SHARED SERVICES AND OUTSOURCING ADVISORY (SSOA)

Get more valueToday’s global business services

go far beyond cost savings alone.

kpmg.com

1 | Shared Services and Outsourcing Advisory

The Shared Services and Outsourcing Advisory (SSOA) practice is supported by more than 138,000 partners and professionals from across KPMG International’s global network of member firms. KPMG LLP delivers Management Consulting, Risk Consulting, and Transactions and Restructuring services along with our Tax and Audit platform to create value while reducing complexity.

2014World’s BestOutsourcing Advisors

Since 2009, KPMG has ranked on IAOP’s list of the World’s Best Outsourcing Advisors and was ranked #1 in 2012.

KPMG is #1 in Shared Services and Outsourcing* • $300B+ advised contract value • 75 percent of the FORTUNE 100 served • average 20+ years of advisory experience • 2,000+ transformation project supported

1 | Shared Services and Outsourcing Advisory

*Ranked by global headcount and revenue

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

Shared Services and Outsourcing Advisory | 2

Why KPMG ?

What to expect from KPMG

Consumer MarketsCoca-Cola

Heineken

Hershey

Johnson & Johnson

Mead Johnson Nutrition

Nestle

Procter and Gamble

Unilever

Wal-Mart

Whirlpool

Financial ServicesAEGON

AFLAC Incorporated

AIG

American Express Company (AMEX)

Aviva Insurance

Barclays

Capital One Financial Corporation

Deutsche Bank

Goldman Sachs

The Hartford

Lloyds Banking Group

Moody’s Corp

Morgan Stanley

Prudential

Standard Chartered Bank

Energy & Natural Resources

BP

Chevron

ConocoPhillips

Healthcare & PharmaceuticalsAbbott

Astellas Pharma, Inc.

AstraZeneca Pharmaceuticals

Baxter

Boehringer Ingelheim

Bristol-Myers Squibb

Cardinal Health, Inc.

Catalent Pharma Solutions

Eli Lilly

GlaxoSmithKline

Hospira, Inc.

Merck & Company Inc.

Mylan Laboratories Inc.

Pfizer

High Tech & ManufacturingBoeing

Chrysler

Cisco

Google

Hewlett-Packard

Microsoft

Warner Bros.

RetailAmway

Ann Taylor

Apple (UK)

Best Buy

Carlson Companies

CarMax

Carphone Warehouse

Chico’s

Church’s Chicken

Coles Myer (APAC)

CVS

Dairy Farm

Delhaize

Dixon’s

Gap

Guthy-Renker

Hallmark

Home Depot

Hudson’s Bay (CN)

IKEA

Kenneth Cole

Kmart (AUS)

Leroy-Merlin

Levi’s

Macy’s

TelecommunicationsAT&T

Vodafone

A small sample of our SSOA clients

KPMG’s Shared Services and Outsourcing – spanning industries, functions, geographies, and business disciplines.

Industry-recognized depth and experience in shared services and outsourcing advisory—our advisors are experienced practitioners.

We’ve been working hard for businesses and organizations that are on their transformational journey. To date, we have advised on a total contract value of more than $300 billion. We believe that no other firm has the people, clients, experience, data, methods, and worldwide reach that KPMG has today. KPMG is one of the world’s leading shared services and outsourcing advisory firms.

• Broad perspective on Global Business Services: a thorough services framework that aligns the services model with business objectives

• Objectivity as advisors: We are not outsourcers, nor do we favor any supplier or delivery model—we are the only Big Four consulting firm with this characteristic

• Full experience across the life cycle of strategy, implementation, and services portfolio management

• Global breadth: capabilities across industries, functions, geographies, and business disciplines

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

3 | Shared Services and Outsourcing Advisory

Global Business Services (GBS): move beyond cost savings

Shared services and outsourcing of selling, general, and administrative expense (SG&A) functions has historically been driven by an innate desire to reduce administrative costs by creating leverage across horizontal business processes, while focusing retained resources on the core competencies of the business. There are, however, many tangible benefits that these organizations have realized, including enhanced global growth, acquisition integration, and improvements in agility and innovation.

