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  • 7/31/2019 Expert Insights Shared Services Outsourcing

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    AccountAnts for business

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    Gautam thakkar, vice president and Global head,enterprise services bpo, inFosys

    Gautam joined In osys Limited in the business consulting servicespractice in 2000, and was subsequently one o the oundingemployees o the companys BPO business. He currently has pro t

    and loss responsibility or all BPO enterprise services businesses,which include nance and accounting, sales and ul lment, sourcingand procurement and human resource outsourcing, and serves as amember o the BPO executive council.

    chris stancombe, Global head oF Finance and accountinGoutsourcinG, capGemini

    Chris joined Capgemini in 2005 as head o global solutions. He wasthe solution architect and subsequently account executive orCapgeminis largest nancial services contract. He is now global heado nance and accounting business process outsourcing. He isresponsible or service delivery to the client and or productdevelopment.

    pascal henssen, senior vice president and chieF operatinGoFFicer, europe at Genpact

    Pascal joined Genpact in 2009 as COO Europe, with responsibility orleading its Romania, Hungary, Poland and Morocco centres. He spentthe previous 14 years with General Electric in various executive

    unctions across di erent industries and geographies, such asEuropean COO in corporate nancial services, GM or GEs sharedservices in EMEA, with 600 employees across 45 countries, and CFOo various business units in GE Plastics.

    austen mcdonach, F&a leader, europe, ibm Global processservices

    Austen leads nance and administration services or IBM within Europe.He has been with IBM or 16 years, per orming various sales rolesacross the UK. He has worked extensively with the insurance industry,been IBM UKs sports solutions manager and led a team dedicated todriving sales with IBM business partners. Be ore joining IBM, Austenwas a manager in corporate nance or PKF and then a governmentagency specialising in raising nance or inward investment in Scotland.

    James meader, partner, ernst & younG

    James is a par tner in Erns t and Youngs Advisor y Servic es Practi ces,specialising in nancial and per ormance management. He has over17 years experience, ocusing on back o ce trans ormation; processdesign, including shared services; and per ormance management aswell as project and programme management.

    patrick van hoeGaerden, Finance transFormationdirector, europe, the coca-cola company

    Patrick has been in nance leadership roles in The Coc a-ColaCompany or 13 years, initially as the CFO o the bottling company inEgypt and then as nance director in three business units located inthe Middle East, Great Britain and Germany. Three years ago he wasappointed to lead the nance trans ormation programme or thecompany in Europe. Be ore joining Coca-Cola, Patri ck spent 14 yearsin Unilever, in various nance and supply chain positions.

    peter moller, partner, deloitte consultinG

    Peter Moller leads Deloittes Shared Services and BPO Advisory Teamin Europe. Since 1990, he has worked in nance trans ormation,shared services and outsourcing/o shoring advisory roles, advisingboth private and public sector clients. He has organised and spoken

    at a number o con erences on these topics and has been quoted inmanagement journals and the national press.

    david e. powell, senior director, Global Financeprocesses, astraZeneca

    Over hal o Davids 23-year career has been in the pharmaceuticalsindustry, while his early years were spent in the oil and chemicalindustries. In his current role, he is leading the optimisation oAstraZenecas nancial transaction processes across the globe.Previously, David held senior leadership positions in nancial reportingand internal audit with AstraZeneca, bringing in-depth businesspartnering experience spanning the value chain.

    anoop saGoo, senior executive, business processoutsourcinG, accenture

    Anoop leads Accentures global BPO sales across operating groups.Previously, he led the rms global nance and accounting BPObusiness. Anoop joined Accenture in 1994 and has spent most o hiscareer working in the BPO and shared service market across industrysectors, on a global basis. Between 2007 and September 2009, Anoopwas responsible or the outsourcing business at Microso t one oAccentures most complex outsourcing relationships.

    terry balZanella, vice president For the exl centre oFexcellence For Finance and accountinG in europe

    Terry has over 30 years experience developing and leading allaspects o nance and accounting operations. As vice-president orthe EXL Centre o Excellence or Finance and Accounting in Europe,his role encompassed all aspects o business development,consultancy and managing the Eastern European production centresin Bulgaria. Be ore joining EXL, Terry was European director o

    nance or Belkin Components Ltd or 13 years.

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    caroline curtis, senior director, controllershipaccountinG and reportinG, europe middle east andaFrica, yahoo.

    Caroline joined Yahoo in 2006 and was promoted to senior director,controllership accounting and reporting or Europe, the Middle East

    and A rica in May 2010. She is currently a director o nine Yahoogroup companies in Ireland, the UK and the Netherlands. Carolinehas a wealth o nance expertise and knowledge developedthroughout her career, having previously held senior nance positionsat Cap Gemini prior to Yahoo. She has particular expertise in nancedelivery through shared services.

    christian kauFmann, vice president, Finance services, unilever

    Christian Kau mann joined Unilevers nance unction in 1993 andhas subsequently assumed various leadership roles or nance insupply chain management, internal audit, operating company andcorporate nance. He was appointed vice-president or nanceservices with a global remit in January 2010. He is responsible or themanagement o traditional transactional nance services and oroutsourcing agreements with Unilevers business process outsourcerpartners.

