A Structured Approach for Global Operations Optimization
Regardless of where they compete, the key issue that all EHT companies must address is this: determining the most appropriate way to organize their global operations to strike the balance between efficiency and responsiveness that will enable them to outperform their competitors.
To learn how leading EHT companies are approaching these operational issues, Accenture is conducting research into how EHT companies address and execute their most pressing operating model challenges. Looking at leading practices—including those of high performance businesses in the industry—we gleaned a number of important insights.
We found a common approach among companies that excel in creating and executing an operating model that both is tightly aligned with who they are as a company and that allows them to efficiently respond to and capitalize on market opportunities.
The leaders start by having a clear idea of what their organization does well to enable them to win in the market and deliver their distinctive value proposition—what we call “competitive essence.” With their competitive essence clearly articulated, the leaders we studied are able to structure their operations around the world— prioritizing investments, choices and trade-offs—and subsequently execute those operations in the right manner which delivers that competitive essence. Creating and executing the “right” global operations for the business typically requires thoroughly answering a number of critical questions.
Four Operating Model Levers: Choices and Trade-offs
As they work to align their operating model with their competitive essence, the critical questions which companies must ask themselves can be broadly grouped around four levers of the operating model:
- Organizational structure: To what extent is decision making centralized or decentralized? How do different groups relate to each other?
- Management processes: To what extent should different capabilities be customized by location, standardized across the firm, shared centrally or outsourced externally?
- Management technologies: What is the right underlying IT infrastructure to enable operations? Which capabilities are built in-house and which are bought?
- People: Who should execute each capability, where should they be located and what skills and culture do they require?
When developing a global operating model, one of the most important exercises is deciding how to structure and execute each major business process. Should it be performed in-house or outsourced? Should it be done off-shore, near-shore or on-shore (e.g., in each country)? Does it require reengineering or can it remain as is?
That’s why Accenture has developed its unique Accenture Business Operations Modeling framework. Accenture's approach, utilizing a powerful modeling workbench, is data-driven and objective, and provides clear guidance on each process. Among the aspects the approach considers when modeling operations are each process’s position within the operating model, the business skills involved in executing it, the volume and flexibility of transactions involved, and its strategic importance.