Hackett's new "Global Operating Model" Book of Numbers research, which looks at the performance of more than 100 companies, found a strong acceleration of the trend towards globalization of business, with most companies moving toward high levels of globalization for their products and services lines and expanding the globalization of delivery of business services over the next few years. In large part these trends are being driven by historically high growth rates in China and other emerging markets combined with stagnation in developed markets.
But despite high levels of automation, most companies cannot quickly access much of the information required to truly understand their global performance. In a recent study, Hackett found that less than half have near real-time visibility into customer information and business volumes, and even fewer have the same level of visibility into supplier spend, working capital, financial performance and forecasts, and risk.
The Hackett Group's research details the need for companies to align the globalization of their business services operations with those of their overall enterprise, in order to truly succeed at their globalization efforts. Globalization of business services requires dramatic changes to improve visibility of management information, in part through expanded use of automation. But most companies lag far behind in this area.
"Globalization is undoubtedly one of today's most important business trends," said The Hackett Group President of Advisory & Research Services Sean Kracklauer. "Companies understand that tapping into emerging markets is a key to success in the future. This is driving the need to focus outside of their domestic markets and truly globalize and standardize their product lines, brands, customer and supplier bases, and business processes. To accomplish this, they require both visibility and control, so that they can understand their customer base, make the best pricing decisions, and make the right choices regarding a wide array of opportunities and risks.
"But it's pretty obvious that most companies simply don't have the 'global DNA' that they need to do this effectively," Kracklauer explained. "For example, companies understand the value of having one view of the customer. But most don't have the ability to quickly see and understand what they're doing across different parts of their organizations, given the highly manual methods in use to compile information from many different sources. Timeliness of financial performance and forecasts information is an even greater challenge for most companies. Incredibly, although we have been talking for years on the need to move beyond stand-alone spreadsheets, they are still the primary forecasting tool in nearly three quarters of companies.
"This continued reliance on spreadsheets and manual data sourcing are preventing companies from moving to more forward-looking analyses based on a wider variety of non-financial data sources. The challenge is only compounded as companies further globalize their operational footprint," said Kracklauer. "As a result, companies are missing opportunities, and are likely to get hit with problems that they could have anticipated and mitigated otherwise."
According to The Hackett Group's research, less than half of all typical companies have "near real-time" access to customer information. Only about a quarter of all typical companies have similar access to financial performance and forecasts. Similarly, less than 30 percent have "near real-time" access to supplier base spend volumes. In all cases, globalization leaders show dramatically greater levels of access to near real-time information, having access to all this information and more nearly 80 percent of the time, on average. Automation is one key strategy companies use to achieve these results, with The Hackett Group's research showing that globalization leaders say they have "mostly or fully" automated key areas up to 50 percent more often than typical companies.
The Hackett Group's research found that while globalization leaders have already almost completely globalized their brands and products and service lines, typical companies have only done this about half the time, on average. But typical companies are hoping to increase globalization in these areas by up to 30 percent over the next two to three years. In areas such as supplier and customer bases, even leaders say they have achieved significant levels of globalization only about half the time. But this is still about twice as often as typical companies. Compared to typical companies, globalization leaders also have much higher levels of standardization across everything from marketing and R&D to customer support, manufacturing, and sales.
The Global Operating Model Book of Numbers research also details the critical importance of governance, particularly in regards to clearly defining decision rights across cross-functional end to end processes, organizational spans, and ownership of specific activities to successfully execute the design, build and running of processes through global process ownership.
"What we're seeing is that globalization leaders take a much more holistic approach to developing their global operations," said The Hackett Group senior research director Erik Dorr. "They understand the need to transform their service delivery model. This is a process that begins with issues such as governance, service placement, and high-level design of information and processes, then moves on to detailed process and information design. Finally, the process is completed as companies specify the new skills and talent needed to run the service delivery organization, and develop a new sourcing model specifying which processes will remain in-house and which will be outsourced, as well as where they will be executed. This is a complex process, and there's no boilerplate approach. But it's critical for companies to focus on this if they are to truly succeed at their globalization efforts."
Source: The Hackett Group
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