sharedserviceslink - north american ss leaders summit - penny weller - the hackett group - 9-30-2015

October 7, 2015

How to Achieve World-classGBS Performance

2© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

• Research, key insights, and advisory

services Global Business Services /

Shared Services

• 30 year Shared Services executive

with Pfizer (formerly Pharmacia)

• Director of Performance

Management

• Six Sigma Motorola-certified Black

Belt

• Global Director, Institute of

Management Accountants

Penny Weller, PhD, CMA

Global Business Services Advisory,

North America Operations Leader

[email protected]

Phone: 269.345.7240

www.thehackettgroup.com

mailto:[email protected]

Contents

Hackett Overview

Why Pursue

World-class GBS

Key Drivers to World-class

GBS Today

GBS in 2020

Opportunity to Participate

in 2016 GBS Performance

Study


The Hackett DifferenceExpertise that accelerates sustainable benefit realization

Global leader in operations improvement strategies,

implementation know-how and G&A agility

Efficiency and effectiveness improvements

Fact based insights 10,000+ benchmarks

Best Practices Intelligence Center™ differentiator

and enabler:

– 20,000+ performance metrics

– 1,500+ best practices, 95 processes

– 1,000+ best practice-based process maps and

configuration guides

– 1,000+ case studies, implementation examples

and research

Results delivered through a global team of senior

practitioners using consistent methodology and best

practice-based toolset

Hackett Value Grid™

We help companies establish and

implement business performance

improvements.


Hackett Group Solution Offerings

▪ Library of 2,500+ Best Practice Research Perspectives, Books of Numbers, and Hackett

Certified Best Practices through the Best Practice Intelligence Center

▪ Unlimited inquiry access for members to Hackett experts for transformation steering

▪ Peer-to-Leader 1-2-1 Best Practices sharing, and Best Practices networking events

▪ Enterprise, functional and process-based performance studies & value accelerators

▪ “Gold Standard” Benchmark – over 10,000 conducted, the empirical backbone for your

transformation at the SG&A Enterprise, Functional, and Process level.

▪ World-Class, Peer, and Custom Peer comparative metrics and best practices

▪ Ability to provide multiyear World-Class Program view of performance over time

▪ Hackett Performance Exchange (automatic accumulation of performance data from Oracle or SAP)

Finance

Human Resources

Information Technology

Procurement

Supply Chain and Operations

Membership

Advisory &

Research (Provides insights into

World-Class

Performance)

Benchmarking(Defines World-Class

Performance)Hackett Perspective on World-Class Finance – Accelerating GBS | 9

Peer Group World Class

The World-Class Advantage – FinanceWorld-Class organizations always find a way to get there

IT Cost (per end user Equivalent)

Procurement Cost (% of spend)


23%

$1.7K$2.2K

HR Cost (per employee)


19%

0.59%0.73%$6.0K

22%

2014 Cost of Finance by Process Category (as a % of revenue)

Finance Cost (% of revenue)


1.12% 46%

-59%-46%

-23%

0.60%$7.7K

0.39%

0.21% 0.23%

0.16%0.11%

0.17%

Transacting Control & Risk Planning & Strategy

Practice or

Outcome

Process

Taxonomy

Vision

Dimension

SDM

Component

Capability /

Enabler 1 - Lagging 2 - Achieving 3 - Exceeding 4 - Leading

Current

State

Assessment

PriorityFuture State

TargetAverage Gap

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree to which a

sourcing strategy

exists

Sourcing strategy is ad hoc or

nonexistent.

Sourcing strategies reflect and are

aligned with overall business

strategy and objectives, including

high level risk requirements.

Historical spend analyses are

regularly and routinely conducted

by market and across markets -

i.e. by specific commodity, service,

location and business.

Commodity management and

sourcing strategies define

appropriate purchasing and

payment processes and tools.

Contract terms, lengths, and

conditions are defined to drive

optimal benefits to the enterprise;

in terms of total life-cycle cost,

service, and quality.

