How a Strategy Realization Office (SRO) Can Benefit GCC Setup | ISG

Enterprises are increasingly turning to global capability centers (GCCs) for more than just cost efficiency. Once regarded predominantly as a collection of back-office service providers, GCCs have evolved into key contributors of innovation, transformation and substantive value. According to ISG Research, nearly a quarter of enterprises are contemplating the establishment of a new GCC in the next 18 months – and 40% aim to expand their existing operations.  

But – while demand is on the rise – GCCs that lack strategic oversight can fail to meet expected outcomes. Only 36% of enterprises that have set up or significantly changed their GCCs in the last two years see significant improvement in quality of operations. 

Why do so many GCCs fail to meet expected outcomes?  

Challenges to Optimal GCC Performance  

Here are some common reasons that GCCs don’t always live up to expectations: 

1. Overly aggressive cost-saving targets: Some organizations establish GCCs with the primary goal of rapid cost reduction. This approach can lead to underinvestment in critical areas such as leadership and infrastructure, ultimately hindering the GCC's effectiveness.
2. Inadequate investment in leadership: Strong local leadership is critical for the success of a GCC. Insufficient investment in putting experienced leaders on the ground who understand both the local context and the company's culture can lead to operational challenges and strategic missteps.
3. Lack of strategy: Organizations with poor strategic foresight face significant challenges. Mistakenly assuming that global brand recognition will automatically translate to local success can hinder effective talent acquisition and retention. Poor communication between headquarters and the GCC, as well as faulty benchmarking that neglects local dynamics, can exacerbate these issues.

Establishing a GCC requires a significant investment in time and money. To see a return on that investment, strategic oversight is imperative. A strategy realization office (SRO) is vital to making sure a GCC achieves its goals.   

What Is a Strategy Realization Office (SRO)? 

An SRO serves as a bridge between enterprise leadership, business units and vendors to ensure a seamless partnership, as outlined in Figure 1 below. The enterprise makes pivotal decisions concerning scope, budget and timelines, while a multi-vendor framework delivers services per contractual obligations. The SRO operates closely with the enterprise leadership to align strategic objectives and ensure the GCC delivers quantifiable value. At the same time, the SRO collaborates with vendors and delivery partners to ensure compliance with contractual agreements and ensure timely and budget-conscious delivery of the defined scope.  

Through effective steering, performance tracking and quality assurance, the SRO guarantees that the GCC is established with the best chances of success, achieves desired business outcomes and maintains stakeholder alignment. 

Figure 1: How an SRO Works in Practice