Fix 'Broken' Processes Before Outsourcing F&A  

3 February 2010:

Companies offering services to the F&A industry continue to evolve, adopt unique techniques and are aggressively offering end-to-end solutions. The demand for finance and accounting outsourcing (FAO) services is strong and will continue to grow in 2010, according to the findings of The WNS Annual CFO Survey 2010.

Stan Lepeak, Managing Director, Global Research, Equaterra, says, "While most organizations are still dealing with the fallout from the global recession, this study suggests their 2010 priorities are shifting back towards growing the business in preparation for the economic upturn. For the CFO, this means focusing on managing costs and improving internal controls but also preparing for the upturn by driving the transformation of F&A operations."
Undoubtedly, the trend is changing as the economy recovers and the focus is shifting to innovation and transformation of their businesses.

According to Jenifer Hartnett-Bullen, a principal consultant in PA Consulting Group's IT Consulting practice, following are the key trends today;

• The focus is on innovation, improvement and transformation. That is, using outsourcing as a tool to transform the finance function and improve processes
• Though "piecemeal" outsourcing is still a common practice (specially in companies where different functions are independent groups), most buyers are realizing the benefits of shared functions and the advantages of outsourcing both service and application development
• Software-as-a-service has become more mature and the level of comfort of using it has increased in the F&A industry

Ms. Sulakshana Patankar, Business Unit Leader, F&A, WNS Global Services, also finds the emergence of bolt-on tools and applications as service offerings rather than product offerings, as an emerging trend. She says, "While platform based BPO has not moved very far than being a concept, there is a marked move towards bolt-on tools and applications being offered as a service rather than being a product offering. With increasing levels of sophistication and capital outlays, service providers can leverage scale of their operations to provide the benefits of bolt-on tools and application at a fraction of the cost if offered as a service rather than as a product. Moreover, this allows business enterprises to circumvent risk of technology obsolescence. WNS believes that over the next 3-5 years, service providers will start offering business processes under the BPU (Business Process Utility) model."

With increase in the need for outsourcing F&A services, customers need to overcome challenges in order to make the best of outsourcing.  Jenifer believes following are some of the main concerns of the senior executives in the F&A industry;

• Fixing "broken" processes or organizational challenges before outsourcing them
• Organizations creating barriers to moving towards shared services
• "Selling" the benefits of outsourcing when it's not always about cost savings

In addition to the above, F&A organizations also need to support the corporate strategies of growing the business and competing against new entrants, and improve their own operational efficiencies by reducing F&A costs and driving corporate cost cutting.
In the current economy, it is extremely important for the company (buyer) to address their challenges first and then adopt best practices to ensure the success of outsourcing.  Jenifer says, "A company that wishes to outsource their F&A functions must consider the following three best practices;

1. Think about an integrated financial function. Think beyond single F&A functions and look at the end-to-end process to ensure that you understand handoffs and data integration requirements
2. Move towards a shared services culture. Use outsourcing as a tool to transform the way your organization views the finance function
3. Fix faulty processes before outsourcing them: Be honest with yourself regarding what needs to be fixed and take steps to do so before engaging an outside party; don't view outsourcing as something to fix a faulty process."
    

Another factor that can immensely contribute to the success of outsourcing F&A function is hiring a service provider who offers end-to-end solution. Outsourcing of end to end services offers a very favorable situation for clients in every respect with the potential benefits of increased market competitiveness, quality and efficiency, control and profitability.

 According to Sulakshana following are some of the significant advantages of using an end-to-end solution over the 'piecemeal' approach:

• Ability to outsource end to end processes to one provider results in better control and consolidation of operations resulting in tangible benefits
• High stability and continuity of operations with lower risk of service breakdown
• Offers the availability of global skills supply chain and up to date knowledge and expertise to overcome resource availability issues
• Generates additional value by providing business insights and access to tools and techniques developed by service provider for automation and control assurance of the client processes
• The scale of this type of engagement usually results in competitive prices for the client and implementation of innovative pricing mechanisms and projects by the service provider to further drive down the costs through the period of the contract
• Helps build partner like relations with service provider to enable collaboration for more strategic initiatives

Advice for the buyers

Don't get hung up on the technology. Focus on what the supplier is delivering

• Don't outsource a mess. It will still be a mess once it's outsourced, it will just be harder to fix
• Don't short-change the importance of communications and training in a successful outsourcing deal. All individuals impacted need to be brought along, even the end users, to ensure that they understand what will change, what will stay the same, and what they need to do to get ready
• Involve key stakeholders at the right time. Ensure that you are involving people who will support the initiative as well as those you may need to convince to support it

It is probably that time of the year when most companies are planning, innovating and work on strategies to transform their businesses. At the end, what seems may work, is the focus of the organization to first correct 'broken' processes in-house and document it, sell the concept of outsourcing to not only the stakeholders but the employees as well, and finally, the adoption of a service provider who offers end-to-end solutions for your needs.

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Source: Global Services Media

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