The thing with global trends is that they are, well – global. One such trend that has swept businesses started with multi-nationals about ten years ago. In this case, they evolved the range of the services and the size of work they shared with other organizations. This led to the emergence of an expanded model from the traditional business model.
One of the driving changes was their direction towards managing their services all through the enterprise across geographical locations. Another change was the expansion of the process scope to encompass more than the transactional activities of the former model. All the activities were organized by one person and the results reported to him alone. This model is now known as the Global Business Services model.
Essentially, the model only differs from the traditional model in few ways and is more suitably an extension rather than an entirely new concept.
UAE companies that desire to expand their geographic scope as well as the organizational scope may need to adopt this more robust system of delivery.
The model has the following characteristics:-
- It includes high-value activities
- All through the enterprise, infrastructure is shared– they optimize global locations as well to deliver services efficiently
- Members of staff report to one person who has responsibility for the whole budget
- Services are delivered to a global customer base – the organization must define how this will be done for all locations
- There is, therein end-to-end process ownerships
As compared to the traditional models, companies that make the transition to GBS successfully expect to make profits of between 5 to 20 percent more in terms of savings. These benefits will be driven by global process standardization, optimizing infrastructure (both technology and location), and increasing the economies of scale.
The real benefits for GBS, however, can be attributed to the value that is generated in the enterprise in general through the delivery of integrated support services. An example of this would be shortening the working capital cycle by reducing processes that it has to go through. It would also lead to optimization of vendor spending and increase the engagement of the employee. These factors translate to great benefits that transcend saving costs.
What it means for Dubai
If at all the nation is to support the government’s goal of fostering economic development in the years leading to 2020 through business services, then GBS may be a viable route. This will help the individual companies increase the value offered by traditional shared service models.
The design of the organization and the framework of governance play a large role in the successful implementation of GBS. In order to design an operating model and an organizational structure, there is a need for a careful balance of the execution of end-to-end processes, efficiency in support processes, and exceptionality in customer care. Additionally, good governance is required to resolve disputes and to make the difficult decisions without having to slow down implementation.
Companies in Dubai are reportedly beginning to take part in the rise of global business services. Those that reach this goal will get very significant rewards.