    GeorGe connell, vice president strateGy, Financeoperations and centre Finance lead (GlasGow), shell

    George is both Shells head o strategy nance operations and itscentre nance lead, Glasgow. Be ore joining Shell in 1998, he heldvarious nance roles in organisations that included GrandMetropolitan, Avon Cosmetics, Britoil and Whitman Corporation.

    nick atkin, partner, pricewaterhousecoopers consultinG

    A consultant since 1995, Nick advises clients, across industries, onthe trans ormation o their global nance org anisations, developing avision and strategy or nance, target operating model design,per ormance-management solutions, and process and systems

    design and implementation. He also assists his clients in setting upshared service organisations and in the selection o BPO providers.

    viJay damle, vice president, operations, tata consultancy services (tcs) bpo

    Vijay manages service delivery or F&A, procurement, SCM and HROprocesses. He is responsible or delivering the certainty experience tocustomers globally. Vijay has held diverse roles over his career starting as a nance analyst, and over time has managed nance,production planning, transitions and sales/relationship management.

    Graham russell, director oF business processoutsourcinG, wpp Group

    Graham joined WPP Group, the media communication servicesgroup, in June 2011 as BPO director, to assist in the evaluation andimplementation o BPO across the Group. He has previous experiencein the pharmaceutical, telecommunications and high-tech industries.Graham was ormerly the global head o shared services atAstraZeneca, where he led the migration to and management o aregionally based, shared services and outsourcing environment.

    John ashworth, Global head oF business processoutsourcinG, pearson

    John joined Pea rson plc as p art o the intern al audit team romCoopers & Lybrand be ore working in a variety o roles in PenguinBooks, a division o Pearson, including those o international nancedirector, supply chain business manager and UK controller. He wasCFO, then CFO and IT director, be ore becoming MD o Pearsons UKshared services team. He now runs Pearsons global BPO deal withIBM as well as its F1 nance trans ormation programme.

    simon newton, vice president, shared services, kimberly-clark

    Since 2006 Simon has been responsible or Kimberly-Clarks sharedservice development, including harmonisation across regions andexecutive coordination o global outsourcing unctions. Previously hehas been vice-president o nance or Europe, the Middle-East andA rica, and a director o business analysis supporting variousKimberly-Clark businesses. Simon has a wealth o experience in M&Aand has also worked at ICI and Rowntree Mackintosh.

    claudio altini, director, sourcinG advisory, kpmG in the uk Claudio is an acknowledged expert in nance and HR unctionaltrans ormation, with broad experience in support unctionreorganisation and re-engineering assignments, in both pan-European shared service centre projects and business processoutsourcing projects. Claudio advises diverse industries includingmedia, telecoms, automotive, IT, manu acturing, chemicaldistribution, pharmaceuticals, FMCG, leisure and central government.

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    Joanna reynolds, Global shared service lead, marsh & mclennan

    Joanna jo ined Marsh & McLenn an companies in 1985 an d has worked in mos t o thedi erent areas o nance. In 1999 she created a green elds shared service centrewith 80 colleagues in Denver. In 2005 she led the project or outsourcing nance. In2010 she took on the role o organisation design or nance trans ormation.

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    about acca

    ACCA (the Association o Chartered Certi edAccountants) is the global body or pro essionalaccountants. We aim to o er business-relevant,

    rst-choice quali cations to people o application,ability and ambition around the world who seek arewarding career in accountancy, nance andmanagement.

    Founded in 1904, ACCA has consistently held uniquecore values: opportunity, diversity, innovation, integrityand accountability. We believe that accountants bringvalue to economies at all stages o their development.We seek to develop capacity in the pro ession andencourage the adoption o global standards. Ourvalues are aligned to the needs o employers in allsectors and we ensure that, through our quali cations,we prepare accountants or business. We seek to openup the pro ession to people o all backgrounds andremove arti cial barriers, innovating our quali cationsand their delivery to meet the diverse needs o traineepro essionals and their employers.

    We support our 140,000 members and 404,000students in 170 countries, helping them to developsuccess ul careers in accounting and business, basedon the skills required by employers. We work through a

    network o 83 o ces and centres and more than8,000 Approved Employers worldwide, who providehigh standards o employee learning and development.Through our public interest remit, we promoteappropriate regulation o accounting and conductrelevant research to ensure accountancy continues togrow in reputation and infuence.

    about accountants For business

    ACCAs global programme, Accountants for Business ,champions the role o nance pro essionals in allsectors as true value creators in organisations.Through people, process and pro essionalism,accountants are central to great per ormance. Theyshape business strategy through a deep understandingo nancial drivers and seek opportunities or long-term success. By ocusing on the critical rolepro essional accountants play in economies at allstages o development around the world, and indiverse organisations, ACCA seeks to highlight andenhance the role the accountancy pro ession plays insupporting a healthy global economy.

    www.accaglobal.com/accountants_business

    The Association o Chartered Certi ed Accountants, January 2012

    This report presents insights romglobal experts o companies at the

    ore ront o nance trans ormationactivity.

    It explores the issues, challengesand opportunities acing businessestransitioning to new nance modelsto improve business per ormance.

    This is the rst in a series o reportsexploring aspects o nance

    trans ormation, and presentingunique perspectives on howsuccess ul programmes can bedelivered.

    For more in ormation visitwww.accaglobal.com/transformation

    http://www.accaglobal.com/accountants_businesshttp://www.accaglobal.com/accountants_business
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    FINANCE TRANSFORMATION: EXPERT INSIGHTS ON SHARED SERVICES AND OUTSOURCING 5

    The true prize o success ul nance trans ormation is to unlock value, improveshareholders return and create competitive advantage. The continuous use oshared services and outsourcing as a tool is testimony to the act that CFOs areprioritising the re-engineering and trans ormation o nance activities.

    This has signi cant implications or the pro ession and ACCA. As nancemodels evolve, so too will the career opportunities or ACCA students andmembers. Across the end to end nance model, new nance roles will evolve,new career paths will emerge and new skills and capabilities will be required.These developments represent a superb opportunity or nance pro essionalsto drive uture organisational success. As the global body or pro essionalaccountants, ACCA will be at the ore ront o supporting organisations in theirinitiatives as our quali cation is uniquely positioned to deliver the new nanceand business capabilities required.

