WORLD-CLASS IN GLOBAL BUSINESS SERVICES - OVERVIEW & TRENDS ABSL, Prague
Tom Olavi Bangemann SVP Business Transformation , The Hackett Group October, 2014
Statement of Confidentiality and Usage Restrictions
This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein,
in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.
Copyright © 2012 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.
Global business services (GBS) Overview & Trends | 3 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Presenter
Global business services (GBS) Overview & Trends | 4 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Hackett Group defines and enables World-Class performance
Global business services (GBS) Overview & Trends | 5 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
1,15% 1,21% 1,22% 1,17% 1,10% 1,05% 1,04% 1,17% 1,22% 1,15% 1,00% 1,08% 1,05%
0,64% 0,63% 0,57% 0,57% 0,58% 0,57% 0,62% 0,59% 0,65% 0,59% 0,64% 0,54% 0,51%
2,90% 2,58% 2,34% 2,38% 2,36% 2,19% 2,30% 2,28% 2,34% 2,06% 2,04% 1,90% 1,83%
0,51% 0,42%
0,33% 0,30% 0,30% 0,31% 0,30% 0,30% 0,28%
0,28% 0,28% 0,26% 0,26%
5,20% 4,83%
4,46% 4,42% 4,34% 4,12% 4,25% 4,35% 4,48%
4,09% 3,95% 3,79% 3,65%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F
FN HR IT PR
Hackett benchmark historical moving median Hackett forecasted results
Cost of G&A as % of Revenue
The good news: costs are down…
Global business services (GBS) Overview & Trends | 6 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
G&A Performance from 2004 through 2013
0,78%
0,60% 0,60%
1,11% 1,13% 1,17%
0,00%
0,20%
0,40%
0,60%
0,80%
1,00%
1,20%
1,40%
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Finance Cost as a % of Revenue
- 30% - 47% - 48% 0,74%
0,60% 0,60%
1,01%
0,80% 0,75%
0,00%
0,20%
0,40%
0,60%
0,80%
1,00%
1,20%
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Procurement Cost as a % of Spend
- 27% - 24% - 20%
$7,6 $7,3
$6,2
$9,2
$7,8
$7,3
$5,0$5,5$6,0$6,5$7,0$7,5$8,0$8,5$9,0$9,5
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
IT Cost per End User Equivalent (x 1000)
- 18% - 6%
- 15%
World-Class Peer Group
$1,4
$1,8 $1,7
$1,9
$2,2 $2,2
$0,0
$0,5
$1,0
$1,5
$2,0
$2,5
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
HR Cost per Employee (x 1000)
- 27% - 17% - 22%
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4,9%
-1,3%
-0,2%
6,7%
-0,7%
0,5%
Revenue growth Number of staff (FTEs) Operating Budget
2012 - 2013 actual 2013 - 2014 projected
Productivity Gap 7.4%
Efficiency Gap 6.2%
Tactic 1; Manage cost Business service functions to need to delivery 6-8% annual productivity improvement
Business Services Functions
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Reinvesting in innovation enablement is occurring across G&A
64% 53%
36% 47%
World-ClassPeer
Knowledge- centric
Transactional
Finance
Procurement
69% 58%
31% 42%
World-ClassPeer
HR
58% 56%
42% 44%
World-ClassPeer
Transactional
IT
46% 38%
54% 62%
World-ClassPeer
Transactional (Run IT)
Knowledge- Centric
(Design / Build)
Knowledge- centric
Transactional
Knowledge- centric
Source: Hackett 2014 Benchmark Data
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Multi-functional GBS for G&A is the standard – the debate is into non-traditional functions and progressive placement
39%
44%
56%
46%
38%
38%
38%
33%
50%
58%
58%
CorporateComms.
