Global business services innovation - optimizing the business model for competitiveness

Most large and many mid-sized companies have adopted and/or expanded their shared services models over the past decade. While this leveraged model has become the norm, most have approached change with a cost reduction mindset. Few have taken on the challenge of using shared services to fundamentally advance their business model, and fewer still have truly innovated their Global Business Services (GBS) platform to improve competitive positioning. Without dismissing the great strides organizations have taken to stand up their current models, the question remains, “what’s next?”

As GBS thinking matures and organizations seek a wider array of benefits, top of

mind are:

• Where are we versus leaders in the evolution of our shared services model?

• What benefits are leaders realizing that we have yet to explore?

• How do we learn from the best to accelerate our own organization’s journey?

To begin to address these questions, learn more about leading Global 500

organizations’ GBS efforts and identify key success factors and leading practices,

The KPMG Shared Services and Outsourcing Institute has undertaken an ongoing

research initiative in which it examines firms’ global services delivery efforts through

interviews with their GBS executive leadership. This research complements and

extends in-depth advisory work KPMG is performing with its clients across the globe.

Contents

Global Business Services Defined . . 2

Global Business Services Maturity Model . . . . . . . . . . . . . . . . . . 3

The Research Construct . . . . . . . . . . 5

Key Research Findings . . . . . . . . . . . . 6

Driving Global Business Services Maturity . . . . . . . . . . . . . . . . 7

Detailed Research Results . . . . . . . . 12

Conclusion . . . . . . . . . . . . . . . . . . . . . 15

Appendix 1: Measurement Criteria . . . . . . . . . . . 16

KPMG’s Enterprise Services Transformation (EST) Framework

The Enterprise Services Transformation (EST) framework is a multi-disciplinary

framework that leverages the full capabilities of KPMG’s Management

Consulting, Advisory and Tax practices to provide its clients with a holistic

capability to transform their business via a services model that advances

the corporate strategy. It provides not only a perspective on how services

should be structured, but also the methods, tools and people necessary to

transform the business.

www.equaterra.com 2

A key component of this research is assessing organizations’ global services delivery

maturity using components of KPMG’s Enterprise Services Transformation (EST)

framework, which organizations can utilize to understand where they are on their

GBS journey, the value of driving toward greater maturity, the required efforts and

investments, and how to accelerate and improve their GBS efforts.

To set the stage for a discussion on the findings of this research study, we must

first provide explanations of and insights on what KPMG means by Global Business

Services and the Global Business Services Maturity Model.

Global Business Services Defined

KPMG defines global business services (GBS) as the collective set of resources,

capabilities and systems to deliver support services such as finance and accounting

(F&A), human resources (HR), procurement and other business processes across

an organization. Implied in GBS is greater aggregation and leveraging of common

information technology (IT) and business processes, models and best practices to

deliver these services more efficiently and effectively than in the past. As the name

implies, this is often done on a global scale, using multiple service delivery models

including elements of shared services, outsourcing and, increasingly, cloud solutions.

Adopting, deploying and expanding GBS efforts is an ongoing journey. The initial

destination is usually strong cost savings achieved via elements of shared services

and/or outsourcing through traditional levers such as scale, standardization, wage

arbitrage, technology enablement and process re-engineering. The destination is a

moving target based on changing business needs and conditions, evolving corporate

strategy, and advancement in system platforms and leading practices.

For example, one GBS destination that goes far afield from narrow cost cutting is

brand equity enhancement, achieved by ensuring standard services experiences

and labor practices. Indeed, for some companies where 90 percent of their value is

intangible (e.g., entertainment, media, services, etc.) this is often the main goal of

GBS. Acquisition integration is another activity that GBS greatly accelerates. Revenue

benefits and competitive advantage are considerable when acquisitions can be up

and running optimally in a compressed timeframe. Both of these outcomes can

significantly outweigh cost savings for companies that take a more broad view of the

goals of GBS.

