Taking Global Business Services to the Next Level

For those who have not read my previous post, “Moving from Shared Services to Global Business Services,” let me provide a quick summary. Shared Services (SS) is an operating model that has been around for decades. It enables function-specific resources (i.e., HR, IT, Finance, etc.) to be leveraged across an entire organization, resulting in lower costs with agreed-upon customer-service levels. Around the time of the 2008/2009 recession, greater demands were placed on the SS operating model and what evolved was Global Business Services (GBS). The GBS operating model offers better efficiency, wider geographic reach, and broader scope coverage, to handle greater regulatory scrutiny for the same or even lower costs. However, there are some obstacles to overcome to ensure the full value of the GBS operating model is achieved… which is the focus of this post.

State of GBS

Multiple surveys and commentary have been published indicating the widespread and increasing trend of companies moving from SS to the GBS operating model. An annual survey by the Shared Services and Outsourcing Network (SSON), one of the largest communities of shared services and outsourcing professionals, stated that nearly 70% of the respondents operate as a GBS or multi-function model. Although GBS adoption continues, we have also heard of examples of GBS initiatives not delivering the “promised” return on investment (ROI). In the first year, most initiatives seem to deliver a respectable 7-10% ROI, but what is concerning is that according to Genpact, a global leader in business process management and technology services, “as many as one-third of all such transitions fail to ever achieve anticipated cost savings.” Unfortunately, from my network of peers in this space, I personally know of examples where this has occurred. There are several reasons for this occurrence, so let’s discuss a few of the major ones.

ROI Shortfall

Fundamentally, there are a few main reasons why a GBS transformation may fall short:

1. Aligned Strategy and Governance – Many companies do not take the time to have ALL key stakeholders agree to an overall GBS strategy and governance upfront. Executive commitment is key.

2. Direct Linkage to Desired Business Outcomes – Misalignment between GBS Leaders and Business Clients on priorities, and/or not being able to adjust quickly as market conditions change. Alignment to client priorities is key.

3. End-to-End Scope Coverage – Only portions of an “end to end” process like Order to Cash are moved into GBS, without accountability (or a voice) to influence the balance of the “end to end” process not moved into GBS. “End to End” process accountability is key.

There are a myriad of other operational, process and technological constraints that impact success. Some of those areas include limited technology investment, an unclear talent management and acquisition strategy, under-resourced service and client management capabilities, to name a few.

Improvement Areas

So, what can you do to ensure that your GBS is positioned to get to the next level? As with most any enterprise transformations, it is critical to have executive commitment prior to moving forward. However, for a successful GBS transformation it is even more critical to have the CEO/COO and all the business and functional executives onboard, due to the potential enterprise impact. Obviously, there may be situations where select businesses or functions may be deferred (or even excluded) due to business model conflicts, but these need to be managed carefully so as to not encourage others to “opt-out.” Other improvement areas include:

1. Strategy – Alignment upfront and on an ongoing basis between GBS and Business Clients is critically important to creating value. If that is done, GBS is off to a good start. Some key strategy elements to “hash out” include short/medium term vision, value proposition, roles and responsibilities, decision rights, and governance structure.

2. Governance – Many companies prefer to not have a separate governance structure for GBS, but rather to add the responsibility to an existing structure. I think that is a mistake in the beginning because it is critical to get this right at the outset. Good governance establishes a clear mandate for GBS, removes board members from operational issues, and develops a separate “client voice” when business complexity requires doing so. In addition, as the GBS/Client relationship matures the concept of an enterprise process owners board could be considered, to help drive even larger areas of business value.

3. Scope – The discussion of scope is a topic that is covered upfront as part of the strategy dialogue, and remains an ongoing discussion at the Governance Board. It should be clear what migrates to GBS at the start, over time (as long as ROI and business value commitments are achieved), and what scope still needs further dialogue. There needs to be continual dialogue to ensure alignment, and to minimize any strategy changes especially as executive changes occur.

4. Service Management – Experienced GBS operations (of a decade or more) all seem to have a well-developed service management capability and view it as critical to their success. This team is initially focused on driving a consistent service delivery strategy across GBS, communicating operational performance and business value in a consistent/branded fashion to clients, and coordinating all the behind the scenes KPI measurement activities efficiently. However, as the GBS matures, this team shifts to more of a “services marketing accountability” driving services strategy, design, M&A migration, and new service offerings jointly with operating leaders and business clients.

If the above items are implemented, the chances of a successful GBS transformation are significantly enhanced.