Sourcing strategy is reviewed and

updated annually (or more

frequently) to reflect direct linkage

to the company's strategic growth

plans, market changes and

product innovations, production

plans and business

M&A/ventures.

2 - Achieving 2 - Medium 3 - Exceeding 1.00

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Breadth of supplier

universe

Supplier selection is based on

historical or personal

relationships; suppliers often

selected prior to Procurement’s

involvement in a project.

Projects are initiated to limit the

total number of suppliers and

bundle the spend volume.

Procurement is involved in the

supplier selection process.

Suppliers are often considered on

a regional or compartmentalized

basis.

Supplier universe is considered

by major commodity or service

area rather than in aggregate.

Suppliers are considered for

bundled and/or extended services

that may extend to multiple areas

of competency.

Supply universe is global and not

limited to traditional commodity

suppliers.

1 - Lagging 2 - Medium 2 - Achieving 1.00

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree to which

supplier risk is

measured and

managed within the

sourcing process

Risk not considered as part of

sourcing decisions or supplier

management.

Supply risk is considered as part

of category-specific sourcing

efforts and supplier performance

management processes.

Supply base risk is explicitly

factored into broader business

continuity objectives. Supplier

risk is considered beyond the

specific good or service being

sourced.

Procurement works with other risk

management staff, ensuring

alignment between internal

risk/return preferences, business

objectives, and both general and

specific supply market risks.

3 - Exceeding 3 - High 4 - Leading 0.90

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree of

contingency

planning performed

to assure supply

No supply contingency planning

exists.

Contingency plan exists in case of

supply shortage; alternate

suppliers and alternate locations

identified.

Alternative supply sources are

developed in conjunction with

current suppliers for key

purchases.

Back-up suppliers are required for

critical or strategic categories and

items, including formalized

contingency plans to ensure

seamless supplier transition and

application of penalties and

liabilities with supplier(s) at fault.

3 - Exceeding 2 - Medium 3 - Exceeding -0.55

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree of supplier

qualification in

place

No formal supplier qualification

process.

Simple processes in place to

register suppliers and inspect

supplier qualifications at time of

registration or category review.

Established supplier training

program on enablement

strategies and buyer’s

technologies. Formal program

exists to identify key qualification

metrics with stratification based

on category criticality and supply

alternatives.

Annual review of at risk suppliers

and suppliers of key categories.2 - Achieving 2 - Medium 2 - Achieving 0.37

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree of

effectiveness and

efficiency of price

refresh process

Quoting and price refresh process

is undefined and performed

manually and on an ad hoc basis.

Quoting and price refresh process

is defined and audited manually.

Quoting and price refresh

processes are structured to

minimize enterprise financial

impact to all parties.

Quoting and price refresh

processes are automated, nearly

error-proof,, with appropriate

controls in place..

2 - Achieving 2 - Medium 2 - Achieving 0.46

Practice

Sourcing and

Supply Base

Strategy

Purchased

Cost

Reduction

Process

Design

Level of

rationalization of

supply base size

Large number of suppliers due to

short-term, “one-off” relationships.

Organization has identified the

need to rationalize the number of

suppliers in order to create

leverage.

Supply base rationalization is

complete. Few new suppliers are

needed and an added supplier

typically results in a removed

supplier (equilibrium). Strong

relationships developed with

current suppliers focusing on JPI

in critical or large dollar spend

areas.

Structured process is in place that

benchmarks the marketplace and

ensures continual supply base

assessment.


Practice

Sourcing and

Supply Base

Strategy

Purchased

Cost

Reduction

Process

Design

Maturity of use of

supply market

intelligence

Supply market knowledge is ad

hoc and incomplete.

Process, tools, and sources

established to gather and

organize data on most categories.

Supply market intelligence /

knowledge captured to identify

when a supply strategy needs to

be re-visited.

Supply market intelligence /

knowledge captured, modeled,

and utilized for pro-forma

simulations done during strategic

planning, design, sales, etc.


