Global Business Services (GBS) Model
Global business services (GBS) is an integrated, scalable, and mature version of the shared services model. Global Business Services Model is a result of shared services maturing and evolving on a global scale. It is represented by the growth and maturity of the Shared services to better service the global corporations they support.
Global business services (GBS) is an integrated, scalable, and mature version of the shared services model. Global Business Services Model is a result of shared services maturing and evolving on a global scale. It is represented by the growth and maturity of the Shared services to better service the global corporations they support. Global Business Services framework adds value to the shared services model by taking the model beyond labor arbitrage. This model adds consistent approaches to global services strategy formation, transition, and governance resulting in improved collaboration across the entire enterprise ecosystem. GBS provides services beyond transactional functions and provides value to the organization by enabling standardization, scalability, technology, well defined and optimized processes and business analytics. Under this model the entire organization collectively start leveraging global business services to accelerate attainment of corporate strategies.
General Electric, Bank of America, American Express are some examples who have already established Global Business Services model for their entire finance functions where a Global Operations Finance Team provides record to report and statutory and tax compliance services to all the businesses under its umbrella.
Main Features of GBS model:
- Integrated compilation of service offerings for multiple support functions within a company
- Global in nature with respect to both delivery centers and customers
- Service provides can be both internal and/or external
- Service providers are managed centrally by GBS organization
- Service offerings by GBS are standardized and follow process model with defined roles and responsibilities and handshakes at each interaction
- Global process ownership
- Integrated application suite(s)/Information Systems across the enterprise with well-defined processes and best practices
- Virtual centers of expertise to build and disseminate subject-matter expertise
- Defined and well tracked operational metrics to measure speed, quality and costs
- Standardization of processes and practices that result in the GBS organization being run like an independent entity
- Ability to take competitive advantage of cost arbitrage and third party expertise
- Mix of service delivery models - Captive offshore; In-house shared services centers; outsourced delivery models; “hybrids”
Value drivers of GBS Model
- Cost savings through economies of scale and labor arbitrage
- Simplification and standardization of processes
- Advanced analytics and visibility across different structures (legal/operational) of the enterprise
- Ability to hire and retain global talent
- Skill arbitrage: value derived from access to higher-skilled labor across globe
- Ability to work in shifts leveraging the time zone differences across globe
- Ability to deploy advanced tools and technology
- Ability to deliver scalability to processes and functions
Functions that can be shared across business units
- Sourcing and Procurement
- Buy to Pay – Accounts Payable
- Invoice to Cash – Accounts Receivable
- Payroll Management
- Record to Report – General Ledger
- Fixed Assets Management
- Statutory Reporting and Tax Reporting
- Human Resources
- Information Technology
- Vendor Management
- Customer Management
- Master Data Maintenance
All the models described above represent matrix structures. However, Matrix Structures can become overly complex, effectively having to uphold two hierarchies, with potential tensions between the two.
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