How to Make Strategic Decisions for Centralization in Your Business Model

Many of us are keen to centralize different areas of the business for all good reasons. You may think of the usual benefits of centralization is the first step towards optimized operations which has a direct bottom line impact. Hold on!

This is a list of five key decision-making points before you take the plunge.

1. Business fit – the approach will be vastly different basis the type of business that you are in. A manufacturing organization with hubs spread across the globe may not be able to centralize due to quicker response time required. A 24x7 service organization can have a centralized approach since they will have different team covering different time zones. Essentially the response time and close ness to business will dictate the ultimate decision-making process.

   
   

2. Purpose – is critical before you take the call. You should be able clearly articulate the purpose which broadly aligns with one or multiple business drivers: a) profitability b) talent challenges  c) business dynamics (shrinking market)

   
   

3. Process maturity – should be analysed by your process leads or global process owners. The more fragmented the process either due to inefficiencies or too many touchpoints will make the transition to centralization make it so more challenging.

   
   

4. Stakeholder buy in – is an absolute must. I have seen global clients hesitating to move in this direction since the business leaders are not aligned. It might be a good idea to identify senior sponsors who can enable the change management. Always remember successful change management is key success measure of this project.

   
   

5. Customer feedback - will actually tell you if the client is aligned. After all the client will get impacted due to the change in operating model. Establish early touchpoints to understand their point of view and probably it would be worthwhile to include their feedback in the project components.