    This report draws insights rom nance leaders and provider organisationsrepresenting global businesses. It is essential reading or those seeking anunderstanding o success ul nance trans ormation and sets out a newplat orm or debate across the pro ession.

    Helen BrandChief executive, ACCA

    F

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    e

    This paper considers the challenges, issues andopportunities in nance trans ormation through sharedservices and outsourcing. A preoccupation or CFOs intodays global economy is how they can shape and evolvethe optimal nance model to drive business per ormance.Increasingly, nance and accounting delivery throughshared services and outsourcing is playing an importantpart in optimizing the structure o the nance unction.

    The paper shares opinion rom global experts in thenance trans ormation, shared services and outsourcing

    space. It draws insights rom nance leaders responsibleor reshaping the nance unction, as well as exploring the

    issues with the providers o nance and accountingservices to these clients. It also draws expert comment

    rom leading advisory organisations.

    The ndings rom this report suggest that signi cantbene ts rom shared services and outsourcing or the

    nance unction have been realised, yet there are greateropportunities to drive business per ormance in the uture.Our experts see a number o speci c challenges to currenttrans ormation approaches. At the heart o all thesechallenges is the question o the capability and theaspiration o businesses, nance leaders and providerorganisations to work together in an aligned partnership todrive the level o trans ormation change required. The goalshould be trans ormation that ensures businesses adoptoptimal nance models through shared services andoutsourcing that drive sustainable improved businessper ormance. This report suggests that there is muchmore that can be done.

    1. no turninG back From shared services andoutsourcinG

    This paper concludes that, i the expert respondents arerepresentative, there is no turning back rom the adoptiono shared services and outsourcing as a meaning ul

    nance trans ormation tool. The bene ts transparency,lower cost, greater e ciency, standardization andimproved governance, and more are now taken orgranted by the industry.

    2. diFFerent approaches to FinancetransFormation are evident

    The application o these delivery models is, however, still awork in progress, and di erent approaches to nancetrans ormation are evident. Some leaders use shared

    services and outsourcing as a unctional x, improvingnance operations and processes, while others see nance

    trans ormation as a means to trans orm the business,rather than stop at a better nance unction. Regardless othe endpoint, nance leaders stand rm in their belie thattrans ormation is a journey, not only in terms o valuecreation but also in the evolution o the nance model.

    3. correlations between transFormationambition and sourcinG strateGy are evident

    There is a strong relationship between the nance modeland the business trans ormation ambition. Where a unctional x is sought, the sourcing model o choice isoutsourcing. Conversely, those nance leaders seeking todrive business per ormance grapple with a much greaterdegree o model complexity. They see beyond the nance

    unction, ocusing on the connectedness o the nanceunction to the rest o the business, trans orming and

    aligning end-to-end processes, regardless o where theyare housed the business, the retained nance unction,within a shared services or outsourced environment. Thisrequires signi cant infuencing capability, internally andexternally. They understand that they must ocus on thebusiness need, evaluating the best means to integrate

    nance into the business in order to be e ective. Thesolutions are not cut-and-dried.

    4. cost remains the startinG point

    Although they acknowledge that their rst objective isalways nance unction cost and e ciency, some nanceleaders recognise that their peers within the business towhom they are providing a nance service (the business)are not concerned about a better nance unction per se,but rather the more how do I get more cash, morein ormation, more service, more business intelligence todrive business per ormance? To nance leaders, deliveringmore does not end with the outsourced or sharedservices delivery o nance processes.

    5. Finance leaders diFFerentiate betweenprovider capability

    As a result, todays nance leaders are now becomingmore attuned to provider skills, placing greater demands

    to improve their capability. They are consciously mappingsolutions and considering the providers ability to createvalue, fexibility, and their service approach against theirtrans ormation requirements, as opposed to simply

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    FINANCE TRANSFORMATION: EXPERT INSIGHTS ON SHARED SERVICES AND OUTSOURCING 7

    adopting a classic, straight orward buyer-providerrelationship or nance and accounting services. Someproviders are more adept at working with complexity,implementing business not just nance solutions andmoving along a trans ormation path that drives businessresults. As a result, certain businesses are now moretargeted to nance and accounting outsourcing providerswith particular capabilities.

    6. Finance transFormation success rests onchanGe manaGement

    Notably, the so called so ter stu continues to be thenumber one impediment to achieving trans ormationsuccess. Finance leaders and outsource providers alikename change management as the biggest barrier, and inparticular cite the organisations inability to assimilate newways o working as a key challenge. For their part,providers remain con used as to why clients still do not

    deliver change management e ectively.

    7. retained Function capability is the primedriver oF value, yet it is still a missedopportunity

    Concerns about the capability o the retained team areequally evident. From the client side the challenge or

    nance leaders is no longer am I doing the right thing byadopting a remote model? It is now a question o howdoes the retained team add value and how can weimplement a complete end to end vision or nance thatbest supports the business? Our experts see ongoingconcerns about the ability o the retained nance team towork within a di erent nance unction model, both romthe standpoint o engagement and capability. In particular,the roles and skills o the retained nance team havetypically not been well articulated, impacting on the abilityo the nance unction to support the business moste ectively.

    8. clientprovider relationship continues to bemisaliGned

    Finance leaders are vocal about the natural misalignmentbetween themselves and the provider, believing thatservice delivery is o ten suboptimal; di erent

    incentivisation approaches, varying trans ormationexpectations and goals, and di erent economic interest intransition speed. Finance leaders express concern thatsome providers promote a one size ts all approach to

    the nance model, whereas providers question theambition o nance leaders to drive the level o changerequired. Both parties agree that there is also a question ogetting the right balance in the relationship providers stillneed to be able to tell the client things they may not wantto hear; tough love is cited as a key buying value inprovider selection.

