If organizations that sell directly to retail customers are throwing up their hands in confusion, it should come as little surprise. These businesses once concentrated their efforts on the affluent markets of North America and, perhaps, Western Europe. Growth rates were acceptable and returns were good. As growth rates in these developed markets slow down—or, in some cases, reverse—these organizations must deliver growth in a broad range of markets with different requirements for success.
Fragmentation is a characteristic of such markets. A consumer products company wanting to do business in India may have to work with hundreds of thousands of small, independent retailers to reach potential customers throughout the country. While chief marketing officers (CMOs) dealing primarily with the needs of customers in developed markets can keep tight controls over functions such as CRM, the challenge of delivering services of a uniform high quality at acceptable cost is vastly greater in new and diverse markets.
Shared services—the concentration of key business services in one place within an organization, and providing such services to internal customers throughout a company—have been helpful in dealing with this challenge. Facing divergent economic growth rates, distinctive consumer preferences, varied competitive environments, and a mix of currencies, cultures, and regulatory requirements, CMOs are relying on shared services to adapt quickly to changing strategies and market conditions.
As companies quickly enter (or exit) markets and adjust marketing and promotional programs to reflect changing consumer behavior, however, they sometimes bump up against the limits of the shared services concept. Leading consumer products companies are moving from shared services and integrating their business services to deliver higher value services on an enterprise-wide basis. Integrated business services organizations do so in a way that leverages both captive and outsourced CRM solutions to maintain quality and control costs.
The central idea of creating integrated business services is to provide the analytics, infrastructure, discipline, and expertise necessary to cope with varied, volatile markets and their associated risks.
To accomplish this, integrated business services organizations are becoming strategic partners to the enterprise by supplying services that can help resolve end-to-end business problems and deliver increased enterprise value.
Organizations also realize the significant value that can come from aligning business services such as CRM within the right governance model to create an enterprise-wide master data, reporting, and analytics capability. Such a capability can support the organization and each of its business units, helping them outmaneuver and outperform competitors.
Integrated business services are an inherently customer-focused concept. By moving ownership of master data, reporting, and analytics capabilities into integrated business services, an enterprise can get the structural support it needs to scale, modify, and improve services to meet a business' changing needs. The right governance, consistent data structures across entities, and a dedicated team whose skills range from transactional data management to higher-order analysis can provide the insight and analysis to support effective decision-making.
One company wanted a better understanding of consumer consumption habits across product lines. The company hypothesized that if it could achieve this, it could develop a holistic and effective social media strategy to better engage customers and influence consumption. This could provide a catalyst for increasing sales and improving margins.
As the company quickly discovered, exploiting this opportunity would require addressing incompatible data structures and business goals across siloed business units. Moving to integrated business services–owned master data, reporting, and analytics could have accelerated its ability to capitalize on a strong idea and generate a more optimized value chain.
And while functions and business units may realize initial success in developing their own master data, reporting, and analytics capabilities, the best insight often comes when organizations can quickly, easily, and confidently link the data and the insights from multiple functions or business units. Additional insights (and value) are often generated if the organization can adeptly layer in and manage third-party data sources as well.
Our research and conversations with companies indicate that organizations are redefining their service models and modifying their governance to better align with the overall business strategy and to deliver the agility and flexibility to support global business operations. They are implementing new and innovative services—particularly those related to analytics—to drive business performance. For example, a business services organization can support a company's digital marketing efforts worldwide. Cost reduction, while important, may be secondary to delivering broader business outcomes that drive value. It's a matter of striking the right balance.
With a strong master data and reporting foundation in place, analytics can benefit integrated business services customers by providing insights about a company's customer base, data that directs how a company repositions its products in the market, ideas on how to drive more profitable sales, or information to better manage its resources in the face of persistent volatility and changing market conditions. In all of these cases, the integrated business services organization partners with the business to use data and analytics to make an impact on the product and the marketplace as well as on top-line sales and bottom-line savings.
Paul Jeruchimowitz is a managing director in management consulting at Accenture, a global management consulting, technology services, and outsourcing company.