IBM Global Process Services December 2011

Thought Leadership White Paper

Today’s shared services operating models:

The engine behind enterprise transformation
Leveraging the power of globally integrated business services
2 Today’s shared services operating models: The engine behind enterprise transformation

Contents Today’s market leaders understand the need

2 Today’s global marketplace to create an integrated organization that can
3 The BPO shared-services evolution seamlessly connect and interact with as well
4 Moving toward globally integrated business services
as respond to customers, consumers, suppliers
and resources worldwide.
8 The engine of today’s globally integrated back
office: GIBS
Aspiring to change their operating models is one thing, but
10 GIBS benefits achieving this level of transformation is another matter. It
requires an end-to-end integration that is possible only with
11 Getting started repeatable processes, optimized assets, insightful analysis, skilled
11 Let’s continue the conversation resources and integrated operations—all occurring on a global
basis. In addition, transformation requires strong support from
12 For more information leadership, collaborative governance and common technology.
Insights from the 2010 IBM global chief financial officer (CFO)
Today’s global marketplace study confirm that many organizations do not have the expertise,
A slow global economic recovery presents ongoing challenges technology and innovation in place to achieve rapid end-to-end
to businesses of almost every size in virtually every industry. enterprise transformation.1 The study highlights the importance
Companies are must find ways to spend less and achieve more of leveraging service delivery models that combine internal
with fewer resources. Within this global arena, competition is shared services with outsourcing (referred to in the market as
arising from every corner of the world—but so are opportuni- “hybrid models”).
ties. Today’s market leaders are recognizing that to succeed in
this new business environment, they must rethink their existing Companies executing these hybrid models are centrally manag-
operational models to better support their strategic direction. ing their processes using an end-to-end approach and success-
Now they are looking to an operating model that helps create an fully accelerating the path of transformation. This approach
organization that can seamlessly connect, interact and respond to can result in a more integrated organization that is able to not
customers, consumers, suppliers and resources worldwide. By only help drive rapid cost savings but also increase agility and
doing so, the enterprise is able to take advantage of innovation business growth. This improved cash flow can fund the cost
and globalization and drive integration and value across the busi- of transformation while driving ongoing innovation and sustain-
ness now and into the future. able performance improvements that can translate into lasting
shareholder value for the entire business.

This white paper describes a new model that involves the cre-
ation of a single hybrid business unit consisting of internal
shared services and external providers of business services. The
 IBM Global Process Services 3

paper discusses the benefits of this model and provides insight chief procurement officer). At the same time, off-shore capabili-
into key considerations organizations should address when ties began to offer new reduced-cost sourcing options. As a
embarking on this path. result, regional centers emerged, with cross-national processes
located off shore to drive cost reduction and take advantage of a
new group of skilled professionals. Simultaneously, this model
Enterprise transformation requires saw greater investment in leading enterprise resource planning
end-to-end integration possible only with (ERP) systems but was still largely functionally led and siloed.
repeatable processes, optimized assets, insight-
Today’s next-generation or “integrated” shared services model
ful analysis, skilled resources and integrated aggregates transactional and common activities across functions
operations—all occurring on a global basis. into a stand-alone globally integrated business services (GIBS)
unit. This means creating an entirely new joint “hybrid”
organization (encompassing internal and external provider
The BPO shared-services evolution shared services scope) led by a newly created C-level executive.
As information technology, outsourcing providers and the
This model—designed to take service delivery to the next
business process outsourcing (BPO) industry itself have greatly
level—embraces innovation, end-to-end integration and a truly
matured over the past decade, shared-services models have been
global perspective. Regardless of where a company is in its evo-
undergoing their own parallel evolution, as shown in Figure 1.
lution or whether it is large, small or somewhere in between, a
In the early 1990s, “shared services” was a unique operating
global perspective is critical to success in the 21st century
model in which an internal shared-services organization was set
because it enables a stronger growth strategy at a pace that
up within the company’s primary operations region. This service
is right for that particular business. The GIBS model sets the
center was primarily focused on driving cost reduction. Its
stage to optimize business processes and better leverage business
policy, practice and adoption decisions were determined on a
insights that enable enhanced decision making—helping to make
business unit or regional basis, with process scope separated into
the entire business smarter and more resilient.
“core” and “non-core” processes. Functionally led and governed,
this model lacked standard enterprise-wide processes and oper-
ated with fragmented technologies and service silos. Today’s next-generation shared services
In the late 1990s, companies began to horizontally integrate
model is designed to aggregate transactional
their back-office functions by aligning functional activities, head- and common activities into a consolidated,
count and budgets under one worldwide functional leader (for stand-alone globally integrated business
example, the CFO, the chief human resources officer or the
services (GIBS) unit.
4 Today’s shared services operating models: The engine behind enterprise transformation

Early Late 2005 Today

1990s 1990s

International Multinational Integrated Smarter

Instrumented
Instrumented

Interconnected Intelligent

Replicate Offshore Connect Optimize

Figure 1: Globally integrated business services enable the evolution toward smarter organizational models that are more instrumented, interconnected
and intelligent.

