Finance & Accounting As-a-Service Business Process Outsourcing ... · benefitsachievedthrough BPO,...

The Services Research Company

Finance & Accounting As-a-Service Business Process Outsourcing BlueprintExcerpt for GenpactApril 2016

[email protected]

[email protected]

BarbraSheridanMcGannExecutiveVicePresident,[email protected]

©2016 HfSResearch Confidential and Proprietary │Page2

Table of Contents

TOPIC PAGE

StateoftheMarket 3

Journey toFinanceAs-a-Service 14

Multi-ProcessF&A DealSizeandMarketTrends 32

GlobalF&ABPOMarketSizeandForecast 46

ResearchMethodology 57

ServiceProviderAnalysis 62

MarketDirectionandRecommendations 67

About theAuthors 75

Confidential and Proprietary │Page3

Executive Summary

Proprietary │Page4©2016 HfSResearch

Introduction to the 2016 HfS Blueprint Report: Finance & Accounting As-a-Service Blueprintn The Finance & Accounting (F&A) As-a-Service Blueprint for 2016 is an annually refreshed analysis of

the business process services and outsourcing market for F&A. This Blueprint builds on theProgressive F&A BPO report we published a year ago, reviewing in more detail the market andservice provider adoption of the Eight Ideals of the As-a-Service Economy for redefining the value ofsourcing engagements.

n This F&A As-a-Service Blueprint covers market size, trends, and direction, as well as analysis of 18service providers.

n Unlike other quadrants and matrices, the HfS Blueprint identifies relevant differentials betweenservice providers across a number of facets under two main categories: innovation and execution.

n For this 2016 report, HfS has increased the attention paid to innovation criteria in particular andadopted the new 2016 Blueprint Grid layout to assess service providers. This Grid nowrecognizes up-and-coming service providers (High Potentials) that are scoring higher oninnovation criteria than on execution criteria as the providers invest and collaborate with clientsand in services that move to a more business outcome-focused, flexible, and talent- andtechnology-enabled F&A service.

n The Grid includes a new grouping for established, high-execution service providers (ExecutionPowerhouses) that have maintained effective delivery operations but need to innovatecapabilities and offerings further. That is in addition to the existing rankings for highest overallperformance (Winner’s Circle) and a strong combination of innovation and executionperformance (High Performers).

Proprietary │Page5©2016 HfSResearch Ltd.

FinanceTransformation

• FinancialProcessConsulting

• SupportingInnovationRoadmap

• ChangeManagementandCommunicationsSupport

Record toReport

• FixedAssetAccounting

• IntercompanyManagement

• RiskManagement• TaxandTreasury

ProcuretoPay

• AccountsPayable• TravelandExpense• CreditManagement• PayrollServices

OrdertoCash

• CashApp/AccountsReceivable

• Billing/Invoicing• Collections• RevenueReporting

HfSValueChainDefinition:Valuechainreferstothebusinessunitsthatcarryoutvalue-creatingactivitiestodesign,produce,market,deliver,andsupportacompany’sproductorservice.Inthisusage,werefertotherangeofprimaryprocessesandsupportservicesthatprovidersoffertotheirclients.

ControllershipActivities

• Regulatory/StatutoryReporting

• ManagementReporting

• RiskManagement/Treasury

• InternalAuditing• BusinessIntelligence• FinancialPlanningandAnalysis

ENABLINGTECHNOLOGIES

Digitization&RoboticAutomation• Analytics• Mobility• SocialMedia• CognitiveComputing•ArtificialIntelligence

OPERATINGMODELS,METHODOLOGIES,ANDPLATFORMS

Outsourcing•SharedServices• GBS• COEs• BPaaS/SaaS/IaaS• DesignThinking

Inthisreport,welookathowserviceprovidersaresupportingtheF&AAs-a-Service:Finance & Accounting As-a-Service Value Chain

Analytics

• FinanceAnalytics • WorkingCapitalAnalytics • RiskandComplianceAnalytics


State of the F&A As-a-Service Marketn F&A service buyers fall into three categories:

• Legacy buyers looking for a third party to “lift and shift” their current operations and run them at alower cost over a long contract, usually with minimal process transformation.These buyers are becoming fewer and farther between.

