Introduction
The concept of running Global Business Services (GBS) as a business represents a powerful construct for organizations seeking to maximize the value of their shared services operations. This approach transcends traditional views of GBS as a cost center and positions it as a strategic enabler that drives transformation and innovation across the enterprise. By adopting commercial mindsets, transparent financial models, and client-focused service delivery, GBS organizations can enhance their strategic relevance and deliver measurable business outcomes. This article explores the key components of running GBS as a business, drawing on insights from industry practitioners and thought leaders.
Establishing a Business Mindset
Commercial Orientation
Running GBS as a business requires adopting a commercial orientation that mirrors external market dynamics. GBS leaders must treat their organization as a separate entity with clear boundaries, much like how a company like Apple would not allow its manufacturing partner to interact directly with its customers. This separation creates clarity around roles, responsibilities, and expectations, enabling GBS to operate with greater autonomy and focus.
Value Proposition and Strategic Intent
A clear value proposition is essential for GBS organizations to articulate their worth to stakeholders. GBS must define its strategic intent and operating principles, ensuring alignment with the broader organization’s goals. This involves identifying how GBS contributes to business outcomes beyond cost reduction, such as process excellence, innovation, and transformation capabilities. The ultimate goal is to position GBS as a transformation engine for the company, leveraging its unique perspective across functions and processes.
Evolution and Renewal
GBS leaders must be deliberate about renewing their organization every few years. This allows the organization to adapt to changing business needs, develop new skills, and move up the value chain. Without this continuous evolution, GBS risks becoming commoditized and losing relevance. Organizations should adopt a mindset of continuous evolution, introducing new GBS initiatives every two to three years to avoid stagnation and maintain strategic importance.
Financial Models for GBS
Transparent Pricing Models
A robust financial model is a key driver of GBS success. It enables the organization to clearly articulate its value to the business, avoid misalignment, and build credibility with stakeholders. Pricing models should be transparent, aligned with market benchmarks, and designed to drive desired behaviors. Options include FTE-based pricing, transaction-based pricing, or service-based pricing for design and continuous improvement work.
Unit Pricing vs. Aggregate Costs
Financial management in GBS should emphasize unit pricing rather than aggregate costs. Unit pricing helps clarify the value GBS delivers by showing cost efficiency on a per-unit basis, regardless of volume changes driven by business growth or other factors. This approach separates volume-driven costs from unit costs to clearly demonstrate cost savings and avoid confusion, which is critical for maintaining credibility and showing value to the business.
Cross-Charging and Virtual Invoices
Financial management in GBS involves not only controlling costs but also creating transparency through chargeback mechanisms or virtual invoices to demonstrate the financial impact of GBS services. Even if cross-charging is not implemented, creating a notional pricing model helps benchmark GBS performance against external providers and demonstrates value to the business. Cross-charging models should be transparent, automated, and aligned with legal and regulatory requirements.
Total Cost of Ownership
Understanding and managing the total cost of ownership (TCO) is fundamental for GBS leaders. This includes accounting for people, systems, and data costs. Collaboration with finance resources is necessary to dissect fixed and variable costs and define resource units for pricing. By providing this level of transparency, GBS can demonstrate its value proposition and make informed decisions about resource allocation.
Service and Client Management
Product Management Mindset
Service management in GBS should adopt a product management approach, starting with a clear service catalogue, defining service charters, and creating annual service strategies based on gaps between the ideal and current states. This product management mindset positions GBS as a value creator rather than a commodity service provider.
End-to-End Service Management
End-to-end service management is critical for GBS organizations. It involves creating a service catalog, appointing service managers, establishing service-level agreements (SLAs), and evolving services over time. These elements ensure clarity, accountability, and continuous improvement. By owning processes end-to-end, GBS can identify and eliminate inefficiencies at the seams between functions.
Client vs. User Management
Client management is distinct from user management. Clients (e.g., senior functional leaders) help translate user wants into actionable needs. Effective client management includes joint business planning, measuring client satisfaction, and aligning SLAs with client priorities. This approach ensures that GBS addresses strategic business needs rather than just responding to tactical requests.
Joint Business Planning
Joint business planning is a critical tool for aligning GBS with the broader organization. This involves financial management, operational excellence metrics, and key initiatives tailored to the business unit’s needs. By co-creating plans with business partners, GBS ensures alignment on priorities, expectations, and success measures.
Operational Excellence and Continuous Improvement Discipline and Control
Operations management in GBS requires discipline, control, and continuous improvement. Key elements include defining critical-to-quality metrics, documenting processes, implementing daily management dashboards, and distinguishing between incident and problem management. This disciplined approach ensures consistent service delivery and provides a foundation for continuous improvement.
