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Parul Jain

Parul Jain is a member of the Global Sourcing team and assists clients on topics related to location optimization, sourcing strategy, cost and price benchmarking and peer intelligence. Her recent research pursuits include the impact of next-generation technologies on GICs. Parul’s responsibilities include leading Everest Group’s Location Insider subscription offering.

The Three Components Your Shared Services Center Needs to Include in its Innovation Equation | Blog

By | Blog, Shared Services/Global In-house Centers

Supporting enterprises’ innovation agendas is no longer simply an opportunity for in-house shared services centers – what we call global in-house centers (GICs); it’s fast becoming a competitive imperative. And, contrary to popular perception, cracking the innovation code requires much more than just novel ideas. Success entails boarding the right people on the bus, gearing them up with the right mechanisms to drive agile decision making, and reengineering the organization’s cultural DNA to foster innovation. We’ve developed a simple approach that will help you solve this complex problem.

Let’s take a look at the three components.

The Three Components Your Shared Services Center Needs to Include in its Innovation Equation

Process

Innovation is not the product of logical thought, although the result is tied to logical structure – Albert Einstein

The first element is formulation of the right mechanisms to evangelize innovation initiatives. It requires the right idea generation mechanisms to harness unique ideas from both internal (GIC and parent company stakeholders) and external (including startups, academia, and service providers / specialists) ecosystems. A critical part of this is evaluating the strategic rationale for the partnership. While some shared services centers partner with third-party providers and start-ups for talent augmentation and skill acquisition, others leverage the connections to develop domain expertise or increase the speed of innovation.

Another essential component, specifically for GICs, is the right funding mechanism. While we see most shared services centers carving out a separate fund for innovation (which is part of the overall GIC CEO budget), we are increasingly seeing them push for a global/centralized fund where the innovation team within the center operates as an extension of the global innovation team(s), and is funded by centralized global venture funds / programs. For select initiatives, we have also seen GICs securing funding from business units and driving project-based innovation initiatives.

The third component here is timely deployment of robust governance mechanisms. Shared services centers need to adopt a disciplined approach to rigorously track performance and incorporate remedial feedback on a continual basis. This not only helps to assess the effectiveness of activities, but also guides allocation process for resources, and helps assign accountability for actions/responsibilities.

People

Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have and how you’re led – Steve Jobs

Involving the right people in the right team structure is the second critical component. Leading GICs involve stakeholders from different parts of the organization, i.e., functional and business teams, central innovation groups, R&D departments, and corporate teams to invest time in exploring adjacent and transformational opportunities. This helps in cross-pollination of teams and enables development of a holistic solution in an accelerated go-to-market timeframe. While we have seen varied designs for innovation teams (based on organizational fit and business alignment), the common thread is the focused top-driven approach to creating structural changes, supplemented by continuous support from middle management to ensure smooth implementation.

Another key initiative leading centers are taking is remodeling their existing talent practices. They are now shifting their focus from hiring for specific “skills” to hiring for “learnability” / “thinking skills”, i.e., the ability to innovate. They are incentivizing innovation, and providing special recognition for outside- the-box thinking. We are also seeing strong innovators recalibrate their existing performance measurement metrics to align with the impact generated against the business objectives.

 Culture

“Innovation is not something you do for one afternoon a week, it’s got to be in your DNA” – Jasper de Valk and James van Thiel, Google

The third principal tenet to ensuring foundational success on the innovation journey is dedicated investment in developing a customer-centric culture with active CXO-level participation. Shared services centers are deploying multiple tools to reengineer their DNA and develop a culture that breeds innovation. Most successful examples include: gamification of programs and distinctive recognition for positive reinforcement; stimulation of an experimentation mindset and instillation of risk appetite; and adoption of flexible employment models, including remote working, crowdsourcing, and open innovation.

Although new technologies are path-breaking, we believe that the key to a GIC’s success is incremental innovation. They should keep testing small-scale POCs to demonstrate end-client value and build credibility. Successful implementation of pilots can help them instill confidence among parent stakeholders, and ensure adequate support and funding for much larger scale initiatives. This process also presents centers with an opportunity to course-correct early and drive/lead enterprise-wide digital initiatives.