Marketing
Legal
Supply Chain
Risk & Security
Industry-specific
CCC(outbound)
DirectProcurement
OrderManagement
CCC (inbound)
Inclusion of non-traditional functions in GBS scope by Industry
Healthcare Consumer DiscretionaryFinancials IndustrialsIT MaterialsConsumer Staples Energy & Utilities
Source: The Hackett Group’s annual Global Business Services (GBS) Performance Study, 2014
% companies with single- function shared services vs. multi-function GBS
28%
72%
2004
72%
28%
2004
multi function single function
2014
Service Placement – Finance, HR, IT, Proc. combined
8%
16%
11% Median
34%
35%
31%
Corporate
Business Units
GBS
Organization structure
BU - Local centers
One global delivery center
Geographical structure Multiple regional delivery centers
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GBS keep pushing the boundaries to include more value-adding finance processes and knowledge centric-activities
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Outlook/Interim forecastBudgeting
Business performance analysisCost analysis
Business performance reportingTax filing & reporting
Cost AccountingExternal reporting
Order EntryInventory Accounting
TreasuryCash management
Time and AttendanceCustomer billing
CreditGeneral ledger accounting
PayrollCollections
Intercompany accountingFixed assets
Travel ExpenseCash application
Accounts payable
GBS - Transactional GBS - Knowledge-centric GBS - Outsourced Outside the GBS organization
Service Placement – Finance processes
5 years ago today In 5 years
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GBS continue to move up the value curve with a modest increase of companies developing stage-2 type models
Focus, Value
Time
8%
35%
57% Single Function Consolidation
Single Function Optimization
Multi-function Aggregation
Strategic Enterprise GBS
Integrated Services Operations
Multi-function Integration
Single Function Shared Services
Stage
3 Stage
2 Business Service
Excellence
Enterprise Strategic
Enablement
Source: The Hackett Group
Stage
1 Function
Transactional Excellence
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Process split example: Best practice based budgeting process All activities can be categorized by where in the organization they should ideally be performed
Top-down target setting
Bottom-up planning
Data submission
Data validation
Data aggregation
Budget discussion
Report preparation & variance
analysis
Board approval
Thinking about the future
35%
Data collection and validation
37%
Report preparation & variance analysis
28%
Retained organization 50%
CoE 40%
SSC 10%
Tasks that require close cooperation of central management and Finance as
Business Partner understanding business needs
Tasks that require local knowledge
and local presence
Tasks that are repetitive and standardizable and do not require
local presence
Time Spent
High-level process split
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GBS think strategic alignment is key to creating value, and most think they deliver on this promise
50%
60%
76%
68%
31%
46%
50%
59%
Delivering a high-quality servicesportfolio (service excellence focus)
Delivering operating cost reduction (costleadership focus)
Contributing to effective enterprisecompliance (compliance focus)
Alignment with corporate and businessunit strategic goals
GBS Objectives according to GBS (Importance vs. Perceived Effectiveness)
Importance – Highly important to have a GBS that meets this objective Effectiveness – Highly or mostly effective in achieving this objective
Global business services (GBS) Overview & Trends | 14 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
*Each year, The Hackett Group conducts a study of mid-sized and large companies surveying executive management and leaders of business services functions including finance, HR, IT and procurement about enterprise and business services priorities and initiatives for 2014 to identify their strategic priorities for the coming year.
C-suite executives value strategic alignment and quality of service equally, cost reduction is not the only goal
52%
53%
56%
42%
67%
49%
56%
65%
Delivering a high-quality servicesportfolio (service excellence focus)
Delivering operating cost reduction (costleadership focus)
Contributing to effective enterprisecompliance (compliance focus)
Alignment with corporate and businessunit strategic goals
GBS Objectives according to C-suite Executives* (Importance vs. Perceived Effectiveness)
Importance – Highly important to have a GBS that meets this objective Effectiveness – Highly or mostly effective in achieving this objective
Global business services (GBS) Overview & Trends | 15 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The war for talent is here, and will be waged on a few key battlefields Ex
trem
e Di
fficu
lt Mi
nor
Very strong Significant Demand: Low
R E D
Source: 2011 Hackett Business Services Skills and Talent Performance Study
Diff
icul
ty to
attr
act/r
etai
n
Z O N E
Finance HR IT Procurement
Strategic Thinking & Analysis
Transactional Process
Global Business Acumen
Relationship Management
Global business services (GBS) Overview & Trends | 16 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The mix of talent management practices used changes in each stage of GBS
Stage 2 Stage 1 Stage 3
13% 5% 38%
16% 38%
50%
9% 26% 13%
40% 51% 50%
7% 11% 25%
21% 23% 50%
23% 46% 50%
17%
23%
38%
38%
42%
46%
54%
11%
8%
25%
12%
22%
45%
31%
Virtual work practices (work fromhome)
Job rotation outside GBS
Bonus tied to GBS performance(e.g. productivity, quality, or
productivity)
Opportunity for advancement inpositions outside GBS through
career planning
Flexible working practices
Bonus tied to companyperformance
Job rotation within GBS
HR practices (Used to a high extent)
Peer World Class
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Offshoring levels across functions are still lower than most would expect
20% 14% 11% 30%
80% 86% 89% 70%
26% 9%
20%
74% 91%
80%
56%
17% 25% 30%
44%
83% 76% 70%
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Finance HR Procurement IT
Onshore vs. Offshore delivery of transactional services by Function across GBS maturity stage
Small sample
Transactional Finance – Cash Disbursements, Revenue Cycle, General Ledger Accounting & Reporting) Transactional HR – Employee Data Management, Payroll Administration Transactional Procurement – Supply master data mgt, Requisition & PO processing, Receipt Processing Transactional IT – Infrastructure mgt., Infra. Development, Application Maintenance, End-user Support
% of activities delivered offshore by GBS maturity stage % of activities delivered onshore
Source: The Hackett Group’s annual Global Business Services (GBS) Performance Study, 2014
Global business services (GBS) Overview & Trends | 18 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
SSC/BPO distribution in CEE
SSC BPO
Poland Czech Republic
Slovakia Romania
Latvia Lithuania Bulgaria Estonia
Hungary
96
25
29 25
45
9
10
35
16 27
8
29 18
11
115
26
310
195
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Companies have been producing productivity improvements, and utilizing off-shoring – but wage arbitrage is an ending game !
