg&imgrefurl=http://wwwp.medtronic.com/Newsroom/ImageLibraryDetails.do?itemId=1100120607874&lang=en_US&h=411&w=720&sz=75&tbnid=an_pG5KWeCJo0M::&tbnh=80&tbnw=140&prev=/images?q=medtronic+logo&hl=en&usg=__Ks7WPiZKxsbL6v4dX5DIX9BJ9rs=&ei=bQO1SdrtNs3dtgfnuv3qDA&sa=X&oi=image_result&resnum=4&ct=image&cd=1

http://www.google.com/imgres?imgurl=http://cooperfreight.com/vendors pics/Michelin Logo (2).gif&imgrefurl=http://cooperfreight.com/Customer Profile.htm&h=472&w=1299&sz=19&tbnid=ZRn_wANCkkgK0M::&tbnh=55&tbnw=150&prev=/images?q=michelin+logo&hl=en&usg=__yeoqQciEyS8Vi8GxB7MtP5QUZCg=&ei=qwO1Sb7PDoqhtwexq-DqDA&sa=X&oi=image_result&resnum=2&ct=image&cd=1

http://www.google.com/imgres?imgurl=http://www.stanford.edu/group/idk2ceo2007/images/ibm-logo.jpg&imgrefurl=http://www.stanford.edu/group/idk2ceo2007/sponsors.html&h=330&w=609&sz=62&tbnid=pQtsZ1HWHWuE0M::&tbnh=74&tbnw=136&prev=/images?q=IBM+logo&hl=en&usg=__ffJLXGA9ymPea9eb3xfBdgybWsQ=&ei=9QO1SfmcE-PetgfgwNDqDA&sa=X&oi=image_result&resnum=3&ct=image&cd=1


…as well as shared service centres based around the globe…

…providing Hackett with unparalleled insight into GBS

performance

http://images.google.co.in/imgres?imgurl=http://www.billfair.com/clientLogos/McDonaldsCorporation.jpg&imgrefurl=http://www.billfair.com/financial.html&usg=__Nvolh8a4ZBQrnqMdkN_ylHmtsjE=&h=819&w=1200&sz=68&hl=en&start=7&um=1&itbs=1&tbnid=SKYbVxjN5JauqM:&tbnh=102&tbnw=150&prev=/images?q=McDonald's+Corporation+logo&hl=en&sa=N&um=1

http://www.bat.com/servlet/SPMerge?mainurl=/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO79SFNF?opendocument&SKN=1

http://images.google.co.in/imgres?imgurl=http://www.worldcharitymall.com/CBC_logo_onairWEB.jpg&imgrefurl=http://www.worldcharitymall.com/&usg=__GLWyHujiRP8vSp-6qkG6eQvJTwM=&h=469&w=347&sz=84&hl=en&start=4&um=1&itbs=1&tbnid=Pr9ZUnR5sG-i-M:&tbnh=128&tbnw=95&prev=/images?q=cbc+logo&hl=en&um=1

http://images.google.co.in/imgres?imgurl=http://interactive.bis.gov.uk/backingyoungbritain/wp-content/uploads/2009/09/Steria-logo-RGB-300.jpg&imgrefurl=http://interactive.bis.gov.uk/backingyoungbritain/steria-limited&usg=__JSWCzI_fEo0VJns_Yr_olYQGDQc=&h=122&w=300&sz=32&hl=en&start=3&um=1&itbs=1&tbnid=yGBywzhf89RwKM:&tbnh=47&tbnw=116&prev=/images?q=Steria+Ltd&hl=en&um=1


The Hackett Group methodology We accelerate performance improvement through performance measurement and the implementation of proven practices