Strategy &

Business

Transformation(Transforms

Performance into World-

Class)

Service

Delivery

Components

Information

Service

Placement /

Scope

Process

Sourcing /

Location

Strategy

Process

Design

Enabling

Technology

Skills &

Talent

Governance

&Organization

Enterprise Performance Management

Shared Services, Global Business Services & Outsourcing

Merger Integration

Working Capital Management

Oracle EPM (Platinum Partner)

SAP ERP (Gold Partner)

Hyperion

Kronos

Workforce Management

Application Managed Services

– Functional Application Support

– Technical Application Support

– Cloud and Hosting

– Remote Development

Best Practice

Technology

Enablement(Implements Technology

to enable World-Class)

In

-h

ou

se

Co

mp

le

te

O

utso

urc

in

g

Colo

catio

n

CustomerResponsibility

ProviderResponsibility

Sa

aS

A

pp

lic

atio

ns

Contents

Hackett Overview

Why Pursue

World-class GBS


GBS Today

GBS in 2020



Study


Source: 2015 Hackett Global Business Services Performance Study

Average initial

savings over baseline

costs realized by

world-class GBS

Peer = 20%

35% Average annual recurring

savings realized by

world-class GBS

Peer = 7%

11%

Percentage of world-

class GBS rated as

“effective or highly

effective” at delivering a

high-quality services

portfolio

Peer = 49%

100% Percentage of world-

class GBS rated as


effective” at delivering

against customer

intimacy goals

Peer = 26%

75%

Percentage of world-

class GBS rated as


effective” in

contributing to

enterprise agility

Peer = 43%

92%

Why is World-Class GBS Important - One Word: Outperformance

Contents

Hackett Overview

Why Pursue

World-class GBS


GBS Today

GBS in 2020



Study


Your performance comparedPeer and World-class

Efficiency Peer World-class

GBS

Operating cost improvement 7% 11%

Productivity Improvement 9% 13%

Quality Improvement 6% 8%

Customer Service Improvement 6% 8%

Effectiveness Peer World-class

GBS

Alignment with corporate and business unit

strategic goalsEffective Effective

Enterprise agility contribution Neutral Effective

Enterprise compliance with financial,

operational rules, and regulations Neutral Effective

Delivery of competitive advantage by

reducing the operating cost Effective Very Effective

Competitive advantage through high-quality

servicesNeutral Effective

Competitive advantage through business

partneringNeutral Effective

Other

companies Your Company

Hackett Value GridTM

High

1Q

1Q

World-

class GBS

Efficiency

Eff

ecti

ven

ess


Global Business Services – Three Stage Model

Multi-function

End-to-end Process Ownership

Service Management

Enterprise standards

Technology Integration

Centers of Excellence

Captive Plus Delivery Model

Agility

Innovation

Commercial Profile

Customer-centric Mindset

Function Aggregation

Multi-function Shared Services

Integrated Services

Function

Transactional

Excellence

Business

Services

Excellence

Enterprise

Strategic

Enablement

Single-function

Transactional Standardization

Regional Consolidation

Transactional Automation

Focus

Value

Stage

2

Stage

1

Stage

3

Contents

Hackett Overview

Why Pursue

World-class GBS


GBS Today

GBS in 2020



Study


Being World-class and advancing your GBS up the value curve matters, advancing GBS means changing strategy

92%

75%

100%

75%

100%

92%

43%

26%

49%

57%

67%

76%

Contribution to enterprise agility

Delivering business partner value(customer intimacy focus)

Delivering a high-quality servicesportfolio (service excellence focus)

Delivering effective enterprisecompliance (compliance focus)

Delivering operating cost savings (costleadership focus)

Alignment with corporate and businessunit strategic goals

GBS Strategic Objectives% effective and highly effective in meeting the stated goal

