CFOs, get a partner who thinks beyond outsourcing

Need is for someone who can participate in decision-making and support them with analytics

Updated: Oct 15, 2014 01:56:33 PM UTC
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Chief financial officers (CFOs) who have set up shared service centers (SSCs) and captive financial centres are at the crossroad of transformation. They’ve achieved varying degree of success with their initiative and now want more. At the crossroads, some turn to a business process outsourcing (BPO) partner. They have several questions on their mind: “Have I achieved real financial benefits? Is there scope for further optimisation? Should I automate 100 percent or leverage existing technology investments or get bolt-on solutions? Am I tracking the right metrics? Is the SSC positioned correctly within the larger client organisation–as a cost centre or a service centre? How do I invoice the internal customer organisation–is FTE-based pricing the only option? And of course, is there a way to showcase business value delivered?”

More often than not, BPO service providers have answers in the form of an ‘outsourcing solution’–as if it was a magic pill for every challenge faced by a CFO. Outsourcing could be a consequential downstream activity that may be considered by the CFO depending on business priorities of the finance function. The real value of a service provider is to engage with a client in a long-term partnership and serve as the domain consultant in designing, building and implementing the ‘transformation’ journey.

I am often asked by my clients: “How will I define my transformation journey? What is the net outcome?”

This is where a service provider needs to work closely with the client and understand the CFO’s real business challenge. Is it only reduction in cost (efficiency), or is effectiveness equally important? There cannot be one solution that fits all situations in the case of SSCs or captives. The various factors that determine the course of action depends on client priorities and objectives, appetite for risk, maturity level of finance operations, presence of change management processes, among others. Another important factor is the alignment of CFO’s objectives with the overall business objective of the company, i.e. how will faster book closure, automation of controls, quality and accuracy of financial transactions, or cloud-based computing enable the organisation in meeting its business objectives?

Although cost continues to be the prime driver for CFOs, they are looking for partners who can own end-to-end KPIs, participate in decision-making, and support them with analytics. Even when they know the next big ask of the industry is automation, they want to take it up at minimal investment. Given that global ERP implementation may not be the best option in the current financial climate, it is necessary that they build on the available technology investment or adopt point solutions.

How can a service provider support a client CFO or SSC owner? Or how can a client choose the right partner?

I define the value that can be delivered by a service provider in five buckets–product-based offering, service offering, transformation, part or full outsourcing, centre rebadging and transformation.

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Clients are evaluating the domain knowledge of the service provider and the willingness to look beyond outsourcing. The ability of service providers to productise service offerings will be a key differentiator. Another differentiator will be the ability to assist in standalone transformation projects. This includes benchmarking, providing analytics and reporting capabilities, ERP implementation, SSC set up, report rationalisation, and maturity assessment studies. A product-based solution can be a window to multiple transformation opportunities within the client engagement. It is also an opportunity for the client and service provider to chart the transformation journey together and develop a model that best meets the business requirements of the client CFO. Many SSCs now need consultants who can support them in converting the SSC from a cost centre to a profit centre. This is where the domain knowledge as well as the agility and the willingness of the service provider to invest in new areas will pay off.

To make this happen, a consultative approach will be the key, analytics will be an enabler, and technology will be pervasive. Investments in cloud options (capex vs opex), adoption of disruptive technology like mobility and robotics, and the ability to develop an end-to-end finance and accounting (F&A) platform with varied modules will stand out. However, these must be complemented by having the right people in the field who have relationships that impact decision-making and leadership that is ready to “think BIG, take calculative risk, match appropriate investments, and adapt to changing requirements of the client”. In essence, partners that make CFOs look better in their organisation or ecosystem. Partners who focus on impacting the client’s P&L account instead of focusing on how the engagement with the client impacts their P&L account.

-By Vinay Gopala Rao, AVP & Strategic Business Practice Head, Finance & Accounting, Infosys BPO

The thoughts and opinions shared here are of the author.

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