As organizations gain GBS maturity, the pace of change quickens, and the alignment

of GBS strategy to further the C-suite agenda at the organization – be it greater

efficiency, compliance or growth – becomes stronger.

Learn more about service delivery strategies by reading this paper available from the KPMG Shared Services and Outsourcing Institute:

Rethinking Business Services

Models for Competitive

Advantage

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Global Business Services Maturity Model

Assessing the maturity and performance levels of an organization’s business services

capabilities has never been easy. This task has become more complicated as

organizations diversify their service delivery models, increasingly relying on shared

services and outsourcing to complement, extend or replace traditional models.

Organizations need to understand the maturity of their service delivery capabilities

so they can measure progress in improving them over time, and understand how

far and fast to push these improvement efforts. To attain this understanding,

organizations need a structured approach to measuring the performance of global

service delivery processes, systems, operating and governance models. Figure 1

below illustrates the KPMG model for measuring global business services maturity.

KPMG’s Global Business Services (GBS) Maturity Model

Val

ue

Cap

ture

an

d P

erfo

rman

ce S

ust

ain

abili

ty

The Journey . . . Development Stages . . . Time

Level 5 – DifferentiatedGlobally integrated services portfolio with aggressive use of

alternative and mixed delivery models

Level 4 – StrategicOptimized balance of internal and external delivery

capabilities, global sourcing with multifunction focus

Level 3 – OptimizedTraditional outsourcing relationships with global delivery;

non-integrated internal shared services capabilities

Level 2 – RationalizedSingle function shared services with tactical onshore or

offshore provider relationships

Level 1 – Sub-OptimizedDecentralized and duplicative functions; little central control

over business support services

Figure 1

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This model defines five levels of maturity, ranging from sub-optimized up through

differentiated. The assessment and measurement of service delivery maturity

should occur across a range of operating categories such as commercial orientation,

delivery models employed, global process ownership, governance and organizational

models, and degree of standardization. The following are characteristics of highly

mature GBS operations:

• Integrated services portfolio operating on a standard platform

• The use of services portfolio management supported by a strong business

intelligence capability and measured on business value

• Emphasis on end-to-end processes across functions in scope

• Focus on moving services up the value chain to support evolving business

needs

• Seamless integration of internal and external outsourcing and cloud service

providers via centers of excellence (COE)

• Common services architecture across functions and businesses.

It is important to balance the benefits of pursuing greater maturity against the

cost and complexity of doing so. The pursuit of “academic” maturity without a

strong business case is ill advised and unlikely to gain executive support in the

current market environment. Similarly, the desired maturity level must map to the

organization’s overall operating model. For example, a large multinational might

value high maturity in one or two regions, but find less or little value in higher levels

of maturity across all geographies. In this respect, a model such as this can add value

both as a means to assess current performance levels as well as to define a future

roadmap for improvement efforts.

It is important to balance the benefits of pursuing greater

maturity against the cost and complexity of doing so.

The desired maturity level

must map to the organization’s

overall operating model

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The Research Construct

In October and November 2011, KPMG conducted a series of in-depth interviews

with global business services executives across a mix of Fortune and Global

500 corporations in the U.S. and Europe. These executives were asked detailed

questions on global business services maturity, using the KPMG GBS maturity

model as a guide to evaluate each company. As part of the interview, respondents

were asked to rate the maturity of their organization on a 4 point scale per 22

questions focused on governance, commercial orientation, standardization,

organizational excellence, global process ownership and global scope.

The companies spanned a cross section of industries, including food and beverage

(4), IT (3), financial (3), media and entertainment (2), industrial (2), consumer

services (1), pharmaceutical (1), apparel (1) and CPG (1). Fourteen companies were

in the Global 500, three were in the Fortune 500 and one was in the Software

100. Four were Global 100 companies. The average age of their global business

services organizations is approximately six years.