KPMG, based on years of practical experience and research, has identified a few primary factors that are most often overlooked:

• Sourcing and shared services goals are moving beyond just cost savings.

• Leading sourcing and shared services organizations are advancing their capabilities, evolving to models engineered to be positive influencers of change.

• Success in this new model depends on the ability to dynamically assemble a variety of capabilities—regardless of where those capabilities reside—into a seamless end-to-end process that’s focused on a specific business outcome.

Your support service functions can be a competitive advantage, and KPMG is a recognized leader at helping you optimize the service delivery model and reduce your support costs. KPMG assists organizations in achieving their objectives in shared services and outsourcing using the Enterprise Services Transformation (EST) framework.

KPMG’s EST framework allows organizations to build value, and achieve sustainable quality improvements while controlling costs. We help organizations transform and optimize their investments through leveraging process improvements, tools, resource capabilities, and management, all while helping to reduce costs. Costs reductions are achieved through a variety of means including labor arbitrage, process efficiencies, and managing the white space between functions and processes (improving alignment).

The EST framework from KPMG is a transformative service delivery approach designed to maintain alignment of core business objectives with services delivery. Utilizing this framework, we can facilitate:

• Improved integration – The EST framework institutionalizes cross-functional collaboration and improves the ability to offer end-to-end services to the business.

• Customer-focused service delivery – The EST framework allows customers more flexible access to the appropriate services with improved visibility into costs and rates.

• Adaptability and flexibility – Developing an internal governance capability and associated practices provides the business more access to “services-on-demand” such as software, infrastructure, and contractors, with less capital investment in hardware and infrastructure.

• Simplified management – Provides a more standard approach to metrics, contracts, and pricing across functions.

• Access to innovation – Centers of Excellence and internal service providers are better identified and integrated into the overall services portfolio.

Cost savings ranging from 10% to 35% across major back-office functions (IT, Finance, HR)

Reductions in facilities costs ranging from 10% to 15%

Improved processes resulting in 8% to 13% spend management on indirect goods and services

Collaborative relationship between internal and external stakeholders

Optimized internal and external delivery capabilities—virtual and real-time

Enhanced governance, risk mitigation, performance metrics, and reporting processes

Improvements in the effectiveness of overall portfolio management

Potential benefits

10–35%

10–15%

8–13%

ü

ü

ü

ü

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

Shared Services and Outsourcing Advisory | 4

GBSMATURITY

SUB-OPTIMIZED RATIONALIZED OPTIMIZED STRATEGIC INTEGRATEDDecentralized and duplicative functions; little central control over business support services

Single function shared services with tactical onshore or offshore provider relationships

Traditional outsourcing relationships with global delivery; non-integrated internal shared services capabilities

Optimized balance of internal and external delivery capabilities, global sourcing with multifunction focus

Globally integrated services portfolio with aggressive use of alternative and mixed delivery models

Level 01

Level 02

Level 03

Level 04

Level 05

Value capture and performance sustainability occurs over time

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

5 | Shared Services and Outsourcing Advisory

GBS as a source of competitive advantage

IT F&AHR Procurement

Service Delivery Focus

Resettling the value propositionEnterprise service models are evolving to deliver a much broader value proposition closely aligned to the C-Suite agenda.

• Align the operating model for efficiency and effectiveness.

• Drive growth in merging markets.

• Optimize the global operations.

• Redefine the business model for greater integration.

• Collaborate across teams and mine data to drive greater insight.

• Protect the brand and foster a common customer experience.

Function

% Impacted by Change in Service

Delivery Model

Savings Range (% of Impacted

Costs)% of Revenue

Saved

IT 80% 10-15% 0.2-0.4%

HR 50% 15-30% 0.4–0.1%

Indirect Procurement

80% 8-13% 1.4–1.9%

Finance 60% 20-40% 0.1-0.2%

For a company at the front end of a transformation journey, the delivery model change and savings can be significant.

