The transformation of shared services

Over the past several decades, organizations in both the private and public sectors have turned to shared services. Sometimes, the goal was reducing operational costs or improving efficiency. Other times, it was more about consolidating functions and improving service. In most cases, the shared services concept focused on a single back-office function like human resources (HR), finance and accounting, facilities management, procurement, and IT. In the IT realm, that might mean troubleshooting, help desk, datacenter management, and maintenance. In procurement, it might focus on sourcing, negotiation, contract management, and spending.

While the shared services model can provide real benefits, cracks in the seams began to show about 10 years ago, fueled by changing customer demands, new supply chain realities, and a push toward full digitization. In the Asia/Pacific region, for example, companies are facing challenges in shared services implementation ranging from inaccuracies in outcomes to prolonged request completion times (IDC Survey: Shared Services Automation for Business Optimization, March 2024). These issues can impact operational efficiency and hamper both customer satisfaction and agility for organizations across the globe. More importantly, it points to a misalignment between shared services delivery and organizational needs.

Factors like these are just some of the reasons why shared services has morphed into a more comprehensive service called global business services (GBS). While the goals are similar, GBS takes a completely different approach; GBS entities operate as strategic business partners that actively contribute to an organization’s shared objectives. As explained in IDC’s recent Growth and Transformation of Global Business Services (September 2024), while shared services typically pertain to a single function that can serve multiple business units, GBS can serve every unit or person in an enterprise and can execute the processes for any function anywhere in the world centrally and at scale. Typically, they provide a single point of services for combined process flows.

Enterprises move to the GBS model for many reasons, including better process execution; lower cycle time; continuous visibility of process status; continually optimized workloads; flexibility; and better-balanced teams based on skills, availability, and SLAs.

Over the past several years, many large organizations have benefitted from the GBS approach. IDC’s Evolution of Global Business Services (May 2023) describes several successes with this approach. For example, Siemens operates a large GBS organization that services Siemens while providing services to other firms. HSBC’s GBS organization consists of 27,000 staff in 53 countries and supports 2 trillion transactions per year. Amazon operates a large GBS organization to support its finance processes, with large teams in India, Slovakia, and the Philippines.

Yet GBS growth may still be in its infancy. The model continues to evolve to embrace higher levels of technology and automation like artificial intelligence, robotic process automation (RPA), process mining, and process discovery. These advances will bring much-needed transparency, customization, and efficiency.

At the same time, it has become more functional and all-encompassing. For example, KPMG has partnered with ServiceNow to provide not only comprehensive GBS services for IT, procurement, finance, HR, risk, cybersecurity, and ESG but also new solutions that will incorporate AI, low-code development capabilities, and industry-specific knowledge.

These types of partnerships, in concert with new capabilities, can lead to greater transparency — which may tempt enterprises on the fence to finally lean in. Business today demands full transparency into process status and execution.

While higher-level technology like RPA and process mining are critical, the centerpiece of next-generation GBS is artificial intelligence, especially generative AI, which has already begun to deliver greater automation and efficiencies that result in new capabilities at lower costs. IDC research predicts that GenAI will revolutionize the way GBS serves customers.

Next-generation GBS will embrace AI in a big way, with the ultimate goal of providing more customized, transparent, and efficient services. For example, AI tools may be able to answer a query in minutes that may have taken an employee several hours or days to find. More specifically, GenAI-powered automation can improve every step in the service optimization process. It can:

• Automate routine and repetitive tasks like data entry, document processing, and basic customer queries
• Analyze service workflows, identify bottlenecks, and suggest improvements
• Personalize customer and user interactions
• Ensure that data is accurate, standardized, and readily available
• Analyze historical data to predict future workloads
• Continually learn from data and user interactions, enabling service organizations to adapt and improve over time

All of these factors together present great opportunities for organizations that choose to embrace the GBS model. Next-generation GBS models will be more able to bring process acceleration and visibility to the table, better connect the front and back office to enhance the customer experience, keep pushing the envelope in terms of efficiency, change processes quickly to respond to changing market and business dynamics, and remain resilient in the face of disruption.

Over time, IDC expects the GBS model to mature further, with more intelligent and adaptive operating models; higher levels of process, inefficiency, and anomaly analysis; and more evolved end-to-end orchestration.

Organizations considering the GBS model should keep in mind that going the GBS route is pretty much a one-way street; it’s very hard to reverse. Also, carefully evaluate up-front costs, which can be significant even though cost savings are a big driver for GBS.

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Karen D. Schwartz is an adjunct research advisor with IDC’s IT Executive Programs (IEP), focusing on IT business, digital business, disaster recovery, and data management. She has extensive experience both as a researcher and a business and technology journalist, covering a broad range of issues and topics. She often writes about cybersecurity, disaster recovery, storage, unified communications, and wireless technology. Karen holds a Bachelor of Arts degree from UCLA.