Revolutionizing Service Delivery in Medium-Scale Businesses Through Digital Innovation

Our era is one of rapid digital transformation and Branded Business Models recognizes, medium-scale businesses are uniquely positioned to leverage Service Delivery Innovation (SDI) to enhance their operational efficiency and customer experience. Leading consulting firms like McKinsey & Company, Boston Consulting Group (BCG), Bain & Company, and Accenture have shed light on the pivotal role of digital control towers and ‘nerve centers’ in revolutionizing service delivery.

1. Embracing the Nerve Center Approach:

McKinsey & Company outlines, the concept of Global Business Services (GBS) as a ‘nerve center’ is pivotal for medium-scale businesses. These centers are not just operational hubs but are the brainpower driving digital capability, automation, and software development. These centers streamline operations, reduce costs, and enhance customer experiences by centralizing functions. The transformation begins with establishing foundational goals and technologies.

In one example, a medical distribution company achieved a seamless global-delivery model by forming a sponsorship committee across multiple departments, ensuring stakeholder integration and support. Source: McKinsey

A more recent study emphasizes the importance of innovation in Global Business Services (GBS) for improving productivity and agility. Key points include:

1. Centralizing business services enhances efficiency.
2. Challenges include limited investment in transformative technologies and fragmented processes.
3. Recommendations for fostering innovation:
   • Strengthen GBS leadership and talent.
   • Empower GBS units with autonomy.
   • Develop robust innovation processes and ecosystems.
   • Implement structured funding models for promising ideas.

Source: McKinsey.

2. Beyond Economies of Scale: Agile and Tailored Solutions:

While economies of scale drive efficiencies, BCG highlights the shift towards more agile and user-centric approaches. This involves deploying AI, machine learning, and blockchain to provide insights and continuous learning across the organization. Platform-based service delivery is key, offering end-to-end processes and enabling rapid business decision-making.

BCG discusses scaling agile practices across entire organizations to enhance efficiency, creativity, and resilience. Key points include:

1. Understanding the organization’s starting point with tools like agile maturity assessments.
2. Enabling the organization through workshops, coaching, and change management tactics.
3. Executing agile pilots to generate value and inform further scaling.
4. Adapting the operating model based on learnings.
5. Building a sustainable agile playbook.

They emphasize the importance of leadership support and tailored strategies for successful agile transformation.

Source: BCG

Here they discuss the transformative impact of AI at scale, emphasizing the need for a holistic approach that integrates strategy, process redesign, and human and technical capabilities. Key points include:

1. AI leaders use AI to drive business outcomes.
2. Importance of embedding AI into organizational processes.
3. The 10/20/70 rule: 10% algorithms, 20% data/tech, 70% business/people transformation.
4. The role of generative AI in democratizing AI benefits.
5. Emphasis on responsible AI practices.

Source BCG

3. The Agile Revolution in Support Functions:

Bain & Company emphasizes the Agile approach in support and control functions. Recognizing internal teams as customers, these functions must innovate continuously, focusing on customer feedback. For example, a large retailer restructured its HR department into Agile teams, enhancing employee engagement and service delivery, and adopting an employee journey perspective from hiring to development.

Bain & Company discusses how support and control functions (e.g., HR, finance) can adopt agile methodologies to enhance collaboration and innovation. Key strategies include:

1. Partnering with agile teams to provide timely support.
2. Implementing agile practices within their own departments.
3. Redesigning processes like budgeting and talent management to reduce delays.

This approach helps organizations improve agility and speed of innovation, creating a more responsive and efficient operational environment.

Source: Bain & Company

4. The Intelligent Business Office: A Paradigm Shift:

Accenture’s concept of the intelligent business office is more than just a technology upgrade. It’s about supporting greater efficiency, agility, and resilience. This transformation unlocks capacity to drive long-term results, nurturing top talent and managing innovation for continuous service improvement.

