By Deborah Kops
I know Europeans are different to North Americans. They don’t drink super-sized Slurpies. Shops may close at 6 pm. Every household doesn’t have a three-car garage. And they don’t lavish lights on their houses at Christmas. But is there a difference in the way they design and operate their global business services organizations?
Two models separated by an ocean? At times, when I am in Europe I wonder whether what we commonly call GBS has much similarity to its North American-headquartered counterpart. Sure, we both have mastered the basic GBS dance moves; we all pursue end-to-end, take work to the same offshore geographies and implement the same tools, but does the similarity stop there?
We tend to forget that GBS is highly contextual, and reflects cultural, strategic, organizational and differences. So, by extrapolation, the architectures should be different…or are they?
Let’s look at the context within which our major GBS headquartered markets operate (yes, friends, I know there is nothing absolute in this world…)
European GBS context:
- Decision-making driven by consensus given complicated nature of markets
- Open to implementing a market-based or regional model with some level of global consistency
- Prioritize long(er) term value creation
- Cater to a multi-lingual reality
- Employee rights impeding implementation of a global delivery model
- Strong emphasis on sustainability
- Governed by concerns about data privacy
- Likely to move talent around for career development
- Focus KPIs on customer satisfaction, ESG compliance, and employee engagement
North American GBS context:
- Decision-making driven by the tendency to drive efficiency and consistency in operations
- Homogeneous approach to GBS operations to drive rapid scalability and globalization
- Driven by quarterly performance given reporting requirements
- Belief that everyone has good English
- Few impediments to rolling out a global delivery model
- Lesser focus on sustainability
- Sees data privacy as a necessary compliance issue
- More likely to pigeon-hole talent
- Focus KPIs on cost reduction, turnaround time, and operational efficiency
As a result, European GBS organizations tend to emphasize localization, compliance, and long-term strategic goals, while American GBS organizations prioritize standardization, efficiency, and short-term financial performance.
How does this manifest itself in the respective continents’ GBS architectures (defined as patterns in models, organizational alignment, resourcing strategy and other factors) are organized and integrated?
Well, I’ve got data for that! I have recently concluded a soon to be released study entitled GBS Architectures with global research firm Everest Group (www.everestgrp.com). The results of the survey confirm that how GBS organizations are designed are highly contextual; there is in fact a pronounced Atlantic divide.
What does this divide look like:
- Model: While process ownership is still the default position for the GBS model, European organizations are far more open to the deployment of a landlord or blended model (ownership for some processes, landlording others) than their North American counterparts. This is likely due to the complexity of the markets European GBS serves.
- Resourcing approach: Unsurprisingly, European-headquartered GBS are more likely to embrace an in-house delivery strategy than their North American counterparts.
The European approach is a direct reflection of the compact they have with their employees and the challenges inherent in regulation.
- Reporting line: Although GBS is seen by the majority of enterprises as a creature of the Chief Financial Officer, European enterprises are breaking away from the trend, with a surprising number reporting to the COO. Conversely, when North American GBS do not report into the CFO, they tend to align with the CIO/CTO.
This may reflect common management science belief that North Americans are faster adopters of technology, positioning American GBS as digitally driven. And perhaps the COO reporting line reflects a stronger operational positioning for the Europeans.
- Scale: Surprisingly, European GBS follow the “bigger is better” mantra, embracing centers of over 3000 FTEs, while North Americans are likely to center scale on a range of 1000 to 2999 FTEs.
This finding is a bit counterintuitive, and a headscratcher given North American GBS’s propensity for consolidation and standardization, and a European penchant for localization.
However, in many respects European and North American architectures are similar. For example:
- GPOs Approximately one-half of all GBS organizations, regardless of which side of the Atlantic they sit, have GPOs as part of their model, whether reporting directly or not
- Delivery network locations Each geography operates a with a 50-50 split between up to three and over three locations
- Enabling capabilities The number exceeds over 3 in three quarters of GBS organizations, with a slight North American bias to a number greater than 6
- Integration with enterprise planning Half of all GBS—whether European or North American—integrate with their enterprise’s planning cycles
Ok, it’s interesting—what does this mean for a GBS leader? In short, architectures do reflect some level of business and cultural context. If a GBS organization does not cater to that context, it will likely be less successful as a model.