    9. service and service delivery

    There is a growing realisation rom nance leaders oclients that e ective sourcing is synonymous with service,and that while cost bene ts are achievable, servicebene ts are rather more elusive. Increasingly, nanceleaders di erentiate between the quality o service deliverythey receive (i.e. the actual experience o service delivery)and the achievement o service level agreements.Providers o ten recognise that green indicators on servicelevel agreements do not necessarily mean the client is

    happy.

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    expert viewF p m ,

    , d c g

    Shared services started in the 1980s inthe US and the early 1990s in Europe.Despite a ew stories o certain activitiesbeing pulled back rom centres (o tenvoice-related activities being pulled back

    rom o shore BPO centres owing toaccent neutralisation issues) sharedservices have been an overwhelmingsuccess and are now recognised as a keycomponent o a best-practice nance

    unction. It is an idea whose time hascome and any organisation with multipleback o ce nance unctions is likely tobene t rom a shared services structure whether it be run as a captive oroutsourced to a third party. The labourarbitrage that has driven a lot o thenear-shoring and o -shoring o the lastten years (eg to eastern Europe andIndia) will, over the next 1015 years,

    decrease to the extent that theselocations may lose a good deal o theircurrent attractiveness. But even i there islittle cost arbitrage to be gained rom alow-cost location there are many otherbene ts, such as the adoption o a singlebest-practice and more productiveprocess, better spans o control, andstandardised and enhanced data andreporting, that will ensure thatconsolidating transaction processing andeven higher-value activities will continueto make good business sense there willbe no turning back.

    Trans ormation continues to be an imprecise term ormany in nance leadership. In the words o In osysGautam Thakkar, everyone wants trans ormation but noone knows how to de ne it. Yet no matter what the precisede nition, the nance industry agrees that trans ormationis about cost, e ciency and e ectiveness, providing agility

    or growth, speeding up new market entry, integratingacquisitions more easily, creating greater costtransparency, and providing business insights.

    Some nance leaders implement an internaltrans ormation through some combination o single-plat orm enterprise resource planning (ERP)implementation, business process re-engineering andcontinuous improvement, or by introducing methodologiessuch as Lean or Six Sigma, with associated organisationalredesign and re-skilling. Others take a more radicalapproach such as changing the business model byconsolidating and standardising business process delivery

    into one or more captive shared services centres, or bymoving processes to a third-party outsourcing providerspecialising in nance and accounting delivery.

    1. n g g

    Over the last 10 years, nance leaders have increasinglyturned to shared services and outsourcing as a primarystrategy or change. They have been examining thedelivery models (the model), asking how trans ormingoperations in this way can release more cash, developbetter insights to support decision making, and providebetter service to the business.

    The use o shared services and outsourcing to achievethese aspirations continues to grow. In the US, more than70% o Fortune 500 companies now use shared servicesor outsourcing models or their nance and accountingoperations (Everest Group research 2011).

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    FINANCE TRANSFORMATION: EXPERT INSIGHTS ON SHARED SERVICES AND OUTSOURCING 9

    The scope or trans ormation varies according to thebusiness priority. There is not a one-size- ts-all approachto use o the model. For some organisations,trans ormation is simply ocused on improving nance

    unction processes. For others, it is a business solutionthat unlocks greater value across the enterprise andrepresents a undamental shi t in the vision and corepurpose o nance change. Accentures Anoop Sagoodescribes the second group succinctly: the CFOs that Iwork with see nance trans ormation as a vehicle and toolto drive change. What they are most interested in now isper ormance.

    Business-led trans ormation recognises the importanceand broad reach o nance across organisations and seeksto deliver valuable business outcomes. It requires astrategic approach across end-to-end processes thatbridge business unctions and integrate the ront-end othe business with the back-end. Simon Newton o

    Kimberly-Clark asserts that we are not taking a unctionalapproach but a process-led approach because greaterbene t to the business can be generated more quickly bytaking a cross- unctional process approach. GeorgeConnell o Shell concurs, saying strategically we re ocusedshared service centre per ormance rom attaining servicelevel agreements to being a true business partner. Now wehave connected nance across the organisation.

    expert viewF c a ,

    , g ,kpmG uk

    Finance leaders are increasinglycon dent in their understanding o thecapabilities o shared services andoutsourcing. As a consequence, thebusiness goals that they are using thesetools to deliver are, paradoxically,becoming both bolder and moreconstrained. Some organisations arechoosing to deploy shared services andoutsourcing tactically, to x or improvethe nance unction. At the other end othe spectrum, organisations arecom ortable driving broader change inthis way, unlocking greater value or thewhole organisation.

    Tactical activity might be ocused onoutsourcing a single transactionalprocess. Alternatively, a project could bemore trans ormational, such as

    establishing a ull-scope shared serviceoperation to help deliver business-wideambitions. However the nancetrans ormation journey begins, its clearthat shared services and outsourcing aresupporting a range o objectives ororganisations: rom the quick wins tothe game changers, where the bene tsare elt ar beyond the nance unction.