ü

Leading GBS organizations are moving beyond cost-cutting and resource optimization to focus on business alignment.

Success in this new model depends on the ability to dynamically assemble a variety of capabilities—regardless of where those capabilities reside—into a seamless end-to-end process that’s focused on business outcomes.

KPMG’s SSOA practice can help. We can give you the tools, experience, and data to align your services to support your overall business strategy. Our goal is to provide you with the full suite of capabilities required to provision services and drive high-value, sustainable transformation in your services models.

Product Innovation

Business Intelligence

Business Agility

Process Transformation

New Market Entry

Labor Arbitrage

Capacity Management

Quality Improvement

Process Efficiency

Onshore/Offshore Leverage

Value Proposition40%

High and Low Savings Range by Support Function(% of Impacted Costs)

35%

30%

25%

20%

15%

10%

5%

0%IT HR Indirect

ProcurementFinance

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

Shared Services and Outsourcing Advisory | 6

GBS as a source of competitive advantage

It’s not what you say —it’s what you can do that matters.

The journey: Today’s shared services organizations can map their development across stages of maturity. Where are you in this continuum? Our experienced professionals have assisted organizations across a variety of different industries to migrate among all phases.

The global enterprise – extendedToday, our advisors are taking shared services and outsourcing to the next level, with the help of KPMG’s EST framework, where we are changing the way technology and services are purchased, priced, and delivered. To drive meaningful value, sustainable improvement, and cost reductions, we are showing our clients how to look beyond the traditional enterprise to find a global network of capabilities and a pool of configurable resources with rapid deployment and provisioning. Nothing less will meet tomorrow’s market conditions and business objectives.

The business of productivity and riskAs has been our tradition for more than a century, KPMG advisors bring leading insights on the implications of tax, compliance, accounting, risk management, forensics, and transaction services to global businesses. This knowledge, our experience, and our collaborative, team-based approach helps keep our clients at the top of their game.

Attributes of a mature model• Cohesive vision for leveraging and

integrating “horizontal” processes across the enterprise

• Global process management and service delivery platform

• Balance of internal and external service delivery

• Integrated delivery centers and Centers of Excellence (COEs), with a focus on business intelligence

• Diligent emphasis on governance, performance, and talent management

• Flexible to dynamic business needs and priorities

• Ongoing competition within the service supply chain

• Outcome-focused

Single-function transactionalFew shared or centralized services

Multifunction and center of excellenceFull business partner

Functional Breadth

Independent, non-standardDisparate processes and technology

IntegratedPeople, process and technology standardized

Standardization

Functionally focusedBusiness unit and functional silos

End-to-endFull E2E delivery and governance

Process Orientation

CaptiveInternal with no third-party leverage

BPOBPO leverage including higher complexity

Sourcing

Disparate systemsMultiple data models, tools and applications

Global data model/SystemsStandard technology, single instance

Technology

Reduce resistance, risk Enhance impact, savingsStrategic Continuum

Measured changeOpportunistic, focused on quick wins

Transformational changeSupport model drives true transformation

Prioritization of Investment

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

7 | Shared Services and Outsourcing Advisory

Change is everywhere

Transformational change isn’t a new term. But today, it’s taken on new meaning as businesses evolve. We’re working with clients on trends that pose both opportunities and challenges:

Strategy and designWe can begin by architecting a transformed organization that is more global, flexible, and integrated, then align appropriate strategies for shared services and outsourcing. For those farther along in their transformative journey, we offer diagnostics and assessments to maintain the strategic focus.

Methodologies and implementationFrom building shared methodology centers to full outsourcing management, including due diligence, RFP selection, transition management, and change management, we can be with companies throughout the entire process. We watch out for things that only the most seasoned shared services and outsourcing advisors can know—and resolve.

Enhancement and governanceFrom an analysis of the current state, we can discover and diagnose issues that are hindering operations and build a roadmap to the future state. We can also review existing contracts for value through our existing database of contract information, market assessments, and benchmarks.

