GBS organizations of the future are growth enablers and resource wells for innovation

The evolution of global business services (GBS) over the last few decades is one of the most impressive transformation stories in the corporate world. What initially started as “shared services” characterized by centralized delivery models to manage business functions have morphed into internal tech and innovation nerve centers within global enterprises. The term “global business services” now fails to encapsulate the full spectrum of capabilities these hubs embody.

Today’s GBS organizations consider themselves resource wells for innovation, growth, and reinvestment. This is why the traditional GBS model is dead and supplanted by a new GBS: generative business services. As part of our generative business services research in partnership with IBM Consulting, we spoke with leaders of mature GBS organizations to help bring our point of view to life.

Global business services enabled by technology and driven with an AI-first mindset is going to be one of the greatest transformation stories for the history books.

– Joanne Wright, SVP Transformation and Operations
IBM

Please note that our survey data shared in this POV refers to global business services, and while “global” is still the primary naming convention for these entities, we feel that the shift in focus and value will eventually convey “generative”—our interviewees agreed. The old idea of stodgy shared services has been under pressure for some time to deliver real value and drive innovation for the enterprise. This shift has led GBS leaders to increasingly concentrate on technology, positioning them as “mini-CTOs” where technology is seen as a key enabler of experience, value, and performance. Now, GBS organizations are fundamentally shifting away from traditional service delivery and becoming innovation powerhouses leveraging generative artificial intelligence (GenAI) for strategic advantage and value creation.

We choose to call our organization Global Enterprise Services (GES)—as this reflects the new operating model and our alignment with enterprise goals.

– Global Enterprise Services VP, Multinational Manufacturing Firm

GBS organizations are now growth enablers driving real value for the enterprise

For a long time, the GBS construct has centered on centralizing processes to enhance efficiency and leverage lower-cost labor to reduce costs. However, most GBS organizations have maximized cost and efficiency levers in recent years, and they need to shift their focus to build smarter operations to retain a competitive edge and stay relevant. A financial leader for a large global consumer packaged goods (CPG) company rightly notes, “You’re seeing 10% inflation every year on savings, so the question really becomes—how do we create value for the future?”

Our research of more than 600 business services decision makers across the Global 2000 reveals that nearly 50% of GBS organizations focus on cost savings today. However, they expect that focus to decrease by half in the next two to three years and shift to leveraging data for new sources of value. GBS organizations of the future must align with the enterprise growth agenda—not just better, faster, and cheaper operations.

Exhibit 1: GBS must align with enterprise growth to remain viable

Sample: 1,800 employees across leading IT and business service providers, September 2023 survey
Source: HFS Research, 2024

To this end, GBS organizations will need to work in tandem with the business to understand broader enterprise goals and identify ways to support that growth. A GBS leader from a multinational manufacturing firm adds, “The Global Enterprise Services (GES) team is part of the digital strategy committee that takes strategic decisions on the digital strategy of the company. We are part of discussions on how the company is investing in digital and the way forward.” This approach ensures GBS organizations align seamlessly with the overall strategic direction of the enterprise, enabling them to contribute effectively to its goals.

IBM is transforming shared services as “client zero” with IBM Consulting, setting the example for driving innovation

At IBM, the vision is to reimagine GBS by cultivating smarter operations that leverage data and insights for enhanced value creation. IBM’s strategic GBS initiative is anchored on three key pillars:

• Leveraging a comprehensive tech stack: It modernizes enterprise IT by leveraging its comprehensive tech stack to establish a robust hybrid cloud environment, streamline application costs, and minimize the application footprint.
• Adopting an AI-first approach: IBM propels its digital transformation by partnering with its consulting arm. It adopts an AI-first approach to reimagine every enterprise process as seamlessly digitally enabled with GenAI and fully integrated. Joanne Wright noted, “If you can reimagine how work gets done with automation and AI, you can unleash the productivity across your enterprise.”
• Fostering a cultural transformation: Last, IBM commits to a cultural transformation, motivating employees to embrace new behaviors that align with this shift, thereby positioning them as catalysts of productivity, innovation, and growth.

This comprehensive strategy underscores IBM’s dedication to its leadership in technological innovation and operational excellence.

Joanne Wright described how IBM’s GBS function has served as “client zero” for its consulting practice, setting the example for how to transform internally before taking its best practices to help clients transform. Wright takes pride in knowing that her organization fuels IBM’s growth, providing opportunities to reinvest in innovation, acquisitions, and other value-driven initiatives. Recognizing that both IBM and its clients are becoming data and AI-first organizations, the remit is not just to streamline operating models and modernize technology but to invest in skills for the future, especially in passionate people who want to learn.

GBS organizations can embrace the new S-curve of value creation, turning GBS staff into productivity catalysts

GBS leaders searching for the next big thing after “offshoring” may have their prayers answered with the dawn of GenAI. GenAI technology is unique because it can synthesize information and language patterns and handle complex natural language processing tasks such as language understanding automatic text generation and dialogue systems. Business leaders are eager to learn how to infuse GenAI into business processes to drive fierce improvements and outcomes; in the new S-curve of value creation for enterprises (see Exhibit 2), GenAI has the potential to vastly accelerate productivity and value creation. Joanne Wright of IBM sees this as “an incredible opportunity to reimagine smart operations with an AI-first mindset.”