Peer World-class

Source: Annual Global Business Services (GBS) performance study, 2015


Service Delivery Model Optimization

In-house vs. outsource

Onshore vs. offshore

Geographic footprint,

location and clustering

strategy

Governance for how

decisions are made

Organizational entities,

Structure, reporting lines

Spans, levels, layers

Organizational sizing

Which activities

and processes

take place where

How and where

processes and sub-

processes are

sourced

Architecture of

technology

platforms

Skills needed to

execute and

transform

services

Data standards, report

design, scorecards, KPIs,

master data

Process ownership

Decision rights /

authority

Mgmt participation

Service Management

Org Model, RACI

Talent Management Strategy

Career-pathing

Formal training and skills-

development

Retention of top performers

Automation

Self -service access

Digitization

IT and systems integration

Decision-making frameworks

Single version of the truth

Global master data standards

Single vs. multi-function GBS,

Corporate, or BU

Transactional / Knowledge COEs

Processes,

exception-handling

rules, mappings

functional roles,

responsibilities

BU, local standards

Target enterprise standards

End-to-end processes and process

Target capability maturity

Service

Delivery

Components

Information

Service

Placement

& Scope

Process

Sourcing /

Location

Strategy

Process

Design

Enabling

Technology

Skills &

Talent

Governance

&

Organization

Model


Service Management Framework Effectiveness

Demand

management

Service

portfolio

management

Financial

management

Supply

management

Service catalog

management

Supplier

management

Service

migration

management

Change

management

Contact center

management

Infrastructure

management

Service

continuity

management

Quality

Improvement

Knowledge

management

Service

Strategy

Service

Design

Service

Transition

Service

Operation

Continual

Service

Improvement

Source: Introducing GBS Service Management, Part 1: A Pivotal Capability for Enabling Enterprise Growth 2011

Contents

Hackett Overview

Why Pursue

World-class GBS


GBS Today

GBS in 2020



Study


Study results in headlines: GBS TodayOperating models vary; customers king


OPERATING MODEL

GBS adopt a variety of

operating models to

continue to meet

stakeholder expectations

CUSTOMER EXPERIENCE

Few GBS are able to

generate value through

customer experience

improvement


Study results in headlines: GBS TodayEnterprise Standards and End-to-End Process Design

PROCESS OWNERSHIP

World-class GBS get better

results from process

ownership through superior

role design


75% Percent of companies at which agility of

talent management process falls short of business

needs (next most-deficient E2E process: 43%)

94% Percent of top performers citing E2E

process design and ownership model as enabler of

execution of strategy and operational plans

(peers = 47%)

E2E Process Performance


Study results in headlines: GBS TodayEarly Adoption is Low

TECHNOLOGY ADOPTION

Cloud and mobile

solutions have yet to

gain broad adoption


8%

8%

11%

12%

12%

12%

12%

16%

19%

24%

12%

11%

19%

16%

4%

4%

4%

15%

24%

81%

92%

78%

69%

72%

84%

84%

80%

65%

52%

0% 20% 40% 60% 80% 100%

Automatic invoice processing

Rapid close cockpit tools

Account Reconciliation tools

Self-service analytics and BIreporting tools

Self-service employees (T&E,payments, ordering)

Compliance management tools

Receivables management tools

E-Invoicing

Workflow management tools

Self-service external partner(vendor, customer)

Plan to Implement Planned Upgrade No plans


Study results in headlines: GBS TodayCenters of Excellence – Reasons to Implement


CENTERS OF EXCELLENCE

Centers of excellence

adoption in GBS is in

its infancy

Cost Reduction - including move to low labor cost

geography

Organizational effectiveness – focus activities

fragmented across businesses into a single

organization

Data Quality and Insight - improve the

ability to have a single data set and

'source of truth'

