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F&A

Finance and Accounting

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Finance and Accounting

Our Finance and Accounting (F&A) research helps organizations optimize global operations by delivering high value insights on finance and accounting outsourcing relationships, shared services, locations, talent, pricing, and peer benchmarks

Finance and Accounting outsourcing, BPO,

Our Finance and Accounting Coverage

Our data and analysis covers all areas of Finance and Accounting outsourcing: accounts receivable, accounts payable, general accounting, management reporting, and other F&A processes

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In this report, we examine how organizations can leverage new value creation levers such as Service Delivery Automation (SDA), analytics, cognitive intelligence, cloud computing, and mobility to achieve “best-in-class” finance and accounting processes.

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We offer an unparalleled depth of coverage in our fact-based and easy-to-digest reports on the finance and accounting outsourcing market. Access to reports and our analysts is available as an annual membership

 

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Our industry-leading analysis can help you benchmark finance & accounting services – prices for outsourced services, contracts and service levels, global delivery models, and more

 

 

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Recent research from Everest Group Recent Finance & Accounting Reports

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Finance and Accounting Outsourcing (FAO) – Service Provider Landscape with Services PEAK Matrix™ Assessment 2019

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The roles of both Finance & Accounting (F&A) operations and the CFO have changed significantly over the past few years. Given th[...]
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Your Complete Guide to Accounts Payable Transformation

The Accounts Payable (AP) process is one of the most important transactional F&A processes, as it directly affects cash outflow and vendor an[...]
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Finance and Accounting Digital Augmentation Suite (F&A DAS) – Service Provider Landscape with Solutions PEAK Matrix™ Assessment 2018

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Leaping on the Shoulders of Evolution: F&A Delivery from Global In-house Centers (GICs) | Sherpas in Blue Shirts

By | Blog

While Finance & Accounting (F&A) is one of the most outsourced functions, it is also one of the first to be delivered through offshore global in-house centers (GICs) on a large scale.  Indeed, the GIC market for F&A delivery (by FTEs) now comprises ~13 percent of the overall GIC market. During this insourcing process, the F&A function has grown by leaps and bounds, and has evolved along the following key themes.

GICs are gradually moving from the functional definition of F&A to an end-to-end definition

The functional definition of F&A has been evolving gradually, giving way to an outcome-focused approach in which organizations are looking to break down functional silos and achieve effective process delivery. F&A processes are no longer being treated as stand-alone activities with independent objectives. Instead, they now have a broader mandate of being delivered in tandem with related procurement and supply chain activities. For instance, accounts payable is both a transactional F&A process and a transactional procurement process. It has  been “repackaged” under the Procure-to-Pay (P2P) definition, which takes into account end-to-end delivery of accounts payable, travel and expenses, invoice processing, Requisition-to-PO, sourcing support, and catalog management. Similarly, Order-to-Cash (O2C) and Record-to-Report (R2R) are end-to-end processes now included within the F&A definition. Thus, mature GICs are offering seamless delivery of F&A processes with limited duplication of work.

end-to-end process F&A pic

GICs are increasingly leveraging nearshore locations for F&A delivery

Nearshore locations, such as Central and Eastern Europe (CEE) and Latin America, are increasingly playing a greater role in enterprises’ GIC location footprint for F&A delivery. Apart from time zone advantages and cultural affinity with onshore geographies, nearshore locations offer language capabilities that are essential for delivery to multiple onshore locations. For instance, Poland is being leveraged to serve Western and Eastern European countries due to the availability of language and finance talent. Nearshore locations, particularly in the CEE region, are also being leveraged to deliver niche/complex F&A work.

Companies that have chosen the GIC delivery model prefer to keep judgment-intensive F&A functions in-house

Many companies that have adopted the GIC model extensively prefer to deliver judgment-intensive F&A processes through the same in-house model, rather than outsourcing them. One of the key reasons for this preference is that the nature of work requires greater interaction with senior management.

Companies have evolved to a global delivery model for F&A services

Although many parent organizations initially considered F&A a shared function characterized by shared services centers across various regions, they are increasingly looking to break the regional silos and deliver F&A through global delivery centers, which work toward specific business outcomes. Many companies have been able to derive significant cost savings from this transformation through staff reductions, simplification of processes, and integration across functional silos in the global delivery model.