    2. d f

    The starting point or our nancetrans ormation journey was the recognitionthat the nance unction had to support our

    global business as it evolved. Our rst goalwas superior service delivery to thebusiness. We then evolved our nancemodel to ensure we had the right balance olocal support with deep expertise to supportlocal business decision making,complemented by regionally basedoperations that drove nance processingexcellence and scalability, but that were stillhighly embedded to serve the needs o thebusiness.PATRICK VAN HOEGAERDEN, FINANCE TRANSFORMATIONDIRECTOR EUROPE, THE COCA-COLA COMPANY

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    There is a strong relationship between the model and thenance leaders trans ormation ambition. When an

    organisation sees nance unction e ciency as the maingoal, the sourcing model o choice is outsourcing, with aparticular ocus on tapping into a providers transaction

    actory. Outsourcings process e ciency, fexibility,scalability and contractually mandated continuousimprovement are considered the better option or speedand investment. An alternative sourcing model, particularlyin very complex organisations is the centralised sharedservices model. Coca-Colas Patrick van Hoegaerden saysthe driver behind shared services was that the companywas so ragmented that we could not drive skills, depthand expertise without centralisation in a shared servicesmodel. Those moving toward a shared services modelclaim that they are able to engineer greater proximity tothe core business and establish sound relationshipsgrounded in the same organisational culture. Leaderssuggest that they have more control over talent, turnover,

    skills development, and engagement. As Caroline Curtisrom Yahoo says, Our shared service centres bring many

    bene ts: speed o execution, a reduction in operationalrisk, specialised capability when it may be needed with, orexample, regulatory issues, operational fexibility andability to control talent development e ectively.

    When the aspiration is or broader businesstrans ormation, the model can quickly become morecomplex, with a high degree o interconnectivity with thebusiness. This leads to hybrid models being used, whichcombine in-house service provision, shared services andoutsourcing. The decision to implement a hybrid nancedelivery model is driven by a business construct howmuch integration must nance have with the business inorder to be e ective? As Austen McDonach o IBMcon rms, We see an entirely new hybrid organisationemerging with innovation and end-to-end integration,bringing a truly global perspective.

    At Marsh & McLennan, we have establisheddi erent models or di erent operatingcompanies the driver is always what are

    the business needs at a given point in time,and what is the most appropriate model tosupport those needs?. Our decision toimplement outsourcing was driven by ourneed to draw a clear line betweentransactional processing and maintainingcontrol in the business. To compare, our useo shared services was driven by the actthat we are in the business o selling nanceand accounting service delivery ourselves, sowe wanted to make a point to our clientsthat i we used it, we had complete aith inthe model. We will continue to evolve ourmodel to ensure it is t or purpose or the

    uture. JOANNA REYNOLDS, GLOBAL SHARED SERVICE LEAD, MARSH &MCLENNAN

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    FINANCE TRANSFORMATION: EXPERT INSIGHTS ON SHARED SERVICES AND OUTSOURCING 11

    Finance leaders and several o their service providersagree on the same trans ormation starting point: e ciencyis always the ticket to entry. Delivering more or less is the

    rst goal; less cost and less complexity throughstandardisation eventually results in greater transparency,greater coordination and increased leverage in short,greater e ectiveness. With the process standardisationbox ticked across geographies, leaders are able to moveup the nance value curve more rapidly. As Coca-ColasPatrick van Hoegaerden says, our starting point wassimpli ying processes.

    At the same time, nance leaders are acutely aware o theact that the business is less concerned about processes

    than about the outcomes o good processes more cash,more in ormation and more service. Kimberly-ClarksSimon Newton asks do shared services and outsourcingget you better? Will better talent and service create morevalue?

    While nance leaders and their service providers acceptthat trans ormation is a journey, there is not unilateralagreement about where to start. Both Genpacts PascalHenssen and Capgeminis Chris Stancombe questionleaders predilection or starting down the trans ormationpath with pure transactional activity. Both agree that whilethese processes deliver cost savings through scale, nanceleaders should perhaps think more strategically at theoutset, and recognise the greater bene ts the journey candeliver.

    Going in, clients think they are saving costbut losing control. They get the costadvantage, but then start to realise that

    quality is rising because we are applyingbenchmarks to their per ormance. Then theyrecognise that their control is improving too.This then results in trust and subsequentlyvalue. Thats the typical journey.CHRIS STANCOMBE, GLOBAL HEAD OF FINANCE ANDACCOUNTING OUTSOURCING, CAPGEMINI

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    Finance leaders suggest that not all nance andoutsourcing providers are created equal with someproviders being very good operators, and others beingmore strategic in approach. As such, a provider may bewell positioned to trans orm the nance unction but maynot always be the right one or a ull trans ormationjourney. Joanna Reynolds o Marsh & McLennan con rms,the main reason we selected our provider was thefexibility and ability to create business solutions to suitour organisation.

    Increasingly, providers are pushing to di erentiate theircapability by aligning their market approaches withindustry sector, on the premise that sector knowledge is akey buying criterion or leaders. Providers such as Genpactbelieve that in-depth sector or domain knowledge helpsthem understand the process business context. IBMsAusten McDonach suggests that the complexities o aparticular industry may infuence the extent to which the

    client wants to retain parts o the process. CapgeminisChris Stancombe agrees that industry experience is a plus,saying there is no doubt that i you have got work in asector, i you understand the industry and have otherclients in that industry and i you want to benchmark, thenthere is an advantage. For some clients, such as AstraZenecas David E. Powell, this knowledge andunderstanding is critical. But or others, skills in nanceand accounting delivery are more important.

    There is also a separation in the relationship betweenbuyer and client. According to Accentures Anoop Sagoo,some clients just want to put the provider in the box; theyare more com ortable with this type o relationship whileCapgeminis Chris Stancombe acknowledges that theclients viewpoint can limit the providers scope. Anoop

    urther suggests that the overall nature o the relationshipmay be driven by the clients ambition and how heperceives the providers capability, also saying that itsabout a providers ability to change with the client, a goodbusiness provider understands what the businessimperatives are, and recognises they will change overtime.