Globalization

Increased regulation

Virtualization

Dataanalytics

Cloud

It’s a tumultuous time for business, so we offer a wide range of strategy,

methodology, and enhancement services.

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

Shared Services and Outsourcing Advisory | 8

Multifunctional scope is a growing trend across leading shared services delivery organizations

6Six functions have evolved as core pillars of a mature shared service strategy...

• Analytics

• Consulting, business process management, quality program (e.g., Lean Sigma)

• Corporate affairs/communication

• Customer service/contact center

• Engineering

• Environmental health and safety

• Legal

• Marketing

• Outsourcing COE

• Sustainability

• Travel management

...while a number of others are emerging as opportunities to increase relevance and impact.

Finance

ProcurementHR

Facilities Management IT

Cross-functional Master Data

The key—driving business through information and innovation. In our experience, the challenges you face can be turned into competitive advantage.

In our experience:

• Shared services and outsourcing goals are moving beyond just cost savings.

• Leading shared services and sourcing organizations are advancing their capabilities, evolving to models engineered to be positive influencers of change.

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

9 | Shared Services and Outsourcing Advisory

What we do: Business Services optimization across all functions

The Service Delivery Lifecycle is a complex journey that requires meticulous planning, solution definition and rigorous implementation control and optimization to ensure full value realization.

• Deep functional expertise with over 500 Advisors experienced in IT, Finance and accounting, Human Resources and Procurement.

• We apply focused research, automating tools, proprietary data, clear business acumen, and a mindset to get quickly to what matters in providing actionable advice and practical answers to clients.

• We are solution agnostic, our independence from technology or providers means we can provide objective advice to clients.

Governance

SharedServices &

Outsourcing

Market Research

Know

ledg

e

Training & E

ducation

Peer Networks

Stra

tegy Solution

Implem

enta

tion

Optim

ization

Finance and Accounting

Human Resources

Information Technology

Industry Specific

StrategyAssess service delivery model options

SolutionDesign target operating model and roadmap

ImplementationTransition organization to new operating model

OptimizationIdentify improvement opportunities

GovernanceMaximize value and mitigate risks

• Opportunity assessment• Baseline (FTEs,

volumes, SLAs)• Base case (costs of

Ownership)• Location analysis• Operating model options• Modeling &

business case• Risk assessment• Stakeholders alignment• Transition strategy• Implementation roadmap

• Shared services design• Location selection• Outsourcing RFP• Vendor selection• Contract & negotiation• Organization design • Change impact assess• Technology blueprint• Key perform. indicators• Transition methodology• Tax/compliance risks

• Shared services build-out• Retained organization• Transition management• Outsourcing transition• Readiness assessment• Service mgt governance• Change management• Communication mgt• Tax/compliance review• ERP remediation• Transformation office

• Global Business Services maturity assessment

• Shared services diagnostic

• Services portfolio review and optimization

• Governance health check• Outsourcing contract

value assurance• Supplier strategy review

and portfolio balancing• Outsourcing contract

renegotiation/remediation• Benchmarking

• Governance committees structure

• Service management processes

• Governance organization and decision matrix

• Governance tools• Supply/demand mgt

organization benchmark• Service performance

dashboard• Service level agreements• Charge back models

We offer clients the benefit of working with a professional services firm that draws upon the skills and experience of 155,000 audit, tax, and business advisory colleagues across 155 countries.

Our value proposition

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

Shared Services and Outsourcing Advisory | 10

Selected industry thought leadership

KPMG Sourcing Advisory Pulse SurveysThe Pulse surveys provide insights into trends and projections in end-user organizations’ usage of shared services, outsourcing, and third-party business and IT services.

Outsourced and Optimized the Back Office? What’s Your Next Competitive Advantage? Back-office functions, such as Information Technology (IT), Human Resources (HR), and Finance and Accounting (F&A), have executed complex and innovative strategies to deliver cost savings and improved service levels which seem commonplace today.