• Progressive buyers realizing labor arbitrage benefits are finite and broader engagement valuedepends on a partner with higher quality process expertise, compliance, transparency in operations,an appetite to move to consumption-based pricing, using a combination of talent and technologythat keep pace with client needs on a sustained basis.The growing majority of services buyers are at this stage.

• As-a-Service buyers eager to work with a strategic partner to define and execute against achievablebusiness outcomes as part of a broad transformation and change management effort within theirown organization, tapping into talent and technology, both internally and externally.These are the future-oriented buyers that are in the minority today.

n For the most part, service buyers within enterprise customers are starting to look beyond the efficiencybenefits achieved through BPO, largely by standardizing F&A delivery, improved quality of delivery, processstandardization and consolidation, and cost savings. These were the critical levers in the last phase of BPO.

n In the emerging As-a-Service Economy, the onus in Finance shifts to serving the end user—executives,managers, and staff–and managing proactively the increased transparency and interaction that digitaltechnology is empowering. Service buyers seek greater flexibility in the way finance supports the businesswith increased productivity that drives business growth without operations growth.

n According to our recent research, Finance In The Digital Age, approximately three out of four buyersbelieve that service providers that fail to embed more digital capabilities within their F&A operations willsee their value proposition fade away.

©2016 HfSResearch Proprietary │Page7

Finance Professionals Buy Into Digital TransformationTowhatextentdoyouagree/disagreewiththefollowingstatements?

Source: “Finance In The Digital Age,” HfS Research, 2016Sample: Enterprise Buyers = 160

35%

32%

23%

25%

28%

49%

50%

53%

51%

46%

13%

16%

16%

19%

18%

7%

4%

6%

Enterprisesthat embrace digitaltransformationacrossbusinessfunctionswillgainmore groundthantheir

competitors inthenextcoupleofyears

Successful digitaltransformation impacts thewholeserviceexperience forendcustomersandinternalemployees, byintegratingthe front,middleandbackofficeprocesses

Thenewwaveofdigitaltechnologies isfundamentallychangingthewaythatthefinance functionoperates

Financeprofessionals who embrace digitaltechnologies willexperience faster careerprogression

Serviceprovidersthatfailtoembedmoredigitalcapabilitieswithintheirfinance andaccountingoperationswillsee their

valuepropositionfadeaway

Agree Strongly AgreeSomewhat Neutral DisagreeSomewhat DisgreeStrongly


Buyers’ Wish List—Be More Data-Driven & Efficient ProcessesThinkingabouttheadoptionofdigitaltechnologies,howimportantwouldyousaythefollowingbusinessdriversaretoyourfinanceorganization?

35%

39%

32%

31%

30%

23%

31%

19%

23%

57%

49%

51%

52%

52%

59%

49%

56%

47%

7%

10%

15%

16%

17%

17%

19%

23%

29%

Improveoperationalinsightstoincrease productivity

Gainoperationalefficiencytohelpstafffocusonhighervalueactivities

Breakfromlegacytechnologythatisholdingbackourorganization

Createamoreanalyticalcultureamongstaff

Enhanceourcollaborativecapabilitywithourcustomersandpartners

Promotemorecreativethinkingandcollaborationamongstaff

Expandmarketinsightstoimprovecompetitivenessandgrowthopportunities

Lessen theneedtokeephiringnewstafftosupportbusiness growth

Improvethemobilityexperienceofemployees

Hugeimportance Someimportance Minimalimportance Noimportanceatall



State of the F&A As-a-Service Market: Highlightsn Nature of Engagement to Encompass Change Management: During the study, HfS heard a number of

references to service providers clearly working to understand better the maturity and readiness of theclient environment for change, and the extent of change. There is an increasing focus on changemanagement in transition, and service providers being more active in defining and delivering on sharedservices and global business services business cases across client organizations. The service provider’sinterface to the client is becoming a more critical and strategic role.