 Multiple GICs have been transformed into Centers of Excellence (COEs) for delivering specific capabilities within F&A

 COEs are expected to push beyond stipulated delivery mandates by unilaterally focusing their talent and investment on specific aspects of delivery, and transforming them to help derive additional value for the parent organization. In F&A, analytics and reporting COEs are being created to deliver analytics processes such as management reporting. By making use of data modeling and information analysis, these COEs can help the parent company make impactful decisions.

In addition to the above themes, GIC-based F&A delivery is witnessing critical changes in terms of operating model characteristics. GICs are fairly aggressively adopting analytics to reduce costs and increase operations profitability. They are also running pilot programs to measure the cost advantages offered by technologies such as Robotic Process Automation (RPA) for transactional F&A processes (primarily, accounts receivable, accounts payable, and general ledger). Although cost savings are the immediate motivation for most GICs, RPA will eventually become an intrinsic part of F&A delivery, as it will impact location decisions and future offshoring of work.

Everest Group has conducted a deep-dive analysis of this market, covering the current F&A delivery landscape from GICs, the evolution of delivery across key themes, descriptions of F&A process maturity achieved by GICs, and key operating model elements.

For more details, please see Everest Group’s latest report, “Finance & Accounting Delivery from GICs: Trusted Partner to Move F&A Beyond Delivery to Value Creation.”

 

Liberty Source: Bringing Innovation to the Onshore Delivery Model | Sherpas in Blue Shirts

By | Blog, Impact Sourcing

What if a service provider could build itself from scratch based on the learnings from the past two decades? Liberty Source, launched in 2013 as an impact sourcing provider, is trying to do just that in the highly competitive finance & accounting (F&A) outsourcing market. It has agreed to share its story with us over the coming months as its business continues to scale. We plan to look at how it optimizes its talent model to align to its social mission, its approach to using automation technology in service delivery, and other key issues which it faces as they look to compete in the market.

Our first discussion was with Steve Hosley, CEO of Liberty Source and a veteran of the outsourcing and shared services industries. We hope you enjoy this unique view into what it is like to start a new service provider company that is attempting to disrupt traditional models.

 

Eric: What is Liberty Source and how is it unique?

Steve: Liberty Source is an onshore BPO provider of F&A services. Our differentiators revolve around transparency and flexibility with our customers. Business is changing fast and flexible agreements are important to keep up with the pace. By flexible, we mean being able to pivot quickly to a company’s evolving delivery needs with a mix of automation and human capital needs.

We have chosen to run our onshore center with a social compass. Our team members – or as we call each other “shipmates” – primarily have a direct military affiliation as spouses of active duty military members or they are veterans themselves. This represents over 70% of our employee base. Our culture continues to be built around the U.S. military community.  We believe that this community makes us look and operate much differently than a typical BPO operation. For example, we have “family meetings” instead of the more stereotypical “all-hands meetings.” Our conference rooms are named after famous U.S. military spouses with our Boardroom named after Martha Washington. Our transformation training revolves around the OODA Loop (Observe, Orient, Decide, Act) rather than the typical Six Sigma.

Lastly, we aim to create a business that is known as a transformation center – where customers come to transform their work and employees come to transform their careers.

 

Eric: Where is Liberty Source finding this military talent?

Steve: Our current operations center is in Fort Monroe Virginia, near Virginia Beach. It is located near five bases, home to over 70,000 active service members and the largest naval base in the world. 85% of our employees have college degrees and of them, 21% of them are holding Masters Degrees. This helps confirm that we have a talented workforce that is simply seeking big company, multi-national experience. The fort has a storied history and is known as Freedom’s Fortress. Under Union General Benjamin Butler during the U.S. Civil War, it became a beacon for tens of thousands of slaves to come and gain their freedom. We believe, that that in small way, we hope to continue in the spirit of Fort Monroe by providing real commercial technical skills and careers to a population of well-deserving and very talented U.S. military spouses and veterans.

Our spouses are allowed to take their positions with them when they are PCS’d (permanent change of station) so now with over 10 percent of our employees operating virtually, we aim to continue to expand our footprint of Liberty Source coverage to all the major U.S. military bases around the world.

 

Eric: How is Liberty Source structured, legally and financially?

