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Certified Global Business Services Professionals

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Global Business Services Executive Insight

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Management Issue

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April 2017

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Digital Transformation is Accelerating

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GBS Evolution:
Is Your Talent Prepared to Deliver on
New Opportunities?

By Sean Kracklauer, Tony DiRomualdo and Martijn Geerling

Executive summary
As digital transformation gains momentum within global business services (GBS) organizations, executives must
be prepared to manage the implications for talent, or they risk losing some of the potential value of increasingly
digital operations. A reduction in task-oriented work presents GBS organizations with the opportunity to elevate their
services and value to the business. To capitalize, they will need to pivot quickly to a new talent management model
– one focused on transforming transactional and task-oriented employees into business partners with analytical and
relationship skills that enable them to shift easily between GBS functions and roles as the business’s needs and
operations continue to change.

This article reviews implications and imperatives for GBS talent management in the digital era, including:
• Elevating talent management capabilities
• Offering training that builds versatile knowledge workers
• Refocusing on retaining key skills

Talent: the stepping stone to greater value

Global business services have aggressive plans to adopt robotic process automation
(RPA) along with other digital operations technologies over the next two to three years
(Fig. 1). This rapid shift in technology will change the landscape for GBS labor
requirements significantly – eliminating a substantial amount of time spent on
transactional tasks. It will dramatically reduce labor requirements in some areas of
the business but also create some new responsibilities for operating effectively in a
digital world: for example, “retraining” robots when the organization introduces new
policies or procedures, overseeing additional process improvements in the use of
automation, monitoring virtual workforce performance and managing its integration
within the organization.

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 1
 FIG. 1 Current and expected level of emerging technology adoption

89%
83%
75% 74%
70%
31% 64%
29%
53% 51% 50% 49%
44% 47%
44% 31%
39%

57% 25% 40% 39% 37% 26% 35%

31% 46% 19%
31% 22% 31% 33% 23%
26% 17%
8% 11% 11% 11% 12%
3% 3% 3%
Currently 2-3 Years Currently 2-3 Years Currently 2-3 Years Currently 2-3 Years Currently 2-3 Years Currently 2-3 Years Currently 2-3 Years
Cloud based RPA Advanced Mobile Social media/ Cognitive Internet
applications/Software analytics* computing Collaboration computing/artificial of Things
as a Service intelligence**

MAINSTREAM ADOPTION LIMITED ADOPTION

* Including predictive modeling, big data analytics, unstructured data analytics

** Including machine learning, natural language processing, speech recognition, expert systems, augmented reality

Source: 2017 Key Issues Study, The Hackett Group

More significantly, digital transformation creates opportunities for GBS organizations

– already challenged to do more with the same or fewer resources – to take on new
knowledge-centric activities that have the potential to create even greater business value
and to enable enterprise strategy. While GBS executives aspire to be recognized as value
contributors rather than cost savers, many haven’t been able to make this paradigm
shift for two reasons: Most of their resources have been consumed with transactional
tasks (“keeping the lights on”), and they lack key skills for delivering knowledge-based
services. Few companies report that they have the necessary talent in place to enable
digital transformation (Fig. 2). Moreover, half of GBS organizations view access to critical
talent as a risk to their businesses over the next several years (Fig. 3).

FIG. 2 GBS organizations lack the talent to deliver digital transformation

GBS organizations believe digital transformation will fundamentally change

the way business services are delivered by GBS over the next 3-5 years

... but only

92%
26%
report having resources and competencies in place to execute
a digital transformation strategy

FIG. 3 Access to talent is a current and projected risk to the business

Percentage of companies ranking as “high” or “very high” risk to the business

Projected risk
(2018-2019)
Access to
critical talent
Current risk
(2017)
52% #4 ranked risk overall

31%

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 2
 Three Stages of GBS Evolution

Historically, the primary value driver for adopting a shared services model was to improve
operational efficiencies through standardization, specialization and economies of scale.
To increase value, many shared services organizations evolved into multifunctional,
enterprisewide GBS organizations – the preferred delivery model today for business
support services. In parallel with expanding their functional and organizational scope,
GBS organizations improved their operational efficiency, service delivery performance
and business value contributions. The Hackett Group defines three progressive stages
of GBS evolution, or maturity. While GBS organizations continue to move up the value
curve, stage 3 remains a future prospect for most companies.