Hackett Value Grid™

Eff

ec

tive

ne

ss

E

ffic

ien

cy

Complexity

Reduction

Operating

Excellence

CO

ST

S

ER

VIC

E

VA

LU

E

Strategic Business

Enablement

EFFECTIVENESS

Quality

Access to information

Supplier leverage

Economic return

Alignment with business

Working Capital

EFFICIENCY

Cost

Cycle time

Productivity

Staffing

Technology leverage


Peer ..World Class..how big is the difference






World-class HR organisations deliver greater efficiency and

effectiveness at a lower cost

$1,350

$950

$515

$272

$172

$191

$216

$199

Peer Group World-class

Other Technology Outsourcing Labor

$2,252

$1,612

Total HR cost per employee

28%

Source: Hackett HR Executive Advisory Program, 2011

» World-class HR is consistently driving their

cost advantage across all areas

» Outsourcing and technology investments

provide the necessary leverage to manage

labour costs

» Process costs are over a 1/3 less overall

» Between 1/3 and ½ less for transaction

processes

» Nearly 50% less for recruiting and

staffing

» Around 1/3 less for workforce

development and organizational

effectiveness


World-class HR organisations employ fewer but more productive FTEs

than peers

5.9

3.9

6.2

4.9

0.8

0.8

0.7

0.5

13.6

10.1

Peer Group World-class

Transactional Employee Life Cycle

Strategy & Planning HR Management

HR FTEs per 1,000 Employees

26%

Source: Hackett HR Executive Advisory Program, 2011

» World-class continues to deliver HR services

with significantly lower FTEs across the board

» 26% fewer total FTEs

» 34% fewer FTEs in transactional processes

» 21% fewer FTEs in employee life cycle

processes

» 34% more employees served per FTE

» From a process perspective, World-class HR

has more FTEs involved in Strategic

Workforce planning, labour relations and

workforce development

» More interactions with unions in a recovery

economy

» Further World-class focus on development

linked to business strategy and employee

engagement purposes

The Anatomy of a

World-Class GBS

Organization

Executive Summary


Who participated in the 10th annual GBS Performance Study?

14%

17%

45%

17%

7%

Study participants - by number of GBS employees

<100

100-250

250-1,000

1,000-2,500

>2,500

22%

19%

14%

13%

10%

10%

4%

4% 3% 1%

Study participants - by industry

Industrials

Consumer Discretionary

Consumer Staples

Information Technology

Healthcare

Materials

Utilities

Financials

Energy

Telecommunication Services

Sample Study Participants


In a decade shared services has moved to global business services…

… and has become the undisputed model for delivery of G&A services across all industries

34%

2/5

250-

1,000

Are savings made from

shared services

sustainable?

The percentage GBS

delivering year-on-year

savings over 10%

Are GBS really global?

The proportion of world-

class GBS delivering

services from global

locations

How large are GBS

today?

The median number of

FTEs in World-class GBS,

delivering transactional and

knowledge-centric

activities.

How many GBS are truly

enabling the business?

The factor World-class GBS

exceed peers in ability to

enable business agility 6x


HR and Procurement are starting to deliver on their promise to be included in the scope of GBS

21%

22%

22%

22%

27%

38%

42%

51%

61%

93%

15%

17%

16%

18%

21%

36%

30%

43%

45%

92%

Legal

Real Estate & Facilities Mgt.

Industry Specific Functions

Customer Call Center (outbound)

Direct Procurement

Customer Call Center (inbound)

Indirect Procurement


Human Resources

Finance

Today Future

Rank

2011

Rank

2012

1 1

3 2

2 3

5 4

4 5

6 6

10 7

12 8

9 9

7 10

Functions included in GBS


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

34%

48%


(IT)

Procurement

49%

52%

51%

34%

69%

69%

Service Placement – G&A Functions


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

Enterprise-wide Business Unit Within geographies No or limited standardization

45%

23%

25%

7%

Peer

85%

12%

3% 0

World-class

Level of process standardization – G&A Functions

World-GBS have almost

2X the level of enterprise-wide process

standardization compared to Peers


29%

17%

6%

48% Peer

29%

30% 2%

39%

World-class

All companies have moved similar activities into GBS, but World-class deliver more knowledge-centric processes

GBS – Transactional GBS – Knowledge-centric GBS – Outsourced Outside GBS

World-GBS have almost

2X More knowledge-centric

activities in scope than Peers

Service Placement – G&A Functions


GBS continue to deliver cost savings, 10 years into the journey benefits continue to be delivered

0%

20%

40%

60%

80%

100%

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

Overall

34% Of GBS report

year-on-year cost

savings of over 10%

% of GBS reporting annual savings against baseline between 0-10%


Peer GBS are less likely to value labor arbitrage over other location decision variables