    Finance leaders not only di erentiate between providercapabilities, but also worry about loss o their owncapabilities through outsourcing. Unilevers ChristianKau mann worries about the danger o outsourcing inrelation to maintaining tacit nance knowledge in house.

    He concludes, a number o companies have outsourcedtheir entire knowledge o process and they dont have agrip on it any more. We say you cant outsource ownershipo process. Graham Russell o WPP concurs, saying wetend to keep in-house the highly skilled roles, the ones youcant a ord to get wrong.

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    Change management is viewed as the single largest barrierto success. While most nance leaders stressed the need

    or good communication, several ocused on the essenceo change the organisations ability to assimilate newways o working.

    Finance is challenged by the act that the business doesnot deeply care about process, just results. So when the

    nance process changes, the business o ten thinks thatthe change is a waste o time and energy. Limitedleadership buy-in outside the nance unction andreluctance to adopt new rules means that is the status quoo ten remains. This is also why nance leaders recognisethe importance o senior buy-in. As Shells George Connellsays Having a strategic mandate supported rom the topwas critical to the change journey.

    People are key to achieving nance trans ormation throughshared services and outsourcing. As John Ashworth o

    Pearson says, our internal challenges were around changemanagement and change readinesschange wasundercooked.

    Change management is o ten made more complicated bygeography and culture. Many nance trans ormationinitiatives cross geographic borders and as such,sensitivity to cultural di erences is exceptionallyimportant. Understanding di erences among organisationsand individuals and their di erent responses to change iscritical. As Coca-Colas Patrick van Hoegaerden points out,developing a communication and change approach thatrecognises everybody is quite di erent and at di erentstages o acceptance is critical. Patience is important, andtiming your move.

    Providers agree that change management is a big issue.But they are also perplexed, asking why buyers have notyet learned to manage change. Providers have experiencedcommon issues including: ine ective communicationplans, a lack o programme management skills, andinsu cient client resources to help with migration. TerryBalzanella o EXL says, more o ten than not, we ndclients ill-prepared or change management. Vijay Damleo TCS agrees, clari ying, especially i the change is

    ast-paced and particularly i they (clients) have minimalprior experience o outsourcing. But some respondentsbelieve outsourcing change is more di cult than sharedservices change. As Kimberly-Clarks Simon Newton says,Providers dont always understand the additional changemanagement issues o an outsourcing programme overcaptive shared services. Cultural, geographic andbehavioural barriers between organisations are not simple.An arms-length agreement with contractual protection isnot a good solution or bad business-user experience

    during change.

    In all these nance trans ormation journeys,the hardest part is always changemanagement. People dont know what theydont know. And its never easy to takepeople on this journey when they dontknow where they are going, they are notquite convinced because the unction works

    today and has worked or a long time.Theres a natural pushback to change.GRAHAM RUSSELL, DIRECTOR OF BUSINESS PROCESSOUTSOURCING (BPO), WPP GROUP

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    Finance leaders challenge is no longer am I doing theright thing by adopting a remote model; it is now aquestion o how does the retained team add value? Bothleaders and providers say that the lack o ocus on theretained team is a major obstacle to trans ormationsuccess. As Accentures Anoop Sagoo says, Its di cult toconceive when youre designing a shared service modelthat you can get a nance and accounting operation to theright level o e ciency and e ectiveness withoutconsidering the retained unction.

    The haste to implement o ten means the retained teamsroles and responsibilities are not well articulated and thiscan result in oversta ng, duplication o e ort and a lack o

    ocus. As Marsh & McLennans Joanna Reynolds pointsout, when we rst implemented trans ormation we had ashadow nance organisation which wasnt particularlye cientnow we are clear about how the retained teamsroles are changing, the skills and capabilities required, and

    how we communicate the change process to them.Engagement and motivation o the retained team are alsocritically important, but o ten overlooked, as Pearsons

    John Ashworth con rms, we looked a ter the people thatwere leaving pretty well and didnt look at all well a ter thepeople le t behind.

    7. r ,

    Skills and capabilities are a key challenge; nance leadersrecognise the evolution in skills that must take place.Implementing shared services and outsourcing o ten shi tsresponsibility o the retained nance team away romdelivering nance processes to managing and governing

    nance processes and managing service deliveryrelationships. This means that new skills are neededincluding skills or managing change, problem solving skillsand communication skills. Infuencing skills are alsoimportant in helping to ensure buy-in rom keystakeholders in the business by demonstrating value isbeing added. It also requires a new mind set and di erentway o working. As Pearsons John Ashworth says, itrequires a certain sort o behaviour, which is to embracethe change and look or opportunities to push deeper andcreate purpose or the retained unction. Kimberly-ClarksSimon Newton adds, in any new sourcing model, itsimportant to move rom unctional arrogance to a servicementality.

    expert viewF J m ,

    , e & y g

    Both leaders and providers cite the lacko ocus on the retained team as a majorobstacle to trans ormation success whenadopting shared services and outsourcingmodels. O ten, the retained teams rolesand responsibilities are not wellarticulated in the haste to implement,resulting in oversta ng and ormation oa shadow organisation. Respondentscomplain that the retained team does nothave the right skills to operate in aremote model, especially businesspartnering, governance, suppliermanagement and the core analyticalskills that ultimately move the dial or theenterprise. Leaders and providersrecognise that new models requirebusiness capabilities, not nancecapabilities.

    A key impetus or shared service andoutsourcing implementations is that thetransaction processing activities are

    removed rom the business, leaving thehigh value, commercial businesspartnering activities at its heart. Howeversimple it may seem, many businessesnever achieve this objective. They struggleto de ne business partnering roles clearlyand communicate the transition, resultingin accountability con usion, skills gaps inthe retained team, loss o trust by thebusiness and unclear career paths. Toaddress these challenges businessesneed to de ne clearly what is expected othe retained organisation, conduct a skillsassessment and train the team, as well asensuring that career paths are developedand transparent.

