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February 05, 2020

Key focus for GBS in 2020? Doing more with less

By Martijn Geerling  – Managing Director, Advisory practice leader Europe at The Hackett Group

According to The Hackett Group’s 2020 Key Issues Study, the challenges of operating global business services (GBS) organizations aren’t letting up. In 2018 and 2019, improving customer focus was the dominant transformation initiative on the enterprise agenda, with cost optimization in second place. In 2020, cost focus is number one, again. At the same time GBS organizations are expected to drive digital transformation of their services portfolio to meet higher business expectations. How can GBS meet these potentially conflicting demands?

Doing more and more with less and less until eventually you can do everything with nothing

‘Doing more with less’ has been the creed for many years in organizations looking for cost efficiencies. A phrase attributed to R. Buckminster Fuller, describing the ability of technological advancement to do “more and more with less and less until eventually you can do everything with nothing,” The lesser-known full quote points to the ability to use technology to realize ever increasing productivity gains Taken to its extreme this is an impossibility. The original observation applied to the introduction of Henry Ford’s assembly line. Today, ‘digital’ technologies hold the promise of replacement of labor with new technology, increasing productivity to get ever closer to this goal.

However, to do more with less, companies have to invest first to gain efficiencies. GBS have traditionally,for a large part, relied on labor arbitrage to realize cost efficiencies. Visionary GBS leaders will reinvest some of those savings and re-invest in other strategies that sustain that cost advantage over time. After all, labor arbitrage is a one-time gain that erodes over time. Moreover, they seek new sources of value with an expanded role for GBS.

5 priorities for GBS in 2020

GBS leaders with foresight will ensure they deliver cost savings by using traditional means, labor arbitrage, outsourcing, continues improvement. At the same time they secure the resources needed to expand their mandate beyond ”doing more with less”. Here are 5 priorities to do just that:

  1. IMPLEMENT NEXT GENERATION CLOUD-BASED IT PLATFORM Many organizations operate legacy system environments with outdated functionality and poor usability. This hinders process efficiency and creation of data-driven business insight. To address these issues, GBS must replace legacy with next generation cloud-based platforms, best-of-breed and smart automation solutions.
  2. CREATE AN ANALYTICS CENTER OF EXCELLENCE Data is not confined to functional silos. The potential of analytics to transform business processes and add business value is increasing quickly. GBS should lead on building cross-functional, predictive analytical capabilities for the enterprise.
  3. BUILD A DIRECT-ACCESS GBS PORTAL A multi-function GBS can be the one-stop-shop for many services. GBS must develop a customer-centric direct access model (on-line portal with voice, chat, self-service etc.) to enable employees, vendors and other GBS stakeholders to interact seamlessly with GBS services.
  4. REDEPLOY CAPACITY TO VALUE-ADDING WORK GBS must free-up time by embracing automation, ‘taking the robot out of the people’ and redeploy staff to manage a more automated workforce, as well as attract new talent to fill value-adding roles, both existing and new such as data scientist and smart automation experts.
  5. SECURE DATA AND SYSTEMS Companies cite cyber risk as a paramount business risk in 2020. As GBS goes digital, exposure to cyber risk grows. GBS must safeguard sensitive data and increase focus on controls to prevent intrusion and fraud.

MARTIJN GEERLING is a Managing Director and leading The Hackett Group‘s best practice research and on-demand advisory services solution in Europe and responsible for the Global Business Services (GBS) Advisory solution. You can contact me at mgeerling@thehackettgroup.com if you’d like to learn more about our 2020 Key issues study.