Research
The GBS Agenda: 2024 Global Business Services Key Issues
Expectations placed on global business services (GBS) teams by businesses have never been higher. This challenge is not new to the GBS function, but in the face of continuing economic uncertainty, teams are feeling increased pressure to do more with less. As experts predict a stall or slowdown for global economic growth in 2024, our findings from The Hackett Group’s 2024 Key Issues Study indicate that GBS leaders have shifted their priorities for this year.
What’s changed
The top priority for GBS leaders for 2024 is being a strategic partner to the business. Also in the top five is an objective with a similar theme – supporting enterprise growth strategies. Objectives that have also moved up are delivering digital transformation and delivering business insights through analytics. Skills and talent are more prominent on this year’s list – with a particular focus on retention as the second highest priority. These priorities are consistent with cross-functional executives’ top 2024 objective to improve and protect margins given concerns with recession risk, rising interest rates, and labor shortages/skill gaps. It is surprising to see in the research that not all GBS organizations are prepared to act on their key priorities. Fewer than one-half of GBS organizations have a major initiative planned to support seven of the top 10 objectives.
It is not enough to have a seat at the table – GBS must be able to influence the conversation
Business partnering is a recurring top objective for GBS organizations. As GBS climbs the value curve, it must continue strengthening its role as a strategic partner to the business. Value creation is at the heart of effective business partnering – and that in turn depends on the ability to turn data into insight. Thus, the ability to achieve this objective will depend on effectiveness in meeting others – most notably, delivering actionable insights from data. But that is just one factor in value creation. GBS leaders will also need to find ways to overcome key organizational barriers to be successful. GBS organizations can also elevate their value as a business partner by pivoting to support more immediate business needs – for example, improving working capital, managing procurement spend and retaining business customers to counter the impact of a recession on business results.
A cooling labor market may affect talent recruitment and retention
GBS executives are concerned about their abilities to recruit and retain talent with critical skills. When asked about the key risks to success in 2024, they ranked people-related issues in the top three spots, with employee turnover remaining in the top three. This concern is not surprising given continuing high attrition rates. What is surprising is that only 35% of GBS organizations have a major 2024 initiative planned to address this issue. This would be a significant misalignment of resources with priorities because failing to retain critical skills and talent can have long-term implications. GBS executives must have tangible strategies for developing digital skills that allow them to capture the value of their investments in becoming digital. Reskilling should be a key area of focus.
Organizations can be a catalyst for growth through strategic positioning
Our research indicates executives across business functions remain wary about the 2024 economic climate and the potential for a slowdown. That said, the fact that supporting enterprise growth strategies rose in priority this year and has ranked above cost reduction reflects at least a degree of optimism about the period ahead. Executives’ confidence in their ability to deliver on it is also a positive, as is the fact that more than one-half of organizations are planning to support this objective with a key 2024 initiative. Aligning major initiatives around cost reduction, business partnering, data/insights and talent management will be key to achieving this objective.
Delivering business insights via analytics
Many GBS organizations struggle to adequately manage master data across all of the transactional services they provide. This compromises their ability to unlock the value of data for the enterprise. GBS executives must learn to lead with cross-functional master data management strategies. Once a strong master data management foundation is in place, organizations can then turn their attention to creating insight from data and delivering data as a service. This will require investment in skills, tools and techniques for this to be a core GBS capability.
GBS executives’ confidence in their ability to achieve this objective in 2024 is lower than for most other top 10 priorities. This is why it is so surprising that only 37% have a major initiative planned to address this objective in 2024. Failure to achieve this objective will affect many of the other top objectives as well.
Explore opportunities to use Gen AI
Nearly three-fifths of GBS organizations have started evaluating the use of generative artificial intelligence (Gen AI) in GBS, even in the early stages of the technology’s evolution. GBS organizations that are evaluating Gen AI consider the most promising GBS-supported functions for applying this technology to be finance, indirect procurement, human resources and customer service. ChatGPT is the most popular Gen AI technology tool used by GBS organizations, followed by Microsoft 365 Copilot. About 20% of respondents don’t know the names of certain tools and haven’t decided on or are still evaluating their options. Some have developed or are developing in-house AI tools with support from GBS and/or emerging technologies’ centers of excellence.
Focus on managing the customer experience
Improving the service delivery experience of GBS executives, end users, and other stakeholders is crucial for expanding scale and scope of operations over time. While customer experience has moved to No. 6 after two years among the top five spots, GBS executives have relatively high confidence in their ability to deliver on this objective, which is positive.
The Hackett Group’s 2023 GBS Performance Study found that Digital World Class® GBS organizations have more mature practices for managing customer experience stemming from their laser focus on customer interaction and aptitude in customer-centric service design and culture. They also typically have an easy-to-access, one-stop shop for GBS services – including a self-service portal, contact center, and digital technologies that enable access through multiple channels such as voice, email, self-service, chat, and chatbots. As a result, they deliver 8% year-over-year improvement in customer services versus just 3% for the peer group.
Acquire critical skills and talent
In the Key Issues Study, nearly one-half of executives across business functions said they are concerned about skills and worker shortages, but only 41% of companies have a formal mitigation program planned or in place for disruptions due to persistent, structural skills gaps that prevent them from executing on digital transformation. Many respondents expect to freeze hiring or reduce staff due to budget pressures. This will further exacerbate skills gaps.
Create a sustainable approach to reducing operating costs
Cost reduction is perennially a part of the GBS key issues list. It may be in the bottom three this year but make no mistake organizations are particularly focused on efficiency. In the Key Issues Study, 82% of executives across business functions said that margin improvement or protection is a high or critical priority
We know the opportunity is there through our analysis of Digital World Class® organizations. These performance leaders run at a 29% lower general and administrative cost than the peer group. For a typical $10 billion organization, this represents a $110 million cost advantage across business functions. GBS organizations have a big role to play in delivering this. GBS organizations – like the selling, general and administrative (SG&A) functions they support – need a deliberate, sustainable approach to optimizing costs, rather than one-off belt tightening.
Deliver operational performance insights through analytics
Delivering operational performance insights through data and analytics is a new entrant on the GBS list of top priorities this year. Understanding GBS performance is crucial for convincing stakeholders of GBS value and achieving Digital World Class® performance.
Facilitated by process mining and technologies related to data analytics, GBS executives must understand the performance of their processes in order to identify bottlenecks and improvement areas. Operational performance insight enables them to streamline, optimize and automate operations while ensuring enhanced stakeholder experiences. They must also benchmark continually to ensure competitive advantage and optimal service performance.
Develop an agile service delivery model
Given extreme uncertainty and fast-paced change, it is increasingly important for GBS organizations to have an agile service delivery model – but achieving this requires agile behavior. GBS organizations must enhance their ability to sense changes in business conditions, plan adaptive responses and swiftly execute these plans. GBS leaders will need to revisit business continuity, location and sourcing strategies to improve agility, and update assumptions about how best to respond to business disruption.
Transform your technology capabilities in 2024
As economic disruption and potential geopolitical risk remain prominent features in the 2024 outlook, GBS leaders will need to adjust their priorities to ensure that they are able to support the success of their business stakeholders. We believe most GBS teams can make meaningful progress toward achieving their priorities by focusing in five areas:
- Enhance team capabilities.
- Architect your technology landscape purposefully.
- Determine the organization design.
- Build master data management.
- Remain vigilant.
Download the full report to get recommendations and learn more about the top priorities of GBS executives for 2024, including business partnering, acquiring and retaining top talent, and delivering powerful insights through analytics.
