Accenture Next Generation Finance

7/28/2019 Accenture Next Generation Finance

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Next-Generation FinanceGetting ahead o the numbers


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A recent Accenture High Perormance

Finance survey underscored these

difculties. The survey, which ollows

a similar project Accenture completed

in 2008, drew responses rom morethan 800 CXOs and senior fnance

executives. While many o these

respondents report advanced fnancial

capabilities and a solid integration

o fnance with other areas o their

companiesparticularly notable given

the recent fnancial upheavalsothers

report concerns about several key

challenges. These include adopting a

more growth-driven posture in the

coming year as global economic demandbegins to rise, cost-containment, risk-

mitigation, and even talent retention

within the fnance department.

A common theme o these challenges is

that business process outsourcing (BPO)

oers a potential solution: fnance and

accounting expertise tailored to the

specifc needs o the company. WhileBPO oerings o the past were limited

to cost reductionoten by moving

transaction reporting unctions to

lower-cost markets in order to take

advantage o labor arbitragetodays

BPO services are ar more complex and

more geared to delivering value. They

still oer signifcant cost reductions,

yet they build o that baseline with

advanced analytics that can give

fnance executives real-time insightsinto how global events are impacting

the companys fnancials.

The complexity o fnance and

accounting unctions has increased

substantially in recent years.CFOs are seeking to become business partners within their organizations, through strategic

alignments between fnance and operations that can create real value. Yet these executives

must also navigate major disruptions rom macroeconomic shits, regulatory uncertainty, and

other hard-to-predict tail eventsat times on a daily basis. The result is a dual challenge: CFOs

have to operate smarter, and do so in an environment characterized by increasing complexity

and volatility. Complicating this challenge is the sheer volume o inormation that fnanceorganizations have access to. With more data than ever beore, on both fnancial and enterprise

perormance, many fnance departments struggle to synthesize it into actionable intelligence.

In short, the right outsourcing

solution leverages data to enhance

specifc business outcomes. It can

better integrate fnance organizations

with the operational elements othe company, and empower CFOs to

become true partners with the rest o

the C-suite.


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Snapshot o a Complex World

Given the signifcant fnancial turmoil

in recent years, Accentures 2011 High

Perormance Finance survey sought

to assess how fnance organizations

have adapted and enhanced their

capabilities. A central goal was to

identiy the main challenges fnance

executives ace today and how well

they are dealing with these challenges.

(We have executed this survey in

the past, most recently in 2008; or

a complete discussion o the 2011

fndings, see Delivering Value in a

Complex World.) The study comprised

online surveys o 536 senior fnance

executives and 297 C-level fnance

customers (CXOs), as well as in-depth

qualitative interviews with 11 CFOs and

fve COOs, all at predominantly large

global companies.

The research revealed several key

fndings, which are reassuring in some

cases. As a group, fnance organizations

have substantially improved their

capabilities and perormance over

the past three years and remain

generally aligned within the C-suite,

an improvement over the 2008

survey. Nearly three-quarters o CXOs

reported that their fnance organization

contributes to the companys overall

strategy and provides timely, responsive

and accurate services.

Thats the good news. While these

results show notable improvements

in fnance capabilities over the past

ew years, other fndings highlight

the growing challenges that fnance

organizations now ace. First,

respondents reported that several

persistent issues are likely to have

a signifcant impact on the fnance

unction. For example, our o fve

reported that complexity is a major

actor. Others identifed regulation,

permanent volatility, the management

o talent within the fnance

organization, and the sheer volume o

data as concerns.

A majority o executives reported that

their fnance organization does notcurrently employ leading practices such

as identiying growth opportunities,

delivering more data than in prior years

providing analytics to the company,

or expanding their input into strategy

and high-level decision making.

Signifcantly, fnance executives report

seeking to enhance their management

capabilities to deal with these concerns

through better orecasting o uture

perormance, and gaining greatervisibility into current results.


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The Evolution o Finance

and Accounting BPO

These are signifcant issues, however

business process outsourcing (BPO)

oers a potential solution. In its

earliest iteration back in the late

1990s, fnance and accounting BPO

was ocused primarily on reducing

costs, through lit and shit strategies

that moved transaction reporting and

other recurring fnance and accounting

unctions out o the company. Thisversion can be thought o as frst-

generation BPO. The second generation

involved the use o oshore markets,

which oered greater cost savings

through labor arbitrage.

Since then, the sophistication and

potential value-add rom BPO have

evolved markedly, in line with the

growing problems that businesses

now ace. Subsequent generations oBPO have moved beyond mere cost

reductions to increase efciencies

within the operations o the fnance

department. They have added

procurement and sourcing capabilities,

and more comprehensively integrated

those into the fnance unction to

enable global strategies or the entire

organization that could ensure best

pricing and volume discounts.

