Centralised Business Services

by Alexander Roan on Jun 12, 2025

"A practical guide to BSOs and GBS for standardisation, automation, and value delivery."

Decentralised services

A brief look into the past provides a clear rationale for the introduction of Business Services Organisation (BSOs).

A typical 1990s business had:

It wasn't uncommon in this set up to see mixed roles. For example, secretaries who also posted invoices.

This set up is inefficient:

Decentralised business

Centralised Business Services

IT: an enabler for centralisation

In the early 1990s client/server enterprise resource planning (ERP) software entered the market. This was a key enabler for Business Services organisations.

Prior to this it was difficult to provide applications that could be accessed easily from multiple locations.

By the mid 90s many leading companies had started to implement ERP such as SAP R/3.

As ERP, the internet and various other applications gained traction physical work location became less important.

This was a gradual process. It took time for organisations to move away from locally hosted applications and paper processes.

However, from the mid to late 90s we've seen organisations shift from decentralised models to centralised Business Services models.

IT centralisation

Business Services organisations

The first step to centralise Business Services is often done within one country.

These central business units are often called 'Business Services organisations'.

The idea is simple:

In the illustration, we add a central BSO entity and shift services staff from all sites to that location. This example results in around 50 full time equivalent roles moving to a BSO. In real-world examples single country BSOs can exceed 1,000 employees.

Introducing a BSO

Scoping Business Services

The scope of work that moves to a BSO is flexible. It's up to each organisation to decide what is right for them.

When discussing this we need a way to refer to work that remains in the Business Unit and work that can shift to the BSO. I will use 'BU work' and 'BSO work'.

A general starting point is:

Examples of BU work:

Examples of BSO work:

Examples of debatable areas:

*Customer contact centre is slightly different as this is the provision of a service directly to an external customer. Most of the the services in a BSO are services to internal Business units. However, there is no reason a BSO can’t take on customer facing services, if they fit with the strategy.

Opinions on this split of work vary by industry, organisation, and even an organisations current leadership team.

As a consultant, I've participated in several Business Services design projects. On each one, the organisations came to their own specific scope based on various factors such as objective, business model, values, culture etc.

There is however, a broad trend of the scope of Business Services increasing over time. This is made possible by improvements to technologies and advancements in automation and simplification.

Creating a process criteria

An effective way to identify the scope of work for a Business Services Organisation is to create a set of criteria to define 'BU work' and 'BSO work'.

Operations can then be assessed against this criteria. This will provide a draft of potential BSO scope. Popular criteria include:

Process criteria

Applying a process criteria

At the initial stages of considering business services a rough estimate of scope can be made at a high level: teams or functions.

This can be done by combining business knowledge, business services expertise and external benchmarks.

This may take the form of a very simple percentage estimate of 'BU work' vs. 'BSO work' by function.

High level estimate

In this example, I split work on whether it can be considered closer to the BU or the BSO. For the BSO work I further split it into two categories to recognise that some of the work that becomes BSO responsibility may need to be co-located with a BU for communication or governance reasons.

Even for a high level assessment, I would recommend going a level of detail down. For finance this may look like:

Next level estimate

These high level estimates are useful for the initial discussions of a potential business case for a BSO. However, to validate a business case or start planning an implementation we need a more detailed scope analysis.

This can be done by assessing process area or roles by criteria such as the one discussed earlier, and using this as a reference to help refine percentages.

These illustrations are still at a high level of detail. In a real life scenario you would walk through each process area in detail with business experts. During this session you would:

illustration of criteria assessment

Regional Business Services

In our single country BSO example we took resources from 11 sites into a central organisation. It totalled to around 50 full time equivalent (FTE).

Image this is repeated across multiple countries. This could easily grow to hundreds of FTE.

Regional Business Services

Global Business Services

This brings us to Global Business Services, where global multinationals with operations in multiple time-zones implement Business Services on a global scale.

As the number of countries increase, the potential for scale efficiencies increase.

However, several challenges are introduced or become more complex:

Languages:

Time zones:

Barriers to efficiencies:

In reality, global Business Services is normally delivered as a number of connected regional centres.

One noteworthy benefit of having multiple regional centres working together is the ability to bring 24 hour service availability on a ‘follow the sun approach’, this can be useful in cases such as:

Illustration of GBS locations

Business Services organisation model

Consider an organisation consisting of three types of units: Group, Business Units, and Business Services. The role of each unit can vary across industries and organisations. In addition to the earlier discussed scoping between Business units and Business Services, there is also the question of what sits in Group. A simple split might be:

Group:

Business units:

Business Services:

The process criteria can also be used to review Group processes for their suitability to shift to Business Services.

