GPOs help ensure that their assigned processes are designed in ways that best meet the needs of everyone involved. To do so, GPOs have decision-making authority for sign-off on all related business policies and procedures. They also establish close working relationships with leaders throughout their processes’ functions and with business users. Let’s examine the GPO’s characteristics more closely.
GPO decision rights
GPOs can have decision rights for key elements of process governance:
- Process design
- Delivery model
- Policies and controls
- Platforms and technology
- Data definitions and standards
- Improvement opportunities
- Performance measurement
With tech-enabled transformation programs, GPOs must often rethink the company’s existing processes and design a desired future state aligned with a newly envisioned operating model. With that in mind, GPOs typically focus on items 1–5 in the design stages and shift attention to items 6–7 when they pivot into operations.
For example, a large global retailer that EY member firms are working with had built up an extensive network of sales locations through acquisitions, with little focus on standardization or efficiency. The company’s legacy IT systems were reaching the end of their life, and the organization decided to replace them with a new, sophisticated enterprise resource planning (ERP) software. Given the program’s large scale and complexity, the client re-evaluated its decentralized and autonomous operating model, and redesigned it in line with a newly defined growth strategy. To kick off the high-level design phase, program leadership designated a key executive to serve as a GPO for each E2E process in scope for the transformation. (The additional details about this client will be traced in subsequent sections.)
GPO working relationships
GPOs report to the executive sponsors of the transformation program. Many GPOs are paired with a specific business lead who has deep expertise in the E2E process at hand. However, to fulfill their role, GPOs may also interact with other business leads. For example, at the client noted earlier, the GPO for the record-to-report process is the company’s controller, and the business lead the person paired with is a specialist from the accounting department. The order-to-cash GPO is a regional sales manager, paired with a former division office head.
Additionally, project timelines with tech-enabled transformations are usually aggressive, and GPOs have little time to build consensus across the organization and across other in-flight initiatives.
1. Designing future processes and solutions
GPOs must be strategic visionaries — defining a clear vision for the E2E process they’re managing that is tied to company strategy and imagining how the process could be more strongly aligned with trends and demands.
GPOs must also consider their organization’s ability to adapt to those process changes and gauge when to take a small step vs. a leap. For example, the global retailer client referenced earlier defined an incremental-step change framework for improving supply and operations planning (S&OP). Instead of a fully centralized planning organization, the project team established a center-led S&OP process supported by the ERP’s planning module. The GPO thought it was wiser to absorb bite-size change until the process had been tested and the organization was ready to move to a fully centralized process run by corporate.
This example shows how effective GPOs help their organization avoid wasting time, money and managerial attention on solutions that won’t work for the transformation program underway.
Finally, to arrive at the right design for the E2E processes they’re overseeing, GPOs coordinate design decisions across multiple players and teams in different parts of the company.
2. Leading others
Great GPOs aren’t just visionaries; they’re also a unique brand of leaders. As organizations shift from stabilizing their enterprises to dealing with disruption, and from industrial to digital production, they require leaders who embody an evolved set of knowledge, skills and abilities. For instance, rather than cultivating individual relationships with a few key players, GPOs build networks and groups with common interests and goals. And instead of focusing only on managing change, they concentrate on embracing disruption.
Effective GPOs provide this form of leadership by embracing the new competencies themselves and by coaching and guiding others. Equally important, they model newly emerging digital-leadership capabilities essential in today’s technology-driven business world, such as empathy, resilience and inspiration.
3. Realizing benefits from the change program
As with any transformation program requiring hefty investment, a company must make a strong business case for committing resources to a large-scale, tech-enabled change effort, specifying the value that each E2E process should ultimately generate.
For example, outcomes that the global retail client wanted to get from its transformation program included better planning and forecasting capabilities. Therefore, the GPO in charge of the forecast-to-produce process considered the impact of the proposed redesign on excess inventory and inventory turns — important benefit metrics for the business case.
A GPO won’t necessarily be directly accountable or responsible for capturing every benefit on offer from reconfiguring the process. That’s because some functions within the process might not sit within that GPO’s control. Given this inherent tension between functional and process ownership of benefits realization, a GPO will have to make “handshake” agreements with other leaders. For instance, at the global retailer, the GPO for procure-to-pay is the CFO, who works closely with the vice president of procurement to document designrequirements and check that the procurement organization ultimately realizes the procurement-related benefits documented in the business case. Ideally these agreements would then be backed by shared goals and even individual performance metrics designed to optimize the end-to-end process rather than the performance of a single function.
Are you planning a tech-enabled transformation program, and do you want to designate GPOs for the E2E processes involved? If you have candidates in mind, that’s great news.
For each person, ask yourself the following questions:
- Is this person passionate about the company’s vision for its future and about being part of the journey to get there?
- Does the individual understand the E2E process and where it needs to go?
- Does he or she have stronger business acumen than IT expertise?
- Can this person resist the impulse to optimize his or her own performance at the expense of other business units’ performance?
- Does the individual possess the seniority and reputation needed to inspire and drive change and to make tough judgment calls quickly?
The more “yes” responses, the higher the likelihood that the individuals you’re considering could make effective GPOs.
So, who will be your organization’s GPOs?
