Last updateFri, 24 Mar 2017 12pm


The quiet evolution



What ten years ago was largely a tactical solution to immediate needs in finance and administration is now a strategic business model achieving world-class outcomes.

In the early sixth century BC the city of Athens was beset by difficulties. Rivalries grew between the aristocracy and the people, and also between individual clans. These rivalries were economic, ideological and regional, and sometimes they were a mixture of some or all of these. In short, it was a mess.

The net result of all this was first, that the state didn’t function adequately and second, that it spent its time focused inwards, on its own problems, rather than outwards, on its place in a turbulent world.

A solution was needed – and found. A new system of government was established. It evolved to accommodate differences and facilitate decision-making, enabling the city-state to organise itself to a degree it had never achieved before. The model was new not only to Athens; it was unique in the known world.

Similarly many businesses taking stock of their finance and administration functions realised they too needed a solution. The circumstances they faced were nowhere near as serious as those in Athens, but they were issues that nonetheless created commercial burdens and put pressure on costs.

Benefits then and now

The model to which they turned was business process outsourcing (BPO). The benefits were significant: outsourcing back off functions like finance and accounting and aggregating the way in which people were employed meant organisations could streamline their approach and reduce costs. It also meant they could quantify areas of their business that hitherto had often been less well defined – and when you can’t define things well, you can’t measure them, making it harder to improve them.

However, the benefits of that ‘lift and shift’ model, as it’s sometimes called, were largely tactical and short-term. A new way of thinking was needed. In Athens, what started as new decision-making structures to address immediate and often-local rivalries was amended, developed and extended until it became a set of principles that are now globally recognised, and the same has happened with Finance and Accounting Outsourcing (FAO).

The Athenian experiment ultimately resulted in what we now call democracy – and over the last ten years, BPO has evolved to give organisations world-class finance outcomes.

At Capgemini, we’re proud to have played a significant part in that evolution. Ten years ago, in the days of ‘lift and shift,’ we often found ourselves being asked to undertake the transfer of work without any change in prevailing processes. Sometimes those processes had been consistently applied right across the client organisation – but sometimes, they weren’t. Instead, they had been allowed to develop in different ways at different locations, and with different degrees of success.

This is why we started to ask ourselves and our clients what would be the optimal approach. Of course, we wanted to continue to achieve tactical cost advantages – but how, we asked, could we go further, exploiting available assets to the full, making the most of people’s skills, moulding everything to achieve the best possible fit with the client’s needs and with the market conditions in which the client operated?

What emerged from these questions was our Global Enterprise Model (GEM) – an ultimate best-practice approach that enabled us to define, manage, measure and deliver enterprise processes to achieve the world-class outcomes we sought for our clients.

Continuous improvement

GEM blazed a trail for the rest of the market to follow, but we weren’t content to leave it at that. We felt our ultimate model needed to be able to adapt to individual circumstances and to make room for continuous improvement. We looked at the technology on which our services and processes were based, and optimised them to make them faster, more cost-effective, better overall. Our FAO-as-a-stack concept developed from this – an integrated, modular and layered set of components that can be tailored to match the outcomes required by any individual client organisation at any time and under any conditions.

Capgemini’s approach to FAO delivers world-class outcomes at the macro level because it drills down to – and up from – the all-important granularity of finance. It covers everything from basic functions to strategic analysis, planning and execution. For instance, in cash management the timeliness of data is paramount, ensuring a clean and up-to-date ledger in real time.

Actionable insights that are built upon the accurate data thanks to analytics help improve collection strategies, debtor handling, order fulfilment and much more besides – and when these areas are being handled well, top-line growth and working capital improvements can be achieved across the business. It’s a comprehensive, top-to-bottom model designed to make a significant impact from Day One on the speed and efficiency of all aspects of the enterprise.

In one case, we were able to help a global operation transform itself, moving all F&A processes across the enterprise to a single framework within just 12 months. In another, the global model we created for a global business addressed specific regional issues of compliance in emerging markets – for instance, Brazil has a complicated tax regime for which we had to optimise – and yet still brought consistency across processes, service delivery, pricing and more, thereby giving the organisation the speed and flexibility it needed in the restructuring and acquisitions that formed the basis of its growth programme.

Of course, in the early days of our evolution we were asking our clients to make a big leap of faith. As with ancient Athens, they were seeking a means of addressing immediate issues, and we were suggesting something that not only delivered tactical outcomes but that radically restructured the way forward, creating a new model for world-class business practice. It was, and is, almost a new ideology. We were delighted they trusted us, because ultimately they saw that what we were suggesting was safer, more robust, more consistent, more scalable and more able to accommodate future strategic needs.

World-class outcomes now and in the future

In a world that is moving faster, where cycles are shorter, where more is always being expected of the CFO, Capgemini’s FAO approach accommodates individual particularities but brings order and structure. It lowers costs of service; it simplifies and streamlines tax structures; and it makes reporting both accurate and timely. By generating better visibility of the granularity of the balance sheet it reduces risk and delivers better and more effective governance.

The net result is better cost control, improved working capital across the organisation, and greater efficiency and agility to deliver significant improvements both to the top line and the bottom.

Nothing is ever the last word. Developments in democracy started over 2,500 years ago, and even today we see interpretations of the structure adapting to new cases and circumstances. So it is too with Finance and Accounting Outsourcing. Our evolution has not reached its end point; but we’ve brought our clients a very long way over the last ten years, and it’s refreshing to hear how excited they are to be part of the journey.

With Capgemini, they know they have an experienced partner with a stable and proven model that delivers transparency, flexibility, reliability – and performance outcomes that are truly world-class.

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