The respondents were either heads of global shared services and outsourcing,

or managers of a specific functional area such as IT or F&A. In most cases, they

reported to the COO, CFO or CIO. Most have been in their present role for over

three years, and have more than 10 years of overall global business services

management experience.

Approximately two-thirds of the participating organizations started their global

business services deployment less than five years ago, and roughly a third started

seven to 10 years ago.

This research study had two goals. The first was to provide a baseline for GBS

maturity among large enterprises using the KPMG GBS maturity model. The

second was to examine the key cultural, organizational, financial and operational

factors that influence maturity. To achieve these goals, KPMG assessed participant

responses by:

• Examining the construct of the KPMG EST framework

• Analyzing how companies’ actual experiences match their progression

• Quantifying those factors that drive maturity.

This is the first in a series of research reports that will evaluate shared services

maturity among Global 500 companies, and the key levers and drivers of delivery

and organizational excellence.

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Key Research Findings

Overarching research findings show that many organizations are rapidly gaining

GBS maturity but at different levels across functions and geographies, and based

on different overall organizational operating models. Three factors stood out in

helping some organizations achieve greater GBS maturity – a strong linkage of GBS

strategy to the enterprise strategy, a rapidly maturing governance framework, and

a strong push toward commercial orientation in running and operating their GBS

organizations.

Key findings include:

• Moving up the maturity curve is hard. Companies often get “stuck”

below their desired level for a variety of reasons. Of the firms with which KPMG

spoke, about a third placed in the higher maturity Strategic or Differentiated

levels of the maturity model, and the other two-thirds placed at the

Rationalized or Optimized levels

• Mature GBS organizations use multiple elements in their service

delivery toolkits. These include multiple service delivery models including

outsourcing, offshoring and shared services (and increasingly, cloud), multiple

value levers including cost savings, innovation, business insights, etc., and more

sophisticated organizational models including stronger governance and end-

to-end process ownership

Related reading:

Clarity in the Cloud

Outsourcing Location Analysis 2011

Driving Outsourcing Innovation through Collaboration

• Breaking through maturity levels requires strong governance and a

commercial orientation. The strongest correlation to higher GBS maturity

was observed through the GBS organizations’ maturity on Governance and

their degree of Commercial Orientation. Strong governance is always required

when weaving together complex initiatives, but the need for a commercial

mindset is a bit less obvious (this point will be explored later in this paper)

Related Reading:

Nine Factors for Great Outsourcing Governance

Multi-vendor Sourcing: Stop the Value Leakage

• A longer-term vision is critical. One of the biggest areas of difference

between the most mature organizations and the rest was in Process

Improvement Sequencing. The more mature organizations deploy multiple

improvement strategies, and have well defined, long-term sequencing for

improvements. The less mature organizations are more opportunistic in their

improvement efforts

“Before the shared services

organization was established,

it would take eighteen months

to rollout a new process; with

shared services in place it takes

a quarter.”

(Global 100 IT industry

participant)

“SAP drove standardization

and eliminated inefficiencies

from the system – this was

a necessary first step to

implement shared services.”

(Global 500 Entertainment

industry participant)

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• The greatest hurdles to maturity are cross-functional and global

integration. Most organizations in KPMG’s research set, even the more

mature ones, do not have consistent maturity when it comes to the functional

and geographic slices of their GBS organizations – the finance and IT functions

tend to be more mature, as do their North American and European GBS

organizations. Cultural and organizational factors, e.g., level of ERP adoption

and standardization, are the other limitations to the levels of maturity to which

an organization strives and how quickly it moves along the maturity curve

• Show me the money! Cost savings are still the number one reason for

companies to advance their GBS maturity. They seek additional value drivers

not only to support but also to advance the business, and constantly evaluate

these value drivers against cost-benefits and returns on investment. The

more mature organizations are looking beyond simple cost savings. They

seek strategic benefits such as ability to support the growth agenda, e.g.,

integrating acquisitions, accelerating technology and policy deployment, and

enabling innovation into services and business processes. These strategic

benefits are weighed against the cost-benefit analysis specific to the

organization

• Maturity matters. Organizations with mature GBS models create greater

shareholder value. While likely not wholly attributable to the service delivery

model, organizations with mature GBS models have an average return on

equity (ROE) of 20.7 percent versus an average of 16.7 percent for the less

mature organizations. The ability of an organization to plan, implement and

improve its support infrastructure is a core competency that can provide a

competitive advantage while delivering greater financial performance.