1 | Shared Services and Outsourcing Advisory / July 2012

© 2012 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

The Death of OutsourcingBy Cliff Justice, KPMG Partner, Shared Services and Outsourcing Advisory

There is a revolution taking shape in the business services industry, one that disregards the traditional shared services and outsourcing paradigms and centers the design of support services on the needs and priorities of the enterprise as a whole.

Since the information technology outsourcing mega-deals of the 1990’s and through the expansion of offshoring and business process outsourcing in the 2000’s, companies have consistently sought ways to use sourcing strategies to reduce the cost of back office services.

When part of a comprehensive strategy, outsourcing has proven to be a transformation catalyst that has helped companies implement new processes and technologies, reduce costs, access a global talent pool, and change their overall business through the use of partners.

But today, the average deal size is smaller, performance expectations are higher and many providers are delivering more complex services with greater industry knowledge and business acumen. While cost is still key, success in a mature relationship is more often determined by its contribution to the business than by cost savings alone.

Shared services has also steadily evolved from the days of simple accounts payable and data entry processing. In many companies it has moved up the value chain to provide a wider range of

more complex services and, as a result, established an internal brand. Indeed, multi-functional captive delivery centers are an example of the success of the global shared services concept. Many organizations have monetized the asset and sold off their captives to become commercial service providers with specialties in an industry and function.

Labor arbitrage, India, and the new customerIn the past five years, a number of significant changes have begun to transform the traditional underpinnings of business service delivery in the Western world. For example, cloud technology and social media are ubiquitous. They are changing not only how we connect with family members or store music, but also how we do business, collect data and deliver technology. These are more than new technologies; they represent a change in behavior in how the customer and business agree to interact, share information and conduct trade.

Perhaps as significant a change is who the customer is. The traditional low cost arbitrage markets have been India, China and other parts of Asia. However, the success of outsourcing and global

KPMG InternationalShared Services and Outsourcing Advisory

manufacturing has spawned a rapidly growing middle class in these regions, which is both increasing the cost of labor and broadening the potential customer base for many companies. As this success causes the benefits of labor arbitrage to disappear, how do organizations effectively serve new markets, and where is the next level of back office savings?

As most companies would opt for a few hundred million new consumers over 20 percent additional savings on information technology (IT) and finance and accounting, the competitive advantage will go to those that can both connect with new customers and do business effectively in these new markets with lower costs, better data and market insights, and operational flexibility.

A change in business services modelsWhen thinking about sales, general and administrative functions—human resources, IT, purchasing, accounting, etc.—some organizations view these support services as a tactical necessity, while others consider them a strategic weapon. Some see cost center, and others a competitive advantage. The reality is, none of these are mutually exclusive. In fact, they demonstrate the degree of contrast KPMG sees in the strategies and objectives of new business services models. But in a market ripe for and requiring change, a services delivery model that focuses on the holistic requirements and priorities

The Death of OutsourcingThere is a revolution taking shape in the business services industry, one that disregards the traditional shared services and outsourcing paradigms and centers the design of support services on the needs and priorities of the enterprise as a whole.

Advice Worth Keeping – KPMG Management Consulting podcast seriesTune in to these short conversations with subject matter experts, industry leaders and eminent researchers who are at the front line of efforts to drive evolutionary and revolutionary changes in the way organizations are structured and operate globally.

KPMG InternationalShared Services and Outsourcing Advisory

© 2012 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

1 | Shared Services and Outsourcing Advisory / July 2012

Prepare to prosper10 leading practices for global business servicesby: Rick Bertheaud, Principal, Shared Services and Outsourcing Advisory

and Bryan Furlong, Director, Shared Services and Outsourcing Advisory

Like many global business services organizations (i.e., groups that deliver shared services globally and/or managing global outsourcing efforts), yours probably has cost savings down to a science. That is, you know how to create centers of scale, take advantage of labor arbitrage and continuously improve productivity – all in the name of cost-effective delivery of transactional services.