50%

50%

67%

75%

83%

34%

44%

69%

76%

65%

Time zone coverage

Infrastructure quality

Co-location with an existing facility

Availability of skills and talent

Labor arbitrage 1/4

Of peer GBS are less

likely to value labor

arbitrage as the most

important factor for

sourcing location

selection

Top-5 reasons for selecting center location(s)

(Multiple options possible)

Peer World-class


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


Southeast Asia

East Europe

The road ahead, East is East and West is West…

… and the twain shall continue to meet in the second decade of the GBS journey

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


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

9%

0%

4%

7%

22%

27%

G&A enabling technologies

Peer World-class

(% of respondents indicating high or

medium use of this type of technology)

Implemented

40%

93%

90%

8%

69%

55%

Cloud technology

Workflow management

Self-service analytics forreporting

Workflow

management

Self-service analytics

for reporting

Cloud

technology


1%

41%

20%

46%

23%

8%

35%

1%

5%

2%

3%

15%

Peer World-class GBS

Deterioration No change 1% - 10% 11% - 20%

21% - 40% 41% - 60% > 60%

58%

12% Quality

improvements

> 10%

27%

10%

48%

20%

19%

33%

2%

25%

4% 13%

Peer World-class GBS

The performance gap between World-class and Peer GBS organizations continues to be significant…

25%

70%

Savings

achieved

>10%

Savings achieved against baseline

(past 12 months)

Quality improvements achieved

against baseline (past 12 months)

Value Delivered Governance Service Placement Talent Management Technology Process Design Information Transformation


What World-class GBS organizations do differently; talent practices

38%

50%

88%

88%

88%

75%

100%

45%

55%

86%

76%

72%

48%

62%

Virtual work practices

Part time flexibility

Skill assessment

Job rotation within GBS

Non monetary awards and recognition

Career planning -into positions outside GBS

Career planning -into positions inside GBS 1/3 World-class GBS

are more likely to

have implemented

career planning

methods

See our other resources,

available on the Advisory

member portal. Specific

references for Skills &

Talent are here

Peer World-class

Talent practices

Value Delivered Governance Service Placement Talent Management Technology Process Design Information Transformation


All acknowledge the importance of measurement, only World-class GBS align measurement with strategy

0%

83%

92%

92%

92%

92%

9%

71%

28%

55%

64%

79%

We have no formal means to measuresuccess

Service Level Agreements (SLAs)

Balanced scorecard/ Strategy maps

Regular external benchmarking

Regular customer satisfaction surveys

Key Performance Indicator (KPI)program

How do you measure performance?

Peer World-class

World-GBS are

3X more likely to use

balanced scorecards

than peers

Value Delivered Governance Service Placement Talent Management Technology Process Design Transformation Information


All GBS have moved similar finance activities into GBS, World-class deliver more knowledge-centric processes

Finance Human Resources (HR) Information Technology (IT) Procurement

33%

11%

5%

52% Peer

26%

23%

2%

48% World-class


World-GBS have

2X More Finance related

knowledge-centric activities in

scope than Peers

Service Placement – Finance Function


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

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Outlook/Interim forecast

Budgeting

Business performance analysis

Cost analysis

Business performance reporting

Tax filing & reporting

Cost Accounting

External reporting

Order Entry

Inventory Accounting

Treasury

Cash management

Time and Attendance

Customer billing

Credit

General ledger accounting

Payroll

Collections

Intercompany accounting

Fixed assets

Travel Expense

Cash application

Accounts payable

GBS - Transactional GBS - Knowledge-centric GBS - Outsourced Outside the GBS organization

Service Placement – Finance processes



28%

16%

6%

50% Peer

32%

18% 0%

49% World-class

World-class and Peers have moved similar HR processes into a GBS environment

Service Placement – HR Function



World-GBS and Peer have

Equal levels of knowledge-centric

activities


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

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

Organizational Design & Development

Strategic Workforce Planning

Total Rewards Planning

Labor Relations

Pension & Savings Administration

Workforce Development

Health & Welfare Administration

Employee Relations

Recruiting & Staffing

Exit Process

Compensation Administration

Time & Attendance

Employee Data Management & HR Reporting

Payroll Administration

Service Placement – HR processes




42%

15%

36%

7%

Peer

75%

25%

0 0

World-class

World-GBS have nearly

2X the level of enterprise-wide

process standardization

compared to Peers

Companies with world-class GBS have achieved a higher level of enterprise-wide HR process standardization

