Delivering Global Business Services benefits in a digital world

Transcription

1 Delivering Global Business Services benefits in a digital world 2Q 2017 KPMG Global Insights Pulse September 27, 2017

2 Webcast facilitators Stan Lepeak Director, Global Research, Management Consulting KPMG in the U.S. David Brown Global Head, Shared Services & Outsourcing Advisory, and Principal, KPMG in the U.S. Liz Evans Principal, Shared Services & Outsourcing Advisory, KPMG in the U.S. 2

3 Administrative CPE regulations require that participants take part in online questions 1. 1 Must respond to a minimum of three questions per 50 minutes 2. 2 Polling questions will appear on your media player 3. 3 Post webcast survey must be completed 4. 4 Results will be reviewed in the aggregate; no responses will be tracked back to any individual or organization To ask a question, use the Ask a Question box on your media player Technical issues: use the '?' button in the upper right corner of your webcast player to access our new online help portal If this does not resolve your issue, please submit a question through the Ask a Question box, and you will receive a reply from our technical staff shortly in the Answered Questions box. 3

4 KPMG Shared Services and Outsourcing Advisory Who they are The Shared Services and Outsourcing Advisory practice brings a specialized team of more than 1,000 professionals within KPMG s global network of independent member firms operating in 155 countries. They help clients design, build and manage IT and business processes across the enterprise. What they do KPMG professionals help clients align their business strategy, organization and execution to enable them to manage the entire IT and business process life cycle, improving business performance and laying the groundwork for genuine business transformation. How they do it KPMG professionals apply focused research, automating tools, proprietary data, clear business acumen and a forward-thinking mind-set to provide timely, objective and actionable advice and practical approaches for clients. 4

5 Polling question 1 In which of the following industry groups does your organization operate? Select one: Business or IT service provider KPMG employee Financial services Diversified industrials/manufacturing Energy and natural resources Healthcare and pharmaceuticals Retail consumer goods/food and beverage Technology Government/Education Other 5

6 KPMG Global Insights Pulse The surveys are a quarterly review of global business services (GBS) and intelligent automation (IA), related service delivery market trends and individual observations from the front lines Input sources: KPMG s global network of advisors focused on: - Sourcing Advisory - Financial Management - CIO Advisory - People and Change - Business Operations - Tax, Deal Advisory, and Audit KPMG market research Topics evaluated: Drivers for GBS usage GBS adoption trends Service delivery usage levels IA - IA uptake - IA opportunities and challenges - IA and digital labor governance Primary functional focus: Call center/customer care Finance and accounting Human resources Information technology Procurement Real estate and facilities management Vertical industry BPO Emerging BPO/KPO functions Focus on performance, trends, and future state Global Insights Pulse launched in 2004 by EquaTerra* Part of a growing family of KPMG Pulse market research studies * KPMG LLP (U.S.), KPMG Holdings Limited (UK) and KPMG International acquired the business and subsidiaries of advisory firm EquaTerra, Inc. in February

7 2Q17 Global Insights Pulse Survey results

8 Agenda There are a variety of means organizations can employ to drive increased maturity levels for their global business services operations thereby furthering meaningful and measureable business outcomes. Two key paths to support this approach are promoting and enhancing the use of IA and digital labor, and in parallel evolving and enhancing GBS governance capabilities to account for the increased use of intelligent labor. 1 GBS 2 3 market trends IA adoption levels and trends IA governance Process and cognitive automation adoption trends 8

9 GBS market trends

10 Demand dashboard Top 10 functional focus areas for service delivery improvement efforts Top 10 sectors for Global Business Services demand IT F&A Procurement/source to pay Data & analytics HR Customer care Supply chain All business functions All areas, including IT REFM Highest in Europe 39% Banking, Financial Services, Insurance CPG, Food & Beverage, Retail, Wholesale Healthcare Energy/Utilities, Oil & Gas No one specific sector/vertical industry Pharma/Biotech Telco Govt (Fed, State, Local), Education/Non-Profit Manufacturing High Tech Products/Svcs Entertainment/Media, Hospitality/Travel, Global/Enterprise Business Services Chemicals, Minerals/Natural Resources Automotive Aerospace/Defence Transportation & Logistics Real Estate Bus Svcs/Consulting, Construction/Engineering 0% 20% 40% 60% 0% 10% 20% 30% 40% 50% 2Q17 1Q16 2Q17 1Q16 KPMG Global Pulse Insights Survey 2Q17 10