Organisation model

Early organisation models for Business Services are relatively simple. They consist of a director of Business Services, function leads, and teams of operational staff. There will also be a set of support roles for the BSO itself, which manage facilities, IT infrastructure etc.

BSO model - basic

Service delivery management

In this section, I’ll look at the basics of managing Business Services:

The terms ‘effective’ and ‘efficient’ are often used when discussing Business Services, however these can be vague. I’d recommend a more direct approach: think in terms of cost and quality. Business Services should provide an agreed quality of service at a minimal cost.

Quality can be defined by service attributes:

Cost can be calculated and compared in various ways:

Defining services with SLAs and OLAs

Service level agreements (SLAs) and operational level agreements (OLAs) provide a way to document the scope of Business Services and their expected quality levels. These are normally appended to contracts which also detail pricing, governance, and other important factors.

These agreements should be as detailed as possible. They should cover both planned services and potential issues and exceptions.

For example, a simple service level agreement for Accounts Payable may state: 1,000 invoices per month with minimum payment on time (PoT) of 95%. A more comprehensive agreement would be expanded to include:

A detailed and clear SLA/OLA ensures:

Agreements should specify the “what” and not the “how”. This provides Business Services flexibility to optimise how they deliver the service.

For example, there shouldn't be statements such as, “provision of 10 FTE A/P clerks”. However, this may be valid for an initial period following transition. In fact, this can be a good risk mitigation against fears of under-resourcing at the outset.

Roles & responsibilities

In addition to service descriptions, it’s a good idea to include a matrix summarising Business Services and Business Unit roles and responsibilities in each area. Formats such as “RACI” provide a good way to see at a glance if any responsibilities are not clear.

Measuring service levels with KPIs

KPIs are a key part of managing quality. In general, we can split KPIs into two categories:

Within the second category, there are various KPIs that provide a good measure of operational or process performance. These range from higher level measures to more detailed measures.

Consider Accounts Payable:

Process measures like these are the foundation for monitoring operational execution.

Within Business Services sometimes process oriented KPIs are called process performance indicators (PPIs).

Some additional examples for the general ledger space:

Misuse of KPIs

KPIs can have unintended consequences. A classic example: posting sales at month end and reversing at the start of the next month as a way to meet monthly sales targets.

In Business Services, there are various ways KPIs can drive poor quality. An example is a service request being closed with reasons such as:

Real world service quality should always be prioritised over simply meeting a KPI. This is critical in order to maintain good relations between Business Services and Business Units.

There are lots of ways to control for KPI misuse. One is to ensure plenty of qualitative feedback is captured. For example:

Service level reporting

The format and content of service level reports should be agreed as part of the contract and SLAs/OLAs.

Generally speaking, there should be quantitative measures and qualitative comments against each service.

Reporting should include the performance of both Business Services and Business Units in their respective responsibilities. This is where having a “RACI” matrix as part of the SLA/OLA can help.

Written reports can be issues on a periodic basis, followed by service review meetings. It’s good practice to hold successive meetings at increasing levels of seniority, open issues that can’t be resolved at one level can move to the next meeting:

In addition to periodic reporting, business systems can be set up to produce self-service reports on KPI performance in real-time.

Managing interactions and escalations

Interactions between Business Services and Business units can quickly become complex. Examples of typical interactions include:

Some of these request may involve multiple roles and teams. For example:

Sounds crazy, but this happens. This chain of interactions can lead to time-delays and frustration.

Even with a simplified organisation model, when considering business as usual interactions, service reporting and issues and escalations, interactions start to get complex.

Complex interactions

Suggestions on how to improve interactions:

Set clear principles

Assign specialist roles

Rather than individuals from large teams interacting with individuals from other large teams, we introduce some single point of contacts, which can help with routing service information, reviews, issues, requests etc. These can include:

Groups and committees

As per the organisation model, business services will be structured into operational teams. These teams and their managers will provide services and prepare service reports. In addition, several other groups may be useful:

Escalation flow There are many ways to design escalations. The key factor is its clear and simple. It should ensure everyone knows clearly what to do in any exception situation.