n Productivity Gains in Contracts Increasing: There is an increasing focus on efficiency gains to ensurethere is no “standing still”—that steps will be taken continuously to improve the operations over thelength of the engagement. This approach is also driving take up automation because it’s a now aproven way to keep achieving these goals over time. “We have a committed outcome contract thatrequires productivity and it is in my interest that they can achieve it,” shared a finance executive,“because of my responsibility to internal stakeholders and the business case as well.” We also hear ofan increasing number of hybrid contracts that combine transaction or gain-sharing with FTE.

n New Age Clients Versus Legacy Relationships: Some service providers are taking a number of steps towork with legacy clients to map a path to the next level of value driven by “digitization”—the use ofautomation, cloud and mobile technology. A major part of original contracts are the use of client ERPsystems, and they are exploring how to better work with or outside of those systems, rather than use itas an excuse to not make changes as at all. The challenge for service providers is to take this approachconsistently across clients, which means hiring and training more change agents to be account leadersand and creating a culture of change in the delivery organization.


State of the F&A As-a-Service Market: Highlightsn Finding and Articulating Problems Could be Better in many instances: Even if a service provider received

high/stellar marks for delivery performance, when it comes to finding problems, articulating, and jointlyresolving them, clients express frustration. Service buyers want to know how the work is going, and whenthere are issues, trouble spots or ideas, to have insight into it. In some service providers, it meansaddressing the tendency to try to fix something “behind the scenes” so that everything “looks good.” In areal partnership there is dialogue around the realities of what is and is not working. Operationsdashboards are becoming more sophisticated, real-time tools to support these discussions.

n “Digital” Drives Discussion: Because “digital” is a term open for interpretation, it can serve as a “dooropener” for a discussion about what really needs to change not just in the Finance organization, but theimpact across an enterprise. Clients are more open to using service provider owned or managedtechnology when it is integrated in the process and connect with business results, and not for the sake oftechnology alone. As one executive said, “where tools are strong is where service provider has invested IPand where the tools are deeply embedded into the practice and method.”

n Early Stages of Robotic Process Automation Uptake: The use of automation is not new in F&A, as serviceproviders have been developing macros to automate routine tasks, and drive workflow, for example, forquite awhile now. Most of what we see today is in in collections, order processing, invoicing, andreporting. The increased use and potential impact of RPA is part of “every” discussion, according to manyof the service providers, who either bring it up proactively, or are responding to questions. But as oneservice provider put it, “we are thinking too small,” and the use of it could be more widespread and withgreater impact. What’s holding back the use of it this way is the lack of understanding among buyercompanies for what RPA is and how it is part of a broader business case for driving business outcomes. Themost effective use over time will be when it is part of the overall solution design between a service buyer(business and IT) and service provider to drive agreed upon business outcomes.


State of the F&A As-a-Service Market: Highlightsn The Need for “Intelligent Delivery”: In the push for “innovation” in service delivery, we hear mixed

reviews. While service delivery teams do need to be identifying and addressing trouble spots andraising ideas/suggestions for change, they also need to consider the context and the impact on theend-to-end process. Service providers need to find the right balance of encouraging change, and beingsure that delivery teams have the right context and environment for it, with checks and balances.

n Industry Verticalization Driving More Insightful Work: Buyers are mixed as to whether or not theyvalue industry-specific capability in their service provider engagement. Some just want standardfinance best practices and capabilities. However, for buyers and service providers looking to increasethe value of the engagement over time, functional and/or industry context helps increase therelevance of the work. And in some industries, industry knowledge is clearly useful for driving moreanalytics based work and extending coverage of the value chain, such as into spend analytics and riskand compliance.

