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shared services

Dec 05

Is Your Shared Services Center Driving Automation Across Your Enterprise? | Blog

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

Over the past few years, automation has become an integral part of Shared Services Centers’ (SSCs) growth and evolution. Whether large or small, whether onshore, nearshore, or offshore, SSCs – what we refer to as Global In-house Centers (GICs) – have made strong progress in adopting automation solutions.

Some have only dipped their toe into basic RPA. Others have moved ahead with more advanced automation technologies like machine learning and artificial intelligence. And a handful have started emerging as key strategic and revenue-generating entities for their parent companies. These GICs have built scaled delivery teams with strong domain knowledge around the implementation of automation solutions. There are multiple instances of GICs housing the global automation Center of Excellence (CoE) and driving initiatives across the enterprise. Aggressive adopters have moved beyond automating processes within the center and are now supporting process automation across locations and businesses. And they’re increasingly leading the design and execution of automation strategy, and are influencing decisions on go/no-go opportunities.

Everest Group’s recently published report Scaling Up the Adoption of Automation Solutions – The Evolving Role of Global In-house Centers discusses the key adoption trends and challenges in the GIC and automation space.

Let’s take a quick look at the four key trends.

Solutions and support

Some mature GICs have developed multiple offerings to support different businesses. Typical offerings include advisory support, platform or infrastructure support, and end-to-end implementation support. For instance, the India GIC of a leading European insurance firm provides bot infrastructure support to the company’s Singapore entity. With this set-up, the Singapore-based team didn’t have to invest in its own infrastructure to gain full access to the bots’ capabilities.

The talent ecosystem

From developing in-house automation talent to managing vendor resources, SSCs are making major strides in the talent management space. As part of their talent management strategy, many best-in-class GICs are investing heavily in building in-house talent, especially for AI-based solutions. This includes developers, data scientists, and project managers. These GICs are also investing significantly in upskilling/reskilling programs for their resources, and are strongly emphasizing education and awareness of automation’s capabilities and benefits. Some GICs are also training their business/operations resources on automation skills; this helps them scale-up faster.

CoE roles, governance mechanisms, and structures

Many GICs are upgrading their CoE model, roles, and responsibilities as they progress along their automation journey. Many successful centers are moving towards the federated hub and spoke CoE model, wherein the GIC houses the CoE hub and the functions have their own automation team (spokes.) The federated model enables rapid scalability and better opportunity identification than centralized CoEs. But, with either model, there are some pitfalls to avoid. Our blog titled Four Reasons Enterprises Aren’t Getting Full Value from Their Automation CoEs details what they are.

In-house automation platforms

Building on their understanding of automation capabilities, some mature GICs have started exploring the use of custom-built in-house platforms to run automations. While in most cases these are for attended RPA bots, some best-in-class SSCs have developed platforms using advanced technologies such as interactive virtual assistants (IVA) and machine learning. There are even a few examples of GICs adopting a 100 percent in-house development model, meaning no third-party vendor support. While we expect GICs to continue exploring in-house automation tools, we don’t expect that these will replace the use of third-party vendor products in the near future.

What GICs have accomplished over the past few years in scaling up the adoption of automation solutions across businesses and locations is just the tip of the iceberg. Going forward, they are likely to build on this foundation and penetrate deeper into the enterprise with ever more complex automations.

To learn more, please read our report — Scaling Up the Adoption of Automation Solutions – The Evolving Role of Global In-house Centers – or contact us directly at Bharath M or Param Dhar.

Sep 27

What’s the Best Structure for Your Shared Services Innovation Team? | Blog

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

As we presented in a recent blog, shared services centers (SSCs) – or what we refer to as Global In-House Centers (GICs) – must create their own innovation team to support their parent enterprises’ innovation agenda. But how should you structure your team to yield the desired outcomes?

Innovation maturity and mandate

You should start by determining your SSC’s innovation maturity and mandate. The maturity is determined by the strength of your existing internal capabilities, including talent, technology, and culture; the involvement and support you require from leadership; the primary focus area of the innovation, e.g., generate revenue, reduce costs, or mitigate risks; and the impact generated by your innovation initiatives e.g., dollar value of costs saved or revenues generated.

The innovation mandate is outlined by the level of ownership and visibility for innovation initiatives; the extent of cross-collaboration between business units / functional teams; and overall alignment of your SSC with the parent enterprise’s structure and business model.

Once you’re armed with that information, you can select one of the three SSC, or GIC, innovation team structures most prevalent today, based on the guidelines we present below.

