In this episode of the “Business Excelleration® Podcast,” what are global business services leaders focused on in 2024? What are their transformation priorities for the coming year? A discussion of findings from our 2024 Global Business Services Key Issues research, with Senior Director Penny Weller, Global GBS Advisory Practice Leader Martijn Geerling, and Digital Enablement and GBS Advisory Practice Leader North America Vin Kumar.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Penny Weller, Global Business Services advisor for North America at The Hackett Group. Today’s episode will discuss findings from The Hackett Group’s 2024 Global Business Services Key Research Study. Her guests today are GBS Global Practice Leader Martijn Geerling and Vin Kumar, digital enablement and GBS Advisory practice leader for North America.
In the fourth quarter of every year, The Hackett Group conducts a Key Issues Study to take the pulse of the business environment and understand global business services (GBS) transformation priorities for the next year. To begin, Martijn shares how GBS leaders are currently seeing the business environment and how this influences their priorities. During 2023, GBS leaders were occupied with rising labor costs, labor shortage and threats of a recession. The expectations for 2024 is that an economic landing with lower inflation and steady business growth may be in sight. With this said, the main focus points for GBS leaders are currently business partnering, retaining people and supporting enterprise growth.
Then, Vin shares his perspective on GBS growth and its ability to spend in these uncertain environments. Over the last several years, we have seen more capabilities added to GBS, which has in turn delivered value for organizations and enterprises. These additions include new services for GBS to offer, and an increase in volume and transactions to do so. However, the funding gap has grown even more this year compared to last year. There is also a 10% increase in overall GBS technology spend. In 2024, the focus of many GBS organizations will be to invest adequate time and money into making sure they are best prepared to leverage artificial intelligence (AI) and new technologies. The biggest adoption of generative AI (Gen AI) we are seeing thus far in the GBS space is around customer service.
GBS is increasingly incorporating technologies into their delivery and getting larger budgets to do so. In the past, we thought of GBS as a vehicle for labor arbitrage. Now, GBS can choose between operating as an integrated GBS or an infrastructure GBS. Most GBS organizations are a combination of the two. There is a clear drive toward core technologies and enterprise resource planning systems owned by information technology, while the outlying layers are owned increasingly by GBS organizations. The biggest obstacles for GBS are largely the same as last year’s challenges. The top three are resistance to change, lack of funding and access to technical resources.
Before wrapping up, Martijn predicts what he believes may be in store for GBS beyond 2024. The largest major foreseeable business disruptor is the impact of Gen AI. Geopolitical instability also adds to the idea that we are in the process of deglobalization. This may affect GBS by stripping the world of a regulatory business environment. Other technology trends may change the equation of industry and business models. This means margins may erode, which could be either a threat or opportunity for GBS organizations. The finding that most surprised Martijn in the study was that improving customer experience dropped lower down on the list, even though it is the most important aspect to focus on. Vin was pleasantly surprised to find that GBS leaders are eager to embrace new technologies, even though they have been slower to adapt to change in the past.
0:46 – Welcome to this episode hosted by Penny Weller.
1:22 – How GBS leaders are currently seeing the business environment.
4:37 – GBS growth and its ability to spend in uncertain markets.
7:48 – Generative AI and technology.
10:54 – Shifting focus from labor costs to digital innovation.
15:50 – The state of labor arbitrage.
17:27 – Obstacles for GBS.
21:37 – What’s in store for the future of GBS beyond 2024.
24:10 – Which finding in the study surprised our guests most and why?