Last time I wrote about the diversity in the Global Capability Centers (GCC) landscape. Today I thought of writing about the metrics that can reflect on the real influence and impact of the GCCs on the parent enterprises.

In the rapidly evolving business landscape, GCCs are emerging as pivotal assets for multinational enterprises. As consultants specializing in the GCC space, we understand that the true value of these centers extends far beyond basic operational efficiency. It is about demonstrating the strategic value addition that GCCs bring to their parent enterprises. This blog delves into the importance of designing and using appropriate metrics to assess, showcase, and enhance this value addition effectively.

The Evolution of Metrics in GCCs

Traditionally, GCCs have relied on basic operational metrics to measure their performance. These metrics, such as the number of widgets produced or service level agreements (SLAs), provide a foundational view of productivity and efficiency. However, as GCCs continue to mature, it is essential to shift the focus from basic operations to metrics that align with the strategic objectives of the enterprise.

At a broad level, there are two inter-related metrics to consider:

1. The GCC’s influence on the enterprise, and
2. The GCC’s impact on the enterprise.

Measuring the Influence – Empower the GCC

This dimension is often not measured for GCCs. However, this is a critical ingredient for a GCC to add strategic value to the enterprise and live up to its potential. A a high score here acts as a catalyst to deliver more value from the GCC whereas a low score invariably limits the score on the impact metric.

At a foundational level, assess which are the strategic decision-making tables (for the enterprise) the GCC has a seat at. To go a step deeper here are some indicative metrics:

1. Decision-Making Authority

Measure the percentage of strategic initiatives led by the GCC and the level of autonomy in decision-making. For instance, a GCC that leads critical projects like new product launches or market expansions demonstrates a higher level of empowerment.

2. Talent/ Leadership Capability Development

Assess leadership roles filled by GCC talent and career progression rates. For example, if a significant number of senior leadership roles are occupied by individuals from the GCC, it indicates a high level of talent empowerment and development.

3. Innovation and Strategic Contributions

Evaluate the GCC’s contribution to the enterprise’s innovation roadmap, the success rate of strategic initiatives, and its influence on market positioning. For instance, a GCC that consistently contributes to successful product launches or innovative solutions showcases its strategic influence.

4. Operational Independence

Assess the degree of alignment with the enterprise’s strategic goals and the impact on enterprise-wide process improvements. A GCC that independently manages critical processes aligned with strategic objectives demonstrates operational empowerment.

5. Collaboration and Integration

Evaluate the quality of cross-functional collaboration, the GCC’s influence on enterprise-wide initiatives, and the level of strategic integration. For example, a GCC that plays a pivotal role in cross-functional projects and strategic initiatives indicates strong collaboration and integration with the enterprise.

Measuring the Impact – Designing metrics aligned with strategic objectives

To establish GCCs as strategic assets, it is crucial to design metrics that resonate with the broader goals of the parent enterprise. Here are a few examples:

1. Speed and Time to Market

• Operational Metric: Speed can be measured in terms of the number of widgets produced per unit time, providing a basic view of productivity.
• Strategic Metric: To showcase value addition, speed can be measured in terms of time to market for new products or services. This metric highlights the GCC’s role in accelerating innovation and staying ahead of the competition. Additionally, metrics such as optimized processes, automation, and cross-functional efficiency can demonstrate how the GCC contributes to faster project completion and enhanced agility. The next step would be to measure the impact of this enhanced speed on top line improvement.

1. 1. Quality and Risk Management
      • Operational Metric: Quality can be assessed through defect rates and adherence to SLAs.
      • Strategic Metric: Quality should also be measured in terms of customer satisfaction, reduced rework, and minimized risk. Metrics like the impact of quality improvements on customer retention and reduced financial risk are some of the ways to showcase the GCC’s contribution to building a resilient and customer-centric enterprise. This in turn can be translated into the top line impact.
   2. Cost Efficiency and Financial Impact
      • Operational Metric: Cost efficiency can be measured through cost savings achieved by the GCC.
      • Strategic Metric: To demonstrate value addition, cost efficiency should be linked to strategic financial impact. Metrics such as the impact of cost savings on pricing strategies, increased sales, and overall profitability can illustrate how the GCC supports the enterprise’s financial goals.
   3. Innovation and Strategic Initiatives
      • Operational Metric: Innovation can be measured through the number of new ideas generated or projects initiated.
      • Strategic Metric: Innovation should be assessed based on its contribution to strategic initiatives. Metrics like the success rate of new product launches, the adoption rate of innovative solutions, and the overall impact on market positioning can highlight the GCC’s role in driving the enterprise’s growth and competitiveness. This then can translate into top line increase and/or higher profitability.

These are examples of metrics that can be shifted from being operational metrics (for the operations leaders) to being strategic metrics (for the executive leadership) – connected directly to the strategic objectives of the enterprise. The shift in perspective brings to the fore the positioning of the GCC and its true impact.

Capturing and Reporting Metrics

Data capture, analysis & interpretation, reporting, and governance are critical aspects of a robust metrics framework. To ensure meaningful insights, it is essential to implement advanced data capture mechanisms, utilize sophisticated analytics tools, and establish clear reporting structures.

1. 1. 1. Data Capture: Implement automated data capture systems to ensure accurate and real-time data collection. This includes leveraging IoT devices, sensors, and data integration platforms, as relevant, to gather comprehensive data from various sources.
      2. Analysis & Interpretation: Utilize advanced analytics tools, such as machine learning and artificial intelligence, to analyze the captured data. Interpret the insights to identify trends, patterns, and opportunities for improvement.
      3. Reporting: Design intuitive and interactive dashboards that provide a holistic view of the metrics. Tailor the reporting to different levels of the organization, from operations management to executive leadership, ensuring that the insights are relevant and actionable.
      4. Governance: Establish robust governance frameworks to ensure data accuracy, consistency, and security. Define clear roles and responsibilities for data management and establish regular review processes to ensure the metrics remain aligned with the strategic objectives.

Buy-in from the appropriate stakeholder

To be effective in this strategic positioning of the GCC, it is important to get the buy-in from the executive leadership in the enterprise. The path goes through the CFO’s office. As a GCC translates regular metrics into ones that showcase impact on the top line and profitability, it is imperative that the CFO’s office buys into this. Once this is done, the impact of the GCC is formal.

Conclusion

As the role of GCCs continues to evolve, it is imperative to move beyond basic operational metrics and focus on metrics that demonstrate strategic value addition. By designing metrics aligned with the enterprise’s strategic objectives and adopting a comprehensive approach to data capture, analysis & interpretation, reporting, and governance, GCCs can showcase their contribution to the parent enterprise’s success. After all, how a GCC is measured is how a GCC is seen in the overall scheme of things in an enterprise.