In Europe, the growing need for productivity and efficiency is fostering the development of large multinational players. These players are investing in internal “shared-services”, which aim to ensure cross-border support for all business units. These large intra-group service operators manage IT, back-office operations, real estate, logistics and procurement.
Building an integrated and flexible governance model can be challenging as it requires setting up new governance instruments which must work in line with multi-country, multi-service, multi-client service platforms and requirements. Once a shared services support system reaches a certain scale, businesses may begin to consider outsourcing certain units. Such a strategy inevitably requires a very advanced governance approach, both during the contract set-up and the service run stages. The need for dedicated tools to govern service delivery mechanisms, monitor service levels and track costs also arises. Outsourcing management is therefore fundamental for IT governance.
Efficient operating frameworks build lean organisations. As the competitive arena grows, so does the complexity of regulatory requirements. Winning players will respond by streamlining processes, reducing the comprehensive “cost-to serve” and adapting. Customer centric, Six-Sigma approaches are becoming increasingly important in the evolution of the financial services industry. Kaizen focus groups and agile methodologies are key for hunting and erasing waste areas, both separately and as a part of a more comprehensive cost reduction programme.
Large operating machines, like banks and insurance companies, need to be innovated from an operational point of view. Lean innovation processes and start-up models (with rapid designing, piloting, testing, learning and re-doing) need to be part of both the strategy and execution programme agenda.