Driving Global Business Services Maturity

Most of the organizations in KPMG’s research tend to advance along a continuum of

strategic options that impact the maturity of their GBS organizations. While not all-

inclusive, the six areas on which KPMG focused during this research initiative included

location strategy, standardization focus, process orientation, commercial orientation,

pace of change and scope of service portfolio.

Three factors stood out in

helping some organizations

achieve greater GBS maturity –

a strong linkage of GBS strategy

to the enterprise strategy, a

rapidly maturing governance

framework, and a strong push

toward commercial orientation

in running and operating their

GBS organizations.

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Strategic options that impact GBS maturity

Location

Standardization

Process Orientation

Commercial Orientation

Pace of Change

Service Portfolio

Current Model

Future Aspiration

Proximate to BusinessMaintain staff in current location

IndependentSpecific to business units(BU), geographies, and functions

Functionally FocusedProcesses aligned and optimized within functionaltowers at BU level

Staff FunctionCost center focus withmodest measurement against metrics

MeasuredLow impact on people, culture; minimal investment

TransactionalTransactional services delivering economies of scale

Relocate FunctionsHeadquarter functions and related BU staff relocated to low cost geographies

IntegratedStandard solutions across business units, geographies, and functions

End-to-EndOrganized by process across BUs and geographies

Run It Like A BusinessService level measurement and accountability with transparent pricing

Rapid DeploymentWillingness to impact people,change culture and invest in long term strategy

Transactional & COECenters of scale and skill delivering transactional and analytical services

Figure 2

They expect to move faster and further to the right on the first four continuum

options of location, standardization, process orientation and commercial orientation.

The more mature GBS organizations continue to be very good at leveraging lower

cost locations, optimizing their location portfolios and seeking arbitrage benefits.

They are also better at creating a more integrated GBS solution that seamlessly

services multiple business and geographical units, and are adept at utilizing assets

across these organizational units. They have strong desire and ambition to drive

end-to-end process ownership and do away with process silos. They do this well

within functions, but struggle across functional silos. They are also good at running

GBS like a business with associated service mechanisms, accountability and price

transparency. Their drive to the right on this continuum is tempered by the pace

of change their organizations can absorb, and how rapidly they can integrate

knowledge processes into their GBS models. They are constantly expanding the

portfolio of service offerings available to their internal and external customers. A key

focus area for a number of the mature organizations is the use of technology to gain

better business insights. They are already the custodians of large amounts of the

enterprise data, and they are innovating on using technology to help the enterprise

use this data to drive better business decisions.

The greater use of flexible service delivery models has historically been driven, and

continues to largely be, by a desire to reduce administrative and overhead costs.

This is typically achieved by creating leverage across horizontal processes, gaining

economies of scale, utilizing lower cost global resources for transactional work, and

(ideally) simultaneously focusing retained resources on more core competencies and

work.

The greater use of flexible

service delivery models has

historically been driven, and

continues to largely be, by a

desire to reduce administrative

and overhead costs. This is

typically achieved by creating

leverage across horizontal

processes, gaining economies of

scale, utilizing lower cost global

resources for transactional work,

and (ideally) simultaneously

focusing retained resources on

more core competencies and

work.

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The characteristics, orientation and benefits of continuing to go up the maturity

curve are summarized below. These benefits are in addition to economic benefits,

such as cost savings. They are increasingly tied to the top-line benefits that

organizations achieve as they continue to push to the right on the maturity curve.