Accenture highlights the importance of digital transformation in enhancing efficiency, agility, and creating new value for businesses. Key points include:

1. Embedding technologies across businesses.
2. Benefits: increased efficiency, agility, and new value creation.
3. Steps: reimagining growth strategy, aligning organization with technology, adopting agile practices, creating a flexible tech core, and empowering people.
4. Importance of a customer-centric approach and continuous innovation.

Source: Accenture

Here they discuss the transformation of back-office functions in public sector organizations into intelligent, strategic centers. Key benefits include enhanced efficiency, agility, and employee experience. Strategies involve leveraging technology for real-time insights, reducing manual processes, and fostering innovation. The goal is to drive long-term results and improve service delivery, supported by technologies like Oracle Cloud, Workday, SAP, and Microsoft.

Source: Accenture

5. Governance and Analytics: The New Frontier:

Structured process control towers, as proposed by BCG, use predictive analytics to identify potential issues and leverage real-time insights for process optimization. Additionally, McKinsey’s insight into the use of data and process-mining analytics by GBS organizations to drive detailed activity insights showcases the potential for sophisticated data-driven decision-making.

BCG discusses the evolution of Global Business Services (GBS) toward “Smart Simplicity,” emphasizing modular, interoperable, and coordinated forms. GBS organizations have been pivotal during the COVID-19 crisis, showing resilience and quick recovery. The future of GBS focuses on efficiency, standardization, end-to-end optimization, and digital acceleration. This includes advanced technology, remote work, and data engagement platforms to enhance customer and employee experiences.

Source: BCG

In another article they emphasize that fewer than half of companies see value in their GBS function. To enhance GBS, companies should adopt a “Beyond GBS” mindset, focusing on end-to-end outcomes, running GBS like a business, and leading digitization efforts. Key strategies include building a robust digital backbone, fostering internal partnerships, and expanding GBS activities beyond traditional processes to include value-added services.

Source: BCG

6. Customization: The New Norm in Service Delivery:

The trend towards bespoke offerings, as observed by McKinsey, highlights the need for services tailored to each client function’s requirements. This could include innovations like digital factories for rapid solution identification and deployment, ensuring customization at scale.

They also discuss the need for Global Business Services (GBS) to adapt to the “next normal” by enhancing digital capabilities and embracing remote work. Key strategies include:

1. Leveraging technology and automation for efficiency.
2. Implementing end-to-end process optimization.
3. Supporting distributed workforces.
4. Building digital capabilities through advanced analytics and automation.
5. Developing a flexible, tech-driven operational model.

These changes are essential for maintaining productivity and meeting evolving client expectations in a post-pandemic world.

Source: McKinsey

7. Final Thoughts:

Service Delivery Innovation is not just a technological upgrade but a strategic shift for medium-scale businesses. By adopting approaches like the nerve center model, embracing Agile methodologies, and leveraging data and analytics together with Generative AI, these businesses can revolutionize their service delivery, ensuring resilience and competitive advantage in a rapidly evolving digital landscape.

Insights:

1. McKinsey & Company: They emphasize the role of Global Business Services (GBS) as a nerve center for digital capability, driving automation, and developing software. They highlight the need for foundational goals and technologies, economies of scale, and a segmented approach to work based on complexity and service-level requirements. McKinsey also discusses the evolving nature of GBS organizations towards more bespoke offerings and the use of data and analytics for detailed insights and advanced digital capabilities.
2. Boston Consulting Group (BCG): BCG stresses the importance of predictive and prescriptive analytics, AI, machine learning, and blockchain in developing superior user experiences. They advocate for platform-based service delivery, emphasizing continuous end-to-end processes with intelligent data conversion. BCG also notes the need for new governance life cycles, with co-sourced innovation centers and structured process control towers using predictive analytics.
3. Bain & Company: Bain focuses on the Agile approach in support and control functions, advocating for customer feedback and continuous innovation. They highlight the importance of cross-functional processes and the need for support and control functions to enable organizational agility.
4. Accenture: Accenture discusses the transformation of the back office into an intelligent business office, aiming for greater efficiency, agility, and continuous innovation. They emphasize that there isn’t a one-size-fits-all approach and highlight the importance of nurturing talent and developing innovations.