Steve: Liberty Source was created to capture the growing commercial demand for onshore BPO delivery but do it in a manner that was socially responsible. We established ourselves as a Public Benefits Corporation, or a PBC. This allows us to operate as a commercially viable and market relevant for-profit enterprise, while also holding the company accountable to a social mission. Given that this structure and delivery model was new, we elected to initially go to market as a wholly owned subsidiary of Digital Divide Data, which pioneered the offshore impact sourcing market in the early 2000s.

 

Eric: What successes has Liberty Source had to date?

Steve: We are a little over a year old in terms of go-to-market efforts and have stabilized our first client, a very large contract with 15 different processes. These were brought back from India from an eight-year incumbent. We transitioned in 100 FTEs and have been live with the client’s work since February. Our first client attained the same price as it did in India, and now the work is only three hours away from them versus being in India.

We achieved price neutrality by doing the work more efficiently. The efficiencies have been gained through three primary drivers. As we stated previously the community we are building is loyal, resulting in single-digit attrition this year. What we have found is that this lack of attrition makes us more competitive in that we are not having to spend time and effort on retraining and extensive review cycles. We inherited an ingrained functional tower orientation and migrated it to end-to-end process teams, which really helped reduce rework. Lastly, we are benefiting from building a business in the era of “As a Service” and cloud offerings so our infrastructure is light and efficient. A combination of things like email from Office365, general ledger from NetSuite, payroll from ADP, and all workstations are laptops to provide DRP (disaster recovery plan) flexibility. Most importantly we strongly believe that we are in the people business and that our success in delivering quality service back in the U.S. on this tough economic contract, is due to the fortitude and dedication of our employees. This is most evident in that we successfully trained 100 people in 120 days with a limited background in SAP and SFDC applications to work effectively in those environments.

 

Eric: How has the organization and its business matured in the short time Liberty Source has been in existence?

Steve: With the monthly delivery to our foundational client, now stable and our second client underway, the Board of Directors of Liberty Source made the decision last month to exit the foundation stage and enter our next stage of growth given that we have proven the viability of the model and have positive momentum. This growth stage includes investing in pursuing other clients. Our second client, also a large Fortune 500 multi-national, is undergoing a transformation and wanted a BPO provider that was willing to be flexible as its strategy evolved. This translates into taking on work that is initially about providing performance-based labor, which they need now, while also working on a project to automate the work, and then eventually rebalance the delivery mix into the appropriate levels required to be done by humans after the automation is completed.

The market and customers have spoken to us, so we have pulled forward the training, building and management of Robotic Process Automation (RPA) in our business model and invested in it earlier than we had planned.

 

Eric: How does Liberty Source plan to compete in the market moving forward?

Steve: We are targeting the market through a couple lenses. We are starting in the F&A area. We typically aim for companies that share our social mission of employing military spouses and vets. Finally, we resonate with organizations that have already outsourced before and are able to understand the benefits of our model when we explain things like transparent governance, providing a pathway to outcome-based pricing and how we embrace technology.

Because we have proven the model in Virginia, we would like to continue to scale and grow this location. We are also open to creating another center near an existing military population that may align with some other company’s geographic delivery or customer base and shares our social mission of providing opportunities to U.S. military families.

Lastly, part of our social mission is about providing upward mobility to our employees and we believe that embracing automation will over time elevate the remaining work and fulfill this commitment. In turn, our customers benefit from Liberty Source’s pursuit of these technology solutions though continuous improvement.

 

Eric: What are some of the things on your mind as you look forward to the next steps of Liberty Source?

Steve: We know the market need – it is seeking agility and flexible arrangements. Ones that can provide innovation and benefit to both parties. We feel our model and culture position us well to provide these differentiators.

Further, we must marry up this to the human capital strategy – we are beginning to build a virtual spouse model, which will give us even more elasticity on how to access and deliver talent. We also believe that bringing RPA into the service delivery model will provide flexibility in how we manage operations and our talent pool.

 

Eric: Thanks for your time and insights – I look forward to hearing more about how the journey has progressed when we speak again.