Interaction support roles

As part of setting up a BSO, a detailed design should be created to lay out how individuals and teams interact and how escalation and governance work.

Managing organisation and people

From a people and organisation perspective, there are many factors to consider:

Culture & reward

Roles & responsibilities

Skills & capability

Governance

In most cases, staff will transfer from Business units to Business Services. This needs to be carefully managed, consider:

Managing technology and data

I like to separate out what I call 'critical minimum technology enablers'. This is the minimum technology required to set up a BSO. In addition to that, there is a wide range of technology that can drive cost and quality improvements. I'll cover the former now, and the latter in a future section.

Business systems

Business Services require access to any business systems that are used to operate Business Unit processes. Minimum changes to these systems may include:

There are two main scenarios to consider here:

  1. IT is in scope of Business Services: they can manage this work themselves. Interacting with Group or Business Unit owners for approvals as necessary.
  2. IT is not in scope of Business Services: they will require Group or Business Unit help.

In either case, if IT outsourcing is present, this may involve service requests and contract changes with the outsourcing provider.

Business systems add-ons

If paper documents are used, scanning & archiving will be required. This may be available within existing business systems or may require an add-on solution. Likewise, basic workflow management may need to be added to assist with basic work routing between Business units and Business Services.

Service management

There are already mature, well-established IT solutions for request tracking (Jira, Service Now, etc.). These can work in a Business Services context. They can be used by Business Units to raise service requests and issues across all HR, Finance, etc.

Performance management

Existing business systems can be used to gather and report KPIs. The capability of existing business systems to gather, aggregate and present this information needs to be assessed. It's possible that some minimum work is required:

IT infrastructure

Basic IT set up:

Some of these are simply a case of extending existing IT services within the organisation.

Business Services operations

Business Services itself will usually be at least one legal entity with its own staff, expenses, assets, etc. and will require relatively basic enterprise resource planning functionality.

Normally, this entity can be set up in existing systems.

Data

The condition of data and data management systems needs to be assessed prior to transition. It’s possible that some minimum work is required prior to implementing Business Services:

Implementing Business Services

The first step is to develop a business case and detailed operating model. If the business case is good and the operating model is feasible, then implementation work can begin. Key stages include initial set-up, first transition/pilot and then successive transition waves.

Implementation approach

Strategy: business case

Projected costs of Business Services, projected savings in Business Units, quantification of quality improvements.

Strategy: operating model

The operating model includes process scope, estimated resource requirements, IT architecture, organisation model, and other key factors.

Strategy: location study

The location study involves comparing locations based on; socio-economic factors, political stability, taxation, grants, access to resources, technical infrastructure (internet), culture, transportation (airport, roads, etc.)

Set up: facilities

Set up: IT

Set up: hiring managers

Transition waves

At its core, transitioning work means shifting work from one location to another.

The state or condition of the work is important. At the outset, Business Services will only be able to operate a process to the same standard the BU operates it.

Processes should be assessed to check:

Depending on the state of the work and Business Services quality targets, processes may be “fixed” or improved before, during, or after transition.

Common transition approaches:

transition methods

Pre-transition assessment

One critical activity is the ‘assessment’ of the Business unit prior to transition. There are two main aims here:

  1. Check if the processes are at the minimum level of stability to move to Business Services
  2. Capture a baseline of the current process performance so that pre transition and post transition performance can be fairly compared.

Typical assessment activities:

Individual transitions

The exact plan for a transition depends on many of the factors discussed:

However, one thing that transitions have in common is the shifting of work across locations and/or people. Key activities to do this include:

Delivering a successful transition with these alone can be challenging, additional steps that can help include:

Improving operations

In order to optimise for quality and cost, Business Services should have a strong focus on improving operations. This should encompass:

Process improvement culture, including the Toyota Production Method and Lean, provide some useful guidelines on how to approach this. There is an optimal order of work:

  1. Stop doing work if it doesn’t deliver any value
  2. Centralise work and gain labour arbitrage and scale efficiency
  3. Simplify work to reduce effort, without affecting value
  4. Automate work to further reduce effort
  5. Improve quality.

Automation being positioned at number 4 may seem a little surprising given increasing advancements in this area. The rationale is:

Lean

Lean is more correctly defined as a culture, than a set of tools. It fits well within Business Services by embedding and rewarding certain behaviours:

Lean also provides some helpful tools. I will briefly cover two: the 7 wastes, and visual management boards.

