Impact case of the month: ‘Digitalization of a Global Business Services Portfolio’

What factors affect a Global Business Services Portfolio? And how can digitalization help overcome challenges in its implementation? This question is at the heart of research by Albert Plugge, professor of ESG Transformation & Digital Innovation at Nyenrode Business Universiteit, and Shahrokh Nikou, researcher at TU Delft.

A Global Business Services Portfolio (GBS) is a business model in which an international company provides shared services across a range of business disciplines. The aim is to leverage economies of scale and standardized processes to drive efficiency, cost effectiveness and innovation. The most common GBS disciplines are Finance & Accounting (F&A), Human Resources (HR), Information Technology (IT), and Supply Chain Management (SCM). "The way companies organize their BMS portfolios, has undergone major global developments in recent years," Plugge points out. "The first concerns the COVID-19 pandemic and how it affected the way we work. Companies are also facing increasing ESG [Environmental, Social & Governance] requirements. Thirdly, digital developments are moving at lightning speed. This makes a BMS portfolio all the more important, but also more complex."

Challenges

A BMS portfolio is designed to respond adequately to external customer demands. However, it is proven difficult for companies to implement this type of portfolio effectively. This is partly because centralizing various business disciplines across different (inter)national regions is complex. The scope of a portfolio (the number of services) also plays a part. Based on a review of the literature available, Plugge and Nikou identified five factors that influence a GBS portfolio, namely: a multiple sourcing strategy, customer focus, modularized business processes, information technology, and governance. In order to identify how the direct and indirect relationships between these factors affect the implementation of a GBS portfolio, Nikou and Plugge developed a research model in which these relationships were made visible. To that end, they made use of the Resource Orchestration Theory (ROT). This is a management theory that focuses on how organizations can effectively manage and deploy their resources to gain a competitive advantage. "A key finding from this unique survey we conducted of 121 companies, is that all GBS disciplines rely significantly on a multiple sourcing strategy that includes both internal and outsourced business services," Nikou explains.

Success factors

Plugge and Nikou also conducted four case studies among internationally operating companies: a logistics service provider, an employment agency, a construction company, and a financial services provider. “This demonstrated that a variety of digital technologies can help implement a GBS portfolio effectively. This includes, for example, technologies related to process mining, machine learning, and artificial intelligence," Nikou goes on to say. "From our research, we have managed to distill six success factors that contribute to a successful GBS portfolio: a clear digital strategy, strong leadership, investment in the right technology, trained staff, a clear vision for change management, and optimal monitoring."

Impact

"Based on the findings of the research, KPMG developed a proposal for the market called the 'GBS Transformation Hub,'" Plugge reports. "You could see it as a Center of Excellence that supports companies in the implementation of their GBS portfolios. By providing the scientific evidence discussed in the case studies and the tested relationships in the proposed research model, we are able to contribute to the creation of effective market propositions used by professionals."