Procter and Gamble
9-404-124
REV: JULY 12, 2005
THOMAS J. DELONG, WARREN BRACKIN, ALEX CABAÑAS, PHIL SHELLHAMMER, DAVID L. AGER
Procter & Gamble: Global Business Services
Dave Walker, vice president of Business Service Opportunities and chairman of the Governance Team at Procter & Gamble, sat and stared at the reports and presentations that were piled on his desk. As head of the Governance Team, Walker was responsible for leading a lengthy review aimed at answering one question: “What should P&G do with its Global Business Services (GBS) unit?” GBS brought together internal services such as finance, accounting, employee services, customer logistics, purchasing, and information technology into a single, global organization providing services to all P&G business units. GBS leveraged P&G’s scale, capitalized on new technology, and standardized work processes to deliver improved services at significantly lower costs to all of P&G. In late 2000, GBS had achieved significant cost savings for the company, but many P&G top executives began to question whether or not continuing to invest in GBS was the best use of the company’s resources. A. G. Lafley, chairman and CEO, saw the decision as one about strategic focus: “We’re a development and commercialization company. That’s really what we do. We develop and commercialize brands and products. So we need to evaluate networking or partnering everything that is required to support a development and commercialization [kind of] company.” Lafley and other top executives were pleased with the cost savings and efficiencies that GBS had already delivered, but they were looking for more. One option was to spin off GBS as a separate entity. The business process outsourcing (BPO) industry, which provided financial, accounting, purchasing, and other critical business services to a wide variety of companies, was young but promising. In early 2001, a comprehensive review revealed that GBS had market value as a stand-alone business that could compete
REV: JULY 12, 2005
THOMAS J. DELONG, WARREN BRACKIN, ALEX CABAÑAS, PHIL SHELLHAMMER, DAVID L. AGER
Procter & Gamble: Global Business Services
Dave Walker, vice president of Business Service Opportunities and chairman of the Governance Team at Procter & Gamble, sat and stared at the reports and presentations that were piled on his desk. As head of the Governance Team, Walker was responsible for leading a lengthy review aimed at answering one question: “What should P&G do with its Global Business Services (GBS) unit?” GBS brought together internal services such as finance, accounting, employee services, customer logistics, purchasing, and information technology into a single, global organization providing services to all P&G business units. GBS leveraged P&G’s scale, capitalized on new technology, and standardized work processes to deliver improved services at significantly lower costs to all of P&G. In late 2000, GBS had achieved significant cost savings for the company, but many P&G top executives began to question whether or not continuing to invest in GBS was the best use of the company’s resources. A. G. Lafley, chairman and CEO, saw the decision as one about strategic focus: “We’re a development and commercialization company. That’s really what we do. We develop and commercialize brands and products. So we need to evaluate networking or partnering everything that is required to support a development and commercialization [kind of] company.” Lafley and other top executives were pleased with the cost savings and efficiencies that GBS had already delivered, but they were looking for more. One option was to spin off GBS as a separate entity. The business process outsourcing (BPO) industry, which provided financial, accounting, purchasing, and other critical business services to a wide variety of companies, was young but promising. In early 2001, a comprehensive review revealed that GBS had market value as a stand-alone business that could compete