This report discusses major trends and predictions for 2016, as well as various ways in which organizations can benefit from improved global sourcing capabilities such as GBS.
“Many of the top trends and predictions identified – particularly negative trends, challenges and enablers for top initiatives – are tied closely to global sourcing in general and GBS in particular. The need to continually reduce costs, address talent gaps and talent management shortages, exploit Big Data and efficiently implement innovative technology are all efforts that GBS organizations and capabilities can enable and support. Consistent global operating models, standardized global process support through the integration of underlying technology applications and systems, strong governance structures and highly leveraged and utilized global talent pools are all components of a competitive business model in the market today. They are also core elements of a successful GBS organization. When organizations assess how best to respond to negative challenges in the market, exploit positive ones and successfully undertake critical initiatives, GBS should be top of mind as one of several key enablers.”
David J. Brown, Partner, Global Lead, Shared Services and Outsourcing Advisory, KPMG
Twenty percent of organizations view a move to a GBS operating model structure in 2016 as a strategy to address the current market trends.
Source: KPMG, GBS Maturity Research Study, 2014-2016
As in 2014 and 2015, survey respondents were most concerned about talent shortages and talent management. This was especially the case with advisors supporting global efforts and those operating in North and South America. These concerns were accompanied by the prospect of continued weaknesses in global economies and certain consumer markets.
These challenges – and especially those involving talent – are not cyclical and will not diminish any time soon. They are a “new norm” and any organization’s strategic and operational plans and models must address them.
It is also highly likely that negative geopolitical events, political gridlock and overregulation will continue to grow as challenges, often in an intertwined manner, and thus must also be factored into business strategies and models.
"If organizations don’t have the right talent, they can’t exploit the new technologies required to address such initiatives as Big Data."
Stan Lepeak, Global Research Director, Management Consulting, KPMG
This year’s top positive trends once again include the use of innovative technology and the increased ability to leverage pools of highly-skilled talent on a global basis. There is a great deal of potential for organizations that can successfully exploit innovative technologies such as Big Data, Robotics Process Automation (RPA) and the cloud.
However, for many organizations, technology-based innovation is still very much a work in process – and for some only wishful thinking. Early-stage planning and development is not the same as implementation.
For example, Big Data can make organizations much smarter in their decision-making, but only if they have the talent to manage, interpret and then apply this data to business problems. Leveraging Big Data usually requires a significant upgrade in skills in both the business and IT sides of the organization. In the same way, RPA holds great potential over the long term to improve process efficiencies and lower operating costs, but high-end RPA is still in its infancy and new skills are required to operate and exploit RPA platforms.
In short, technology enablement will include both benefits and challenges related to change management, organizational structuring and even political and socioeconomic developments as firms, markets and governments address a potentially massive shift in what is needed to support a competitive and sustainable workforce.
In today’s business environment, cost reduction is more than just squeezing suppliers or shaving a few percentage points from expenses. Organizations have to spend money to save money.
This is the central paradox shown by the chart above. Although the top initiative is about driving down costs, the next three require expenditures to execute, especially the second initiative (investing in new technologies) and the fourth (delivering innovation). To cost-justify these expenditures, organizations must invest in ways that help ensure quick wins and relatively short payback periods.
Some examples of this include migrating existing applications to the cloud, jettisoning costly legacy systems, adopting new cost-efficient technology and working with business partners to share costs. The key point is to remain realistic and make sure all relevant parties including business units, IT and management are in sync with their plans and goal.
Large, global organizations often struggle to be nimble. They need seasoned executives and staff resources to take advantage of the latest and greatest technology. But worldwide demographics, inadequate educational systems and the changing tastes of millennial workers mean that talent shortages and the war for talent are here to stay. Addressing these points requires organizations to ask the hard questions – How to shake up talent and talent management models to better find, train and nurture resources? How to identify and reduce the number of underperformers? And, if organizations want to invest in new technologies such as RPA, is the right talent in place to support these investments? In terms of capabilities required to successfully undertake 2016 initiatives, Big Data rose to the top this year and the recurring theme of talent increased in importance. Big Data has great potential, but it is more about having the people to exploit it than the technology itself.