Thought Leadership
Staff shortages and cost pressure continue to rise. This makes it all the more important for companies to use their resources for value-adding activities. Business services create space for the essentials. However, it is important to keep an eye out when choosing a provider and when outsourcing itself.
Many industries in Germany are in the midst of a transformation. Sustainability, regulation, digitalization and platform-based business models are leading to a reorganization that affects manufacturers and suppliers alike. In order to position themselves for the future, a change at process, IT and organizational level must also be taken into their own hands.
A particular challenge in many mature companies is the heterogeneous IT infrastructure with a large number of legacy systems. Such a process landscape repeatedly leads to inefficiencies in day-to-day business and makes it difficult to develop new solutions quickly and flexibly. Employees are then less able to concentrate on their core business and have to spend a lot of time and effort on non-value-adding activities. This not only leads to dissatisfaction, but also entails considerable costs. As a result, companies run the risk of losing out in the face of tough competition.
Optimize processes and structures
Transforming your own IT landscape and architecture is one thing. The other is outsourcing processes and tasks. This makes sense if there is simply no infrastructure or not enough specialists available. The keyword here is business services. Similar functions and processes are completely bundled and provided centrally. The aim is always to make day-to-day work more effective and therefore more economical. Business services can be of a technical, administrative or advisory nature and range from departments such as IT support and accounting to HR management and customer service. Depending on the company’s situation, this is implemented with the help of shared services and business process outsourcing (BPO).
The difference: with shared services, functions and processes are bundled within a company. The implementation is either carried out by the company itself or in cooperation with a partner, whereby the provider can also be used as a shared service center. The provider then brings in external support services, such as technologies, access to experienced international delivery units and best practices. Shared services are generally suitable for medium-sized and large companies that have several business units, departments or locations as well as a large number of similar functions and processes.
With BPO, or managed services, processes are completely outsourced to a partner. The added value lies in the fact that the entire responsibility lies with the provider and companies can not only use their expertise and resources, but also benefit from continuous process optimization. This mainly relates to the use of modern technologies. BPO is suitable for companies of all sizes. Overall, business services make it possible to achieve economies of scale and cost savings.
Realignment according to the 5-phase model
Outsourcing is not a new topic, but the pressure to act has increased. Nevertheless, it is important to keep your eyes open when choosing a partner. Good service providers are characterized by the fact that they advise personally and at eye level across the entire value chain and develop the right solution for each company. They should also accompany customers from the very first stage, if required: with an introduction to the topic, trends and process models, outside-in views and a discussion of vision and use cases.
A five-phase approach has proven its worth when realigning from problem to solution. After defining a target picture, the business services roadmap is usually drawn up, including identification of potential and priorities, design, implementation, operation and further development. Service providers based in the DACH region have an understanding of the local needs of the market and offer German language skills in order to achieve the necessary user acceptance. A global presence offers scalability and flexibility to also cover regional and time requirements Important aspects for SMEs and the IT sector are also: the data remains in the EU and the partner can map language skills, such as German and English, in the service.
Towards consistent automation
There are five major levers of business services that can reduce costs by up to 60 percent and increase performance by up to 50 percent. These levers are labour cost arbitrage, process bundling to achieve economies of scale, standardization and harmonization, optimization of end-to-end processes as well as digitalization and automation. The latter take the efficiency of business processes to the next level with the help of generative AI, robotic process automation and chatbots. In practice, this means, for example: In future, it will not be the HR manager but the bot that clarifies employees’ internal HR matters.
Consistent automation of business processes reduces throughput speed, cuts the number of errors and drastically reduces process costs. Collecting, analyzing and processing large volumes of data in turn increases transparency, enables process innovations and ultimately means a massive competitive advantage. Business process benchmarking also makes it possible to identify potential and derive concrete company-specific measures.
Focus on the core business at REHAU
The transformation of the multi-industry specialist REHAU together with MHP shows how IT can be made scalable and future-oriented through the use of shared services. The family-owned company has been developing polymer-based solutions for the automotive, construction, industrial and furniture sectors for over 70 years. To ensure that day-to-day business at the 170 international locations runs smoothly, one thing must be guaranteed: IT that reliably manages the highly complex processes – in good time and at all levels.
For four years now, the IT target operating model has been running via a hybrid shared service center with a large nearshore component. This means that services in all functional areas of IT are located in a shared service center. This includes all SAP applications and development teams, along with the server, network, firewall and Exchange infrastructure, as well as application security and a 1st level helpdesk. The Shared Service Center is fully integrated into REHAU’s internal IT processes, which ensures smooth cooperation with the internal IT experts and specialist departments. The majority of services are provided in Romania by expert, German-speaking colleagues with consulting expertise and a wealth of experience in nearshore and offshore shared services. As a result, services can be tailored precisely to customer requirements and expanded.
The transition took place completely remotely within a very ambitious timeframe of six months, accompanied by intensive change management at all hierarchical levels. In retrospect, the effort paid off: the company’s digital transformation has since gained significant momentum. For example, the ability to breathe has increased by 40% and has been made more flexible from a position-based approach to a structured talent and skills ecosystem. Furthermore, the project delivery rate increased by 25%. Significantly more projects, including SAP S/4 and M365 transformations, were completed. Last but not least, there was also a 30% increase in the process maturity rate.
Conclusion: Developing strategic advantages with business services
Business services are becoming increasingly relevant for SMEs in particular. Depending on the individual company situation, the use of shared services to quickly fill gaps or business process outsourcing for extensive orders is recommended. When choosing a provider, companies should ensure that they receive comprehensive support and everything from a single source. It should go without saying that the implementation partner complies with technical, linguistic and legal requirements and places great importance on the user and employee experience. When implemented well, business services help to find answers to the shortage of skilled workers, cost pressure and increasing complexity and to develop strategic competitive advantages.
Author: Andreas Richter, MHP
