Companies can generate up to $314 million in annual savings and improve both efficiency and effectiveness by achieving world-class performance in finance, IT, HR, and procurement. In addition, a key factor for realizing the efficiency potential is having an integrated Global Business Services (GBS) operating model in place. This can be concluded from the new research: "Global Business Services: The Revolution Continues” of the strategy management consulting firm The Hackett Group.
Global Business Services model
The Hackett Group's report found that companies with GBS operations are able to drive real cost reduction. Main reasons are the ability to facilitate both greater technology enablement and global end-to-end process ownership. According to the consultants, companies which achieve world-class performance across business operations achieve cost reductions of 29 percent. For a typical Global 1000 company with $28.8 billion in revenue, these reductions amount to $314 million in annual savings. At the same time, top-performing GBS organizations deliver dramatically improved effectiveness, including a nearly 30 percent improvement in quality of service, nearly 6x the improvement seen at typical companies.
GBS with several business functions
The research shows that nearly 75 percent of GBS organizations now integrate processes from across more than one business function, an increase of nearly 50 percent over the past two years. Finance continues to be the dominant anchor function of GBS organizations, followed by IT, HR, customer services, and procurement.
"Our research clearly shows that operating models with stand-alone functions for IT, finance, and other areas are giving way to an integrated service-oriented approach," said The Hackett Group's GBS Global Practice Leader Honorio Padrón. "Now the trend toward GBS is accelerating, and the benefits are becoming even more clear. The opportunity for companies to reduce costs and also improve effectiveness and business alignment by shifting to a GBS approach are impossible to ignore," said Padrón.
According to The Hackett Group's Chief Research Officer Michel Janssen, "What we're seeing with GBS is a dramatic transformation of the corporate back office. But the change requires a real cultural shift, which can be quite challenging.”