Currently, fnance and accounting

BPO is on its ourth generation,

which pushes the cost and efciency

improvements outside the borders o

the fnance organization and into the

entire company. This suite o services

gives CFOs and fnance executives

ar greater visibility about current

fnancial and enterprise perormance.

Primarily, visibility comes through

fnance and accounting analytics,

which allow organizations to capture

and leverage data ar more eectively

than in the past. Defned as the use

o complex algorithms to synthesize

data and improve business outcomes,

analytics have traditionally been

applied to corporate unctions such as

inventory management, marketing andpromotions, and generating actionable

consumer insights. However the tools

are becoming equally powerul in

fnance and accounting.

The current suite o analytics

technologies can look at a greater

number o variables within the fnance

and accounting unction and deliver

insights more quickly than ever beore.

They not only give fnance executivesa greater capability to handle the

volumes o data streaming through

the fnance organization, but also

deliver a real-time indication o

fnancial and enterprise perormance,

dramatically increasingly visibility.

In short, the tools turn data rom an

inormation-processing burden into an

asset. (For CFOs on the road, all this

inormation will soon be delivered via

secure mobile apps: Fith-generation

fnance and accounting BPO, currently

in development, will oer this same

unctionality on devices such as tabletsand smart phones.)

These tools help create value by

improving business outcomes.

Empowered by this inormation, a

CFO now has the opportunity to take

specifc steps to, or example, reduce

days sales outstanding (DSO) or shorten

the closing time or a given cycle.

The right BPO oering, supported by

analytics, lets fnance executives getahead o the numbers. They can stop

reacting to events and become true

partners with the organization.


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Aligning Capabilities to Concerns

Given the strengths and potential

value-add rom an analytics-based

BPO oering, its worth noting how

well these capabilities address the

principal challenges that fnance

executives identifed in the High

Perormance Finance survey. Recall

that these challenges included

dealing with permanent volatility and

complexity, managing data, and the

retention and development o talent

within the fnance organization. The

right BPO arrangementa partnership

between provider and client, with a

comprehensive suite o fnance business

servicescan address all three.

Complexity and Volatility

Regarding volatility and complexity,

the world is now increasingly

interconnected, and distant events can

trigger unoreseen ramifcations on

a companys operations and fnancial

perormance. Witness the tsunamiin Japan, or the volcano eruption in

Iceland, or the recent debt crises in

Europe. This kind o volatility and

complexity is now a permanent part o

the business landscape, and companies

have little choice but to develop a

strategy or managing it.

In the past, the ull impact rom events

like these would take weeks or months

to percolate through the numbers andmaniest itsel in a close. That let CFOs

perpetually looking in the rear-view

mirror. However analytics tools can give

fnance executives more immediate

insights into how external events

are likely to impact the perormance

o the fnance organization and the

overall enterprise. As a result, the

fnance organization can shit rom a

reactionary posture to one that is ar

more orward-thinking and proactive,

with the ability to implement strategic

measures that can mitigate the impact

rom such external events.

Data

A related challenge is the requirement

to manage, retain, and interpret a

tremendous amount o data. As with

volatility, this issue is likely to get

more difcult in the uture. Without

a clear capability or managing

inormation, many companies aredrowning in data, and missing key

insights that would come rom a

better grasp o the numbers.

BPO solutions can give companies

a much better means o handling

data, in two ways. First, they help

companies optimize core back-ofce

unctions with streamlined fnance and

accounting processes. This helps create

an environment o integrity, compliance,transparency, and control. It puts many

o the recurring and routine elements o

fnancial management on autopilot,

generating signifcant cost savingsa

reduction in operating costs o 25

percent to 50 percent.

However, that represents the frst step.

Greater benefts come when companies

layer such an optimized back-ofce

with a strong analytics unction thatcan deliver insights rom the data. In

this way, they can substantially increase

visibility into fnancial and enterprise

perormance. For example, CFOs can

establish a set o dashboards to get a

quick visual summary o consolidated

fnancial data by unction, region, or

other category, along with alerts o

signifcant trends that require attention

or action.

Retention and development

o talent within the fnanceorganization

A more qualitative aspect o BPO

services is that they allow fnance

organizations to dierentiate

themselves by playing a more strategic

role within the company. Armed with

advanced processes and technology,

the fnance organization workorce

can unction at a higher level, and

become more integrated with theoperations o the enterprise. This helps

acilitate greater development and

retention o individuals at all levels o

fnance organization. A world-class,

analytics-based BPO partnership can

show fnance workorces the best

o whats out there the most

sophisticated systems and tools to

enhance perormanceand give these

individuals more substantive challenges

Finance organizations no longer see thecompanys numbers as a fxed entity

to simply record and report, but as a

dynamic set o metrics that they hold

the power to improve.

