Global business services (GBS) centers face two major challenges today: economic uncertainty and generative artificial intelligence. This blog post will focus on the second challenge.
In recent years, companies around the world have restructured their corporate functions into shared-services organizations and global business services units. The aim of such moves is simple: to benefit from the cost savings and efficiency improvements offered by centralization and standardization.
Today those same organizations are pursuing another, newer source of efficiency improvement: the use of advanced digital technologies, such as generative artificial intelligence (gen AI), to automate previously manual processes.
The rapid evolution of gen AI presents a challenge to the traditional shared-services model, with its value proposition based on the efficient execution of labor-intensive processes. Companies are now asking their GBS units to take the lead in the AI-powered transformation of corporate functions such as finance, HR, legal, IT, and procurement.
To understand how GBS leaders are approaching innovation in their centers through automation, analytics, and gen AI, we surveyed attendees at our 27th GBS Leaders Forum. Event participants included the leaders of GBS centers and GBS functions, representing a wide range of industries and geographies.1
GBS in the innovation driver’s seat
The major finding from our survey: innovation matters to GBS leaders. More respondents included driving process innovation as one of their top strategic priorities than any other topic. That puts innovation just ahead of two long-established strategic priorities for GBS units: delivering high-quality service and ensuring the availability of top-quality talent.
Innovation plays an important role in GBS leaders’ operational priorities, too. Increasing the scope of complex and expert functions was the most common operational priority among respondents, followed by efforts to increase automation in current processes, and the drive for greater consolidation of business activities into existing GBS centers
GBS centers are actively driving innovation within their organizations, with 64 percent of respondents saying that the implementation of transformation initiatives is led primarily by GBS (35 percent) or as a collaboration between GBS and relevant business units (29 percent).
The implementation gap
While innovation is clearly a priority for the GBS leaders in our survey, translating ambition into impact is hard. Only 6 percent of respondents say they are realizing the benefits of advanced technologies such as gen AI and advanced analytics across multiple use cases in their organizations (exhibit). Even more troubling, more than 40 percent of GBS leaders have yet to initiate processes to implement innovative solutions in their operations, and more than half lack a defined methodology to measure the impact of innovation projects.
GBS leaders cite operational constraints as the primary challenge to implementing innovation. Limited ownership and fragmented processes hinder transformative efforts, as changes must span end-to-end processes to generate their full potential value.
Overcoming these challenges requires engagement from multiple stakeholders, which, along with limited investment, is the second biggest hurdle faced by GBS leaders. Securing funding for transformation goes beyond technology costs. Allocating internal resources, particularly support from IT, remains a concern. Scaling up will create additional demands for talent, too, with the need for more specialist expertise to develop, maintain, and continually improve gen AI applications.
How GBS leaders can turn innovation ambition into action
We’ve written elsewhere about the challenges facing GBS organizations as they navigate the transition to a world of AI, advanced automation, and rapid digital innovation. Ambitious GBS leaders should pay particular attention to three recommendations from that post:
- GBS organizations are moving to a two-speed model, where they are expected to manage day-to-day operations while also spearheading large-scale transformations. Companies are now looking for leaders who not only have experience running a GBS organization, but also the knowledge and skills to drive change.
- Transformation goals should be closely aligned with stakeholder priorities. GBS leaders can achieve this by working closely with end users across the enterprise and adopting venture-capital-like methodologies such as robust, visible business plans and ROI measurement. In addition, a structured innovation approach should include identifying and prioritizing high-impact use cases with defined business cases. Over time, successful ideas can be replicated across functions and business units.
- GBS leaders should be empowered to shape the future of their organizations. As companies increasingly recognize the value of innovation, they are selectively adopting an “empowered” model for their GBS units. In this model, GBS has greater autonomy to drive change, take an end-to-end view of processes, and invest in continuous improvement and transformation capabilities. High-performing GBS organizations, especially those led by individuals reporting directly to the COO, benefit from this autonomy and wield the influence necessary to drive meaningful change.
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1 Survey conducted on 30 April 2024, n = 21.