Lean 7 wastes

Toyota identified 7 typical wastes in manufacturing. Various organisations have applied this thinking to service processes. This provides a structure or checklist to work through when studying a process.

Waste is any activity that consumes resources, but creates no value for the end customer.

A good example in Business Services is business review reporting packs. In some organisations these can grow to +100 pages. Lean reviews of these have found that up to 80% of the data is not used for decision making.

Here is a further illustration of the 7 wastes for those that are interested:

The 7 wastes

Lean visual management boards

Being focused and organised is key to delivering services well. Physical visual management boards create real spaces to bring together a variety of key information that helps focus teams and their customers on the current situation and priorities. Boards may contain:

Benefits

Visual management boards were originally paper-based. Over the years, large monitors with real-time electronic dashboards have replaced some of these.

However, there is still a benefit to having tactile materials as a centre for huddles and discussions. Boards can have whiteboards installed next to them to facilitate meetings, discussions and qualitative commentary.

Technology/digital

I started my career in Finance IT back in 2000. At that time my employer, Procter & Gamble, had just launched GBS with 3 regional service centres.

I recall a great presentation from one of the senior managers looking back at the previous decades of IT. I think the joke was:

But IT jokes aside, what was clear even back in 2000 was how fundamentally IT was enabling and automating processes. Things that we take for granted such as producing global harmonised accounts in a matter of days wouldn’t be possible without the automation inside ERP.

Looking at each decade from 1970 to 2020 there have been significant technology advances at each stage.

In the 1990s, we reached the point where technology could enable basic centralisation of work.

From the 1990s to now, various technologies have driven quality and cost improvements through automation.

Today, the hot topic is AI.

I’d define recent AI developments as a shift in automation capability from programmatic to generative. In the past, we had to set up automation based on rules. Now, AI is able to generate its own rules and decisions.

This is perhaps a little too much detail, but I think it's interesting to look at how technology has driven automation over the decades. Has your organisation utilised all of these?

Technology automation

1970s: Foundations of Digital Processing

1980s: Rise of Personal Computing

1990s: Client-Server & Digital Workflows

2000s: Integration & Workflow

2010s: Task Automation & Intelligent Assistants

2020s: AI-Driven and Generative Automation

Digital focus area to prioritise for business shared services

If I were to narrow the focus back to what is important for Business Services I would pick the following:

1- As expected, a strong focus on AI:

Intelligent automation

Generative AI and predictive AI

Conversational AI

2- But this should be coupled with leveraging core ERP:

ERP advancements

Modern ERP platforms (e.g. SAP S/4HANA) provide a stable digital foundation. Extend via:

S/4HANA also provides embedded analytics which can be used for service reporting without requiring an additional data warehouse, reporting tools or dashboards.

3- And finally, attention on:

A more comprehensive organisation model

After discussing various aspects of Business Services, we can build on our basic organisation model to highlight some of the advancements in Business Services.

Increasing scope: external services management

Business Services have moved beyond A/P, payroll, call centre etc. One area Business Services can leverage scale on is the management of 3rd party services.

Organisations use 3rd party services in a variety of areas, consider:

The main reasons to move these to Business Services are:

Increasing scope: specialist functions

With increasing knowledge and skills coupled with technology enablers, more specialist work can move into Business Services:

The main reasons to move these to Business Services are:

Organisation structure changes

As part of the drive to deliver service levels at a competitive price, Business Services organisations often create teams and experts to better manage themselves internally:

Depending on the industry and organisation BSOs may adapt into various areas and specialisms.

A migration to a Business Services model also often accompanies a move to horizontal process management. In this case areas such as finance may be replaced with for example record to report. Procurement and finance may be replaced with Purchase to pay.

This was very popular in the 2000s. While it improves end-to-end processes and promotes focus on outputs, it still results in silo's: just different silos. I would argue the way you manage is more important than the structure you manage.

BSO model - advanced

Benefits

Business Services can deliver many benefits. The magnitude of each will depend on the organisation’s specific situation. Expected benefits should be quantified in as detailed a way as possible as part of the business case and validated with transitions.

Cost savings

Quality improvements

Strategy and change improvements

M&A enabler

Outsourcing

Business systems changes

Benefits for the Business unit

Mistakes and Challenges

In this final section, I’ll cover challenges I’ve observed. Some of these also represent opportunities to access benefits when things are done right.