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    Respondents are split as to whether deep nance skills arestill required. Some believe a completely di erent shi t thatis required; Accentures Anoop Sagoo describes it as ashi t rom operations to governance, saying theres amaterial di erence, while Marsh & McLennans JoannaReynolds comments be ore, the person needed to be agood accountant. Now the person needs to be a stellarcommunicator and a problem solver. Even so, AstraZenecas David Powell suggests that the retained teammust still understand transactional processes whileacquiring nance skill sets that go considerably beyondthe control unction. Coca-Colas Patrick van Hoegaerdensums it up by saying, they need to become managementaccountants in the true sense o the word.

    Capabilities vary depending on which end o the spectrumo approaches the nance leader is taking. I the goal isbusiness trans ormation then nely honed business skillsin the retained unction are necessary. As Shells Connell

    says, these guys have to be well connected with their localbusinesses. Marsh & McLennans Joanna Reynoldscon rms, we dont want good controllers in the retained

    unction; we want people who understand the business.

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    Finance leaders are almost unanimous in saying that thereis natural misalignment in the clientprovider relationshipwhen they outsource; solving it is o paramountimportance in meeting their expectations. Alignment canmake or break the outsourcing model success and a lacko alignment between the parties rewards and incentivescan a ect end-to-end nance service delivery negatively;here the trick is to get the balance right. Buyers still wantproviders to be able to tell them things they may notalways want to hear.

    Misalignment is mani ested in several ways. Buyers andproviders di er as to what is core to the nance unction,versus non-core. Leaders are adamant that what isoperationally non-core (eg standard in the industry) maybe core rom the standpoint o business impact withintheir organisations. Leaders also state that cultural values,targets and incentive packages are at variance with thoseo their providers. As Unilevers Christian Kau mann says:

    From a provider perspective, their main goal in li e is tomake sure you cant switch.

    For Pearson, cultural t and tough lovewere buying values in our partner selection.It is clearly a partnership, and yes, they arean extension o the team that we have torecognise but they will never be ully part othe team. The providers team is not goingto behave like our people all the time but weneed their di erent perspective to challengeus and drive change.

    JOHN ASHWORTH, HEAD OF FINANCE TRANSFORMATION,PEARSON

    Misalignment is most obvious at the outset o a clientprovider relationship. Respondents say that a major clasho ten occurs at the beginning o the relationship when thetwo parties disagree as to what value can be deliveredquickly. Over time, an adjustment process takes place,compounding the change issues, not only between clientand provider, but also between the nance unction andthe rest o the business it is trying to serve. Leaders arealso concerned that providers solutions are notnecessarily what they really need, saying some providerspromote a one size ts all approach, expressing the viewthat i the unction can be documented and centralised, itcan be outsourced.

    Lack o alignment is also evident in the approach todeployment. Clients and providers alike agree that theyview trans ormation speed di erently, with providerspushing clients to adopt a big bang approach. At thesame time, providers such as EXLs Terry Balzanella agree

    that outsourcing, like any other trans ormation initiative, isa process that is built on trust gained incrementally overtime, saying its about building con dence and credibilitywithin the organisation, opening their eyes and showingthem what is possible. IBMs Austen McDonach agreesWhen I look at the clients who have been with us longest,theres absolutely no doubt its a step change. The trustwill build, the expertise will build, and the risk is reduced.

    O ten trust is a ected by a clients unrealistic expectations;clients and providers alike admit that o ten clients start outby believing that outsourcing will instantaneouslytrans orm nance with limited e ort on the clients part.Providers are critical o nance leaders, saying that clientswant e ectiveness but do not have the ambition to reachout or it and do not quite know how to get it. In the wordso In osys Gautam Thakkar everyone wants to get toHackett best-in-class, but nobody wants to take the e ortto make it happen. In reply, nance leaders assert thatproviders must learn to mirror clients risk appetite andshow a better understanding o the business issues thatmost concern clients.

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    There is a sense among leader respondents that while costbene ts are achievable, service bene ts are rather moreelusive. Finance leaders are committed to improvingservice delivery capabilities, regardless o the model theyimplement. They expect service deliverers, in the words o

    Kimberly-Clarks Simon Newton, to demonstrate awillingness to get involved in our business. Leaders seeremote delivery rst and oremost as a customer service,with the attendant capabilities o relationship managementand risk management.

    Great service goes beyond simply meeting service levelagreements. Genpacts Pascal Henssen concurs, sayingthat green SLAs across the board do not mean you are ahappy customer. Vijay Damle rom TCS con rms whenwork is outsourced, there is a tendency at times or theservice provider to ignore everything outside o the speci cwork instructions. He goes on to suggest the client has animportant role to play too. When the client starts ocusingon business metrics and less on SLAs, they start ocusingon how we can make things better rather than trying to getthe contract right.

    A critical success actor in driving business solutions, citedby both nance leaders and providers, is ownership oend-to-end processes that cross unctional boundaries.Timing is an issue too. SLAs typically report a ter theevent but what a client wants to capture is the here andnow and the quality o the service delivery they areexperiencing. Some providers recognise the changing

    expectations o clients, but are rustrated that they do nothave client authority to drive process improvements acrossthese processes. As In osys Gautam Thakkar says For anyprovider to have impact on the process, the process mustbe owned end-to-end. This challenge is also recognised by

    nance leaders who struggle to hold the necessary cross-unctional authority. As Unilevers Christian Kau mann

    says, nobody has ully embraced end-to-end becausewhat it basically means is that di erent unctions must talkto each other; normally big corporations do struggle withthat. Its a challenge.