11 Top approaches to improve service delivery capabilities Investments into RPA Investments in data and analytics Internal process improvement/re-engineering efforts Use/expansion of SSCs Improve current SSC/outsourcing governance Combined score for RPA and cognitive just 8% 1Q16 Lowest in Asia Pac 21% Highest in Asia Pac 43% Investments into cloud computing services Use/expansion of BPO Use/expansion of ITO Investments into/improvements to enterprise software Investments into cognitive automation 0% 10% 20% 30% 40% 50% 60% 2Q17 2Q16 KPMG Global Pulse Insights Survey 2Q17 11

12 Demand growth by service delivery model Demand by service delivery model over the past 1-2 quarters BPO 12% 66% 23% ITO 9% 69% 22% Down Flat Shared services/ssc 5% 63% 33% Up Internal process improvement 4% 40% 56% Expected demand by service delivery model over the next 1-2 quarters BPO 12% 56% 32% ITO 7% 60% 34% Down Flat Shared services/ssc 4% 54% 41% Up Internal process improvement 1% 33% 66% KPMG Global Pulse Insights Survey 2Q17 12

13 Demand by service delivery model: Net change in demand 60% (Last 1-2 quarters) net change in demand (up-down responses) 50% 40% 30% 20% 10% 0% 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1Q15 2Q15 4Q15 1Q16 2Q17 Internal process improvement Shared services/ssc ITO BPO KPMG Global Pulse Insights Survey 2Q17 13

14 Intelligent Automation

15 IA and the future of GBS IA, or digital labor, comprised of basic and enhanced robotic process automation (RPA) and cognitive automation, is enabled by a confluence of capabilities that include rules-based macros, artificial intelligence, natural language processing and a wealth of available data to exploit. Over time IA will have a major impact on staffing and operating models and the location of captive and third party deliver centers and disrupt legacy outsourcing models and service providers. While the often cited major potential job losses to internal and external white collar from increased are sometimes overstated, they will nonetheless prove significant and disruptive, especially where retraining and reskilling workforces is impractical. The growth of digital labor will affect organizations for many years to come, while in the short term they struggle with disparate and uncoordinated IA initiatives, fragmented underlying IT systems and applications, uncertainty over where to best start and invest and challenges with change and talent management needs. IA will have a significant impact on how businesses handle their front-, middle-, and back-office services. Companies that today rely on a GBS delivery model should begin now to anticipate and understand the coming changes including taxes, governance, and change management and prepare for the opportunities and advantages they enable. David Brown, KPMG s Global Head, Shared Services and Outsourcing Advisory, and Principal, KPMG in the U.S. KPMG Global Pulse Insights Survey 2Q17 15

16 The evolution of IA Cognitive automation Enhanced process automation 03 REASONING 01 Basic process automation RULES 02 LEARNING Processing of unstructured data and base knowledge Large-scale processing Adaptive alteration Machine learning Natural language processing Big data analytics Artificial intelligence Rules engine Screen scraping Work flow Macro-based applets Screen scraping data collection Workflow Visio -type building blocks Process mapping Business process management Built-in knowledge repository Learning capabilities Ability to work with unstructured data Pattern recognition Reading source data manuals Artificial intelligence Natural language recognition and processing Self-optimization/self-learning Digestion of super data sets Predictive analytics/hypothesis generation Evidence-based learning KPMG Global Pulse Insights Survey 2Q17 16

17 Levels of client automation activity by maturity level 5% 2% 7% 27% 28% 47% +20% vs. 1Q16 45% +26% vs. 1Q16 47% 24% 20% 45% -27% vs. 1Q16 4% Basic process automation Enhanced process automation Cognitive automation No activity Self-educating and planning Experimenting and running pilots Live implementations KPMG Global Pulse Insights Survey 2Q17 17

18 Polling question 2 How aggressive is your organization about pursuing an IA agenda and making the required investments to advance? Select one: Very aggressive/multiple live implementations Somewhat aggressive/mostly running pilots Not aggressive/still exploring developing strategies and plans 18

19 Level of automation by process Procure to pay 45% 38% 17% IT 44% 40% 16% Record to report 46% 41% 12% Customer care 44% 43% 12% Quote to cash 53% 36% 12% F&A 38% 53% +31% vs. 1Q16 9% Source to procure 62% 32% 6% SC/Procurement 58% 37% 5% HR 60% 36% +25% vs. 1Q16 4% No current plans Pilot Live implementation KPMG Global Pulse Insights Survey 2Q17 19