Operating models for global business services

Operating Characteristics

• Work performed by BU for BU

• Centralized functional departments

• New entity that sells services back to BUs

• Global footprint

• Multifunctional

• Rational balance of internal and external service delivery capabilities

• Outcome focus

• End-to-end

• Broad set of end-to-end solution oriented services, both scale- and skill-based across IT and business processes

Service Orientation

• Perform process • Perform process consistently and with scale

• Deliver consistent services against agreed service levels

• Drive efficiency and effectiveness across service portfolio

• Change how the business operates

Benefits • Autonomy & ownership

• Responsiveness

• Flexibility to BU needs

• Economies of scale

• Standardization

• Central control

• Scale & standardization

• Responsiveness

• Central control

• Flexibility to corporate change

• Global scale &standardization

• Economies of place

• Flexibility to global corporate change (e.g. ability to drive quicker integration / synergies from acquisitions)

• Balanced enterprise cost,service, risk, and outcome-based measurement

• Tighter correlation to business strategy (e.g. ability to facilitate growth in emerging markets with global delivery platform)

Sub-optimized Rationalized Optimized Strategic Differentiated

Level One Level Two Level Three Level Four Level Five

Figure 3

While organizations that reported successfully transitioning up the maturity curve

also reported greater benefits, they highlighted the increasing challenges of making

that transition. Their challenges can be summarized into two categories:

• Economic Challenges – as the first wave of labor arbitrage and process

improvement benefits are realized, organizations need to seek additional

value levers to sustain and continue to build on the economic benefits of

GBS. Continued cost savings come from additional levers such as process

standardization, integration of technology, and improvement of capital

structures. However, many of the more mature organizations also seek to help

improve the enterprise top line through integration of more complex activities

into the GBS portfolio, and use of technology and business intelligence to

advance business decision making. These additional benefits come with

additional effort and costs, and require evaluation against the organization’s

investment thresholds

• Cultural and Organizational Challenges – here, the issue is having to

continually convince the key stakeholders to allow the GBS organization to

run a larger, more complex portfolio of services, to think beyond transaction

processes, and in many cases to layer the GBS structure against a highly

regional or business unit-focused structure. As one GBS leader put it, “I know

we’ll be successful when we shift from having to sell the next great idea, to

creating an environment where innovation is expected by our customers.”

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Figure 4 below illustrates the benefits organizations can achieve through improving

GBS capabilities across major support processes. GBS success in this new model

depends on the ability to dynamically assemble a variety of capabilities – regardless

of where those capabilities reside geographically or functionally in the organization –

into a seamless end-to-end process that is focused on specific business outcomes.

Related reading:

A Route to Optimizing Your Outsourcing Relationship

How GBS drive competitive advantage

Figure 4

In terms of operating models, KPMG observed that the following two are associated

with higher levels of global business services maturity. In the Global Business model,

processes are aligned to specific functions and delivered to business units. In KPMG’s

research, this is the most common delivery model in more mature organizations. A

more business-aligned approach is the Multifunctional GBS model in which processes

are shared across functional areas, and all of these are coordinated within one

organization. While this model provides the most scale and efficiency, it is also the

most difficult to implement because of the high degree of process and functional

integration, as well as the larger organizational and cultural change required. This is

the desired state for many organizations in KPMG’s research.

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Higher maturity GBS operating models

Global Business Multifunctional GBS

BU – Business UnitP1 – Process 1P2 – Process 2P3 – Process 3P4 – Process 4

Corporate

Global Business Services

Finance, IT, HR, etc.

P1, P2, P3

BU BUInt’lBU

Corporate

Business Services Entity

P1 P2 P3 P4

BU BUInt’lBU

Figure 5

KPMG uses these concepts of delivery and organization as a foundation for its GBS

maturity model. Organizations KPMG studied through this research project deploy

these elements across multiple functional and process areas to different degrees.