n Mixed Maturity In Analytics: A handful of service providers have carved out areas in Finance &Accounting where they have developed expertise and momentum, such as IBM in receivables analytics,Accenture in financial planning & analysis and risk & compliance, WNS in working capital, and TCS infinance. Cognizant and Genpact also have developed a strong analytics analytics capability that roundsout the leaders in this area to date. The engagement needs to have a certain level of stability and trustfor analytics to be a part of of it. Some of the comments we heard from buyers included: “they bring usinteresting and insightful views of our business and we just have not been able to do something withit,” because the organization has other priorities; “we are looking to stabilize our operations before weget into analytics;” and “they are learning how to present to us well... what’s relevant to our companyand the level of detail versus executive summary…” Also, companies need to be willing to share dataand “allow” insights, e.g., “how come you are giving our data to a service provider”?


State of the F&A As-a-Service Market: Highlightsn Increasing Workforce Flexibility still a Core Benefit: In places where clients have felt the impact of

attrition, turnover, and inappropriate staffing (where the skills are not the right level to meet thedesired results), service providers have been quick to respond and adjust, whether at the account ordelivery level. The F&A sourcing market has mature recruiting and on-boarding in this area, driven byhigh levels of turnover for somany years. We also see increased attention to career path definition andtraining for use of automation and analytics based on employee interests and skills as well. However,there is still an untapped opportunity for service providers to create more dynamic environments foremployees (current, potential, and contractor) to opt in, self-select, or find and apply for engagementopenings and initiatives thatmatch their skills, interest and experience.

n F&A sourcing having Positive Impact on Career Development for in-house staff: We heard from anumber of service buyers that one of their drivers for sourcing was to create a more interesting careerpath for their finance employees. Either in larger enterprises or in mid-market where the finance teamis smaller, they recognize that service providers who specialize in finance across many organizationscan have the focus and resources to offer more advanced training and career options. In theincreasingly technological and analytical nature of the work, there are a number of options emergingfor careers in business process services—those that want to be business process efficiency experts andthose thatwant to take an analytical path, for example.

n Business Process Services: While experienced sourcing professionals are increasingly appreciating thevalue of service providers’ capability and exploring beyond a cost reduction and labor arbitrage valueproposition, broadly speaking, too many people still think of BPO as labor arbitrage and not as services.To drive increased value for a business over time, this perspective needs to change, particularly inprocurement organizations and legal teams.

Proprietary │Page13©2016 HfSResearch Ltd.

n As-a-ServiceWinnersareserviceprovidersthatareincollaborativeengagementswithclients,andmakingrecognizableinvestmentsinfuturecapabilitiesintalentandtechnologytocontinuetoincreasethevalueovertime.TheseprovidersarealsoleadinginincorporatinganalyticsasaserviceintoFinancecontracts.

• Accenture,Capgemini,Genpact,IBM,TCS,WNSn TheHighPerformers allexecutewell,areinvestingin

futurecapabilities,butneedtogainmoreconsistencyandtractionamongclientsindefininganddeliveringagainstbusinessoutcomes,andusinganalytics:

• Cognizant,HCL,HPE,Infosys,Wipron TheExecutionPowerhouses areallstronginoperational

excellenceandincreasinglycombiningtalentandtechnologyeffectively,butarestillinmoreofa“directive”andtransaction-orientedrelationshipwithclients:

• arvato,Sutherland,Xchanging

n OneSourceVirtualhasHighPotential,justenteringtheFinancemarketwithanativeAs-a-Serviceapproach.

n Aegisalsoparticipatedinourstudy,andweseethiscompanymakingtractioninexecutionandinnovation,justalittlefurtherbehindthanitspeers.

AS-A-SERVICEECONOMY

Useofoperatingmodels,enablingtechnologiesandtalenttodrivebusinessoutcomesthroughoutsourcing.Thefocusisonwhatmatterstotheendconsumer.