20 Biggest challenges to process automation efforts Disparate/uncoordinated efforts across an organization Client inability to build compelling/realistic business case Determining where to deploy process automation: where to start Disparate underlying IT systems/lack of integration across IT systems Inconsistent/non-standard business processes Lack of client appetite/budget/skills Inadequate change management focus/capabilities Immaturity of technologies Integrating automation efforts into existing outsourcing arrangements/slas/contracts Client reluctance to reduce headcount//market restrictions on headcount reductions Immaturity of providers 3rd party providers reluctance to cannibalize existing labor based business Determining appropriate pricing models with third party vendors/providers 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2Q17 1Q16 KPMG Global Pulse Insights Survey 2Q17 20

21 Polling question 3 What are the biggest challenges in your organization related to process automation efforts? Select one: Disparate/uncoordinated efforts across an organization Client inability to build compelling/realistic business case Determining where to deploy process automation: where to start Disparate underlying IT systems/lack of integration across IT systems Inconsistent/non-standard business processes Lack of client appetite/budget/skills 21

22 Potential job losses by delivery model: Next 3 years BPO operations 9% 38% 36% 13% 4% ITO operations 20% 41% 28% 10% 2% Shared services operations 16% 39% 30% 10% 5% 2% 2% Retained organization 39% 39% 18% 0-10% down average 10% vs. 1Q % up average 6% vs. 1Q % 11-20% 21-30% 31-50% 50%+ KPMG Global Pulse Insights Survey 2Q17 22

23 Potential job losses by delivery model: Next 5 years BPO operations 7% 22% 37% 25% 9% ITO operations 11% 23% 34% 23% 9% Shared services operations 12% 21% 35% 23% 9% Retained organization 14% 34% 35% 14% 3% 0-10% down average 7% vs. 1Q % up average 5% vs. 1Q % 11-20% 21-30% 31-50% 50%+ KPMG Global Pulse Insights Survey 2Q17 23

24 Polling question 4 What percentage of internal jobs (retained organization + shared services) do you anticipate your organization may automate over the next five years? Select one: 0-10% 11-20% 21-30% 31-50% 50%+ 24

25 Likelihood IA maturation will drive use of less outsourcing/more shared services BPO 6% 28% 38% 25% 4% Up 13% vs. 1Q16 ITO 9% 29% 38% 22% 2% Up 10% vs. 1Q Not at all likely Moderately likely Highly likely KPMG Global Pulse Insights Survey 2Q17 25

26 Intelligent Automation governance

27 IA governance The bar of what constitutes best in class AI governance will constantly be raised, just as with GBS governance, so even as organizations skills improve they will still often not able to keep up with the demands placed upon them greater use digital labor. Good governance coupled with strong change and program management is critical to the success of an organization s IA efforts, just as with global business services and outsourcing efforts, especially as focus shifts to delivering meaningful and measureable business outcomes above and beyond cost savings. Addressing IA governance is a new challenge for organizations overall and for governance given often new and immature technologies, new providers and vendors, changing contractual needs, fragmented governance efforts and a host of other challenges. The biggest challenges today AI governance efforts is determining where to deploy digital labor, addressing change and talent management issues, and renegotiating with third party providers deploying digital labor on clients behalves.. Clearly defined roles and responsibilities for the new governance and operating organization and end-to-end global process ownership are the top two critical considerations for AI as well as GBS governance. KPMG Global Pulse Insights Survey 2Q17 The world of vendor governance is evolving with the shift to incorporate AI in the service delivery model. Vendor governance teams have a leadership responsibility to recalibrate the vendor relationship and commercial model to incorporate AI in a sustainable way for the organization. Liz Evans, Principal, Shared Services and Outsourcing Advisory KPMG in the U.S. 27

28 IA governance: Who is in charge? Have enhanced existing programs to better address digital labor governance 2% 17% Involvement of global process owners in digital labor governance 3% 22% Fully involved, driving the conversation Very common 24% Fully involved, part of the conversation 39% Common Involved, part of the conversation Very uncommon 23% Partially involved but not driving the conversation Not involved 30% 6% 7% KPMG Global Pulse Insights Survey 2Q17 28

29 Polling question 5 Who leads digital labor governance efforts in your organization? Select one: Same group that manages third party provider governance Business unit building out digital labor/dealing with third party providers New group focused on digital labor/dl COE Everyone No one 29

30 Coordinating IA and outsourcing governance Frequency in which digital labor & service provider governance are managed by the same group 29% Frequency in which outsourcing governance group drives digital labor contract review efforts 0% 8% 0% Too soon to tell Always Often Sometimes Occasionally Never Most common in global firms: 26% 2% 17% 24% 23% Always Often Occasionally Sometimes Rarely Never 37% 43% KPMG Global Pulse Insights Survey 2Q17 6% 12% 30