External Perspective

A few years ago, I attended a conference made up of Fortune 500 companies interested in trends and best practices for functions and SS organizations. A large Fortune 50 company who implemented GBS over 10 years ago delivered the keynote presentation. I was “blown away” by how GBS had transformed their company, and how its scope had grown from Finance and IT to non-traditional areas such as Logistics and Joint Venture support, as well as delivering tremendous business value along the way. When you see the potential of GBS in action, it can be a tremendous motivator! Please take advantage of the learnings from others to help accelerate your ROI. For me personally, I did leverage the learnings from select conferences but, I also proceeded to do plenty of targeted benchmarking. We engaged more than 25 companies, with many outside our home industry. The primary focus was to share best practices, but also to get a deeper understanding of GBS optimization methods, and exchange learnings on similar “pain points”. If you are trying to improve your GBS, in addition to the above recommendations, I wholeheartedly suggest utilizing the concept of benchmarking to get some “fresh” ideas.

Next Step

In this article, I have only “skimmed the surface” in how you can take your company’s GBS to the next level. So, in my next post (3rd in the series), I will focus on one of the key improvement areas and do a deep dive on the “Importance of Strategy and Governance.”

Food Service Franchise – Is a Franchise in the Food Service Industry Right for You?

Being in the restaurant business is never an easy road; just ask anyone who’s ever done it. For some people it has an addictive quality, and they cannot get enough of the fast pace, but this type of franchise is not for everyone.

If you have always enjoyed working with the public and being the person “in charge” behind the counter, then maybe a franchise in food service is right for you. To be successful with this type of franchise, you will need great communication skills, high energy, and a passion for owning your own business.

Why is a franchise in food service such a great idea right now?

According to the National Restaurant Association, the number of food service industry jobs in America will increase by 10% or more over the next decade. Most of this growth will be seen in the “franchise food service” category, particularly “fast casual” restaurants. Franchises like Chipotle, Baja Fresh, Cosi, Panera Bread and Peace a Pizza are cropping up in suburban shopping districts everywhere. They succeed by giving patrons more ambience and better food than a fast-food restaurant without the added expense of table service.

This promising new trend for franchise food service entrepreneurs has caught the attention of the restaurant industry as well, so expect to see more restaurants like this starting up over the next few years. It may seem surprising that any category of business could be growing this quickly during a recession, but the success of this type of franchise food service business has come at the expense of higher priced restaurants, who have suffered a decline in consumer spending.

Are you considering a new venture as a franchisee? Do you like the idea of starting a new business without the risk that comes from an unproven concept? Starting a franchise food service business may be the right option for you.

The Lawn Service Industry and Its Products Explored

The last few years have witnessed the clear emergence and prolific growth of an industry that was hitherto virtually nonexistent. The industry we are talking about is the lawn service industry. Twenty years, or even fifteen years ago, this was virtually an unheard of industry. It is not that people didn’t have lawns then – we have always lawns for centuries, if not millennia. Rather it is because people didn’t take very particular care of their lawns, and were as such not willing to spent substantial sums of money on their care. Subsequent years, however, have given rise to a trend where people are increasingly ready to spend and spend some more on their lawns and general ‘landscape management,’ with the trend being what eventually gave birth to what we refer to as the lawn service industry.

The lawn service industry is one that employs thousands upon thousands of people all over the world in various capacities. Aggregated figures are hard to come by, as this is one industry that is yet to recognize itself as being one entity. It is also the sort of industry where people tend to work on casual basis, meaning that the people who may be working on it today could turn out to be extremely different from the people you find in the industry ten months down the line. But at any given point in time, you are certain to find the aforementioned thousands upon thousand of people working in various capacities in the lawn service industry.

An industry is, by the way, defined as an aggregation of firms providing a similar (or almost similar product), and usually competing against one another. There are, of course single firm industries – where the whole business is dominated by a single monopolistic player – but such industries are rare, and getting even rarer by the day as most countries in the world embrace economic liberalization. The lawn service industry, on its part, is a true industry: one that is an aggregation of numerous firms, providing various lawn services in their respective jurisdictions. It is usually the sort of industry where the typical firm tends to be rather small. Most lawn service firms are, indeed, constituted of less than ten staff members, and this is the sort of industry where a firm with a hundred people would be considered a big firm, with a firm that boasts of a thousand being considered a ‘giant.’

The product of the lawn service industry is a service. The service comes in handy for the people and organizations who are keen on having good looking lawns, but who don’t have the time and energy for the labor that goes into the making of such good looking lawns. The lawn service firms step in the gap, with their promise to give you the lawn you desire for a fee. All you typically have to do is show them the plot where you want the lawn established (whatever its current state), give them the agreed fees, and several months down the line, you will have a fantastic lawn right there.