Exhibit 2: The dawn of GenAI has created an inflection point for GBS organizations to jump to a new S-curve of value creation

Source: HFS Research, 2024

The leaders we spoke to voraciously want to learn how GenAI can transform organizational functions such as IT, HR, finance, and procurement by enabling autonomous decision-making and efficient exception processing. Advanced chatbots and GenAI assistants can autonomously address inquiries from internal customers, employees, and partners, freeing personnel to focus on strategic initiatives.

For instance, finance and procurement operators are exploring ways to apply AI, such as AI-powered digital assistants, to improve operational efficiencies, drive productivity, and augment their customers’ experiences. This includes buyers, stakeholders, and suppliers engaging with finance or procurement along the source-to-pay workstream, for instance, who experience cumbersome journeys due to manual and repetitive tasks in payment and query handling.

Overall, GenAI extends its capabilities beyond traditional tasks to embrace a creative scope of work. Human talent and intelligent machines must collaborate, acting as co-pilots to unlock productivity and spark innovation, transforming them into catalysts for growth.

Delivering new value streams with AI at scale today will undoubtedly help enterprises stay competitive. This may require an AI-first approach that involves a digital-first, AI-driven strategy, putting people, processes, and technology at the core. As a starting point, they can explore how to reimagine and change enterprise-wide operations by harnessing the power of GenAI.

Centralizing and standardizing operations reduces costs and improves efficiency within an organization. By reinvesting the savings from these processes into innovation, GBS can be a key enabler to drive productivity and innovation for the organization.

– Financial Leader, Large Global CPG Company

Disrupting the full-time-equivalent (FTE) model means more engaging opportunities for employees

The legacy GBS model was built on labor arbitrage, focusing on process excellence and efficiency. Yet, for enterprises to unlock value beyond labor cost savings, the focus must shift to achieving business-critical outcomes. This requires GBS organizations to adopt a new narrative combining human expertise with AI capabilities to deliver higher-value work that aligns more closely with enterprise innovation goals. In a tech-augmented environment, tasks previously considered non-transactional may become transactional, readily executed by intelligent applications, workflows, and machines enhanced by AI technology.

Consequently, human talent will shift toward strategic, value-driven work, demanding a multidisciplinary approach. The shift from people-centric to tech-centric models is well-positioned to take advantage of an under-challenged workforce. HFS’ research on the employee experiences of 1,800 business services staff shows that close to nine out of 10 want to feel more challenged, but the majority still feel a passion and connection to their industry. This duality of sentiment is exactly what is needed to develop talent within generative business services; exciting challenges are ahead.

Exhibit 3: Employees are under-challenged but remain passionate

Sample: 1,800 employees across leading IT and business service providers, September 2022 survey
Source: HFS Research, 2024

With the emergence of GenAI, GBS organizations have a unique opportunity to provide GBS staff with exciting new “career experiences.” This development necessitates a paradigm shift in GBS models, where people will need to acquire a new skill set to effectively collaborate with intelligent machines. Seventy-four percent (74%) of CEOs say their teams are appropriately skilled in GenAI, yet only 29% of the C-suite agrees. Sixty percent (60%) of executives view HR as a purely administrative function, a risk that can undercut the positive impacts of this revolutionary technology. Consequently, enterprises must prioritize training and upskilling of their teams to keep them abreast of the latest tech advancements and ensure their skills remain relevant.

Traditional process-oriented roles, previously focused on improvement, will increasingly intertwine with technology and data. This shift will create new positions, such as process tech leads or process data leads, reflecting the integrated approach required to drive efficiency and innovation within GBS frameworks.

Joanne Wright comments, “We encourage our teams to reimagine and challenge the way work gets done, challenge the status quo…and we are now growth enablers of the organization.”

The Bottom Line: Transitioning to generative business services with AI enables GBS to become a pivotal growth enabler for the enterprise.

The GBS workforce of the future embodies passion and a relentless drive to learn, underpinned by a growth mindset. Embracing these traits forms a strategic foundation as organizations transition into the next phase of AI-driven GBS models, where unprecedented levels of value await.

To make this transition, IBM’s business process operations experts recommend the following six key priorities:

1. GBS must evolve from operational cost centers to departments with a seat at the innovation and decision-making table.
2. Examine your labor pool (and its technical skills) and pursue a state in which digital and labor work together to deliver new value streams.
3. Reimagine your operations and rearchitect your end-to-end workflows to extract new value from emerging technologies.
4. Explore GenAI and how it can deliver meaningful outcomes across your business.
5. Shift the narrative from service level agreements to driving business outcomes for the enterprise.
6. Immerse yourself in experiential engagements—see it, touch it, and be part of it before scaling the technology.

To start immersing yourself in GenAI solutions and learn about IBM’s modern approach to business process operations, visit https://www.ibm.com/consulting/bpo