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Governance in Global Business Services Delivering Business Value Seamlessly Governance in global business services Delivering business value seamlessly According to KPMG research1, Global Business Services (GBS) organizations Enterprise service governance defined rate their governance aspirations at 3.62 Enterprise service governance is an integrated way on a five-point scale, but their actual of working that engages stakeholders and delivery channels to effectively manage risk and drive the performance at only 2.52. While it’s clear intended business value of GBS. Enterprise service they need to improve their governance governance focuses on how decisions are made capabilities, governing individual GBS and enforced in a dynamic business environment. As organizations move up the GBS maturity curve, components – outsourcing efforts, internal governance becomes a critical component of shared services, and integration with the success when managing across delivery channels retained organization – is challenging in in an integrated manner. itself, and driving governance across all these elements in an integrated manner is What is GBS? even more challenging. But the benefits Global Business Services is a next-generation of doing so are significant, and a necessity operational and organizational model for for driving GBS maturity. enterprises to deliver business processes such as HR, finance, IT, and customer care to internal and Governance has always been critical to realizing the external customers. It’s often applied on a global benefits of alternative service delivery models, such as scale using multiple service delivery models, shared services and outsourcing, and it’s even more including outsourcing, shared services and, important today in an integrated GBS model. increasingly, cloud solutions. The value of GBS is the integration between and Why are organizations considering significant across different channels, functions and processes. investment in GBS? Because it can help them: That’s why GBS requires a different level of – reduce costs governance and a different governance operating – get to market faster model to ensure that business value is delivered – drive process excellence seamlessly. – unlock the power of data and analytics GBS governance necessitates a new understanding – mitigate overall business risk and ensure of the links and handoffs between outsourced compliance functions and internal shared services functions, and – enable excellence and consistency in the between centers of excellence and policymaking customer experience groups as part of the end-to-end process. Deciding – build an internal repository of high-quality talent how to govern in this environment requires an – establish a consistent brand experience understanding of the end-to-end process or service – accelerate time to benefit from mergers being delivered, the handoffs, the control points, the and acquisitions. costs, and the performance. 1 KPMG, GBS Maturity Research Study, 2014-2016 Governance in global business services 1 As there are different nuances and synergies in – Create successful new GBS services. Governance every GBS environment, governance cannot be a is integral to helping ensure the success of new one-size-fits-all proposition. It needs an appropriate, service offerings. For example, when a GBS scalable level of discipline. The premise should be to organization decides to offer employee onboarding avoid bureaucracy while leveraging the discipline that as an end-to-end service, it’s governance that supports collaboration, mitigates risk, and accelerates defines what it means, how it’s done, how it’s an organization’s GBS maturity. monitored, and how it’s reported. Delivering business value What good looks like Getting governance right can improve business KPMG’s analysis of interviews with 200+ global firms,2 outcomes and deliver quantifiable business benefits, running mature GBS organizations demonstrated the including the ability to: following factors are required for successful enterprise service governance: – Elevate GBS as a commercially savvy business entity. Governance is the lever that establishes – Alignment of governance and business strategy. formalized and consistent business relationships, Leading GBS organizations first ask how their global and provides insights and opportunities through services portfolio can drive the business strategy, access to and visibility of data. then build the right governance organization to make it happen. This means they develop a team with the – Stem value leakage. Delays in handoffs and right skills, reporting relationships, communications, issue resolution cause value leakage in a GBS and escalation paths. model. Effective governance helps the organization understand how to work together smoothly, how – Executive process ownership. Having senior to continuously improve, how to better manage executive management as overall process owners is end-to-end processes, and how to measure the one of the most critical factors in driving end-to-end right things so that GBS efforts can reach their full value and consistency. potential. – Alignment of GBS performance with compensation. Tying senior management compensation to GBS performance can help drive a Case in point: Employee onboarding involves common set of business and GBS objectives. human resources, finance, and information – Technology enablement. Mature GBS technology functions working together to help organizations have tools for management reporting, new employees become productive quickly. business alignment, performance management, Good governance makes the process more benchmarking, and notifications across geographies. efficient by helping ensure that all functions speak the same language and have a clear – Operational and cultural integration. Mature understanding of their roles. For example, each GBS organizations ensure that all parties – including function knows the metrics against which it will be internal and external resources throughout the world measured, because the metrics were developed – are integrated operationally and culturally. in concert with other functions. Each function – Vendor management organization (VMO) has the information visibility it needs to act, and operating model. Effective vendor management understands its decision rights, escalation process, has the potential to drive significant cost savings, and accountability. Importantly, each function value capture, and risk management for an views new employees as end customers receiving enterprise. Leading organizations have implemented measurable services that produce quantifiable VMOs charged with executing to a set of enterprise business value. objectives. Figure 1 shows the six key areas in which effective VMOs define and establish capabilities. – Drive better alignment. Governance is a hub of information that GBS leaders can leverage to maintain alignment between business needs and the services being provided. In this way, an effective governance process can drive better alignment among business expectations, services, and services performance. 2 KPMG, GBS Maturity Research Study, 2014-2016 2 Governance in global business services Figure 1 – the foundational components required to execute an effective and efficient VMO operating model Strategy & policy Enabling Services & technology engagement Vendor management organization Data analytics & Organization & reporting governance Process & controls KPMG’s GBS framework is optimized and enabled by 10 dimensions Delivery and sourcing strategy The strategic intent of the GBS organization and its relationship to the overall enterprise Tax and risk optimization Service portfolio Managing change and regulations, including Supporting the breadth, depth, and geographic fiscal, legal, and tax reach of GBS services nge an ha d C Commercial perspective Data and analytics Enabling GBS to operate ‘like a Enhancing value through predictive business’ and strengthen customer P and prescriptive analytics r relationships o g t r n a e m m Enterprise service governance Manage Talent management Working with stakeholders to manage Attracting, retaining, and engaging risk and drive business value from GBS resources Enabling technology Process excellence Standardizing services with a common Providing end-to-end services for quality, technology platform across ERP, continuous improvement, and innovation applications, and tools Change and program management A focused, holistic approach for getting the people and the enterprise ready, willing, and able to fully adopt and sustain changes through targeted strategies promoting understanding, buy-in, and ownership Governance in global business services 3 Critical questions to consider about governance: – How are you going to reorient your organization from the current focus on functions to a focus on services and processes that can deliver more robust and scalable services to your business customers? – What is the mechanism that will allow you to do that? – Where do you start? Can you leverage existing pockets of good practice, such as successful third-party outsourcing relationships? – What is the right governance model? What are the core elements and roles of this model? – How does GBS governance relate to corporate governance? Is it a peer or a subset? – How do you integrate the governance of your existing third parties and internal shared service functions to enterprise service governance in a GBS environment? How KPMG can help KPMG recognizes that today’s enterprise business If your organization is seeking innovative ways to services leaders
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