Three Stages of GBS Evolution

Maturity

Of companies reap benefits

Stage of an advanced GBS
Enterprise operating model which
3 Strategic Enablement 8% integrates business services
and supply chain and enables
enterprise strategy

Of companies have integrated

Stage
multiple functions’ shared
Business
2 Services Excellence 35% services organizations to create
more value through end-to-end
process management

Of companies have single-

Stage
function shared services
Function
1 Transactional Excellence 57% organizations focused on
achieving function-specific
value

Shared Global business

services services

Source: The Hackett Group’s Global Business Services (GBS) Performance Study, 2016

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 3
 By freeing up labor from transactional work, digital transformation initiatives offer the
chance to reskill and redeploy resources to fill gaps in critical knowledge-based skills (see
table) such as strategic thinking, relationship management and process improvement.
These skills will be essential to delivering higher-value services. Without them, GBS
organizations are less able to participate in activities that support company strategy.

Information
Function Finance Human Resources Procurement
Technology
Critical knowledge- • Master data • Strategic • IT architecture • Supplier
based skill gaps management workforce design relationship
planning management
• Enterprise risk • Emerging
expertise
management • Human capital technology
analytics knowledge • Supplier risk
• Financial
management
planning and
performance • Strategic
management sourcing
• Strategic thinking and analysis
• Business acumen
• Data analytics
• Relationship management
• Change management
• Technology deployment

Source: The Hackett Group, 2017 Key Issues Study

Raising the skill level of the GBS workforce is a critical stepping stone toward maturing
operations and becoming a value-producing business partner (see sidebar, “Three stages
of GBS evolution”).

By improving its ability to take on knowledge-based work, a GBS organization can

begin to establish a series of knowledge centers of excellence (COEs) positioned close
to its end “customers” to improve speed and localized service delivery (see sidebar,
“Centers of excellence in a GBS structure”). This accelerates both maturity and value
to the organization.

Elevate talent management capabilities

To date, few GBS organizations have adopted RPA and other evolving digital technologies
on a large scale; thus the workforce impact of digital transformation is likely to have been
limited. However, as a GBS organization becomes more familiar with and expands its
approach to employing such technologies, the implications for workforce management
will become greater – and more urgent. When this happens, the organization will need
to be able to pivot quickly to a new highly skilled and trained workforce. Otherwise, it
stands to lose out on some of the potential value for automating in the first place. Few
GBS organizations, however, have talent management capabilities today that are primed
for operating in this increasingly digital and automated world.

To effectively blend digital operating technologies into the workforce and realize the
potential value they promise, GBS organizations will need to rethink the way they
manage talent – from strategic planning to competency models, skills, profiles, recruiting
and retention – and establish nimble and responsive capabilities for adapting their
workforces at the same rate of speed that technology is changing GBS roles.

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 4
 Centers of excellence in a GBS
structure

Leading GBS organizations are increasingly implementing centers of excellence (COEs)

as a means of efficiently and effectively managing specific complex business tasks.
Centers of excellence are teams of people with specialized expertise who work together
to develop and promote best practices in their area of responsibility. A COE may
provide subject matter expertise to the rest of the enterprise, or it may deliver tangible
business services. Examples of business tasks around which GBS organizations create
COEs include project management, quality assurance, regulatory compliance, business
analysis, continuous process improvement and enterprise performance management.

Within COEs, to which personnel may be attached part time or full time, there is an
emphasis on advanced training and certification, knowledge sharing and development of
standards and methodologies. When implemented properly, COEs can drive both cost
reduction and improved performance in their area of focus.

In our work with companies worldwide, The Hackett Group has seen top-performing GBS
and business services organizations move toward a workforce model that taps into three
types of talent:
• Staff working in large-volume transaction processing centers, typically in offshore
locations in low-cost countries
• High-level knowledge workers co-located within business units, who serve as on-site
business partners
• A virtual – or robotic – workforce that performs structured, rule-based activities

A center of excellence plays a key role in this model, with responsibility for deploying
and running a process or processes using the right mix of those resources. It also acts
as the primary interface with business leaders and process owners and provides process
experts as required.

