A new approach to finance and accounting services.
The Business Process Outsourcing (BPO) industry has experienced radical change over the past decade, evolving from a ‘lift-and-shift’ model for cost-cutting to a necessary business function focused on transformation and enabling growth. For more and more CFOs, BPO is no longer seen as a matter of buying a service from external suppliers, but rather an integral part of their own strategic thinking: an essential tool for achieving competitive advantage.As with many BPO services, Finance and Accounting outsourcing (FAO) has traditionally focused on operational outcomes – more cash in the bank, lower costs or higher margins – with measures around outcomes delivered across revenue, control, cost, margin and working capital.
The next wave of finance and accounting services looks beyond operational outcomes and links them to shareholder outcomes while addressing the total cost of service. This new approach that capgemini has coined ‘FAO-as-a-stack’ is the complete optimum configuration of finance and accounting operations ranging from people, processes, and technology underpinned by the policies that deliver the right outcomes for each client to achieve the right outcomes for their shareholders.
The diagram above (second image, click to enlarge) sets out the core architecture of a “stack” approach. In this structure all of the different components of a BPO-based Finance and Accounting service are vertically integrated, making it possible to customise and update services while optimising the total cost of service.
Layer 1: Services. Consistent global governance and standards must be applied at this level to ensure consistently high quality outcomes across the entire BPO stack. This is where services are delivered to clients (internal and external) and the ability to reach consistently excellent performance levels depends on what we think of as Customised Standardisation. A standards-based approach is essential but there has to be room for a certain number of variations to deal with different realities in different parts of the market. Once again, the modular approach we apply makes it easier to deliver consistency without imposing inappropriate uniformity on all aspects of operations.
Layer 2: Processes. In order to deliver world-class outcomes to clients, and to act as an integrated part of an enterprise’s own operations, it is essential to deliver processes that are end-to-end in scope and fully interconnected with client business systems. In the past there has been a fundamental difficulty in building BPO processes of this kind, caused largely by the fragmented nature of existing applications landscapes.
For a process (Credit to Cash, for example) to deliver the highest level of benefits possible, it must be seamlessly connected from one end to the other, which will involve numerous interfaces with existing applications, departments (sales, finance, delivery, for example) and data sources. In large organisations, complexity in systems, applications and organisational structure can make this difficult. That helps to explain why so many BPO projects tend to start slowly, involve a long discovery phase and often lead to difficult transition.
By building templates for best practice, end to end processes, implementation becomes easier and less disruptive. An engineering plan must be in place from the start, with control points defined and interfaces already mapped. The modular structure of our stack-based approach makes integration simpler, and it allows us to select each process component from as if shopping in a “Process Store”. This also helps to speed up and simplify process implementation.
Layer 3: Applications. This represents a different approach, when compared to “standard” Finance and Accounting services. Capgemini’s FAO Application Store approach is used here to enable flexible deployment of applications and application components as a way of configuring services in a targeted way, while also reducing the total cost of service.
The FAO Application Store contains a growing number of options, all based on modular components, suitable for fast deployment in response to business requirements. This approach supports fast market entry and testing of new markets and products, while it can also be used to shorten development cycles for new services.
Layer 4: Infrastructure. This is a key factor in removing the burden of legacy from client organisations. Core technology can be virtualised and delivered either from a dedicated private Cloud or from a multi-tenant platform (public or hybrid Cloud). The infrastructure platform available to clients is always future-proofed and scalable by design, bringing a higher level of flexibility and cost-efficiency to the service than before.
The concept of finance and accounting as an integrated stack has been developed as a direct result of real-world experience in the marketplace. Early adopters for this new approach are large enterprises that have a specific need for delivering a consistent quality of service, but with an equal need to use disparate components in doing so.
FAO-as-a-stack is a game-changer in a market that is already moving at high speed. CFOs will increasingly look to the right BPO partners to deliver the world-class outcomes they require as well as the methods and processes offered. The market at the end of this decade will look very different and there will be real competitive advantage for those businesses most ready to embrace change.