Level of process standardization – HR Function

Enterprise-Wide Business Unit Within geographies No or limited standardization



26%

21%

4%

48% Peer

32%

34%

1%

34%

World-class

All GBS have moved similar activities into GBS, World-class deliver more knowledge-centric processes

World-GBS almost

2X More Procurement related

knowledge-centric activities

in scope than Peers

Service Placement – Procurement Function


Finance Human Resources (HR) Procurement Information Technology (IT)


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

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Supplier Scheduling

Customer Management

Receipt Processing

Sourcing Execution

Compliance Management

Supplier Management & Development

Requisition & Purchase Order Processing

Sourcing & Supply Base Strategy - Indirect Spend

Function Strategy - Indirect Spend

Supply Data Management

Service Placement – Procurement processes


Finance Human Resources (HR) Procurement Information Technology (IT)


The Journey to World-Class Performance is consistent… …but the speed of execution and importance of the outcome has increased

Strategic

Alignment

Eliminate

Simplify

Standardize

Leveraged

Delivery

Centres of

Scale (SSC)

Automate Centres of

Skill (COE)

enablers

Specialised

BU Delivery

Corporate

Outsource

Centres (BPO)

Self-Service

Portals

Determine services needed, and

delivery/management model to

support strategic objectives

Reduce complexity &

implement Best

Practices across

enterprise

IT enablement for lowest

service delivery cost

Reduce manual effort

and errors

Deliver standard services through

best service points

1

2

3

4

5

people

process

technology

Move towards World-

Class performance

levels

6


Trends for the next five years

The new reality – Cost Competitive, Platform for Growth..Strategic

alignment...

Global delivery centres – Second Tier Cities

Monetisation of data – The rise of Analytics

Capital Allocation – New reality

Changes in process improvement

– Measurement Intensive

– Atomisation of work

– Price signals

Productivity matters......

........It’s going to get Ugly......if you are serious about benefits realisation

.......Go Hard ...Go Early...Go headcount

Corporate Headquarters

1001 Brickell Bay Drive

30th Floor

Miami, Florida 33131

TEL: +1 305 375 8005

Amsterdam

Camerastraat 25

1322 BB Almere Amsterdam

TEL: + 31 36 535 00 82

Atlanta

1000 Abernathy Road NW

Suite 1400

Atlanta, GA 30328

TEL: +1 770 225 3600

Chicago

525 W. Monroe Street

Suite 1550

Chicago, IL 60661

TEL: +1 312 325 2900

Frankfurt

Torhaus Westhafen

Speicherstrasse 59

60327 Frankfurt am Main

TEL: +49 69 900 217 0

Hyderabad

8-2-120/112/88&89

1st Floor, Aparna Crest

Road #2, Banjara Hills

Hyderabad 500034

TEL: +91 40 66544000

London

Martin House

5 Martin Lane

London EC4R 0DP

TEL: +44 20 7398 9100

New York

110 Wall Street

17th Floor

New York, NY 10005

TEL: +1 646 354 4400

Paris

8, rue de Port Mahon

75002 Paris

TEL: +33 1 53 43 0400

Philadelphia

225 Washington Street

Conshohocken, PA 19428

TEL: +1 610 234 5500

San Francisco

100 Montgomery Street

Suite 2225

San Francisco, CA 94104

TEL: +1 415 249 3500

Sydney

Suite 403

35 Lime Street

Sydney, NSW2000

Australia

TEL: 1300 457 779 (within Australia)

TEL: +61 2 9299 8830

Martin Fahy

Asia-Pacific Practice Leader

Phone: +61 407 902751

[email protected]

Simon Narroway

Director

Phone: + 61 419 293 562

[email protected]

mailto:[email protected]



Date post:	20-Jan-2015
Category:	Business
Upload:	shared-services-outsourcing-network-sson
View:	3,004 times
Download:	1 times