Moving toward globally integrated companies cited greater agility in responding to business changes
business services and growth as the main driver toward multifunctional integra-
In a world that continues to accelerate the pace of change in tion. Interestingly, more than 63 percent also cited increased
most industries, flexibility becomes a competitive differentiator. process standardization and integration and improved quality
As a result, many companies are seeking to reach the next level, and consistency of service as compelling factors.2
one that transcends cost benefits to encompass agility, flexibility
and the ability to anticipate and quickly respond to trends, pat- This underscores that the move to a multifunctional shared serv-
terns and behaviors. This innovative business services model ices (or GIBS model) will never be driven by cost reduction
allows a shared-services organization to focus on what it does alone. Instead it will be more focused on the value that this
best—providing a more integrated, efficient and streamlined model can bring to the business over the long term, including:
customer experience while empowering business units to focus
on what they do best—growing the business. ● Increased responsiveness to new markets, new customers
and acquisitions
According to a 2011 executive summary report from the ● Improved service delivery
Corporate Executive Board titled “Is integrated business services ● Extension of innovation across cross-functional and
the end state? Meeting of multifunctional shared services lead- global services
ers,” executives from a wide variety of large enterprises and ● Better use of technology and skills across functions
industries stated that their shared services path was initially ● Improved cross-functional data integration and visibility
driven by the search for cost savings. However, 75 percent of ● Improved business insight to enable better decision making3
 IBM Global Process Services 5

The differences in shared services operating models are highlighted in the following table.

Business Unit or Regional SSC Global Functional SSC Global Integrated Business
Services (GIBS) SSC

Guiding principles

Structure Business unit or region controls Global functional leader controls Single GIBS leader owns
transactional activities, transactional activities, cross-functional transactional, common
headcount, budget headcount, budget activities, headcount and budget

Governance Local governance, with each function Regional governance, with multiple Global governance, with single
operated separately by business unit governance organizations across each standalone organization, across back
or region global function operated separately office functions operated globally on an
end-to-end basis
Required to show value and sell Mandatory usage of global functional
services to units; CEO encourages use shared services required by Global Mandatory usage of GIBS required
in most cases Functional Leader by CEO

Strategy, policy setting, and decision

support activities retained by worldwide
functional leader

Challenges Fragmented, inefficient Bureaucracy rules each silo Requires top-down executive
sponsorship

ROI objective Cost reduction Cost reduction and service standards Cost reduction, process optimization,
sustainable value creation

Location Regional Global with regional hubs by function Global with regional hubs with
cross-functional center leverage

Metrics Cost reduction; cost to serve Cost and productivity metrics End-to-end process optimization;
service excellence

Table 1: Shared services centers: Which is the right model for you?
6 Today’s shared services operating models: The engine behind enterprise transformation

As companies with mature shared-services organizations analyze companies are seeing new opportunities to consolidate transac-
the next stage of evolution, they are changing the way they assess tional and common activities into a GIBS model. The GIBS
scope for multifunctional shared service models. In the past, model is a global, centralized organization built on the principles
assessment of “core” compared to “non-core” processes of global process ownership, highly trained global resources,
determined whether activities should migrate to shared services consolidated technologies, end-to-end process optimization,
operating models. Today, this decision-making process has embedded analytics and global integration. While GIBS focuses
changed, and the assessment involves which activities are on back-office processes, a similar philosophy is also applied to
“common” versus those that are “unique” across all back-office front-office support services such as sales and customer-facing
functions, including finance and administration, human services that are integrating channels to enable a single view of
resources, procurement, information technology, information the customer.
management, facilities management and travel. As a result, these

Divisions
deliver core Develop Market Produce Sell Distribute Service
competencies

Support
services
Corporate- policy & IT governance, internal auditing,
tax, treasury (financing), legal, strategic planning, compensation on planning