But in today’s world of global business services, a fixation on efficiency gains, or more specifically cost savings, has become table stakes; efficiency gains, such as process improvement or transformation, have remained more elusive. Even though you’re making a measurable impact, you have an unanswered call to contribute more fundamentally to the business, as GBS organizations face new challenges that historically haven’t been posed. Can you use your broad process footprint to get products to market faster? How do you help the company quickly integrate acquisitions to accelerate growth? Can you drive growth in emerging markets by seamlessly supporting operations in China or Brazil?

If you’re like many organizations, you may get involved in these activities from time to time, but you’re rarely leading the strategy. And you’re often called in too late, providing only tactical support.

How can you elevate your value proposition to make your organization a strategic contributor to the business? How can you better align your services model with the C-suite agenda? How can you support strategic business initiatives, such as M&A efforts, new market penetration or protecting/enabling a quality and consistent global brand, above and beyond helping the firm save money?

The most mature services organizations are leveraging much more than labor arbitrage and transactional economies of scale. They’re also leveraging their process expertise and a global portfolio of services. As a result, they’re not only supporting the business – they’re advancing it and fully integrating with it. As you explore the opportunities within your organization, consider these 10 dimensions of global business services:

The Journey: Global Business Services

Val

ue C

aptu

re a

nd P

erfo

rman

ce S

usta

inab

ility

The Journey . . . Development Stages . . . Time

Level 5 – Differentiated

Globally integrated services portfolio with aggressive use of alternative and mixed delivery models

Level 4 – Strategic

Optimized balance of internal and external delivery capabilities, global sourcing with multifunction focus

Level 3 – Optimized

Traditional outsourcing relationships with global delivery; non-integrated internal shared services capabilities

Level 2 – Rationalized

Single function shared services with tactical onshore or offshore provider relationships

Level 1 – Sub Optimized

Decentralized and duplicative functions; little central control over business support services

According to a recent KPMG study of GBS organizations at Fortune 500 companies, about two-thirds of them – including many that have been doing shared services for five or more years – are at level two or three on the maturity scale.

Translation: There’s a big opportunity for GBS to contribute more to the business.

Where is your organization in the journey? Here are 10 leading practices for the journey to level 5.

Prepare to Prosper: 10 Leading Practices for Global Business ServicesLeading organizations are leveraging their global business services—outsourcing, shared services and internal processes—as a strategic asset, not just a transactional processing engine. Learn how adopting the attributes of these 10 practices can help you succeed in your organization’s next opportunity

Global Business Services Innovation: Optimizing the Business Model for CompetitivenessA series of in-depth interviews with business executives reveals success factors and leading practices for advancing the maturity of global services delivery.

1 | Shared Services and Outsourcing Advisory

The Shared Services and Outsourcing Advisory (SSOA) practice is supported by more than 138,000 partners and professionals from across KPMG International’s global network of member firms. KPMG delivers Management Consulting, Risk Consulting, and Transactions and Restructuring along with our Tax and Audit platform to create value while reducing complexity.

2011

™Since 2009, KPMG has ranked on IAOP’s list of the World’s Best Outsourcing Advisors and was ranked #1 in 2012.

KPMG is #1 in Shared Services and Outsourcing* • $300B+ advised contract value • 75 percent of the FORTUNE 100 served • 20+ years of average advisory experience • 2,000+ transformation project supported

1 | Shared Services and Outsourcing Advisory

*Ranked by global headcount and revenue

Sustain Competitive Advantage by Rethinking Your Business Services ModelsSurvey results from top-performing shared service centers in Europe and discussion on how they are distinguished from their peers.

From CRM to CEMTaking your shared services brand to the next level

Trying to elevate the value proposition of your shared services organization? It’s time to move from customer relationship management to customer experience management.

Effective shared services centers (SSCs) know their

performance goes beyond delivering the right services at the

right price. It’s also about elevating the internal brand and

improving strategic relevance.

To do so, they’ve taken a page from outsourcing service

providers by focusing on customer relationship management

(CRM). These organizations are determining customers’ needs

and expectations, measuring satisfaction and identifying

opportunities for innovation – all with a goal to enhance the

reputation of shared services and deliver long-term value.