If you’d like detailed insights and real-life case studies on how GICs have effectively driven the innovation agenda for their enterprises, please read our recently published report – Leading Innovation and Creating Value: The 2019 Imperative for GICs. And feel free to reach out to us at [email protected] to explore this further. We will be happy to hear your story, questions, concerns, and successes!

Is a Bigger Shared Services Center (or GIC) Always Better Performing? Maybe Not | Sherpas in Blue Shirts

By | Blog, Pricing, Shared Services/Global In-house Centers

We recently conducted a deep analysis of the digital maturity of almost 60 shared services centers, (also referred to as GICs) across diverse industries and geographies, and disseminated summary findings through a series of round tables across different Indian cities, including Delhi NCR, Bangalore, Mumbai, and Pune. You can read the detailed results in our recently released Digital Maturity in GICs | Pinnacle Model™ Analysis.

Here, I want to focus on a question that recurs in most of our conversations: Does the size of a GIC have any implication on its Pinnacle performance on digital maturity? Note that we define Pinnacle GICs™ as those that achieve superior performance because of their advanced capabilities.

The answer to this question is not as objective as it seems.

Related: Commercial Options for India GIC Setups

Our study revealed that scaled GICs (those with 3,000+ FTEs) have consistently delivered better impact across cost savings, operational KPIs, and even strategic metrics such as contribution to revenue growth. It also showed that small (those with less than 1,000 FTEs) and mid-sized GICs (those with 1,000 – 3,000 FTEs) have demonstrated lower improvement across all business outcomes.

Is a Bigger Shared Services Center or GIC Always Better Performing Maybe Not blog image

Does this Mean that all Scaled GICs are Pinnacle GICs? Not Really

Based on our analysis, less than one-third of scaled GICs have been able to demonstrate Pinnacle performance, while multiple small and mid-sized Pinnacle GICs (~30 percent of the Pinnacle performers) have achieved superior outcomes because of their advanced capabilities.

  • For instance, a multinational conglomerate’s GIC (mid-sized with 1,000-1,500 FTEs) delivered 20-30 percent improvement on operational KPIs such as process agility and SLA compliance. This GIC operates as the global competency center for IT solutions development with end-to-end ownership across the application development lifecycle, thereby allowing it to drive process transformation changes and yield impressive improvements
  • A U.S. food & beverages major’s GIC (also mid-sized, with 1,500-2,000 FTEs) is leveraging pricing analytics to drive competitive advantage for its parent. The GIC developed a competitive intelligence and analytics platform, which allowed the firm to view what its competitors are selling and make recommendations on the necessary price changes to its merchants. This platform is tied to a machine learning engine that dynamically prices their products.

Related: Learn more about Everest Group’s Shared Services Center capabilities

Common Threads across all Pinnacle GICs’ Journeys

We believe it is the triumvirate of the approach to demand creation, strategic focus of the digital strategy, and orientation towards cross-functional collaboration.

Demand Creation

A pull-based approach to demand creation – i.e., a proactive approach to creating Proof of Concepts (POCs) and showcasing capabilities – has not only helped shared services centers secure CXO-level sponsorship, but also increase the existing breadth and depth of services to enable end-to-end process orchestration. For instance, a European BFSI major’s GIC currently operates as the RPA CoE, and champions the end-to-end global RPA program for the enterprise. However, this was not the initial mandate for this shared services center. It proactively started developing POCs, capitalized on visits by onshore C-level executives to showcase their capabilities, and subsequently received buy-in from the parent company. The CoE now operates in a hub and spoke model, wherein the India GIC (hub) provides global governance and drives RPA for Europe through the CEE shared services center (spoke).

Strategic Focus of Digital Strategy

While other GICs solely focus on technology adoption, most Pinnacle GICs focus on using technology to enable operational improvement, which consequentially results in employee and/or customer experience enhancement. With achievement of these objectives, financial benefits – both top-line and bottom-line growth – follow suit automatically. Technology adoption per se needs to be viewed as a means to the end, not the end itself. Pinnacle GICs’ more holistic approach allows them to see both higher chances of success and ROI.