Customer service team supports external customers and strategic business units

Information Information Facilities and Customer

Procurement Finance and Order to cash Human
technology technology materials relationship
and sourcing accounting processing resources
operations development management management

Measurement and performance tracking

Figure 2: GIBS leverages mature outsourcing capabilities to align with internal shared-services strategies to help deliver virtually all functional areas and activities.
 IBM Global Process Services 7

A GIBS model is a global, centralized Common technology and standardized processes and methodol-
ogy enable work in a GIBS model to easily shift to wherever it
organization built on the principles of can be performed most efficiently. The GIBS organization also
consolidated technologies, embedded analytics, acts as a conduit to continually build and share subject matter
expertise and innovation across the business. By leveraging this
end-to-end process optimization, global integrated model with primary focus on process innovation, con-
process ownership and global integration. tinuous improvement and radical simplification, the business is
able to go beyond short-term cost savings to drive sustainable
The goal of this type of shared services organization (SSO) is to value and help differentiate their enterprise. The principles
operate under a unified, joint and capability-centric organiza- endorsed and enabled by the GIBS model, as shown below, can
tional model that manages all shared services processes end to build a more robust foundation in the transformation journey
end, including both outsourced and internally retained processes. toward building a globally integrated back office.
With the maturity of outsourcing continuing to grow, a hybrid
model is now the preferred model that can help companies
accelerate their path of transformation.

Integration principles Implications

Capture the opportunity of a Delegate decision making authority to the markets
growing global marketplace Identify high growth opportunities and invest in
Global
Leverage scale and expertise those markets
marketplace to optimize market growth
Serve needs of global clients Leverage the right skills in the right place at the
right cost—anywhere around the world
Operate worldwide a consistent set of processes,
Take advantage of global
controls, and systems
sources for high-quality skills
Operate processes that are fully integrated on an
Global Rationalize support functions end-to-end basis with the processes of other
functions for greater efficiency shared services
Create the flexibility to Optimize the core competencies that provide the
quickly manage change in highest overall contribution
the marketplace Outsource "transactional and common" processes

Create a culture that reflects Guided by the principles of integration, functional focus
global presence and priorities shifted towards unique differentiators
Global
leadership Instill values that promote global Consistently apply governance, risk management,
collaboration and the integration shifted towards unique differentiators
of partners and clients

Figure 3: Shared services can play a pivotal role in helping companies integrate their business processes.
8 Today’s shared services operating models: The engine behind enterprise transformation

The engine of today’s globally integrated 2. Common activities currently performed in multiple shared
back office: GIBS services (such as purchase order processing, collections, recon-
GIBS can provide an operating model designed to accelerate ciliations, learning administration, compensation program
back-office transformation while enabling each function to administration and technical and product support)
strengthen its business partner roles. Specifically, the GIBS
model enables the extraction of transactional and common back- 3. Activities that are linked either upstream or downstream to
office processes from the day-to-day realm of each function, large transactional activities or are inherently cross-functional
helping to increase availability of retained functional teams to for horizontal integration (such as global process ownership,
allow them work on key differentiators and value-focused initia- transition, change management, Lean and continuous
tives. This includes management of strategic business activities improvement)
(such as functional strategy, policy setting, enterprise risk man-
agement and decision support) that can contribute to growth The GIBS model aligns execution under a single leader who has
and improved overall business performance. This segmentation full accountability and responsibility for its processes and typi-
of functional activities allows for developing specialized cally reports to the chief executive officer (CEO). This structure
management systems, integrated analytics, talent development creates opportunity to optimize integration decisions and fund
and organizational capabilities that can better manage and excel prioritization across back-office functional areas.
in each area.
Figure 4 shows an example of a large consumer packaged goods
With a culture of continuous improvement and radical simplifi- (CPG) company that created a GIBS shared services model
cation embedded across GIBS, leverage of common activities is under the direction of a single executive leader, called a chief
shared to best support all end-to-end processes. This approach enterprise support officer, who acts as the focal point for service
encompasses horizontal processes but also extends to other com- delivery for all back-office shared services and outsourcing
plex, industry-specific processes that are common and rules activities. A new team was created under Enterprise Support
based. As a result, the process optimization activities can help Services to focus on common activities that support all func-
improve and support the organization’s change efforts with tional teams, called Service Development and Control. The
greater consistency. foundation of Enterprise Support helps to enable end-to-end
process execution. The current design shown below depicts the
A GIBS organization focuses on three types of activities: first phase of the strategy, which will continue to evolve as the
company migrates toward end-to-end execution of its key back-
1. Large, self-contained, transactional-intensive activities that are office processes.
common across the organization (such as accounts payable,
cash application, fixed assets, employee time and attendance
and employee data management)
 IBM Global Process Services 9

