What global business services need in 2023

The past two years have tested the resilience and sustainability of global business services (GBS) operating models across industries and functions. The good news is that in most businesses, GBS operations adapted quickly to new demands for remote working, contactless business practices, and increasingly distributed global organizations.

Digital solutions have been key to GBS’s resilience, with cloud-based approaches proving effective for both in-office and remote work. In many cases, these types of digital solutions led to innovation, facilitating real-time collaboration and connectivity between customers and stakeholders.

Now GBS finds itself facing new strains: a highly volatile macroeconomic environment, exacerbated by persistent demand fluctuations, unsettled labor markets, and rising geopolitical tensions, has sharpened recession concerns in many global markets. At the same time, regulators and investors continue to push for a broad transition to sustainable operating models—generating new demand for rigorous (yet streamlined) environmental, social, and governance (ESG) compliance-reporting capabilities.

Yet as stakeholders move to optimize capacity, operations, and overheads, GBS leaders are well-positioned to play significant roles—even as they come under increasing pressure to deliver more for less.

Where GBS leaders can pull further ahead

Companies that are taking the lead in GBS recognize that the playbook from previous slowdowns won’t be enough for today’s environment. Instead, they’re taking four actions that are proving especially important in finding new ways to expand GBS’s impact.

Step one: Create a bold new vision for GBS at the core

The capabilities GBS has built during the pandemic can provide crucial support in today’s turbulent environment—if senior executives know where to look. A new vision for GBS is therefore an essential first step in helping leaders understand how it can generate value well beyond its traditional focus on efficiency.

A global pharma manufacturer generated its vision by having GBS partner with the company’s digital and technology group to analyze data flowing across GBS-supported business and functional processes. The resulting insights pointed to new opportunities to accelerate the scale-up of automation across the organization. Leaders then expanded GBS personnel’s access to self-learning programs teaching new digital and data skills—which, combined with structured process-improvement methodologies, enabled them to lead rapid end-to-end redesign of a wide range of services.

Step two: Move quickly to action in target areas

Traditionally, the testing and refinement required for scaling up mid- and long-term initiatives would take at least 12 to 18 months—ample time for market shifts to make the outcomes meaningless. Leading GBS organizations therefore commit to an agile mindset, following a fail-fast approach that develops multiple use cases in rapid “sprints” whose goal is to create minimum viable products (MVPs), not polished offerings. Teams design initiatives to have measurable impact in two to three months, and discard those that don’t produce results.

The GBS of an Asian bank embodies this fast-action approach with an annual hackathon event to find top talent for digital, data, and advanced analytics. Participants are given real-world problems to solve and are tasked with building an MVP. Successful candidates are interviewed for jobs, and the MVP solutions put forward by young talent are integrated into the bank’s backlog of new products. By combining the process for ideating new business solutions with the hiring process, the GBS team improved the bank’s capabilities while minimizing the risks of failure.

Step three: Create ‘nerve centers’

Nerve centers—digital, end-to-end control towers that cut across functional silos—can help business leaders coordinate not only crisis response but also mid- to long-term initiatives. For GBS, a nerve center can encompass both existing and new service partners to help identify, develop, and roll out the next generation of services and capabilities.

Broadly speaking, nerve centers fall into two time horizons. Short-term nerve centers, operating for six to 12 months, are useful for achieving aggressive efficiency opportunities. Longer-term centers, at work for 12 to 18 months, look to a wider variety of potential impacts, such as increases in throughput, cash flow, asset turns, and customer or employee satisfaction. These teams can support scenario planning as well, developing a reserve of use cases based on simulations of extreme demand or supply disruptions, changes in business model, or M&A activity.

Step four: Take the long lens through restructuring

Improving the efficiency of service operations is a never-ending task for GBS’s long-term success, with periodic restructuring needed as business requirements evolve. Companies can explore four different restructuring approaches, either in isolation or in combination.

Segmented demand and capacity management. This option relies on escalation through service tiers, with corresponding KPIs and service-level agreements. Under a typical three-tiered model, tier 0 is self-service and automated, tier 1 is human-assisted, and tier 2 offers expertise-based advice. This structure is highly resource-efficient, with human and expert assistance used only when automation cannot provide a solution.

Support agile with analytics and automation. The agile model of constant iteration and improvement becomes even more powerful when paired with tools such as AIand intelligent process automation. AI is already being embedded across many GBS services, including travel-expense report auditing, general ledger outlier identification, candidate resume scanning, and insurance claim adjudication. Similarly, process mining technologies are enabling the creation of digital twins to proactively assess and resolve service capacity and user experience issues.

Reevaluate location and sourcing strategies. With next-generation technologies becoming more standard, GBS teams may need to adjust their talent recruitment and sourcing strategies. And it’s not just a matter of adding technical skills to GBS; across organizations, interpersonal and self-leadership skill gaps are also critical.

Build new service capabilities. Mastering data, digital, and advanced analytical solutions can allow GBS to develop entirely new service offerings—such as in tracking and reporting ESG performance. The measurement of ESG activity represents a logical extension to existing GBS work in finance functions. GBS can therefore adapt its talent pipelines—both internally and through strategic partners—to scale up ESG capabilities and meet demand from investors and other stakeholders.

Uncertainty isn’t going away anytime soon. But by making the right moves, GBS organizations can give businesses new capacity to turn their own data and skills into unique sources of competitive advantage. The time to start is now.

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