In act, the eects o an analytics-based

BPO partnership can be so pervasive that

they oten transcend the boundaries

that a CFO owns and controls. Our

experience has been that while fnance

organizations usually grasp the benefto a BPO solution, they also recognize

that they will need buy-in rom other

elements o the company, given that

the advantages and value-generation

potential cross over rom fnance into

the overall strategy and operations o

the enterprise.


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Conclusion

A more challenging business

environment requires correspondingly

greater capabilities in the fnance

organization. As the survey results

indicate, CFOs at large corporations have

some specifc concerns about whether

their departments have these needed

capabilities in place. Specifcally, these

concerns include the ability to deal

with increasing complexity, handle the

abundance o data, and understand

the current perormance not only o

the fnance organization but o the

enterprise as a whole.

While some companies will be able to

address these challenges by upgrading

internal resources, others may opt or a

BPO partnership to address needed gaps

in capabilities. Ideally, this solution

includes analytics, which can help a

fnance organization make sense o

enterprise data, delivering key insights

to drive better perormance. Given the

pace at which the business world grows

more interconnected and dynamic, the

goal or CFOs should not merely be to

catch up, but to leverage inormation in

order to get ahead o the numbers.


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Case Study: Microsot

Historically, Microsot has operated

with a broad network o subsidiaries

that are given wide latitude in

determining local operational

strategies. That decentralized

management approach has been a key

element in the companys success, but

it also led to signifcant complications

in the companys fnance, accounting,

and procurement unctions. As

recently as the mid-2000s, most o

Microsots 90 subsidiaries managed

these unctions independently, oten

by working with local vendors. That

resulted in duplicated processes,

inconsistent results, and uneven

compliance with corporate and

ederal guidelines. The fnance and

accounting department was saddled

with high costs, low efciency, and

little visibility into current enterprise

perormance. These challenges let it

scant time or resources or the kind o

strategic alignment that could lead tovalue generation.

In 2007, the company signed Accenture

to a multi-year services agreement in

order to address these issues. Microsot

wanted to consolidate the fnance,

auditing, and procurement unctions o

its subsidiaries into a single optimized

system, which it called OneFinance.

The goal was to standardize processes,

reduce costs, improve visibility andcompliance, andmost undamentally

ree up senior fnance executives to

ocus on more strategic practices that

could truly add value.

Because this was a signifcant

transormationinvolving 95 countries

and 450 positionsit involved

substantial groundwork. Accentures

challenge was to assess and benchmark

current perormance; identiy challenges;

and redesign a more integrated fnance,

accounting, and procurement unction.

Moreover, Microsot wanted minimal

disruption on the day-to-day operation

o the company.

The overall transormation took 18

months, using a mix o Accenture

and Microsot IT resources. Each

transition was broken into fve major

milestones and ocused not only

on reducing costs but on improving

business outcomes and overall

visibility. For example, Accenture

created a Controller Workspace, a

dashboard with clear, real-time data on

regulatory compliance, current status

o the monthly close, and executionperormance at each subsidiary. This

increased the efciency o the fnance

sta, giving executives greater visibility

into day-to-day fnancial perormance

and reeing them up to ocus on more

strategic, value-added activities.

The services agreement was built

around key perormance indicators,

ensuring that Accenture delivered

measurable gains that were alignedaround Microsots business needs.

Within three years, Microsot achieved

a 35 percent reduction in operating

costs, along with improvements to

procurement compliance and supplier

discounts. In addition, Microsot

has streamlined its administrative

burden and improved compliance with

regulations such as Sarbanes-Oxley and

with corporate procurement guidelines.

However those are just the initial gains.

The Microsot/Accenture partnership

was built around continuous

improvement, and as Accentures BPO

oerings have continued to evolve,

Microsot has continued to take

advantage o its enhanced capabilities.

In addition to reduced costs and

greater efciencies driven by the initial

transormation, Microsot is currently

improving business outcomes such as

aster monthly and quarterly closes,

more accurate reports, and improved

business outcomes. Fundamentally,

the fnance organization now has

integrated, world-class capabilities

in recurring unctions, enabling the

CFO and senior fnance executives to

play a more direct role in positioning

and driving company-wide strategy to

enhance fnancial perormance.


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Copyright 2012 AccentureAll rights reserved.

Accenture, its Signature, andHigh Perormance Deliveredare trademarks o Accenture.

About Accenture

Accenture is a global management

consulting, technology services and

outsourcing company, with more than

244,000 people serving clients in

more than 120 countries. Combining

unparalleled experience, comprehensive

capabilities across all industries andbusiness unctions, and extensive

research on the worlds most successul

companies, Accenture collaborates

with clients to help them become

high-perormance businesses and

governments. The company generated

net revenues o US$25.5 billion or the

fscal year ended Aug. 31, 2011. Its home

page is www.accenture.com.

Accenture Next Generation Finance

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