    9. s

    We di erentiate between the quality oservice delivery and the quality o the clientexperience. For Kimberly-Clark the quality o

    SLAs may be consistently green, but thequality o experience targets, which refectthe key business metrics, were o ten red.Now we place much more reliance onquality o experience than quality o service.SIMON NEWTON, VICE PRESIDENT SHARED SERVICES,KIMBERLY-CLARK

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    10. c

    The global experts who contributed to this report agreethat there is simply no turning back rom shared servicesand outsourcing as a nance trans ormation tool. Thoughlabour cost savings may decline over time, it is the otherbene ts o nance remote delivery that will continue to

    prevail; continuous improvement o nance processes,better governance over nance operations, more e ciency.

    In practice there is a spectrum o approaches to nancetrans ormation adopted. At one end some businesses

    ocus primarily on xing nance processes and reducingcost; others see nance trans ormation as an opportunityto trans orm the business and drive solutions which gobeyond the con nes o the nance unction to deliverimproved business per ormance. Here, attention isre ocused on reshaping the nance construct to bettersupport the business, so the question now becomes one oalignment how do you deliver a nance shared servicesand outsourcing model that supports the optimal nancemodel or the business and drives business, not just

    nance, per ormance.

    To this end signi cant challenges still prevail. Our expertsacknowledge particular problems with articulation o therole o the retained team, the development o appropriateskills and capabilities and the interplay o the retained

    nance team with the shared service or outsourceddelivery team. This is symptomatic o a short all in broader

    change management capabilities, cited by our experts asthe key barrier to trans ormation success. There are issuestoo in the alignment o client provider relationships and aquestion rom nance leaders as to the capabilities oproviders to provide a quality o service experience which

    goes ar beyond the attainment o service level agreementsto truly meet business needs.

    What does this report signi y or tomorrows nanceunction? I nance leaders seek trans ormation that drives

    improved business per ormance rather than simply theachievement o nance goals, a more complex servicedelivery model is likely to be needed. Mastering the abilityto e ectively make the change to this new model is critical.Are nance leaders ambitious enough and capable odeveloping and sustaining the right model that connectsthe business to signi cantly drive higher levels o businessper ormance? Do nance teams have the capability toreengineer the way the business works, getting them toadopt a new nance model? Can the retained nance teamadapt, attaining new capabilities such as deep insight,governance, management and service in order to makeshared services and outsourcing work as part o the new

    nance model or the business. And are providers capableo developing the solutions and delivery approachesrequired by nance leaders? ACCAs ongoing programmeon nance trans ormation will seek to address some othese questions.

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    expert viewF n a , ,p c c g

    Creating shared services and/oroutsourcing elements o the nance

    unction is clearly a key enabler orimproving e ectiveness and e ciency.Through our broad experienceimplementing these solutions, we knowthat its critical to ensure that this ormspart o an overarching vision and strategy

    or nance and that the new operatingmodel created is ully aligned andoperates e ectively or the business as awhole.

    Finance leaders need to create the rightbalance between e ciency deployinginitiatives to improve the e ciency ande ectiveness; control and compliance making sure there is the appropriatebalance o robust controls withoutconstraining the business, and insight aligning with the business to provide ane ective per ormance management

    ramework and communicating withimpact. The shared services elementmust align and support these objectives,a ter all Finance leaders will be measuredon the quality o the overall service that

    nance provides not only that o theshared services or outsourcedorganisation.

    Whether a captive shared services centreor an outsourcing strategy is adopted

    nance leaders must create and

    communicate a compelling case orchange. This must engage and energisethe organisation at the economic,rationale and the emotional level. Thetransition needs to balance risk, qualityand cost as well as provide clarity aboutthe journey that they are embarkingupon.

    Inevitably these initiatives result inchanges to skills and people. New skillssuch as service management andgovernance will be increasinglyimportant. It will also ree up time or

    nance pro essionals to become truepartners to the business providing insightto drive strategy and better decisionmaking.

    Finance is at the ore ront o the sharedservices and outsourcing revolution.Many organisations that started with thetransactional elements o nance are nowlooking to increase the scope to includemore high value nance activities such asreporting and analytics. Also many arelooking to create global business servicesorganisations by adopting the sharedservices and outsourcing techniques thathave o ten been developed rst in the

    nance unction into other areas such asHR, procurement, IT and acilitiesmanagement.

    Clearly there is no turning back orshared services and outsourcing. Financehas led this charge and gained manyimportant lessons however there is still alot to do i nance is to ully exploit theopportunity. The same is now true or thebusiness as a whole. Can nance lead theway to global business services?

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    POL-AFB-FTEI

    Jamie lyon

    Jamie Lyon leads ACCAs global research and insightsprogramme on nance trans ormation with a particular

    ocus and interest on the evolving role o the nanceunction, the emerging role o the CFO and nance leaders,

    and related human capital issues across nance such astalent development. He quali ed as an accountant in 1999.Prior to ACCA he spent many years in industry as a nancepro essional working in the UK and overseas.

    deborah kops

    Deborah Kops is the ounder and managing principal oSourcing Change. Formerly a ounding partner o one o the

    rst global business processing outsourcing (BPO) units ,the CMO o a leading o shore BPO, managing director o

    FleetBostons (now Bank o America) Services Group,managing director o Global Sourcing Trans ormation orDeutsche Bank and consulting partner atPricewaterhouseCoopers and Arthur Andersen. Deborahnow works with leading companies to manage globalizationchallenges. She is also a research ellow o award-winninganalyst rm HFS Research, and a member o the editorialboard o the industry-leading publication OutsourceMagazine.

    a