Feb 05, 2013

The Seven Levers of Successful Global Process Standardization

February 5, 2013 - For decades, businesses have focused on process reengineering and optimization to drive cost savings in F&A processes. Now large corporations are turning to global process standardization to extend gains in savings and become more agile and effective across their global footprint.

Standardization can be a difficult process. However, in working with leading enterprises, we have noted seven essential levers that lead to more successful outcomes.

  1. Create an empowered process organization without waiting for change in traditional company organization models.
    Global process standardization cuts across departments, business lines, and geographies, replacing localized processes, systems, and policies. Managing such change requires that the standardization initiative be CXO-led, with a strong central authority overseeing the process to achieve stakeholder buy-in and ensure that milestones are met.
  2. Use a robust process excellence and evolution framework.
    A significant mistake made by many enterprises is focusing on sub-process improvement rather than looking at processes holistically. The organization must understand how each sub-process affects the overall value chain in order to achieve true standardization.
  3. Change the operating model.
    Conceptualizing a new operating model is relatively easy; the execution is difficult. The organization must create centralized, consolidated platforms to perform the majority of process execution. Using a global hub-and-spoke model to consolidate operations in selected locations allows both closely governed localization and faster, targeted changes in technology, processes and policies.
  4. Create a broader vision beyond cost efficiencies.
    Focusing solely on the cost savings from standardization can limit the potential benefits. A variety of metrics deliver significant business impact, such as shortening DSO, which boosts working capital. Creating business objectives beyond cost can generate business cases that will be more readily accepted by local managers and drive better adoption of new processes.
  5. Process standardization must result in clear supplier-customer performance metrics and commitments.
    One common failure point is when process leaders and internal business leaders are unclear regarding their objectives and responsibilities or not held accountable for performance commitments. A decentralized execution model makes it difficult to establish the required relationships.
  6. Global process standardization capabilities are not the same as functional competencies.
    While most companies have highly effective functional experts who manage sub-processes well, creating effective end-to-end processes requires a broader view and experience. This is why 90% of CFOs surveyed by the Chartered Institute of Management Accountants [1] last year said they use or plan to use an external provider to assist with finance transformation and/or are considering outsourcing or moving to an SSC model.
  7. Treat the standardization initiative as a journey, not an endpoint.
    Standardization takes a detailed plan that accommodates local conditions, worldwide systems, and investment constraints. Such plans inevitably take time to implement, but a roadmap focused on high impact and returns allows phased investments and opportunities to experiment with new working models.

Careful planning, strong management oversight, and a competent partner can spell the difference between success and failure in global process standardization projects. Companies who take the smart approach with these seven levers tend to achieve significantly better outcomes.

Read the full version of this article in Business Finance magazine.

About the author

Shantanu Ghosh

Shantanu Ghosh

Global Business Leader, Enterprise Services

Shantanu Ghosh is the global business leader responsible for Genpact's service lines that cut across all industry verticals – Finance & Accounting (F&A), Sourcing and Procurement, Customer Service, and Enterprise Performance Management – along with Risk Management and Supply Chain Management services. In addition, he built and previously led Genpact’s Consulting business for the past several years, creating a growth engine for the company.