Mar 15, 2013

Finance: The Age of Industrialization

March 15, 2013 - Traditionally, operations departments in most organizations are slow to embrace change, since they’re usually optimized for scale rather than agility. This is understandable, given that a tenfold increase scale can shave 50% of the “cost-per-unit” of operations. Yet our volatile global economy requires modern businesses to be flexible and operate both offensively and defensively. They need to not only seek out new markets and opportunities, they must also reduce costs and meet regulatory requirements while keeping ahead of materials prices — all without losing control of operations.

That’s a tall order, but the emergence of GBS delivery models is helping to create industrialized business operations that can support a wider range of business functions. These operations are characterized by focused organizational and HR practices, advanced use of metrics, specialized technology and ultimately data-driven operations management. These models work best, however, if implemented with three critical factors in mind:

  • People: Job requirements are changing and baby boomers are retiring, leaving HR managers with a massive, global imbalance of labor supply and demand. The workforce is also changing with more offshore, part-time, and work-at-home resources in, all of whom require training, management, motivation, and compliance tracking. New onboarding and management approaches are needed to harness the right resources when and where they are needed.
  • Technology: Desktop computers and ERP systems are no longer the only options for organizations of every size. Companies must take greater advantage of advances in bandwidth and screen resolution to give workers more and better tools that fit their needs, expectations, and work styles. Organizations should also facilitate global collaboration through social media and other new technologies that can drive up productivity.
  • Process: Technology alone cannot deliver all of the cost savings and improvements an organization may seek. By standardizing processes on a large scale and “dematerializing” operations (to match people to work, regardless of where they are located), companies can implement industrialized operations models that deliver strong returns through economies of scale, process optimization, and cost arbitrage.

GBS delivery models will continue to emerge. As many as 90 percent of finance and accounting operations already use some form of shared service operations. However, without an understanding of new technologies and the realities of a changing workforce and marketplace, these models will not achieve their maximum potential. Operations leaders must overcome tendencies to think of ERP as the only answer. They must understand the benefits and requirements of global collaboration among widely scattered teams, and deploy technologies that enable employees to work “side by side” on projects even when they are not collocated.

Industrialized business operations are achievable today. CFOs looking to achieve competitive advantage should examine how a GBS model could drive greater productivity and lower costs within their own organizations.

Read our article on this topic in the February 25 edition of Business Finance magazine.

Please share your view. Feel free to connect with me on twitter@ggiacomelli.

About the author

Gianni Giacomelli

Gianni Giacomelli

Chief Innovation Leader

Gianni serves as Chief Innovation Leader where he drives and sponsors Genpact’s strategic initiatives aimed at sustaining clients’ transformation into digitally-enabled companies. He also co-leads the Massachusetts Institute of Technology (MIT) efforts to set up a Collective Intelligence Design Lab.