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Integrated Business Solutions (IBS)

For the management that still focuses on the cost optimization for the use of outsourcing, they are stranded at the basic level of discrete shared services. The objective remains to use the pool of resources to bring in the cost efficiencies, while the governance remains centralized within the organizations. Seldom, it involves numerous interfaces of data exchange and validation processes to achieve the objective of functional shared service.

Often the concept of outsourcing is generalized for using the services of external service providers for the processing of low value functions to demonstrate the cost optimization. However, the concept has now evolved to the new heights. The concept of taking the burden of the management has grown now to provide a complete platform for the organizations to develop the process that can be easily integrated, that can accommodate its own governance structure and create opportunities for the desired level of automation at the process level.

A Shared Services is a regional or functional operating model to organize, deliver, and continuously improve internal business services. That evolves into multi-functional shared servicing, to accumulate similar level of data processing under one umbrella. The challenges led to the concept of Global Business Services (GBS), an operating model used to organize, deliver and continuously improve internal business services provided to support value producing processes and business units.

Integrated Business Solutions emerged as the leading model of shared business services by evolving from earlier ‘stages’ of Discrete Shared Services, Multifunction Shared Service and Global Business Services.

Maturity Chart

Showing the maturity of shared services with the evolution of the Service Function Scope and Objectives.

Impact for the Organizations

IBS model focuses on end-to-end processes and integrates governance, locations and business practices across the organization. This model with its emphasis on integrated technology, data, applications, processes and people has many advantages and is a natural progression from SSCs. However, it is a fundamental shift in the way organization think and operate shared services as it brings together organizational silos, connecting the strategic pieces – processes, people, technology and functions to become a source of agility, end-to-end visibility, and innovation for the entire organization.

Key driver focus shifted from pure cost saving in the short-term to increasing efficiency in the long-term.

This will be achieved by higher impact changes that target each company’s area of weakness apart from traditional process optimization.

To the company they represent more sensitive topics such as introducing a leaner governance, more structured controls and improved compliance. These topics are often highly political and thus need more time for implementation, with benefits becoming visible only in the medium- and long term. Having these areas as target for multiple functions at the same time, both financial and performance data becomes increasingly visible and comparable; Not only per function but across regions and business divisions, comparing end-to-end processes within the whole company.

1. Organizational

IBS is not a single layer, transactional level implementation. It impacts all the level of operations of the organization.

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Strategic level

Governance will play a vital role to give way for the required leverage and process ownership making the implementation of required changes to support strategic objectives easier.
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Middle management

To gain the benefits gained on the strategic level in the way that employees’ time is freed up to focus on their core business. There is no need to spend time with following complex ways of communication and data provision multiple departments that deliver support functions, as they are integrated.
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Operational level

With its own goal to serve the whole company: providing better services in a more efficient way. This ranges from typical improvements such as standardization to automation and technology improvements which are more likely to happen and easier to implement.

2. Change Management

The missing change of people’s mindset and lack of key stakeholder support are easily able to make an IBS a failure – whether it is resistance in the organization to make the change or a lack of common vision. The design of the new organization is crucial to set this common mindset, as it shows how the vision materializes. The “perceived” reality may differ from the actual situation but is crucial for accepting the change and building trust between business and IBS. To achieve the desired “perceived” reality, it needs carefully selected key people that can drive the change with an appropriate level of authority. They can ensure changes in the organization are made and that people actually commit to the new structure.

3. Transformation Challenges

Multi-functional shared services have been the logical result of gaining experience with classical mono-functional shared services. Full understanding at the C-level needs to be achieved. Being part of all global companies’ service delivery strategy, focus shifts from providing transactional services to more business partnering in the future as excellence in transactional services is achieved and new, less transactional areas for achieving new operational efficiency milestones will be integrated. This is not a revolution, but a next step for the organizations and will be part of the standard operating model. The impact on the corporate organization will be substantial as the functions’ delivery model is completely redesigned.

4. IT Strategy

The technology nowadays has an enormous potential for business transformation, especially when speaking about digitalization.

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Standardization

Which may result in the reduction of existing ERP systems. Most companies have a historically grown IT landscape and it takes a certain effort to harmonize and bring all data into a small number or even only one ERP system, but this is still referred to as the most important game changer.
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Simplification

Using appropriate technology can reduce time when executing transactional task, improve accuracy and traceability, and keep people connected in a structured way through predefined platforms.
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Automation

Is the logical next step. Robotics is moving forward quickly and there are big gains to be heard, but the usage is currently marginal and more a buzzword than a sound and bullet-proofed concept. Mature SSCs are looking towards robotics as a way of reducing cost and creating more efficient processes. This has to be gauged within the automation strategy to build up IBS promoting automation as steering driver for the change.

Main Drivers

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Integration

An integrated business services model is key to deliver high value services on an enterprise-wide basis in a consistent and cost-competitive manner. While the global business services (GBS) model has helped organizations scale up, it is the breaking of functional silos that generates real value for the organization. Management under IBS models experience less internal complexity in their businesses.
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Digitilization

Digital technologies are transforming all business functions While Robotic Process Automation (RPA) reduces costs by automating individual processes, cloud-based IT environments enable end-to-end integration of operations. Those integrated processes provide data to analytics, and analytics drive better decision-making, more efficient operations, and increased enterprise performance through high-value business insights.
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Governance

As business functions become more and more integrated, organizations progress towards developing governance models that may ease the move to IBS. Businesses prefer governance through global shared services because it improves proximity of businesses, reduces dependence on time zones, and increases scale of operations. This helps the company to build expertise, achieve economies of scale, standardize processes, and focus on the core business.
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Delivery Hub

As businesses evolve, the way in which they interact with the world will change. Decreasing geographic barriers are encouraging global networks of operations. Concerns over regulations, time zones, and languages are overcome by competitive cost structures offered by increasing globalization. Business leaders are increasingly leveraging economies of scale, labor arbitrage, and improving global standards in their sourcing decisions.

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