But CRM is only the beginning. The next step is to evolve

from managing customers’ relationship to managing their

overall experience with shared services. This discipline, called

customer experience management (CEM), is about turning

customer satisfaction into loyalty, advocacy and higher

organizational relevance for shared services.

Who are your customers? How do they interact with the SSC?

How are you continually improving their experience? How are

you addressing roadblocks? This kind of holistic thinking is the

stuff of CEM.

Challenges in managing the customer experience

It all starts with a good customer relationship model. However,

some SSCs are starting at a disadvantage. Consider these

common challenges:

• Service orientation assumptions. With mandated,

100 percent market share, some SSCs take customers

forgranted.Othersmayhaveaninflatedself-image

by operating under the misconception that they are

providing excellent customer service. Here’s an interesting

fact: 80 percent of service organizations believe they

deliver a superior customer experience, while only about

8 percent of their customers agree.

• Service quality assumptions. Another challenge is

misaligned expectations, as customers generally expect

SSCs not only to process hundreds of thousands of

transactions–buttodosoflawlessly.Afterall,incorrect

payments to employees can have big productivity

consequences. And the impact in other high-volume

transactionalareascanbeevenmoresignificant.For

instance, a faulty payables process could quite literally

shut down a production line.

However,despitetheexpectationforflawlessdelivery,

zero defects is more an aspiration than a reality. Indeed,

even if a process achieves six sigma, it will still fail 3.4

timesinamillionattempts.Forhigh-volumebackoffice

processes,servicelevelmetricsmoretypicallyreflect

accuracy rates of 99.5 to 99.8 percent.

Ultimately, part of building a good customer relationship

model is recognizing – and addressing – the failure

opportunities in all layers of service delivery, as well as inputs

from the customer’s organization. That means avoiding

thetrapsofmarketdominance,inflatedself-imageand

misaligned expectations. It means managing the relationship

in consideration of local and global service delivery. And it

means applying a routine of active measurement, constructive

self-criticism, and best practices across all processes and

technologies.

From CRM to CEMTrying to elevate the value proposition of your shared services organization? It’s time to move from customer relationship management to customer experience management.

is a recognized leader in helping Global 1000 firms plan, implement, and improve Global Business Services.KPMG

© 2

014

KP

MG

LLP

, a D

elaw

are

limite

d lia

bilit

y pa

rtne

rshi

p an

d th

e U

.S. m

embe

r firm

of t

he K

PM

G n

etw

ork

of in

depe

nden

t mem

ber f

irms

affil

iate

d w

ith K

PM

G In

tern

atio

nal C

oope

rativ

e (“

KP

MG

Inte

rnat

iona

l”),

a Sw

iss

entit

y. A

ll rig

hts

rese

rved

. Prin

ted

in th

e U

.S.A

. The

KP

MG

nam

e, lo

go a

nd “

cutt

ing

thro

ugh

com

plex

ity”

are

regi

ster

ed tr

adem

arks

or t

rade

mar

ks o

f KP

MG

Inte

rnat

iona

l. N

DP

PS

110

012

SECTORS AND THEMES

Title hereAdditional information in Univers

45 Light 12pt on 16pt leading

kpmg.com

Credits and authors in Univers 45 light 12pt on 16pt leading

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”).

Contact us

Cliff Justice

Principal and U.S. LeaderShared Services and Outsourcing Advisory Services T: +1 713 319 2781 E: cjustice@kpmg.com

Rick Bertheaud

Principal, Advisory Shared Services and Outsourcing Advisory Services T: +1 413 427 9952 E: rbertheaud@kpmg.com

Bob Cecil

Principal, Advisory Shared Services and Outsourcing Advisory Services T: +1 571 434 7562 E: rcecil@kpmg.com

To learn more, visit the Shared Services and Outsourcing Institute at www.kpmginstitutes.com/shared-servicesoutsourcing-institute.

www.kpmg.com