3 Ways Pinnacle Shared Services Centers Outperform Others | Market Insights™
February 21, 2019
3 ways Pinnacle Shared Services / Global In-house Centers Outperform Others: cost, operational, and business impact
3 ways Pinnacle Shared Services / Global In-house Centers Outperform Others: cost, operational, and business impact
Originally presented live on Thursday, December 6, 2018
This 25-minute on-demand webinar is the first in a series of brief, targeted sessions designed to help service delivery leaders set up leading, effective, and successful delivery centers.
This must-see session addresses how to:
• Articulate business objectives, the center’s role, and its anticipated business impact
• Evaluate setup options, including location, talent model, and commercial & legal options
• Prepare and assess the business case for the center
• Develop the implementation blueprint, including the timeline and sequencing of activities, vendor selection and coordination, and operating and governance models
Who should view, and why?
The content is geared to senior enterprise executives, including: leaders responsible for strategic outsourcing, transformation, and project management, as well as business unit executives.
Presenters:
H. Karthik
Partner, Global Sourcing
Everest Group
Marvin Newell
Partner, Consulting
Everest Group
Complimentary 60-minute webinar held on Tuesday, October 16, 2018 | 9 a.m. CDT, 10 a.m. EDT, 3 p.m. BST, 7:30 p.m. IST
Questions we’ll address:
Businesses around the globe are exploring and adopting digital services at a record pace, driven by changing consumer demands, emerging disruptive technologies, evolving regulations, and increasing cost/margin pressures. Many organizations are finding that their shared services centers / GICs are ideally positioned to orchestrate their digital services management and development, enabling tight integration between the delivery center(s) and the core business while also ensuring optimal growth.
Who should attend, and why?
This webinar will offer real-world insights into how organizations can effectively leverage their delivery centers for digital enablement.
The content is geared to senior enterprise executives – CIOs, CTOs, Chief Digital Officers, Heads of the Global In-house Center (GIC) / Shared Services Center (SSC) / Global Business Service (GBS), Senior Strategy Executives, and Global Sourcing Managers.
Presenters
Michel Jannsen
Chief Research Guru
Everest Group
Rohitashwa Aggarwal
Practice Director
Everest Group
Parul Jain
Senior Analyst
Everest Group
Moderator
Alan Wolfe
Senior Vice President
Everest Group
Clients considering establishing a shared services center – or what we refer to as a Global In-house Center (GIC) – to deliver services, almost invariably ask us how successful the model is and whether it delivers on the expected business impacts.
To set the stage for answering the first question – how successful is the model? – the following chart shows that the number of new annual GIC set-ups has increased from <100 centers in 2015 to 145 centers in 2017, indicating a preference by companies to join the DIY bandwagon.
Multiple factors contribute to this DIY trend, including: the need/desire to take a digital-first approach to service delivery; capacity/growth constraints in onshore locations; challenges with service provider performance; increased adoption of agile/DevOps; pressure to replicate the success of early adopters; and focus on end-to-end ownership in internal delivery.
But that chart only tells part of the pervasiveness story. While it would be reasonable to state that the primary adopters of the GIC model are large enterprises, almost half of the new centers set up since 2014 have been established by small (USD <1.5 billion revenue) and mid-sized (USD <10 billion revenue) enterprises. This adoption – seen across technology, telecom, manufacturing, healthcare, and BFSI verticals – reflects that small and small and medium enterprises recognize the successes the large organizations in their sectors have achieved with the model. By all accounts and measures, it’s clear that use of GICs is becoming truly broad-based.
Here are a few examples of the business impact real-world GICs are delivering beyond arbitrage.
Of course, the only way to ensure business impact beyond arbitrage is by intentionally establishing the GIC to deliver business impact.
For example, we’re currently supporting a global investment management firm through the “impact-first” approach to its GIC set-up. Instead of starting operations with low-value transactional processing, the GIC will predominantly deliver high-end technology services to build tools and systems for quantitative research. The talent model is skill-centric, not scale-centric, and geared to build high-end skills in a sustainable manner. And because a key enabler of delivering business impact is ownership, the GIC will have end-to-end delivery ownership and a seat at the parent’s table to shape its evolution journey from the beginning. All these intentional actions will give the GIC a head-start in delivering business impact, and enable it to leapfrog its more tenured peers.
Overall, having an intentional approach during set-up can significantly influence and enhance the type of business impact the GIC delivers, and how soon it kicks in. And a well-thought-out approach is more likely to keep the expectations from the GIC in check, and its performance assessment objective.
Have you taken an intentional business impact approach with your GIC? Please share your experiences with us at [email protected] or [email protected]. To learn more about how we serve GICs, click here.
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.
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.
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.
We believe it is the triumvirate of the approach to demand creation, strategic focus of the digital strategy, and orientation towards cross-functional collaboration.
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).
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.
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].
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