Photo credit: Flickr

Quick Takes on Robotic Automation | Sherpas in Blue Shirts

By | Blog

Since the start of 2015, we have had the opportunity to speak with a wide range of old friends, new acquaintances, and industry contacts – and spanning across enterprises, services providers, technology providers, academics, and consultants. Almost without fail, the topic of robot process automation (RPA) comes up. Most of the discussion aligns with the thinking in our report from last October (Service Delivery Automation (SDA) Market in 2014 – Moving Business Process Services Beyond Labor Arbitrage), but some goes deeper and adds fresh new colors.

In this blog we offer a quick summary of recent observations from these dialogues. Although these points are an amalgamation of many conversations, a few bear mentioning specifically. Mihir Shukla (CEO of Automation Anywhere), Lee Coulter (CEO of Ascension Health Shared Services), and Gianni Giacomelli (SVP Product Innovation/CMO at Genpact) debated the trends in disruptive technologies, particularly automation, at a recent SSOW event in Orlando. Additionally, Matt Smith and Dan Hudson – formerly leading Virtual Operations North America, now in Cognizant’s RPA group – spent some time explaining how their views have evolved as they have gone from advising service providers to actually working for a provider. We also spent time speaking with a number of enterprises with process improvement programs that are utilizing robotic process automation, plus conducted a recent webinar with Telefónica about automation.

Viability of RPA

  • RPA is a “no regrets” move that essentially guarantees results. Beyond the somewhat obvious fact that it can generally deliver savings quickly, it is also flexible. Unlike many decisions in global services, the approach, priorities, and tactics can all evolve fairly rapidly without having to take major steps back because the automation routines are not fixed and are designed to be changed. In this way, it is closer to how small applications outsourcing projects are simple compared to large infrastructure agreements with multi-year terms, which are complex and hard to reverse transitions, etc.
  • For automation-friendly processes of 8 or more FTEs, 40% savings is a reasonable expectation. Sometimes it is less but can also often be more. As a result, ROIs of new initiatives are measured in quarters, not years.
  • Although the cost savings is nice, the predictability and rigor from automating complex, but rules-based processes can add tremendous value. It makes knowing that operations are under control much easier. Plus, the benefits of reduced errors and delays can be a huge positive–truly value beyond cost savings.

Rate of adoption of RPA

  • Although initial processes can be implemented in several months or quarters, it requires two to three years to implement and reach significant penetration of processes across an organization.
  • There is a surprising degree of organizational inertia to not look seriously at RPA or go slowly. As a result, our view is that it will take five years to penetrate most of the market – despite being a fairly simple, almost no-brainer approach.
  • As an illustration of the pace of adoption, consider the exhibit below from our recent webinar on service delivery automation. RPA is making inroads into FAO renewals and new deals. However, notice that only 12-28% of recent deals are including RPA. Given that most of those are 4-5 year terms plus others immediately preceding them had even lower rates of RPA inclusion, this means that 3-5 years from now deals signed without RPA will be coming up for renewal…and it will still be the majority of the deals hitting the market without RPA. Once we see the deals per year with RPA cross 50%, the rate of change in the market will be noticeably faster. The wildcard, of course, is how many of the deals being signed now without RPA will be restructured during the term of the deal to include it – this will happen, but the rate is not yet clear.

RPA adoption

Technology models for automation

  • No single tool can do everything and it is a matter of building the right portfolio of options. Further, even if a tool tried to do everything, the market would likely be reluctant to select it due to fear of lock-in.
  • Interestingly, we are seeing more proprietary tools by service providers coming into play. This is not to say that the commercially available tools aren’t effective – they are, but rather that providers are experimenting with making their own investments to avoid licenses fees and to create the operating model they desire. In fact, there is a general feeling that some of the proprietary tools have functionality not found in the commercials tools (and vice versa), such that we may be entering an arms-race for innovation in automation tools. Might this even lead to service providers being willing to license their proprietary tools without also providing accompanying services? Time will tell, but this would seem to be a compelling way to attract and retain clients with a differentiated offering while spreading investments across a larger base of users.
  • At this point, those organizations electing to utilize outsourcing appear largely comfortable allowing their service provider to select and provide the relevant tools (results-oriented mindset). Those enterprises wanting to select their own tools, tend to shy away from an outsourcing model anyway.

In case you missed it, we recently released some additional information on automation and technology in business process services:


Photo credit: Flickr