The more mature organizations cover a wider range of elements across more

functional and geographic areas.

KPMG’s GBS Maturity Assessment Framework Elements

Strategy

Operations

Operating Model Change Management -OperationsProcess

Governance

Talent Management

Bu

sin

ess

Rel

atio

nsh

ip M

anag

emen

t

Stak

ehol

der

Man

agem

ent

Dem

and

Man

agem

ent

Vision & Alignment Brand ManagementPortfolio Management

Asset Management

Service Quality & Performance Management Contract ManagementChange Management -

Governance

Process Risk & Compliance Management Financial Management

Serv

ice

Del

iver

y

Cos

t, P

rodu

ctiv

ity

and

Serv

ice

Leve

l Ben

chm

arki

ngLe

adin

g Pr

acti

ces

&

Tech

nolo

gy D

eplo

ymen

t

Cu

sto

mer

s

Cu

sto

mer

s

Figure 6

As organizations apply these elements to their GBS strategies, most progress

through stages of maturity (although there are examples of organizations starting

at the optimized or even strategic levels of the maturity curve). Those organizations

that have been able to accelerate their movement along the maturity curve

displayed specific characteristics:

• They were developing their GBS service strategy in conjunction with their

technology strategy, and used GBS as a major enabler to realize and/or hasten

returns from their technology investments

• They were successful in securing senior management sponsorship early in their

journeys, and used this to create more independent GBS organizations and a

top down push to adopt GBS service delivery models

• They maintained an external focus, learning from others that went before

them and applying those lessons to their own GBS design and deployment.

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Detailed Research Results

KPMG evaluated each participant organization on a set of specific questions in eight

categories.

Category Description

Delta between

lower and higher

maturity GBS

organizations

Commercial

Orientation

GBS discretion over choice of services,

strategic planning and budgeting,

growth and value initiatives and

organizational planning.

Low

Alternative

Delivery Models

Exploration and incorporation of

service delivery model alternatives,

and demand-consumption model

options.

Medium

Organizational

Excellence

Use of formal improvement programs

and their impact, alignment to

business requirements, and use

of formal internal and external

comparator analyses.

Low

Standardization Adoption of standard services,

processes, tools and policies.

Low

Global Process

Ownership

End-to-end process ownership, first

within and then across functions .

Medium

Improvement

Sequencing

Use of multiple short- and long-term

improvement methods, link to ERP

implementations.

High

Global, Multi-

Scope

Multi-functional, multi-geographic

and multi-business coverage of GBS

services.

Low

Governance Use of active steering committees,

strong line of sight from GBS to

organization executives, sophistication

of governance processes and metrics.

High

Generally, more mature GBS organizations have high scores across all of these

factors. Indeed, the highest scoring company in KPMG’s research study was an

international food and beverage firm with an overall score of 3.7 on a scale of 4.

Organizations at the lower end of the maturity scale had an overall score of roughly

2.7, placing them at or below the average on many of these measures.

Most GBS organizations tend to focus well on being Global, Multi-functional, focused

on Organizational Excellence, and striving toward greater Commercial Orientation.

The differences between the more mature organizations and the others in KPMG’s

www.equaterra.com 13

research were more pronounced in factors such as use of Alternative Delivery Models

and Process Ownership. The more mature organizations deliberately create greater

flexibility in their delivery models by using multiple service delivery options: shared

services, outsourcing and cloud. They have become adept at managing demand and

consumption of services across these delivery model options by drawing up or down

on them as their business requirements change.

Flexibility in the service delivery model is a competency with these more mature

GBS organizations, measuring and looking for ways to improve it. Similarly, process

ownership of global end-to-end processes is a key goal for the more mature

GBS organizations. They seek to build, manage, operate and improve horizontal

processes cutting across functional lines. They believe this way they can drive

even greater cost and performance improvement, integration of technology,

standardization and insight into these processes. Most mature GBS organizations

have been successful within functional silos but continue to look to cut across

functional silos to have truly cross-functional, global, end-to-end processes.

