KPMG Finds Rising Global Demand for Shared Services, Internal Process Improvement

Businesses today want to enhance their performance, and intriguing new research from KPMG indicates that firms are turning to shared service models and internal process improvements in order to meet those goals.

More than half (59 percent) of those polled in the KPMG 2Q11 Sourcing Advisory Pulse Survey said they anticipate greater demand from clients for shared services delivery models. Most (51 percent) also saw more demand for internal process improvement. Interestingly, outsourcing demand remained flat including both business process outsourcing (BPO) and IT outsourcing (ITO).

In other findings:


Service providers expect demand to increase. Among providers surveyed, 74 percent expect customer demand for business and IT services to increase over the next one to two quarters. They cited IT as being the strongest functional area in the pipeline (34 percent), followed by multi-tower deals (21 percent) and F&A (16 percent).


Most advisors polled want improvement in current shared services and outsourcing governance processes and capabilities. Nearly two-thirds (66 percent) said this is the most common approach taken to improve service delivery capabilities. It was the top cited approach across all major geographic areas, and among both advisors that primarily support business services (HR, F&A) and those that support IT service and operations. The next most commonly cited approach was the use or expansion of information technology outsourcing/ITO (43 percent).


Financial services companies show the greatest demand for shared services/outsourcing services. Eighty-two percent of service providers from banking, financial services and insurance (BFSI) said they need shared services/outsourcing services. The energy, utilities, oil and gas, and manufacturing industries tied for second at 32 percent.


Service providers and advisors differ in their opinions about uptake of cloud solutions. Forty-two percent of service providers polled indicate that their clients have one or more live cloud services deployments in the field and that this would increase to 66 percent in 12 months. Advisors cite much lower adoption rates of 12 percent today and 30 percent in 12 months.


According to KPMG, this difference is related to views into different user organizations, differences of opinion into what constitutes a "deployment" and what is truly meant by cloud computing (as opposed to relabeled legacy computing models).

"The value proposition and success metrics for shared services operations are evolving," said Stan Lepeak, research director in KPMG's Shared Services and Outsourcing Advisory group. "Leading organizations today receive measureable business value from shared services above and beyond driving costs. This involves driving and improving overall business performance as well as competing for internal business on level ground with external service providers."