Cross-functional Collaboration

The third – and most underrated – differentiator is the focus on cross-pollination of resources by breaking functional barriers. We believe that a siloed approach to digital enablement will not work, and that shared services centers need to break silos and provide employees with wider exposure to functional roles across the firm. This will not only improve knowledge flow and increase productivity, but also stimulate innovation. For some GICs, creating CoEs for select digital capabilities has significantly enhanced the pace of adoption, and sharing of skills and best practices

All these aspects, along with dedicated enterprise leadership, have enabled Pinnacle GICs to champion organization-wide digital services delivery.

If you’d like insights on how your shared services center stacks up against the competition on the digital maturity front, please feel free to reach out to me at [email protected].

Is Your GIC the Secret Weapon for Digital Enablement? | Sherpas in Blue Shirts

By | Blog, Uncategorized

You might recall, back in December we identified digital agility as a key 2018 initiative. In that blog, we discussed how you can create business value by making things easy, reliable, and fast for your customers. The question I would ask GIC organizations for 2018: In realizing that goal, are you part of the problem? Or are you part of the solution?

Our research, Digital Maturity in GICs | Pinnacle Model™ Assessment 2018, seeks to answer those questions.

Most GICs started small and expanded over time as they proved their value. Now that most GICs have realized the fundamental benefits of labor savings, quality and process improvement, and – in some cases – business outcome improvement, it’s time for them to look to their next act.

Our central thesis is that a GIC can be a critical driver in building and running new digital competencies. But we want to hear from you about the functions and processes that are getting the most attention and investment. Which digital technologies are you focusing their efforts on? And what capabilities did you deploy to build out these capabilities?

There are plenty of digital surveys that you can participate in, so – why Everest Group’s? Because we take a different approach that results in more meaningful, useful outputs. Our Pinnacle Model™ approach asks questions about what the very best GICs are doing in terms of real impact and then correlate the capabilities required to achieve those results. And we go beyond the online survey, talking with some respondents to understand their journeys – what worked and what didn’t.

With that information in hand, we identify a set of Pinnacle Practices™ that you can consider deploying in your GIC.

Yes, there is a ton of hype around digital; let’s get beyond the headlines and talk outcomes and practices in your GIC.

Take the survey

Is Perceived Impact Hindering Your GIC’s Growth? | Sherpas in Blue Shirts

By | Blog, Shared Services/Global In-house Centers

The GIC model has evolved significantly over the last decade, and is gearing up for the third wave of evolution – GIC 3.0, as some are calling it – driven by GICs’ strong desire to move away from the “arbitrage-first” delivery model towards a “digital-first” model.

Everest Group describes the journey to mature GICs as progressing through four different stages.

Journey to GIC maturity

GIC maturity for optimal business impact

Our research shows that best-in-class – or Stage 4 – GICs deliver up to six to eight times incremental value beyond arbitrage. Yet, while many of our engagements over the last few years have made it clear that most Global 1,000 GICs deliver value beyond arbitrage, very few track and measure their impact. When they do, it’s typically in a piecemeal, selective manner. Thus, their parent perceives that they are delivering limited business value, beyond arbitrage, to the enterprise.

By educating their parent on their impact, GICs can improve their credibility, and build a case to secure support for expanding their role.

So how can GICs measure and articulate the value they deliver?

We believe that putting a dollar number to the business impact is the most objective and effective way for GICs to showcase their true worth. The framework we use maps value drivers linked to savings, risk, and revenue, quantifying all forms of impact created by the GIC.

GIC business impact model

Here’s an example: a U.S. company’s GIC was able to prove to its parent that it delivered US$20 to 22 million in overall business impact, compared to incremental cost arbitrage of US$4 to 6 million, through increased effectiveness, greater efficiency, and revenue growth. This helped the GIC secure the parent’s buy-in on increasing the scope of functions currently delivered out of their GIC.

A comprehensive quantification facilitates measuring the overall business impact across businesses/LOBs supported by the GIC. A GIC can use these results to:

  • Enable better understanding of its impact/role in the enterprise
  • Guide internal thinking on prioritization of value-add opportunities
  • Map its maturity to the market
  • Achieve greater sponsorship from parent stakeholders

Contact us about Everest Group’s business impact quantification framework, and learn more about our research on in-house delivery models.