Global business services (GBS) Overview & Trends | 20 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Automation remains the single largest optimization potential
Labor arbitrage gap Transformation opportunity % %
$1,63 $2,23
$5,17
$3,50
$1,63
70% Offshore, Highautomation
World-class, (30%Offshore, HighAutomation)
Peer, (20% Offshore,Low Automation)
70% Offshore, Lowautomation
70% Offshore, Highautomation
Automate, Reengineer Offshore
Offshore
Automate, Reengineer
57% 32%
27%
53%
AP Transaction
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Both top performers and peer have a hybrid sourcing model in place for business services
38%
27%
35%
Sourcing Mix – Top performer
Captive onshore Captive offshore Outsourced
38%
24%
37%
Sourcing Mix – Peer
Captive onshore Captive offshore Outsourced
Source: GBS effective sourcing performance study, 2013
Global business services (GBS) Overview & Trends | 22 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Main take-aways as summary..…
Multi-functional GBS is the model of today and the model of the future 2.
Hybrid sourcing and progressive placement are becoming the norm 3.
Multi-dimensional is the holistic view of tomorrow: ops cost, cash, risk and spend 4.
Globalization keeps us busy in improving efficiency and effectiveness – the pendulum swings back and mature organizations require both 1.
The journey is about using technology to eliminate work – higher productivity requires higher standardization as prerequisite 5.
Global business services (GBS) Overview & Trends | 24 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Shared Services in Finance and Accounting offers a route-map to implementing your shared service program. Comprehensive theory is fully supported by hands-on practice and case studies involving some of the world’s leading organizations and enriched with real metrics and KPIs. Shared services work, and this book shows you just how to achieve the same results.
www.
gowe
rpub
.com
/ ISB
N: 05
6608
6077
“A must have tool and reference source” Axel Hesslenberg, Head of Shared Services, Novartis Consumer Health
Profile: Tom Bangemann
“First of all, I don’t know what to say. I was very surprised and feel humble about winning this prize. I would like to thank our partners. I think shared services is a team sport. I was making a joke about our customers, what should we have done without our customers? Of course, they are our partners and we do have some advisors in the audience as well. I’d like to thank The Hackett Group and in particular Tom Bangemann and Martin Wolleswinkel who have been supporting us throughout the years with best practice advice, consulting support, benchmarking..” Hans Jakob Hegge, SVP Global Business Services , StatoilHydro at IQPC SSWeek Awards Ceremony receiving prize for BEST OVERALL SSC, Budapest April 2009
Thought Leader of the Year Winner: Tom Olavi Bangemann Vice President Business Transformation, The Hackett Group Judges’ comment: 'Tom needs no introduction. He has served as an exemplary member of our industry, and stands out by his passion to do whatever it takes. It’s all about heart, connectivity and passion – and Tom has it all.'