CoE model for RPA

Defines
demand and
specifications • Performs demand
END-TO-END PROCESS OWNER
management
• Develops and implements
group-wide agile RPA
development methodology
• Develops RACI
CENTER OF (a responsibility
EXCELLENCE assignment matrix that
ONSHORE OFFSHORE RPA identifies individuals
responsible, accountable,
High-level Large-volume A virtual – or robotic consulted and informed)
knowledge workers transaction – workforce that and role profiles
co-located within processing centers, performs structured, • Monitors execution in
business units who typically in offshore rule-based activities Executes and accordance with group
serve as on-site locations in manages robotic control framework
business partners low-cost countries workforce

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 5
 The Hackett Group has studied GBS organizations that have achieved better outcomes
from talent management. Those companies have distinctive practices and capabilities
that set them apart from peers. Key to their success is that they view talent
management as a high priority and an integrated process (Fig. 4) designed to meet the
GBS’s talent needs as it expands in scope and value.

FIG. 4 Talent management lifecycle

Strategic workforce
1 planning
4 1
Succession planning
Develop Identify talent Employee engagement
talent needs 2 Recruitment
Employee onboarding
Flexible working

Employee appraisal
Drive Acquire better
performance talent
3 Employee rewarding
Employee recognition
3 2
Learning and development
4 management and
leadership development

In particular, world-class GBS organizations tend to have more advanced strategic

workforce planning capabilities, including formal processes, dedicated people and fit-for-
purpose technology to capture and report data that aids demand planning for future skills.

These organizations are also significantly more effective at talent management

because they have shed the longstanding negative perception of a career “graveyard”
and built organizations that are recognized for offering appealing career options. They
emphasize management and leadership development, going beyond standard leadership
development curricula to create specific competency-based programs for individual
leaders. A few have introduced enterprisewide strategic programs built around GBS
leadership and the business context of the company. They use techniques such as
skills assessments and competency models to gauge staff proficiency and design
development and career paths for employees at all levels.

Offer training that builds versatile knowledge workers

The ability to evolve GBS skills will be central to benefiting from digital transformation.
This will require enhanced focus and investment.

A GBS organization will need to be prepared to deliver specific skill-based training

necessary to quickly retrain and redeploy labor that will be released from transactional
work through digital operations initiatives like RPA. This training will also need to cover
new automation-related tasks, such as those described earlier.

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 6
 At the same time, the organization will need a program for building broader GBS-specific
skills and capabilities around service delivery, service management and transformation
management. Workers of the future will be able to deliver the greatest value when they
have cross-functional acumen and knowledge-centric skills in areas such as:
• People management
• Project management
• Change management
• Continuous improvement
• Strategic thinking and analysis
• Data analysis and modeling
• End-to-end finance, HR, IT and procurement and supply chain processes
• Collaboration with business and functional specialists
• Company- and industry-specific operations

These are skills that are transferrable to many GBS job roles. Focusing on developing
them creates a versatile workforce able to shift easily among roles or GBS functions
or even from GBS into the business. This versatility is a tremendous asset as the GBS
evolves and matures its operating model.

Moreover, an organization’s plan for developing GBS talent should consider lifelong
learning opportunities that foster these critical skills at all career levels – from associates
to senior leaders – as individuals progress within their GBS careers. For example,
associate training might focus on developing fundamental knowledge about key
functional areas covered within the GBS environment, as well as organizational structure
and governance, process mapping and metrics. For leaders, on the other hand, it
might focus on skills for developing future service delivery model vision and enabling
transformation toward that vision. The Hackett Group’s GBS research finds that world-
class GBS centers invest significantly more in training their workforce – at all levels –
than peer organizations (Fig. 5).

FIG. 5 Average number of training hours

70 73
60
38
25 23

Manager Professional Clerical

PEER GROUP WORLD CLASS

Source: The Hackett Group GBS Performance Study, 2016

One leading practice for establishing the right skills is providing GBS employees
with professional certification opportunities. Certification is a tangible way for GBS
organizations to recognize top performers, improve retention of key staff and identify top
talent for recruiting into other areas of the organization.

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 7
 Increase focus on retaining key skills
Finally, the new GBS talent management model should include greater focus on
retaining people and skills to preserve and maximize the organization’s investment
in training and developing employees. GBS organizations have long lived with high
turnover. However, the trend away from transactional, commodity skills and toward
knowledge-based talent increases the importance of having a pipeline of skilled and
experienced employees and leaders.

Communicating a compelling employee value proposition and career paths in a

multifunctional environment will become increasingly important. So, too, will attention
to areas such as work environment and incentives tailored to younger generations of
workers that comprise the bulk of the GBS workforce.