Rise Up and Take Your Place in the Digital Sun, GICs! | Sherpas in the News

By | Blog

Something big is stirring throughout the global in-house center (GIC) landscape. Across all industry verticals, GIC tech executives are rolling out a broad array of initiatives that place bold bets on new digital technologies, which they expect will fundamentally change how their business operates.

While the current digital market is unarguably dominated by service providers, the share of GICs is increasing slowly and steadily. GICs are well poised to support the enterprise in its digital transformation journey given that:

  • They have an established foundation with a significant talent pool and an insider’s view that is vitally necessary to support digital-related transformation
  • They play a strategic role in building internal innovation capabilities for the parent, which is imperative to survive in the dynamic digital space
  • They are closely intertwined with the core business functions and can comfortably leverage their unique position to integrate digital delivery capabilities and yield synergies for the parent.

Current landscape

While most GICs have forayed into this digital journey by supporting the parent in its broader digital agenda, some have clearly outshone to display tremendous potential not only to just effectively support, but also to lead the way for digital transformation of the enterprise. There are examples at both ends of the spectrum – some GICs continue to deliver back-end support for digital operations (e.g., social media monitoring, core analytics, and mobility testing), and some enjoy ownership of key end-to-end processes (even Robotics Process Automation!). While some operate with a push-based approach to demand creation for even evolved digitals segments (e.g., analytics,) some relish a pull-based approach for burgeoning digital segments (e.g., RPA,) and meaningfully influence the nature and quantum of digital work being delivered from the GIC.

Analytics is the most evolved segment, with ~40 percent market share. Most of the other digital segments are in the initial to mid stages of evolution. Cloud and mobility represent significant shares, with most of the GICs currently delivering transactional services within these segments, such as application testing within mobility, infrastructure management and orchestration within cloud. Social & interactive and RPA are relatively nascent segments, with only a few GICs showing capabilities to harness them and deliver effective solutions.

The extent of digital adoption across industry verticals, and the maturity of digital segments within these verticals, varies significantly. BFSI is the leading adopter of digital services, with strong capabilities in analytics, mobile, and RPA. The product and technology vertical follows next, with about one-quarter of the market share. GICs in this vertical typically develop sweet spots across the digital stack (e.g., cloud,) with significant scale and depth, thereby achieving a higher level of sophistication in select areas. The third largest adopter is the retail segment, where digital is being leveraged to understand consumer buying behavior and drive a seamless cross-channel customer experience.

Challenges

While digital presents a path-breaking opportunity for GICs to upshift the value being delivered to the enterprise, it doesn’t come without its set of challenges. Almost all GICs unanimously report that their key challenge to going digital is talent – both finding and retaining it. The highly competitive landscape, with the unprecedented shortage of “ready-to-consume” talent, is creating a situation in which entities are feeling the heat of competition not only from their traditional rivals, but also from emerging disruptive rivals. For example, retail banks are facing stiff competition from mobile payment tech providers such as Google Wallet, PayPal, and others. To overcome this challenge, best-in-class GICs have adopted innovative approaches to talent management such as hiring from creative/media agencies for specialized skills, such as social media.

To revel in this digital chaos, GICs are also driving ecosystem partnership with start-ups to drive their innovation agenda, especially automation, workflow management, and analytics. This allows them to derive complementary benefits such as acceleration of own technology, higher speed of innovation, better understanding of customer needs and new business models, branding as an innovation-driven organization, and improved internal employee motivation.

Quite distinctly, digital presents a lucrative opportunity for GICs to upshift their role from a cost arbitrage-focused provider to a strategic partner driving innovation for the parent.

Rise up and take your place in the digital sun, GICs! Your journey has just begun!

For more insights on the GIC digital landscape, please refer to our recently released report, “GICs Leading the way for Digital Transformation of the Enterprise.” The report provides an overview of the current state of digital adoption in GICs, assesses digital maturity of GICs based on a framework, evaluates functional maturity of the top three industry verticals, and highlights best practices, key implications, and calls-to-action for GICs. The report will help senior GIC stakeholders understand the opportunities and challenges offered by this disruptive wave of digital services.