HfSusestheword“economy”todescribethenextphaseofoutsourcingasanewwayofengagingandmanagingresourcestodeliverservices.

The8IdealsoftheAs-a-ServiceEconomy:1. Write OffLegacy2. DesignThinking3. IntelligentEngagement4. BrokersofCapability5. IntelligentAutomation6. AccessibleandActionableData7. Holistic Security8. Plug-and-PlayDigitalServices

Source: Beware of theSmoke: Your Platform Is BurningbyHfS Research, 2015

State of the F&A As-a-Service Market: Service Providers


Journey to Finance As-a-Service


There Is Room for Improvement in Finance Operations PerformanceServiceBuyers:HowsatisfiedareyouwiththeoperationalperformanceofyourF&Aprocessesasoftoday?(VerySatisfied)

13%

13%

10%

8%

8%

6%

6%

25%

19%

17%

15%

15%

13%

17%

Audit

FinancialPlanning&Analysis

OrdertoCash

Overall

ProcuretoPay

RecordtoReport

Treasury,Budgeting

>$5Bn

<$5Bn



Anticipated Impact from Digital Technologies Is a Driver for ChangeServiceBuyers:Towhatdegreedoyouthinktheadoptionofdigitaltechnologieswillimpactthefollowinginthenexttwoyears?

34%

28%

26%

26%

25%

21%

19%

53%

49%

65%

54%

62%

54%

53%

11%

20%

8%

17%

13%

21%

25%

Cycletimeoptimization

Agilityofthebusinesstodrivechangesinoperatingmodel

Costandproductivity

Userexperience infinanceprocesses

Leveragingfinancialandnon-financialdataforbetterdecisionmaking

Internalandexternal customerexperiencesoffinanceprocesses

Operationalriskmanagement

Hugeimpact Some impact Minimalimpact Noimpactatall


Budget Restrictions and Process Standardization Stand in the WayWhataretheprimaryobstaclestoyourfirmachievingmoreF&Abusinessimpactthroughdigital?

51%

48%

38%

33%

29%

22%

22%

20%

16%

13%

12%

Lackofbudget

Lackofprocessstandardization

Co-ordinationbetweenITandbusiness

Dealingwithlegacysystems

Middlemanagementincentives

Failuretoaligndigitaltobusinessoutcomes

Seniormanaementincentives

Seniormanagementdon'tseebenefit

Changemanagement

Lackofserviceprovidercapability

LackofITdepartmentcapability



Service Buyers Could Improve the Quality and Outcomes by Changing the Nature of their Outsourcing Engagement

28%

13%

9%

45%

4%

2%

Lettinggoandgivingupmorehigher-valueworktoourserviceprovider(s)

Threateningtoentertaincompetitivebid(s)toforceyourcurrentprovider(s)touptheirgame

Bringbackmoreworkin-houseandimproveitourselves

Rolloutanautomationstrategyintandemwithourprovider

Bringinaspecialistadvisortorecalibrateourrelationship(s)andgetusontherightcourseforAs-a-

Service

Notalot– wepaidfor“cheapandcheerful”andthat’swhatwe’restuckwith

Whichofthefollowingactions(selecttwo)wouldimprovethequalityandoutcomeofyourcurrentsourcinginitiative(s)?

Source: The HfS Working Summit for Service Buyers, December 2015Sample: 53 Enterprise Outsourcing Leads

Analytics, Creativity, Automation and End-to-end Process Capability Dominate Talent Requirements in Finance

45%

37%

35%

34%

32%

30%

25%

21%

43%

51%

51%

57%

51%

58%

54%

52%

11%

12%

13%

9%

17%

11%

21%

27%

Analyticalskillstoimproveoperations/productivity

Proactivelyidentifyingnewwaysofdoingthings

Understanding/usingautomation

Improvingend-to-endprocesses

Influencingseniorexecutives

Definingbusinessoutcomes

UnderstandingLeanprinciples

Applicationofdesignthinking

Increasingsignificantly Increasingsomewhat Nochange/decreasing

Towhatextentarethefollowingtalentrequirementsincreasinginimportancetogainmorevaluefromyourfinanceprofessionals?