31 IA governance: Techniques and tools Consideration of digital labor governance COEs 0% 9% Consideration of digital labor governance COEs 0% 9% Digital labor COE up and running 24% Digital labor COE up and running 24% Key strategic mechanism to drive value/being implemented Piloting/early deployments 41% Key strategic mechanism to drive value/being implemented Piloting/early deployments 41% Initial conversations with multiple proof of concepts underway Not thinking about it Not thinking about it 26% 26% Initial conversations with multiple proof of concepts underway KPMG Global Pulse Insights Survey 2Q17 31

32 Changes made to governance/supplier management programs to oversee digital labor Doing nothing, too soon to tell if change is needed 45% Reviewing staffing/skills requirements to support DL governance Pushing for greater involvement in DL strategy & planning 28% 28% Relying more on 3rd party providers to support DL governance Aligning closer with BUs deploying DL Deploying DL governance COEs 21% 24% 24% Relying less on 3rd party providers to support DL governance Integrating GBS and DL governance efforts Relying more on software tools/systems to support DL governance Adapting/updating governance processes 17% 15% 14% 12% Introducing a new category of suppler/sp in the segmentation model 9% KPMG Global Pulse Insights Survey 2Q17 32

33 Biggest challenges: Digital labor governance efforts Determining where to apply DL Addressing change/talent management issues as more work is shifted from human to DL Renegotiating contracts with 3rd parties to incorporate DL & ensure benefits are received Managing the mix of digital & human labor for an activity that requires both Managing the mix of digital & human labor for a given function/process Redefining career paths & succession planning for remaining human labor 37% 34% 33% 31% 30% 28% Determining the optimal mix of internal & external DL & human labor 25% Governing 3rd party provider DL 24% Defining/collecting metrics to measure DL performance 23% Creating audit trails for activities performed using DL 10% KPMG Global Pulse Insights Survey 2Q17 33

34 Typical scope: Digital labor governance DL security 40% DL strategy & capacity planning Compliance & change management, request & prioritization of new DL opportunities DL workflow development & management DL compliance (e.g., corporate, regulatory) Bot maintenance/management, library development/management Bot management DL integration across functions & processes DL provided by 3rd party service providers Migration strategies from traditional service delivery models to DL Determining where to apply DL in existing 3rd party relationships Bot development 36% 35% 34% 34% 33% 33% 32% 29% 26% 25% 24% Vetting traditional 3rd party SPs DL capabilities Ensuring that DL benefits gained by 3rd parties are shared equitably with client Internal organization DL 19% 19% 18% Underlying data created & managed by DL 15% KPMG Global Pulse Insights Survey 2Q17 34

35 Digital labor impact on client & service provider relationships Too soon to tell 57% Reassessing what work is performed internally via DL/what is provided externally Introducing use of new class of providers focused specifically on DL Driving rationalization/consolidation of provider portfolio to prioritize DL capabilities 23% 26% 24% Lowering rates paid to providers 20% Decreasing reliance on 3rd party providers in lieu of use on internal DL Shifting "balance of power" more to buyer from the service provider Driving reassessment of In what geos 3rd party services are delivered 14% 13% 13% Increasing reliance on 3rd party providers to /manage DL 12% KPMG Global Pulse Insights Survey 2Q17 35

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39 Q & A

40 Speaker bios

41 David Brown Dave is the global head for KPMG s Shared Services and Outsourcing Advisory practice. In this role, Dave provides shared service and outsourcing advice to many of the larger, complex deal structures. Dave has more than two decades of experience in IT and business process outsourcing; shared services design/build/implement and sourcing management; contract renegotiations; and finance budgeting, planning and analysis. Dave also delivers hands-on services as a client executive and has led many multinational deals and provided leadership support on several large and complex deals for both IT and business processes. In addition to advising clients, Dave engages senior members of outsourcing service providers financial and IT delivery teams to establish and implement industry-accepted processes and structures related to outsourcing transactions. David Brown Global Head, Shared Services & Outsourcing Advisory and Principal, KPMG LLP (U.S.) djbrown@kpmg.com djbrown@kpmg.com Before joining KPMG through the acquisition of EquaTerra where he held various senior leadership positions including one through which he established the Financial Architect and Benchmarking practices, and was a client executive leading large multinational, multifunctional shared service and outsourcing engagements Dave was a senior advisor at TPI. In that role, he assisted clients with the evaluation, negotiation, implementation and management of IT and business process sourcing initiatives. Earlier in his career, Dave held various financial and IT positions in the telecom industry, at organizations including Southwestern Bell Information Services, Southwestern Bell Directory Operations, Ameritech Advertising Services and Bell Canada. Sample client experience Led a large pharmaceutical company through a global IT outsourcing transition involving transitions with total contract value in excess of U.S.$1 billion Led a global finance and accounting outsourcing transaction and global shared service design/build and implementation for a global pharmaceutical company Provided financial and negotiation support for Unilever s finance and accounting outsourcing deal (Europe and North America) Led an assessment of Brazilian telecom s IT operations, outsourcing and joint venture options. Led negotiations with third-party provider Led a large U.S. oil and gas company through a finance and accounting outsourcing transaction, providing overall leadership and financial support 41