Global business services (GBS) Overview & Trends | 25 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Hackett Group – enabling world-class performance through a fact-based approach to consulting
BEST PRACTICES INTELLIGENCE CENTER™
PROVEN STRATEGIES WHICH REDUCE RISK & ALEO PharmaLERATE BENEFIT REALIZATION
BENCHMARKS
SOFTWARE CONFIGURATION
BEST PRACTICE PROCESS FLOWS
BEST PRACTICES PERFORMANCE METRICS
HIGH LEVEL ROADMAP
DETAILED PROCESS DESIGN
PROCESS
IMPLEMENTATION
Profile & Mission The Hackett Group is an IP-based consultancy focusing on enabling
G&A performance improvement through leveraging our intellectual capital, based on over 7,500 benchmarks and performance studies
More than 20,000 performance metrics More than 1,900 best practices Best practice process flows and configuration guides
Approach We help clients to measure current performance compared to peers
and World Class performers We identify project opportunities and develop a business case leading
to an actionable roadmap, supported by a Transformation Management Office
We implement recommended change and empower our clients to improve the organization, processes and the culture that enable agility, leading to sustainable growth
Results Sustainable performance improvement leading to an agile enterprise
with lower costs, higher quality and better margins
Global business services (GBS) Overview & Trends | 26 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
97% of the Dow Jones
Industrials
80% of the
Fortune 100
88% of the Dow Jones
Global Titans
80% of the
DAX 30
49% of the
FTSE 100
35% of the
CAC 40
Hackett’s Intellectual Capital is derived from engagements with the world’s leading companies…
Global business services (GBS) Overview & Trends | 27 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Hackett has a full SG&A taxonomy…
Marketing Marketing Communication Brand and Product Management Planning and Strategy Market Research and Analytics Function Management
Service Order and Contract Management (OTC) Service Execution Service Operations Planning and Strategy Function Management
Executive and Corporate Services Administrative Services Travel and Transportation Services Real Estate & Facilities Management Government Affairs Legal Quality Management Risk and Security Management Corporate Communications Planning and Strategy Executive Office
Procurement Supply Data Management Requisition and PO Processing Supplier Scheduling Receipt Processing Compliance Management Customer Management Sourcing Execution Supplier Management and Development Sourcing & Supply Base Strategy Function Strategy & Performance
Management Function Management
Finance Cash Disbursements Revenue Cycle General Accounting and External Reporting Tax Management Treasury Management Compliance Management Planning & Performance Management Business Analysis Function Management
Human Resources Total Rewards Administration Payroll Services Data Mgmt., Reporting & Compliance Staffing Services Labor Relations Workforce Development Services Organisational Effectiveness Total Rewards Planning Strategic Workforce Planning Function Management
Information Technology Infrastructure Management End User Support Infrastructure Development Application Maintenance Application Development & Implement. Quality Assurance Risk Management IT Business Planning Enterprise Architecture Planning Emerging Technologies Function Management
Sales Sales Execution Sales Operations Planning and Strategy Function Management
Sales, General & Administrative Scope (SG&A)
Capture FTEs and Costs as defined regardless of where they are organizationally located
Global Business Services Service Strategy Service Design Service Transition Service Operations Continual Service Improvement GBS Contact Centre Plus any other process executed inside the
centre
Global business services (GBS) Overview & Trends | 28 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
End-to-end process management is foundational
Purchase-to-Pay End-to-End Process Management
Process groups
Process participants
Procurement
Supply data management
Req. & PO processing
Supplier scheduling
Receipt processing
Invoice processing Settlement
Compliance management
AP Business Unit
Purchase-to-Pay End-to-End Process Scope
Purchase Pay (Settle)
Legal/Contracts Treasury
IT
Business Unit Supply chain planning
Logistics/Operations Quality
AP Procurement
Business unit Treasury
Controller Risk mgmt.
Source: The Hackett Group
Global business services (GBS) Overview & Trends | 29 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Contact Information
Amsterdam | Atlanta | Frankfurt | Hyderabad | London Miami | New York | Paris | Philadelphia | San Francisco | Sydney
Tom Bangemann Senior Vice President Business Transformation
+49 174 3469 974 | Telephone [email protected] I Email
Corporate Headquarters 1001 Brickell Bay Drive 30th Floor Miami, Florida 33131 TEL: +1 305 375 8005 Amsterdam Camerastraat 25 1322 BB Almere Amsterdam TEL: + 31 36 535 00 82 Atlanta 1000 Abernathy Road NW Suite 1400 Atlanta, GA 30328 TEL: +1 770 225 3600 Chicago 525 W. Monroe Street Suite 1550 Chicago, IL 60661 TEL: +1 312 325 2900 Frankfurt Torhaus Westhafen Speicherstrasse 59 60327 Frankfurt am Main TEL: +49 69 900 217 0 Hyderabad 8-2-120/112/88&89 1st Floor, Aparna Crest Road #2, Banjara Hills Hyderabad 500034 TEL: +91 40 66544000
London Martin House 5 Martin Lane London EC4R 0DP TEL: +44 20 7398 9100 New York 110 Wall Street 17th Floor New York, NY 10005 TEL: +1 646 354 4400 Paris 8, rue de Port Mahon 75002 Paris TEL: +33 1 53 43 0400 Philadelphia 225 Washington Street Conshohocken, PA 19428 TEL: +1 610 234 5500 San Francisco 100 Montgomery Street Suite 2225 San Francisco, CA 94104 TEL: +1 415 249 3500 Sydney Suite 403 35 Lime Street Sydney, NSW2000 Australia TEL: 1300 457 779 (within Australia) TEL: +61 2 9299 8830
Global business services (GBS) Overview & Trends | 31 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Statement of Confidentiality and Usage Restrictions
This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.
www.thehackettgroup.com