Global Business Services: What’s the Verdict?

The case for Global Business Services (GBS) has been brought to trial, but the jury is still out. Over the past 5 years, GBS has been seen as part of our evolution in the world of shared services. The organizations that embraced GBS viewed it as the essential next stage in their journey towards maturity. They were ready to become multi-functional, led by one individual, and global. But now GBS is like a suspect under scrutiny, as the SSOs question its motives. 

Enter Exhibit A: Rio Tinto. The global mining company headquartered in London, with annual revenue of 34.78 billion USD (2016), moved from an SSO to GBS back in 2013. With one figurehead, a multi-functional remit, and a Finance department with world-class status, Rio Tinto’s GBS was set for success.

But then, in late 2016, Rio Tinto made the decision to dismantle its GBS, which may have been a shock for many but not for all. 

So, what went wrong? 

Exhibit B: Merck, the US Pharmaceutical giant, also reversed its GBS status and gave back functional ownership.

Merck’s and Rio Tinto’s actions raise questions for us, and, for some, these questions may lead to arguments against GBS. 

In the case of Rio Tinto, it can be argued that:
•    The GBS at Rio Tinto became too large – the scope of the organization was too wide 
•    New leadership within the business wanted a different way of working
•    Leadership wanted to give back functional ownership – they saw this as the best route for the future of the business

These observations by no mean discredit GBS as a suitable route for many large organizations, but they do call into question the merits of implementation of a GBS structure and its impact on the business in certain cases. 

GBS is still a popular choice for many, and does represent the next stage of maturity for an SSO. Yet, there is clearly a feeling of distrust when it comes to GBS, and one could argue that the reality does not always live up to the vision or the ideal. 

While it’s fair to say that two organizations’ reversing their GBS structures does not strike fear into the shared services industry, it certainly prompts us to examine the staying power of GBS. No doubt the jury will be arguing this case for the foreseeable future, so sharedserviceslink will be sure to keep the industry updated on the deliberations.