Transform support functions for the digital age. Capitalising on the potential for faster, leaner reporting means letting go of the old ways and welcoming the new

By Olaf Rehse

Monday September 23, 2019

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The digital future of support functions will be exciting. As traditional, time-intensive tasks get handled through smart digital tools, people can focus on asking the right questions, running and interpreting analyses, drawing conclusions, managing trade-offs, and generating insights that help business units create new value. Capitalising on this potential, however, requires putting the right organisational structure in place. 

At most organisations in Australia and New Zealand, as everywhere across the globe, support functions still look largely the same today as they always did two or three decades ago. They feature a traditional, pyramid-shaped organisational structure in which functions like HR, legal, and finance are set up to mirror the business units. This is an outdated approach, and one that will become even less tenable over time.

The evolution of the ‘rocket’ org structure

Digital technology is changing just about every aspect of how companies operate — including support functions — yet companies will not be able to capitalise on digital unless they put the right operating model in place. Otherwise, they’re trying to bolt a turbocharged engine onto a wooden cart. This is particularly relevant for Australian corporates, which are going through a phase of substantial transformation (in the mining, banking and telco industry, for example) right now. In these transformations, support functions cannot and should not be left out, as they can harvest the full potential of cost savings, make organisations more agile, and support better decisionmaking.

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Support functions can only capitalise on digital if they are reorganised to better reflect the way that technology changes how work gets done. Specifically, the support function of the future will be rocket-shaped rather than pyramid-shaped (see figure 1.)

The rocket structure will have a stronger digital corporate centre at the top, which controls data, sets governance policies, and provides insights to help steer the business. The new structure will have fewer middle layers — or potentially none — because there is no longer a need for multiple levels of reporting and management. At the bottom, automated tools embedded within business units will take over many transactional tasks, executing them faster and more accurately, and at lower costs (customised for the needs of local markets).

This structure doesn’t match the overall organisation in terms of business units and geographic markets — and it doesn’t need to.

Figure 1

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New technologies require a new operating model

New technologies allow support functions to work in new ways and streamline their overall operating model. Specific enabling technologies include the following.

  • Big data. New tools allow companies to collect, validate, store, and process large amounts of information—at far lower costs and higher quality levels than in the past—and make it more accessible to leaders. For example, data lakes can work with the existing, unstructured data that many organisations already have (often in tremendous volume) but do not yet capitalise on. As a result, support functions can proactively identify business needs—and even develop solutions—through increased transparency and smarter business insights.
  • Global connectivity. Cloud computing, software-as-a-service, and mobile/wearable devices make data-driven insights more accessible throughout the organisation, in real time. The increased connectivity allows support function employees to collaborate in new ways and make smarter and faster decisions.
  • Artificial intelligence and machine learning. Advanced technologies allow companies to automate repetitive transactional tasks and rule-based activities, through robotic process automation. And technology can increasingly handle processes that require some judgment as well, through machine learning. Algorithms can work 24/7 with greater accuracy and lower costs. Even self-service functions become smarter through AI.

Clear advantages

This rocket-shaped structure is far faster and more agile than the traditional approach. Organisations can reduce costs and use data to create value in new ways. Support functions will be much leaner and become true partners to the business, since they are freed to focus on strategic elements rather than day-to-day transactions. Decisionmaking can happen much faster — thanks to increased transparency on performance — leading to increased agility. The traditional trade-offs between speed, quality, and costs will disappear. Business units get faster and more accurate information — with far greater levels of detail — at lower costs. And organizations will be able to customise their support services to the needs of local business units and markets, which is a drastic shift from the current move to standardisation.

How to get started

To prepare the organisation to digitally transform support functions, leaders should focus on the following priorities.

  • Create a solid baseline by understanding current service levels, customer satisfaction, capabilities and resource allocation of your support functions,
  • Start building enablers (esp. data lakes, analytical skills) in the centre as well as in, and like real-time data capture abilities in decentralized areas,
  • Implement initial individual use cases, such as using advanced analytics to support decision-making out of the centre, and establish a test-and-learn cycle,
  • Address key architecture questions, e.g. organizations can build on next-level, off-the-shelf integrated ERP systems (like SAP Hana) or build central steering capabilities and tools over the top of their existing IT platform,
  • For service functions, start by assessing automation potential, either through robotics or redesigning end-to-end workflows,
  •  Based on initial learnings, build out your high-level target picture as well as your (multi-year) transformation roadmap.

Co-authored by Martin Twesten, Partner & Associate Director, BCG.

This article by Boston Consulting Group was originally published to Linkedin and is republished here with BCG’s kind permission.

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