©2016 HfSResearch Ltd.

TOOLS/INFRASTRUCTURE GOVERNANCE

Welcome to the As-a-Service EconomyHfSusestheword“economy”toemphasizethattheemergingnextphaseofoutsourcingisamoreflexible,outcomefocusedwayofengagingandmanagingresourcestodeliverservices.OperatingintheAs-a-ServiceEconomymeansarchitectinguseofincreasinglymatureoperatingmodels,enablingtechnologiesandtalenttodrivetargetedbusinessoutcomes.Thefocusisonvaluetotheconsumer.

I.THEOPTIMUMOPERATINGMODEL

Outsourcing|SharedServicesGBS|BPaaS/SaaS/IaaS|Crowdsourcing

II.EMPOWERINGTALENTTOMAKEITALL

POSSIBLECapabilitiesoverSkills|

DefiningOutcomes|Creativity|DataScience

IV.TECHNOLOGYTOAUGMENTKNOWLEDGELABOR

Digitization&RoboticAutomation|Analytics|Mobility|SocialMedia|CognitiveComputing

III.ABURNINGPLATFORMFORCHANGE

GlobalizationofLabor|High-growthEmergingMarkets|

DisruptiveBusinessModels|Consumerization

AS-A-SERVICEECONOMY

Agility|CollaborationOne-to-Many|OutcomeFocus

Plug-and-PlayServices


FixedAssetsLeveragedAssets

2DesignThinking

3BrokersofCapability

1WriteOffLegacy

4CollaborativeEngagement

7HolisticSecurity

5IntelligentAutomation

6Accessible&Actionable

Data

8Plug-and-PlayDigitalServices

SOLUTIONIdeals

LEGACYECONOMY

AS-A-SERVICEECONOMYCHANGEMGMT

Ideals

§ MovingintotheAs-a-ServiceEconomymeanschangingthenatureandfocusofengagementamongenterprisebuyers,serviceproviders,andadvisors

§ “As-a-Service”unleashespeopletalenttodrivenewvaluethroughsmartercombinationsoftalentandtechnologyfocusedonbusinessresultsbeyondcostreduction

Journey to the As-a-Service Economy


F&A Has Yet to Significantly Incorporate the Ideals of the As-a-Service Economy

IDEAL AS-A-SERVICEIDEALDEFINITION

NONEXISTENT

INITIAL EXPANSIVE EXTENSIVE ALLPERVASIVE

WriteOffLegacyUsingplatformbasedsolutions,DevOps,andAPIecosystemsformoreagile,lessexceptionorientedsystemsandprocesses 2016

DesignThinkingUnderstandingthebusinesscontexttoreimagineprocessesalignedwithmeetingclientneeds 2016

Brokers ofCapability

Orientinggovernance tosourceexpertisefromallavailablesources,bothinternallyandexternally,toaddresscapabilitygaps 2016

CollaborativeEngagement

Ensuring relationshipsarecontractedtodrivesustainedexpertiseanddefinedoutcomes 2016

IntelligentAutomation

Using ofautomationandcognitivecomputingtoblendanalytics,talent,andtechnology 2016

Accessible&ActionableData

Applyinganalyticsmodels,techniquesandinsightsfrombigdata,real-time 2016

HolisticSecurityProactivelymanagingdigitaldataacrossservicechainofpeople,systems&processes 2016

Plug andPlayDigitalBusinessServices

Plugginginto“readytogo”business-outcomefocused, people/process/technologysolutionswithsecuritymeasures 2016