Chief enterprise
support officer

VP Service
VP Workplace
development VP Finance VP IT VP HR VP IM
and travel
and Control

Transactional IT Services Information Real estate

▲
▲

Transition / HR
finance service desk management Finance

▲
project Business Building svcs
▲

Purchase application
▲

management Information
▲
▲

Payroll, Office supplies

▲
to pay benefits, delivery Procurement
Server / Facilities svcs

▲
▲

rewards
Travel storage
▲

Global process
▲

Analytics Travel agency

▲
expenses management
▲

owners / Learning support IT

Fleet

▲
transformation
▲

Bill to cash Calendar,

▲

Recruitment
▲

▲
email Corporate card
Record to HR
▲

Performance Master data

▲

Professional
▲
▲

Change report Desktop and talent management

support services
management management
Legal
Finance support Software asset
▲

Workforce
Travel management admin
▲

Lean / expenses IT security

▲

Intl mobility
▲

continuous
Supply chain
▲

improvement Smart /
▲

accounting Temporary
mobile phones labor
▲

User Data network

experience / Telephony
▲

interface

Performance
reporting /
service control

Figure 4: A global CPG company set up a GIBS model and aligned execution under a single global leader with full accountability and responsibility for
its processes.
10 Today’s shared services operating models: The engine behind enterprise transformation

● A more cohesive, process-led organization that can provide

Five things to consider when starting the journey towards more consistent management, deep domain knowledge and
global integrated business services sharing of best practices across the business, leveraging experi-
enced, highly educated staff enabled by extensive training pro-
1. Think expansive in terms of scope. Develop and commu-
grams and a breadth of expertise
nicate a strategy that encompasses all support activities.
2. Do not limit financial analyses to shared services only. Process optimization drives a management system and culture
The business case calculations are complicated. that has an unwavering focus on industrialized processes, similar
Integrated process design may require additional cost in
to a factory-floor model:
the shared-services organization and result in profit
improvements in the business unit.
● An integrated framework enables instrumentation to
3. Get quick wins and establish credibility in easier areas measure and manage activity-level daily performance
such as Travel Expense Management, Employee captured at the source and to analyze it against standards
Onboarding or Help Desk Services before trying to
and benchmark targets.
go larger. End-to-end integrated process design
● A GIBS model leverages strong process and industry expertise
is challenging.
and innovative technologies and analytics to help simplify and
4. Design GIBS products and services with your customers standardize processes, identify gaps to proven best-practice
in mind, which is the internal business unit, not the func- process models, more quickly strengthen controls and design
tional head. tactical road maps to help improve performance.
5. Develop performance measures for the end-to-end ● A robust analytics framework enables more intelligent, insight-
integrated business services; actively work informal ful business decisions and dynamic benchmarking capabilities.
and formal channels for communicating total
shared-services value.4 Horizontal integration is realized by end-to-end process
harmonization of cross-functional activities managed internally
or outsourced:

GIBS benefits ● Reducing handoffs and touchpoints, enhancing work continu-

The GIBS model presents an opportunity to deliver significant ity and reducing work overlap enables process simplification,
measurable benefits from BPO, including operational savings which can improve both efficiency and effectiveness
and enterprise business benefits based on three primary drivers: ● Roles are aligned to the process instead of functional scope,
exploiting opportunities to integrate roles with high adjacen-
Cross-functional consolidation allows for: cies (that is, transition, Lean and continuous improvement),
helping to reduce the total number of roles
● Common activities to be grouped together and performed ● Horizontal integration and simplified processes can reduce the
from on-shore, near-shore or off-shore locations to create risk of implementing new technology initiatives and can
economies of scale streamline new customers and acquisitions
● An established global footprint that can provide flexibility and
scalability to more quickly leverage benefits of groups of
skilled professionals around the globe
 IBM Global Process Services 11