Customer satisfaction - improve customer

experience

Compliance - Improve control and

ability to meet regulatory

requirements

Professionalism - promote higher delivery

standards through knowledge sharing,

common tools and techniques

21.1%

19.6%

13.4%

12.9%

10.5%

9.1%

Contents

Hackett Overview

Why Pursue

World-class GBS


GBS Today

GBS in 2020



Study


Study results in headlines

2020 VISION

By 2020, a majority of

companies will have

moved beyond single-

function GBS models


Enterprise

Strategic Enablement

Stage

3

Stage

2

Stage

1

Maturity

Shared

Services

Global Business

Services

Business

Services Excellence

Function

Transactional Excellence

50%

9%

41%

38%

14%

48%

2015 2020


Scope of GBS…’all in…’

Finance Executive & Corporate Services

Human Resources Sales

Information Technology Service

Procurement Marketing

G&A or SG&A

Finance

Human Resources

Information Technology

Procurement

Function

Accounts Payable Cash Application

Fixed Assets Intercompany Accounting

Contact Center Time & Attendance

Travel Expense Payroll

Credit Order Management

Processes


92%

43%45%

21%

30%

84%

40%

51%

25%

36%

84%

43%

55%

26%

37%

84%

41%

59%

22%

48%

86%

42%

82%

26%

73%

Finance InformationTechnology

Human Resources Direct Procurement Indirect Procurement

Adoption of GBS model by function (2012-2020)

2012 2013 2014 2015 2020(F)

In 2020 nearly as many GBS will have HR and Indirect Procurement in scope as well as Finance



Industry-specific functions are next for GBS growth, other functions are expected to be more of a niche for large GBS

16%

15% 13%

9%

11%10%

23%

11%

13%

9%5% 5%

23%

11%10%

9%

5%3%

18%

12%11%

8% 8%

1%

24%

12% 12%

8% 7%

5%

Industry-specificfunctions

Legal Risk & Security Environmental, Health& Safety

CorporateCommunications

Government Affairs

Adoption of GBS model by function (2012-2020)

2012 2013 2014 2015 2020(F)

Source: 2015 GBS Performance Study


As adoption rate of a GBS model by function increases, so does the value that GBS can deliver for that function

IT Function

45%

68%

Finance

43%

59%

Procurement

20%

47%

GB

S V

alu

eG

BS

Sco

pe

Peer World-class

HR

33%

51%



Build It…they will Come…Moving Up the Value Chain orStart at the Top and Add Value…Aspirations?

Accounts

Payable

Business

Analytics

Contents

Hackett Overview

Why Pursue

World-class GBS


GBS Today

GBS in 2020



Study

World-class

Other

companies Your Company

Hackett Value GridTM

High

1Q

1Q

World-

class GBS

Efficiency

Eff

ecti

ven

ess

Low

High

The Hackett Group Performance Study Identifies

Stage 1 Stage 2 Stage 3

Stage 1, 2, 3 GBS

The Hackett Group's 2016 GBS Performance study open through November

Is your GBS organisation delivering enterprise value?

Participants in The Hackett Group's 2016 Global Business

Services (GBS) Performance Study will learn about:

Strategic Focus – How GBS ensure that they focus

on what the business values and measure what needs

to be delivered

Talent management – How GBS organisation

manage talent for their and the company’s benefit

Technology – show the use and benefit of emerging

technologies (cloud, robotics, mobile) on GBS

organisations

2020 Vision – based on more than a decade of

analysis, show where GBS functions will be at the end

of the next decade

Receive a customized report with key research findings

and assessment of your GBS Performance

https://thehackettgroup.co1.qualtrics.com/SE/?SID=SV_7VC00CpKuY0JSst&fn=2

15th Annual Global Business Services (GBS) performance

study


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The Hackett Group’s data, equipment, apparatus, programs, software, security keys, specifications, drawings, business information, pricing,

tools, taxonomy, questionnaires, deliverables, including without limitation any benchmark reports, and the data and calculations contained

therein, may not be duplicated or otherwise distributed without The Hackett Group Inc.’s express written approval.

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sharedserviceslink - north american ss leaders summit - penny weller - the hackett group - 9-30-2015

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