Global Business Services Trends 2021
Peter Drucker said, “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.
The COVID-19 pandemic led to a period of enormous uncertainty for businesses around the world. Some enterprises adapted swiftly while other organizations struggled, taking a longer time to adjust. For organizations who have fared well, often, the edge has been brought about by the quality of their global business services (GBS). According to recent studies, average and top-performing organizations differ substantially in the benefits they derive from shared services. The most adaptive enterprises had a centralized, digitally enabled GBS that provided paperless end-to-end support at scale for various locations across the globe. Let us look at the impact that the pandemic has had on shared services and GBS.
Lack of Readiness: Business Continuity Plans did not prepare enterprises adequately for an event of the magnitude of COVID-19. Current business continuity plans proved to be inadequate for many enterprises in addressing risks brought about by events such as the pandemic.
Inaccurate Cash Flow Forecasts: Processes such as supplier payments and collections were severely disrupted by the pandemic leading to errors in cash flow forecasts. Additionally, delays in customer payments also negatively impacted cash balances.
Legal Implications: GBS performance is being severely challenged by risks relating to information security and GDPR.
Digitalization: Global business services that have already invested in digital operating models fared much better through the pandemic than those which did not. They saw a lesser degree of disruption to their delivery model because of digitization.
GBS Takes the Centre Stage
The COVID-19 pandemic will not be the last global crisis, in fact, enterprises have faced disruptions due to numerous events like trade wars and natural disasters in recent years. GBS leaders today are looking to make the large enterprise more capable and adaptive to change. There are few focus areas for global business services to consider in order to have a natural competitive advantage and become a resilient organization.
GBS enterprises have had to implement various measures to ensure business continuity and meet business requirements such as supplier invoice processing and customer cash collection. Wherever necessary, onshore teams have stepped in for outsourcing service providers to deliver services. Temporary solutions may be important, given the current situation but they hardly address business continuity and disaster recovery challenges. Enterprises across the globe are increasing the pace of digitization and automation in service delivery to reduce and mitigate risks to business continuity.
Service Delivery Models
Ensuring business continuity across process areas delivered by shared services centers is pertinent to ensure business continuity. The maturity of the service delivery model, as well as the location of the service provision, has a huge impact on business continuity. Going forward, it will be important to review outsourcing agreements to identify any key risks that should be mitigated in the current operations.
A scalable platform is a digitally enabled centre, typically managed by GBS, that connects every part of an E2E process (P2P, O2C etc.) with interoperable software, data, and analytics. Platforms change the ways in which the enterprise manages its geographic footprint. A typical large corporation has several hubs of functional expertise located around the world. Previously, they were separate; now, they share a high-speed digital infrastructure connecting all business units, enabling remote working, and balancing the support load on a global basis.
Although some enterprises have adopted digital transformation and cloud platforms, many still believe that these technologies are “nice-to-haves” rather than treating them as absolute essentials. With the pandemic, what became clear was how digitally mature GBS organizations fared better with minimal impact on service delivery. Enterprises with a high degree of digitalization have also often enabled agile business processes and employee flexibility. Legacy systems generally increase access issues and risks in data security. Enterprises are now accelerating their pace to digitalization as a key lever to deliver competitive advantage.
In the near future, the effect of the disruptions is expected to continue. As a result, GBS organizations will continue to leverage technologies to deliver value. Let us look at the technology trends that will reshape the shared services function in 2021.
- Robotic Process Automation
- Advanced Analytics
- Artificial Intelligence
GBS units have always focused on delivering cheaper, faster, and better services to the enterprises they serve. However, while cost-efficiency continues to be an important strategic imperative, there is more pressure than ever for SSCs and GBS to digitally transform the operations they are charged with, and create new services and business value, not just cut costs.
GBS units stand to benefit immensely from RPA as it improves efficiency, reduces costs and increases ROI. This allows organizations to shift their workforce to higher-value tasks, as RPA takes care of low-value repetitive tasks. Most SSCs and GBS are still in the early phases of shared services automation, primarily using unattended robots, with little to no functionality or intelligence, to improve several back-office tasks. However, as RPA has increased its capabilities – through embedded and Artificial Intelligence, GBS units would be able to perform more cognitive-heavy tasks automatically while keeping human employees in the loop.
Global business services organizations can leverage predictive analytics using data from multiple departments and perform cross-functional analytics that can deliver unique operational insights. In a recent global survey, 61% of respondents said that the data analytics in their organizations was still ‘basic’, while 27% said they had sufficiently competent analytics. Only 8% had capabilities for complex event processing and neural networks. Enterprises today are increasingly looking towards predictive analytics to manage uncertainties and make swift and sound decisions.
AI will increasingly be adopted by enterprises worldwide for business transformation with newer capabilities of AI already being used by some organizations like facial recognition and natural language processing (NLP). For global business services organizations, AI can mean automation beyond RPA. Using cognitive AI and analytics, organizations can use unstructured data and handle complex marketing, finance, accounting, and customer service processes with automation.
Shared services can become the core backbone for an enterprise’s goals relating to agility and innovation by moving up the value chain both in terms of processes covered as well as on how they cover them by leveraging new business models combined with digital technology. The pandemic has accelerated the emergence of these technology trends manifold and GBS organizations are now at a point of taking the leap which is no longer a choice but a necessity to be future-ready.