42 Liz Evans Liz has over 18 years experience, focused on working with organizations to support transformational change, often in the form of shared services, outsourcing or other changes to the service delivery environment. Liz is a leader within the Outsourcing and Shared Services area and has led efforts to establish appropriate governance mechanisms for large transformation programs. Much of Liz work is spent advising client on how to successfully establish supplier portfolios and govern them effectively. She is experienced in the set-up, operations and program management within large programs of change. Prior to joining KPMG, Liz led the Governance & Transformation Advisory practice at EquaTerra. Liz was a key contributor to the development of EquaTerra s, governance, transition, Center of Excellence and health check methodologies based on her experience of working with global firms across the business service portfolio. Liz Evans Principal, Shared Services and Outsourcing Advisory, KPMG LLP (U.S.) erevans@kpmg.com Sample client experience State Governance Agency Currently leading the engagement to provide input and market leading practices to support the development of a robust and scalable governance model for the new Emergency Call Program. The program is highly transformative and involves a large and complex stakeholder group. Global Pharmaceuticals Organization Led the effort to design, build and implement an Outsourcing Center of Excellence. This organization reports directly to the CFO and has purview of all business process outsourcing agreements (traditional BPO and ITO). Led the development of the governance model for the newly define, multi-channel operating model. Currently leading the implementation of a multi-year managed governance service initiative. State Government Authority Currently leading an engagement to review and re-design the IT outsourcing governance model as the client contracts for a multi-provider delivery environment. This multiprovider solution leverages a combination of a third party service integrator and multiple service providers. Global Pharmaceuticals Organization Led the effort to design and implement the governance structure for the Finance & Accounting outsourcing relationship. Currently leading a multi-year managed governance service initiative. Global Beverage Organization Led an engagement to collaboratively review and improve a strategic outsourcing relationship. Led the development and delivery of Service Provider Relationship Outsourcing training for both the client and a key service provider. Additionally, led an effort to determine gaps and remediation strategy for applications outsourcing governance for a multi-vendor environment 42

43 Stan Lepeak Stan leads market research and thought leadership efforts for KPMG s Global Management Consulting research practice, focused on trends, issues and futures in enterprise services transformation and optimization, the threats and opportunities from market and technology disruptions and industry best practices in responding to and capitalizing on these market trends, including: Stan Lepeak Director, Global Management Consulting Research, KPMG LLP (U.S.) slepeak@kpmg.com The tactical and strategic organizational opportunities, challenges and ramifications from: - technology disrupters and enablers such as cloud, big data and analytics, mobile, Internet of Things, social media, consumerization of IT and robotics process automation - business disrupters such as globalization, increased regulatory and compliance complexity, talent and skills shortages, shifting global economic and competitive dynamics and geopolitical risks Global business services usage and models including shared services, process outsourcing and automation, and cloud, and their leading practices and maturity models across major back- (F&A, HR, IT, procurement, supply chain), middle- and front-office functions Use of data and analytics, process automation and related technologies to create and exploit 'intelligent' business functions to enable organizational innovation and transformation Vertical industry and geographic trends and variations relative to disruptive market trends and technologies and their impact on enterprise transformation and innovation efforts Representative experience 25 years' experience in the business and IT services markets. Led global research for leading boutique sourcing advisory firm EquaTerra (acquired by KPMG in 2011) for seven years. Worked for the META Group (acquired by Gartner in 2004) as VP and Research Director; had executive roles on the vendor and provider side in the software and services industries as well as positions in finance, accounting and operations across several industries. Noted commentator and frequent speaker on global business services and globalization, and business and IT enablers and disrupters 43

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