Who should manage a global services-portfolio function?

Good question. One of the largest challenges in the industry is that most procurement functions have historically employed buyers rather than sophisticated business problem solvers; administrators rather than services managers. The challenges inherent in quickly changing the capabilities of procurement departments to those required for business-process services leads multinationals to set up a separate services function, discrete from traditional purchasing, often reporting directly to the C-suite.

The right leader for the function is rare bird. As the implementation of global services delivery represents radical change, he must understand the art of the possible within the organization, yet bring a level of creativity and problem solving acumen that is not hidebound by “the way things have always been done.” This individual is capable of managing the six aspects of transformation — change, people, sourcing, performance management, risk and governance, and can develop and lead a high visibility, high performing team.

Once the imperative is understood, how should companies start down the path?

Believe it or not, the simple act of defining scope — what constitutes a service under portfolio management — should be a first step. In some corporations, security, catering or reproduction may be deemed commodities to purchase rather than services to implement; in others, they are part of a services portfolio. And developing a lexicon of risk and complexity is also critical to successful portfolio management. Some services such as multiprocess outsourcing have inherent complexities and risks that a point service deal — such as learning services — does not have.

Developing principles and a consistent approach is vital. Guidance on the definition of what is a core/noncore process, the range of risk factors and the scope of regulatory restriction form the basis of policy. Directives on leveraging scale in a contract or a captive center and on combining like processes should be inherent in services principles. Exceptions to the rule will always occur; guidance should be given on acceptable tradeoffs. And minimum performance criteria — returns, time horizons, and key performance indicators — should be established.

Establishing rules, and institutionalizing control points to support application of principles should follow. Getting executive leadership to approve comprehensive policies for the entire lifecycle of service is often not easy but a prerequisite for effective management.

Without the clout of policy and procedures that solve for risk, reporting and good governance, global services functions become optional internal consultancies. A comprehensive policy for both outsourcing and captive development, clearly articulated as to the approval process at all stages of global services delivery, is essential.

Ring fencing the universe of initiatives both in place and underway is not only an arduous task but also a critical component for both effective portfolio management and regulatory reporting in certain global jurisdictions. Standardizing information to be captured and maintained in one place rather than across the organization, setting up systems and developing reporting routines, are early tasks.

And what if business lines won’t initially play?

Any change in control from the center represents radical change, especially in an organization where power has devolved to business lines. Establishing a new organization, which exerts corporate control by managing compliance with policy and gathers and maintains data, may be a big step for some organizations.

Concurrent with implementing policy, forming an “optional” center of excellence with the requisite talent, tools, templates, workflows and project/industry data may be a good first step on the road to global services-portfolio evolution. An internal consultancy capability may present less of a threat than a centrally mandated point of control.

The effort involved in changing a delivery structure through outsourcing or offshoring is drastically underestimated by any business line or function unfamiliar with the complexity of the transformation. Being able to get assistance internally from a function whose aim is to leverage existing knowledge and expedite the process reduces time and cost for the sponsoring organization. Over time, the successful center of excellence becomes institutionalized, and its use can be more easily mandated.

Whether the function controls and implements all services delivery change from inception or whether it serves as a centre of excellence for all business units will depend on the culture, organizational structure (center-led as opposed to business-line led), and executive-level appetite for change.

Will the crime of the century be solved?

All signs point to the positive, particularly in the financial services and consumer products industry. There is a growing recognition of the scale of investment, time required and inherent risk in transforming services delivery across the corporation. And, as boards of directors ask more questions about changes in business architecture, corporate management must have the answers to hand. This means developing data bases, policies, procedures and standards, and investing in the right team.

The business case to manage services as a portfolio — controlling risk, managing implementation cost, achieving scale, leveraging expertise — cannot help but be compelling as corporations shift their focus from doing deals back to obtaining benefit from radical changes in process delivery.

Best Practices in Global Portfolio Services Management
•	Lead from the center through policies, procedures and performance criteria
•	Invest in a robust data base suitable for tracking and regulatory reporting
•	Appoint a team with the right capabilities
•	Evolve the team from center of excellence to central leadership
•	Focus on managing changes in corporate services delivery rather than individual deals