Strategic insights
Until a GBS organization begins to work with RPA or other digital operations
technologies, it is difficult to understand the art of the possible – beyond cost savings
– including the opportunities associated with shifting talent to roles that produce even
greater value for the business. That said, as its use of such technologies accelerates, a
GBS organization must be prepared to pivot quickly with respect to managing talent in
order to maximize the benefits.

Digital transformation will only accelerate from here, so taking steps to advance GBS
talent management capabilities now, in the early stages of deploying RPA and other
technologies, can impact performance in the years to come. In this environment, a
strategy for transforming transactional and task-oriented employees into business
partners with critical analytical and relationship skills must be high on the GBS agenda. A
GBS-specific training program centered on creating a versatile workforce that can work
across a greater range to processes to deliver value will help the organization adapt to a
rapidly changing environment and elevate its role as a value-producing business partner.

About the Advisors

Sean Kracklauer
Managing Director, Executive Advisory Membership Services and Research, The Hackett Group

Over the past 20 years, Sean has advised Global 1000 businesses on
strategy, organizational structure and process redesign. He has worked
extensively in finance strategy, business performance management,
planning and budgeting, financial reporting compliance, and functional
design for business intelligence systems. His fields of expertise include
leading large-scale cross-functional projects to improve the effectiveness
and efficiency of general and administrative service delivery by identifying the optimal
strategy, structure, sourcing and enabling technologies to achieve business objectives.
Sean has served clients ranging from $5 million to over $100 billion in revenues in the
financial services, technology, pharmaceutical, telecommunications, energy, health care,
retailing, consumer packaged goods, software, broadcasting and manufacturing sectors.

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 8
 Tony DiRomualdo
Senior Research Director, The Hackett Group

Tony has over 20 years of research and advisory experience in HR, IT

and business strategy. His work has focused on areas including talent
management, organizational structure and governance, technology,
outsourcing, and globalization strategies and practices. Tony has directed
several ground-breaking global studies, producing insights and tools used
by major corporations worldwide. He is the author of numerous reports,
case studies and articles appearing in prominent business and academic publications
including MIT’s Sloan Management Review. Before joining The Hackett Group, Tony
headed his own research firm and ran research programs at major management
consulting firms.

Martijn Geerling
Associate Principal and Practice Leader, Global GBS Advisory Program,
The Hackett Group

Martijn has 15 years of consulting experience in strategy development,

business process redesign and implementing sourcing strategy, both
shared services and outsourcing. During this time he has worked with
business services organizations of leading global companies across
various industries. Prior to joining The Hackett Group, he worked at KPMG
Consulting assisting clients in Europe and Asia with finance function
transformation, business process redesign, and risk and compliance management.

© 2017 The Hackett Group, Inc.; All Rights Reserved. Talent Management I The Hackett Group I 9
 About the Certified GBS Professionals program
The Certified GBS Professionals (CGBSP) program from The Hackett Group addresses the
growing need for talent in business services functions. The program provides structured
professional certification, talent development and lifelong learning for GBS organizations
and their employees.

The unique program draws on The Hackett Group’s GBS best practices intellectual property
that defines how to achieve world-class performance. We offer three unique career
development and certification programs tailored to business services professionals at
different career stages.

For more papers, perspectives and research, please visit: www.thehackettgroup.com. Or to learn more
about the Certified GBS Professionals program, please contact us at +1 866 614 6901 (U.S.) or
+44 20 7398 9100 (U.K.).

The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best prac-
tices implementation firm to global companies, offering digital transformation and enterprise application approaches including robotic process
automation and cloud computing. Services include business transformation, enterprise performance management, working capital management
and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital man-
agement, strategic sourcing, procurement and information technology, including its award-winning Oracle EPM and SAP practices.

The Hackett Group has completed more than 13,000 benchmarking studies with major corporations and government agencies, including 93% of
the Dow Jones Industrials, 87% of the Fortune 100, 87% of the DAX 30 and 58% of the FTSE 100. These studies drive its Best Practice Intel-
ligence Center™ which includes the firm’s benchmarking metrics, best practices repository and best practice configuration guides and process
flows, which enable The Hackett Group’s clients and partners to achieve world-class performance.

Email: info@thehackettgroup.com
www.thehackettgroup.com

Atlanta +1 770 225 3600 London +44 20 7398 9100 Sydney +61 2 9299 8830
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