1. Unrealistic cost saving targets

In most cases, shifting from decentralised to centralised services will deliver a cost saving. However, there’s a risk of setting the cost saving target too aggressively. This is often the underlying cause of poor quality services and a lack of satisfaction. Creating a Business Services organisation with a insufficient budget leads to:

If an operational process moves to Business Services without any ‘fixing’:

2. Broken processes, process variation & the importance of a baseline

If a business service organisation takes on poor processes, they will struggle to operate them well. Business Services organisations should set a minimum acceptance criteria and run a pre-transition assessment. This should cover:

The results of an assessment should lead to a conclusion on:

3. Poor management of services levels, poor use of KPIs

Service levels should be carefully drafted and agreed. They need to be structured in a way that they will ensure Business units receive good service while also being achievable for the Business Services organisation.

There should be mechanisms in place to manage service issues at the lowest levels, avoiding unnecessary escalations. A good relationship should avoid debating contract details.

KPIs or process performance indicators are extremely important for a few reasons:

4. Staff Retention

Business Services organisations may suffer from higher turnover rates than their Business Units. Note: this is an even bigger problem for outsourcers. This can present challenges with developing highly skilled staff and consistent services delivery. Some factors which may help include:

5. Business Services image & culture

There is a risk the Business unit is considered the real business and Business Services is considered as second class. This can create various issues:

It’s important to stress from the beginning that Business Services are strategic. Top performing companies have top Business Services. There are excellent opportunities for career progression within Business Services and the external market.

6. Communication and interactions

We touched on interaction earlier. With a lot of complexity and effort going into process, technology, and data, it’s easy to overlook this.

Even decently performing processes can lead to a lack of customer satisfaction if the communication doesn’t work. Simple things that can help include:

7. Lack of Business unit accountabilities

As Business units are customers of Business Services, there is a risk of focusing exclusively on the service being provided However, in order for Business Services to work effectively, the quality of inputs from Business units are important. It’s good practice to formalise this in detail at the outset. This will help avoid debates around exceptions, missed services levels, issues, etc.

One of the most useful tools for this is clear roles and responsibilities within the SLAs and OLAs. Using a RACI matrix can help.

8. Lack of ambition

1- On a geographic basis:

Organisations may implement country specific Business Services and gain some benefits, but miss out on larger scale benefits by shifting to regional and global services. This can be a challenge, especially for organisations with strong 'country management' or companies with concerns around cultural impacts.

2- On a service basis:

The process criteria for early Business Services was limited to rule based, repetitive work that could be easily documented. Payroll, A/P, A/R, are classic examples. However, many organisations have successfully centralised highly skilled work. For example, within finance this includes cost accounting, and financial planning and analytics. At first, it was hard to envision cost accounting being done outside the plants, but I've seen this work with zero issues. This also brings more consistency of the approach to costs across sites, countries, and regions, making profitability reporting more accurate across Business units.

Future of Business Services & conclusions

Business Services are still relevant

At Procter & Gamble, we launched global Business Services in 2000. I spent 7 years rolling it out along with helping lead process and systems improvements. The transformation that GBS delivered can’t be easily described. It helped shift P&G into a truly global business from the perspective of process harmonisation, reporting consistency, etc. It’s often cited as a benchmark for global systems and Business Services.

Since then, up to and including recent years, I continue to come across multinational clients with fragmented, decentralised operating models. These organisations often:

Many organisations are leaving leaving cost savings and quality improvements on the table by not implementing BSOs/GBS.

Business Services and AI

I’ve seen some ‘hot takes’ on LinkedIn, such as “AI will replace ERP”. As someone who focuses on Finance where accuracy and governance are key, that really made me laugh.

Business Services is somewhat similar, I don't see AI automating to an extent that BSOs/GBS is no longer relevant. In fact Business Services are enablers in that they can drive implementation and governance of AI better than Business Units. BSOs/GBS can lead the implementation of:

Business Services and open technology standards

One noteworthy observation is SAP moving towards role based applications based on open web standards (HTML/CSS/JS) with their Fiori apps, this is another trend that can be leveraged by Business Services.

Political trends

Topics such as Brexit, Trump tariffs, etc. raise a concern around building an operating model based on centralised global and regional services. I haven’t seen tangible impacts on service industries, so I don’t see a concern here.

Has your organisation implemented business services? Where are you in the journey? What issues have you encountered? What direction do you see business services taking?

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