The differences between the more mature firms and the others were highest in

the areas of Governance and Improvement Sequencing. Significantly, one of the

areas in which most of the organizations scored lowest was Governance. Many of

the participants observed the lack of a sophisticated governance model to help

them manage the increasingly complex GBS portfolio and requirements. They cited

elements of steering committee, decision making, budgeting and service level

management on multiple value dimensions as being the most challenging elements

of Governance.

For the most part, all GBS organizations in KPMG’s study address multiple functional

requirements – IT, F&A, procurement and HR, to name a few. In many cases, KPMG

saw that certain functional areas of services delivery were at higher levels of maturity

than the GBS organization as a whole. Driving this functional area maturity is process

optimization and standardization, strong functional management support and use

of multiple service delivery model options. Indeed, the majority of companies KPMG

interviewed had the common response that F&A or IT are at a strategic (Level 4)

level, but the organization as a whole remains at the rationalized or optimized state

(Levels 2 and 3).

The following two quotes from a leading international financial services firm and a

consumer packaged goods company sum up the situation of many companies.

“Each of the functional areas are not aligned to each other – we try

to optimize each area separately.” (Financial industry participant)

“We don't want to lose customer focus by institutionalizing process

ownership – we would rather keep it flexible either regionally or

within parts of the tower.” (IT industry participant)

Learn more about Governance

Nine Factors for Great

Outsourcing Governance

Multi-vendor Sourcing: Stop the

Value Leakage

www.equaterra.com 14

Following is a brief case history of one of the more mature GBS organizations in

KPMG’s study.

Background:

A major, multibillion dollar IT company has had a long and successful global

shared services experience that benefits the organization not only through

significantly reduced operating costs but also via support of its most strategic

goals.

Operations:

Multifunctional shared services across 13 functional areas (F&A, HR, IT, etc.),

with more than 18,000 staff. Twelve delivery hubs support all regions around

the world. There is a head of global shared services. Outsourcing is selective.

End-to-end process enablement on a global basis is the norm.

History:

Shared services started in 2000 with a focus on F&A. The goal was to quickly

move to the use of standardization and quality measures that the lines of

business found difficult to implement.

Differentiation:

Process ownership is regional or functional in order to keep service focus

close to customers. However, the company uses a process—not a functional—

vocabulary when talking about shared services deployment.

Benefits:

New processes are rolled out in less than one quarter (versus 18 months

before global shared services took hold); major acquisitions are integrated into

the organization in less than one year, providing a major strategic advantage;

over $200 million in savings each year due to reduction of service delivery

costs; and over $2 billion in acceleration of revenue or deferral of payments

due to better financial management.

Future:

The company is at an optimized level on KPMG’s global shared services

maturity curve. The goal is to move to a fully integrated organization in

the next one to two years. The two major areas of improvement are global

process management with an eye to maintaining regional delivery excellence,

and creation of centers of excellence.

www.equaterra.com 15

Conclusion

While shared services and outsourcing have become the norm in the past decade,

the folding of these service delivery strategies into GBS is allowing organizations the

unique opportunity to leverage GBS as a strategic asset to further the C-suite agenda

– to drive greater efficiencies, enable business growth and support global standards

and compliance. Our discussions through this research showed that the more mature

GBS organizations are doing this in many different ways:

• Better analyzing the rich data sources they manage in the GBS, and predicting

business and customer requirements

• Enabling a significant change in the business model by assuming responsibility

for increasingly more non-core business activities, and allowing their business

units to be more market focused

• Driving considerable process efficiencies, control and standards through cross-

functional process design and ownership, cutting through functional silos, and

fundamentally changing the functional organizational models

• Supporting the business strategy by integrating mergers and acquisitions faster,

and penetrating new and emerging markets more quickly and efficiently.