How As-a-Service Is Taking Shape in F&A: Writing Off Legacy

Legacytechnologyinvestments thatlimitagilityandcreate exceptionsaddressedby

addinginternalandexternalFTEs

Usingplatform-basedsolutions,DevOps,andAPIecosystemsformoreagile,less-exception-orientedsystems

§ In the Finance operations world, ERP systems have been king for many years. Significant investment have goneinto implementing and in many cases, customizing these systems. “Writing off Legacy” is not about abandoningthese systems, but in exploring and using, as the finance organizations look at corporate objectives andstrategy, platform-based solutions that integrate with the system of record, making the data more accessibleand extensible, and interfacing and integrating with other technologies. Service providers are developingpartner ecosystems with technology providers, wrapping around technology and business services, to be ableto both tap into existing systems (e.g., SAP and Oracle in many cases) and leverage newer proprietary and thirdparty options (e.g., Coupa, BlackLine, TradeShift), investing in platformsupport where they didn’t in the past.

Examples:§ With its LeanDigital approach, Genpact has evolved its traditional Lean Six Sigma process excellence focus.

LeanDigital provides a framework for working with clients to use design thinking for identifying, aligning andaddressing issues and opportunities. It’s a transformative approach to align digital technology and talent withdesired business outcomes fromF&A delivery.

§ An EXL client described how they are developing an integrated network of their own and EXL tools andresources. EXL works in their SAP system, uses an EXL tool for indexing in accounts payable and expenseauditing, and has incorporated a number of automation macros to address a variety of tasks. Now they areworking in partnership with an RPA third party provider to explore the use of RPA for general ledger processing.For each problem they are looking to address, they consider the tools, technologies, and capabilities of eachparty for the best combination to reach the objective.


How As-a-Service Is Taking Shape in F&A: Design Thinking

Resolvingproblemsbylookingfirstattheprocessasthesourceofthesolution

Understandingthebusinesscontexttoreimagineprocessesalignedwithmeetingclientneeds

§ Design Thinking provides a new way to think and engage as partners. It helps shift the focus of work andengagement from “internal” to “external”—to the end consumer—for deals stuck in “holding pattern,”engagements that have reached levels of consistent “green” in SLAs, and are questioning the next level of value,for executives that realize that there should be more and better use of digital technology such as automation,analytics, and cloud-based solutions. We are seeing very little, “Nascent,” use of Design Thinking in F&A today,and we believe there is an opportunity to use it as a way to establish joint initiatives and change the nature ofengagement in F&A. However, both the service buyer and service provider have to be interested in engagingthis way.

Examples:§ IBM is one of the more mature users of Design Thinking, even having a designer with F&A expertise. They are

infusing it into early stages of engagement, as well as in more established relationships. In one example,working with a client that wanted more than a low cost solution for the business, and a partner willing to investin the success, IBM and the client started using Design Thinking in the proposal process and the orals sessions,and committed to fund innovation that would push the boundaries on analytics and cognitive, iterating onsolutions in set sessions over time. In another session, IBM and a client explored how to reduce the close cycle.

§ Over the past few months, Infosys been “infusing” design thinking into its organization through training andalso through top-down messaging on changing the culture to being more of a “learning environment.” Theyshared examples of using this approach to define and address trouble spots and bottlenecks in accountsreceivable and accounts payable, ultimately redesigning processes that have impacted cash flow.


How As-a-Service Is Taking Shape in F&A: Brokers of Capability

Focusinggovernanceandoperationsstaffonmanagingtotheletterofthecontractandthedecimalpointsofservice levels

Orientinggovernancetosourceexpertisefromallavailablesources,bothinternallyandexternally,toaddresscapabilitygaps

§ Being a broker of capability is about articulating a business problem or opportunity, the desired outcomes, andthen coordinating and facilitating across internal and external entities to reach those results. In our research,we spoke to many finance, shared services, and global business services leaders who fill these roles in theircompanies and with their service providers. One finance executive described his career path as starting in acontroller role, moving into a project management lead for implementing shared finance services, then directorof BPO services, increasingly facilitating across internal business unit leaders and external third party serviceproviders to set and manage expectations for results. These professionals, in both clients and service providers,as the linchpins in the emerging As-a-Service Economy, and we see an increasingly “Expansive” network ofbrokers in F&A.