Getting started Let’s continue the conversation

In their discussions with enterprise executives, the Corporate Forward-thinking companies understand the need to go beyond
Executive Board discovered that the process of deciding which process optimization and ask how their operating model can
functions to include and exclude in the multifunctional organiza- help support their growth agendas. An integrated shared services
tion varied. For some organizations, it was highly strategic. For BPO model, which combines common and transactional activi-
others, the process was driven by more tactical or qualitative ties occurring across back-office functions into a single Global
factors, such as leadership experience and capabilities; more Integrated Business Services (GIBS) organization, is available
advanced, shared services maturity in one function compared today. By delivering end-to-end process execution standardized
with another; and in some cases, political drivers. across the globe, these leading companies are on a reliable path
that elevates performance to the next level—and keeps it there.
Deciding who should lead the organization was another key
consideration dependent upon leadership experience, capabili- Whether large or small, with operations around the world or
ties, functional backgrounds and CEO trust. Beyond any plans in just one country, we are here to help your business chart
to add scope, most executives agreed it made sense to focus on a its unique path and fully explore the opportunities, advantages
deeper integration within their existing shared services organiza- and sustainable performance benefits presented by a mature
tions versus expanding to new scope. The group consensus: It is outsourcing industry, innovation, growth, globalization and
better to extract more costs out and integrate existing functional shared global integration.
services offerings than to pursue new functions. This makes vast
economic sense, considering the political capital and change
management required to import more functions into the shared
Did you know
services organization.5 Most important, CEO support is critical
to the adoption of a GIBS operating model to go beyond cost Process consolidation, optimization and end-to-end integra-
savings to get sustainable, total service value from their outsourc- tion, on average, enable the following enterprise business
ing initiatives. outcomes:
● Working capital improvements from 15 to 25 percent
● Procurement sourcing and compliance savings of 3 to
7 percent
The top five accelerators of globally integrated business
services (GIBS) Functional cost improvements up to:
1. Worldwide ownership of functions (prerequisite to GIBS) ● 30 to 60 percent from baseline (calculated as annualized
2. Global process ownership of end-to-end processes run-rate savings)

3. Centralized operations – 55 percent from globalization scale and expertise

4. Shared services process maturity – 45 percent from standardization and automation

5. Common and standard processes Other enterprise business benefits:

● Improved risk, controls and compliance
● Data, access, quality and integrity
● Cost avoidance
● Governance-driven predictability
● Accelerating change readiness
● Better business agility6
For more information
To learn more about IBM Global Process Services and our flexi-
ble solutions and pricing arrangements (including outcome- and
transaction-based models), contact your IBM representative or
visit: ibm.com/services/bpo
© Copyright IBM Corporation 2011

Learn how CFOs are driving higher performance across the IBM Global Services
enterprise at: ibm.com/services/cfo/outsourcing Route 100
Somers, NY 10589 U.S.A.

Produced in the United States of America

December 2011

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1
“The new value integrator. Insights from the global chief financial officer study:
Exploring alternative delivery models for stronger financial performance.”
IBM. June 2010.
2
Corporate Executive Board’s Shared Services Roundtable executive summary
report (short form):
“Is Integrated Business Services the End State?” Meeting of Multifunctional
Shared Services Leader, February 2011, [p4].
2
Corporate Executive Board’s Shared Services Roundtable executive summary
report (long form):
“Is Integrated Business Services the End State?” Meeting of Multifunctional
4
Corporate Executive Board’s Shared Services Roundtable executive Shared Services Leader, Arlington, VA: Corporate Executive Board,
summary report (long form): February 2011.
“Is Integrated Business Services the End State?” Meeting of 3
Multifunctional Shared Services Leader, Arlington, VA: Corporate Corporate Executive Board’s Shared Services Roundtable executive summary
Executive Board, February 2011. report (short form):
“Is Integrated Business Services the End State?” Meeting of Multifunctional
5
Corporate Executive Board’s Shared Services Roundtable executive Shared Services Leader, February 2011, [p4].
summary report (short form): 3
“Is Integrated Business Services the End State?” Meeting of Corporate Executive Board’s Shared Services Roundtable executive summary
Multifunctional Shared Services Leader, February 2011, [pp 6, 7]. report (long form):
“Is Integrated Business Services the End State?” Meeting of Multifunctional
5
Corporate Executive Board’s Shared Services Roundtable executive Shared Services Leader, Arlington, VA: Corporate Executive Board,
summary report (long form): February 2011.
“Is Integrated Business Services the End State?” Meeting of 4
Multifunctional Shared Services Leader, Arlington, VA: Corporate Corporate Executive Board’s Shared Services Roundtable executive summary
Executive Board, February 2011. report (short form):
“Is Integrated Business Services the End State?” Meeting of Multifunctional
6
IBM has delivered these kinds of results across a wide range of clients. Shared Services Leader, February 2011, [p8].

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