Types of SSC innovation team structures

SSCs with low-to-medium maturity and innovation mandate

If this describes your SSC, you’ll do best with a centralized structure in which your parent enterprise drives the innovation and you have limited involvement. This structure allows the parent company to have greater control and ownership, and prevents the GIC’s low maturity from being an obstacle. Many organizations prefer this structure, as it enables faster implementation of enterprise-wide and business model-related innovations, promotes standardization, and improves governance of innovation initiatives. However, many SSCs are reluctant to operate in this structure, as it presents limited opportunities for them to breed an in-house culture of innovation and deliver higher-level transformational value.

SSCs with moderate-to-high maturity and innovation mandate in a specific domain

The best fit for these SSCs is a business unit-or functional team-led innovation structure. This allows the parent enterprise to adopt a decentralized innovation approach, enable direct communication and visibility between the SSC and business unit or functional stakeholders, leverage innovation teams placed within the GIC’s business units or functional teams, and provide better alignment on domain-specific end-business objectives. Key success factors include regular mentoring by the parent’s teams to build strong future-ready GIC leadership, and direct communication channels between SSC and business unit stakeholders.

SSCs with high overall maturity and innovation mandate

For GICs that fall into this category, a dedicated innovation team in which responsibility for innovation is fully in its hands works best. This structure allows the GIC to take more ownership of proposing and prototyping new, innovative solutions, and equips it with capabilities to better respond to enterprise-wide requirements.

Achieving the right balance of ownership, accountability, and investment is the key to successfully implementing this structure and making it a win-win for both SSCs and parent enterprises. It enables the SSC to reach its true potential and gain recognition as a thought leadership partner and empowers the parent to implement innovation initiatives with relative ease and replicate best practices across business units and functions.

Because every company’s innovation structure is inherently different, GIC leaders need to thoroughly investigate each of the models and decide on the most appropriate one based on their GICs’ overall maturity and mandate.

If you’d like detailed insights and real-life case studies on how SSCs are driving their enterprises’ innovation agenda, please read our report Leading Innovation and Creating Value: The 2019 Imperative for GICs.

In upcoming blogs, we’ll be discussing ways you can promote innovation and increase its impact in your shared services. Stay tuned!

 

Sep 26

Shared Services Centers and the Myth of Scale | Blog

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

Shared Services Centers (SSCs) – what we refer to as Global In-house Centers (GICs) – need to achieve breakeven to be financially viable. The breakeven equation is straightforward: the point at which total labor arbitrage (the average difference in labor cost between the SSC and a center at home) is equal to the SSC’s run cost (all non-labor costs such as facility rent, utilities, training, recruitment, travel, and other miscellaneous costs.)

Conventional wisdom says that that only large centers with a minimum of 1,000 FTEs can achieve breakeven. But that’s old-school thinking, and old-world reality.

We analyzed the breakeven point for 850 GICs in today’s digital world across a variety of factors, including the scope and complexity of services delivered, locations leveraged, and employee profiles. And we found that even an SSC with as few as 25 FTEs can be financially viable if it is delivering high-end, judgment-intensive services.

The rise of small SSCs/GICs

In the last three years, the average SSC scale, as measured by the number of FTEs, has declined by about 60 percent.

Why are we seeing this significant increase in small-scale centers? Several reasons:

  • Lower barriers to entry: Technology advancements facilitate better collaboration and knowledge transfer among leadership and peers
  • More robust ecosystem: Better infrastructure, access to a large talent pool with relevant technical and functional skills, and multiple professional services firms to provide on-ground support
  • Lower cost: Easier access to cost-competitive real estate, and wider availability of talent with the relevant functional, and managerial skills.

Today, it’s not about scale…it’s about alignment with the broader sourcing strategy

Ever since the inception of the SSC model, enterprises have been relying on their centers to improve products, processes, customer and employee experiences, build high-value skills, and drive operational excellence. But in today’s environment, scale no longer matters. Why? Because some of the main levers for SSC success, such as enhancing cultural integration, accelerating the strategic agenda (e.g., innovation, digital transformation), facilitating cross-functional collaboration, and promoting process ownership, are scale-agnostic.

Today, the decision on whether or not to establish a delivery center must be based on how it aligns with the enterprise’s broader sourcing strategy. In particular, enterprises should assess whether the SSC/GIC can help them:

  • Retain and strengthen in-house capabilities, especially for core intellectual property intensive work
  • Develop tighter integration (better control and governance) and stronger alignment on culture and brand
  • Accelerate the adoption of digital and other disruptive technologies such as automation, analytics, and artificial intelligence.

The next time you’re thinking about setting up a new SSC/GIC, don’t let the scale of the center – or lack thereof – stop you from exploring the possibilities!