Metrics and Performance Tracking
Regularly reviewing and communicating GBS performance through operational reviews and key performance indicators (KPIs) helps maintain alignment with business expectations and demonstrates value. Performance tracking should include both quantitative metrics (e.g., cost savings, SLA adherence) and qualitative measures (e.g., employee engagement, customer satisfaction) to provide a holistic view of GBS success.
Continuous Improvement Framework
Continuous improvement in GBS requires experimentation, learning from failures, and scaling successful models. This iterative approach helps build a sustainable and high-performing organization. By embedding continuous improvement into the culture of GBS, organizations can drive innovation and enhance service delivery over time.
Transformation and Innovation
Balanced Investment Approach
The 70-20-10 model, adapted from Google, can guide GBS resource allocation: 70% on operations, 20% on continuous improvement, and 10% on disruptive innovation. The exact percentages may vary but having a structured approach is key. This balanced investment ensures that GBS maintains operational excellence while driving innovation and transformation.
Ecosystem of Innovation
Building an ecosystem of innovation involves three components: experienced operations leaders, startups for cutting-edge solutions, and IT/BPO partners for scalability and execution. By cultivating this ecosystem, GBS can leverage diverse perspectives and capabilities to drive transformative change.
Venture Capitalist Mindset
GBS must adopt a venture capitalist mindset for innovation, focusing on killing non-viable projects quickly and investing in those with high potential. This approach ensures that resources are allocated to initiatives with the greatest potential for impact and return on investment.
Organizational Design and Culture
Evolving Organizational Models
Organizational design in GBS should evolve with the organization’s maturity, integrating and horizontalizing processes to maximize efficiency and value. Early stages may focus on efficiency and standardization, while later stages require capabilities in end-to-end process redesign, transformation management, and managing by influence.
Horizontal Integration
A consistent operating model across GBS services accelerates maturity and ensures alignment with business needs. This includes standardizing pricing models, engagement models, and service strategy templates. Horizontal integration enables GBS to leverage scale across functions and deliver consistent experiences to customers.
Culture of Accountability and Innovation
Building a strong GBS culture requires recognizing and rewarding behaviors that align with organizational goals. Recognition can be monetary or non-monetary (e.g., public appreciation, symbolic rewards) and should reinforce desired behaviors. A culture that values accountability, innovation, and customer focus is essential for long-term success.
Talent Development and Retention
Career Pathways and Growth
Reward systems in GBS should go beyond transactional labor. They must demonstrate upward mobility, career growth, and recognition of employees as high-potential contributors rather than unskilled labor. By creating clear career pathways, GBS can attract and retain top talent.
Triangular Skill Development
Career development in GBS requires a triangular approach: corporate-wide skills (e.g., leadership, ethics), functional skills (e.g., finance, IT), and GBS-specific skills (e.g., managing by influence, service management). All three must be integrated for long-term success. This comprehensive approach ensures that GBS professionals develop the diverse skill sets needed to thrive in a multifaceted environment.
GBS Academy
Establishing a GBS Academy can help educate stakeholders and partners about GBS capabilities, fostering understanding and support for centralized models and standardization. A GBS University or structured training program can help develop the unique skills required for GBS leadership and operations. This investment in talent development pays dividends in terms of employee engagement, productivity, and innovation.
Communication and Perception Management
Strategic Narrative Alignment
Aligning the GBS narrative with the priorities of the C-suite is essential. Business relevance is the foundation of GBS survival and growth. The narrative must clearly articulate the business value GBS delivers, as this is the lifeblood of the service. This strategic alignment ensures that GBS is perceived as a value creator rather than a cost center.
Professional Communication
Professional communication within GBS organizations is critical. Leaders must ensure communication is in a language that resonates with business clients and is consistent across the organization. This may require professional communication roles within GBS to enhance how the organization presents itself. By communicating effectively, GBS can build credibility and trust with stakeholders.
Managing Perceptions
GBS organizations must address perceptions proactively. Even if actual performance is strong, negative perceptions about cost, SLA performance, or value can undermine credibility and support. By actively managing perceptions and addressing concerns transparently, GBS can build and maintain trust with stakeholders.
Conclusion
Running GBS as a business represents a transformative approach that can elevate GBS’s role within the organization. By adopting commercial mindsets, transparent financial models, and client focused service delivery, GBS organizations can position themselves as strategic partners and drivers of business value. This approach requires a clear understanding of the business model, effective client management, operational excellence, and a culture of innovation and continuous improvement. By embracing these principles, GBS leaders can ensure that their organizations remain relevant, valuable, and impactful in an increasingly complex and competitive business environment.