All of the more mature organizations with which KPMG spoke are using GBS to

better align their operating model for efficiency and effectiveness, optimize and

enable their global footprint, help create traction in emerging markets, optimize

capital investments in technology, and help manage global risk and compliance. The

value of greater maturity in GBS goes well beyond the traditional benefits of shared

services and outsourcing.

To learn more on this and related topics, visit the KPMG Shared Services and

Outsourcing Institute at http://www.kpmginstitutes.com/shared-services-

outsourcing-institute/.

View the companion Webcast to this paper, Assessing Global Shared Services

and Outsourcing Maturity

To learn more about global business services, please contact:

Rick BertheaudManagement Consulting, Shared Services & Outsourcing AdvisoryPrincipal T: +1 413 427 9952 E: rbertheaud@kpmg.com

Bob CecilManagement Consulting, Shared Services & Outsourcing AdvisoryPrincipal T: +1 703 965 8863 E: rcecil@kpmg.com

Cliff JusticeShared Services & Outsourcing AdvisoryU.S. Leader T: +1 713 319 2781 E: cjustice@kpmg.com

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Appendix 1: Measurement Criteria

The following are the criteria KPMG used to rank the companies’ global shared

services maturity.

Criteria Category

Which statement best describes your internal

customer choice for services provided by the

Business Services?

Commercial Orientation

Which statement best describes strategic

planning for the Business Services?Commercial Orientation

Which statement best describes where you intend

to focus growth initiatives over the next year?Commercial Orientation

Is human resource development/succession

planning a part of your overall annual planning

process?

Commercial Orientation

How closely does service pricing methodology

link demand and consumption to cost and fees?Alternative Delivery Models

How aggressively have alternative delivery

models, such as offshoring and/or outsourcing,

been explored and deployed?

Alternative Delivery Models

Do you have enterprise-wide process owners? Global Process Ownership

Which statement best describes the functional

coverage within Business Services?Global, Multi Scope

Which statement best describes your business

unit coverage?Global, Multi Scope

Which statement best describes your geographic

coverage?Global, Multi Scope

Using the latest processes migrated into the

Business Services as a basis, which statement best

describes your process migration philosophy?

Improvement Sequencing

Which statement best describes how your

service strategy and direction is established (e.g.,

goals and objectives, functional scope, delivery

mechanisms, service center location, etc.)?

Governance

To whom does the head of Business Services

report? Governance

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Criteria Category

Which statement best describes the development

and approval of the Business Services operating

budget?

Governance

Which statement best describes how service

levels are set?Governance

Do you benchmark regularly to identify costs

and productivity gaps and identify new best

practices?

Organizational Excellence

Which statement best describes your approach to

process improvement?Organizational Excellence

Which structure best describes the geographic

layout of functional services and service centers? Organizational Excellence

Which of the following best describes the

compliance policies associated with the

standardization of processes and tools used to

deliver this function?

Standardization

Which of the following best describes the impact

of the standardization of the processes and tools

used to deliver this function?

Standardization

Which of the following best describes the

standardization of the services delivered by this

function (i.e., the actual 'product' delivered to the

business unit)?

Standardization

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For country, industry and service-specific contacts, please visit: www.kpmg.com/Global/en/Pages/contactus.aspx

For information and research on outsourcing, shared services and internal improvement, visit the KPMG Shared Services and Outsourcing Institute at http://www.kpmginstitutes.com/shared-services-outsourcing-institute/.

About KPMG

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About EquaTerra

EquaTerra was founded upon the principle of helping clients achieve sustainable value in their IT and business processes through internal transformation, shared services and outsourcing. On February 18, 2011 the business of sourcing advisory firm EquaTerra, Inc. and its subsidiaries was acquired by KPMG LLP (US), KPMG Holdings Limited (UK) and KPMG International.