Examples:§ We have heard many stories from Capgemini and clients of brokers of capability in action, and alignment of

brokers between the two companies to advance the value of the operations and engagement. In clients, thesebrokers are typically in a shared services leadership role, or a global process owner, and have decision makingauthority, and manage the partnership to achieve outcomes, not just address contractual terms and conditions.

§ With the increasing number of alliances between service providers and technology vendors to deliver digitallybusiness process services, we see brokers of capability playing critical roles in companies like Cognizant (withBlackLine) and Xerox (with TradeShift) to coordinate between clients, their own organizations and third parties.One caution we heard here from a client is for the service provider to be sure to set appropriate expectationsand managewhich party is accountable forwhat activity and business outcome.


How As-a-Service Is Taking Shape in F&A: Collaborative Engagement

§ At the core of the As-a-Service Economy—linking the solution ideals to the change management ideals thatmake a solution effective over the long term—is collaborative engagement. As such, the service providers thatare considered “partners” by service buyers are typically leaders in moving the industry toward Finance As-a-Service. Traditionally, business process outsourcing work has been directive from service buyers to serviceproviders and managed strictly by procurement organizations. As more business units and global sharedservices centers take responsibility for relationships, HfS is seeing a move over time to more collaborationwhere trust and experience are in place, often through shared outcomes and results. The adoption of practicesof collaborative engagement is “Expansive” in F&A today as there is still a mix in themarket on simple cost andefficiency play versus solving challenging business issues.

Examples:§ “Our relationship is a partnership,” said one client of the engagement with EXL. EXL takes initiative to explore

complicated scenarios and problems, and potential solutions that can use either client, EXL, or partnercapability, and shared investments. Central to this success is the time and effort clients believe EXL takes tounderstand their business.

§ Often asked what WNS stands for, the CEO’s current response is “we nurture specialists,” and from what wehear from clients, the service provider also nurtures “service buyers.” WNS is organized by industry businessunits, with close integration within the company, allowing them to be very flexible and responsive to clients,especially over the length of the engagement as trust builds.

Evaluatingrelationshipsonbaselinesofcost,effort,andlabor

Ensuringrelationshipsarecontractedtodrivesustainedexpertiseandoutcomes


How As-a-Service Is Taking Shape in F&A: Intelligent Automation

Operatingfragmentedprocessesacrossmultipletechnologieswithsignificant

manualinterventions

Usingautomationandcognitivecomputingtoblendanalytics,talent,andtechnology

§ As a market, F&A is in the “Initial” stages in using what we call Intelligent Automation—using software andtechnology to do routine tasks, and enhancing it through machine learning and natural language processing,and moving up the curve with artificial intelligence. All service providers have been using macros and “mini-bots” on what they can manage without touching the client IT environment for years, and are increasinglyapplying it more aggressively across activities for standardized processes to increase predictability, speed, andquality. As they do so, staff are oftenbeing retrained or shifted to new engagements.

§ Clients also are increasingly using automation, and exploring RPA. What we are not hearing a lot of is on joint orcollaborative effort for a strategy or use of RPA. The hesitation to do so seems to vary as to whether it isbecause of limitations on the client side or disinterest in engaging in joint efforts that could cannibalize theircurrent work on the service provider side. At the HfS Summit in late 2015, 45% of the attending service buyerexecutives said they believe a joint automationeffort could drive a new level of value in their engagement.

§ We heard many references to pilots underway for RPA, and some discussion on how to collaborate with ITdepartments of clients, which will be necessary to get full benefit from autonomics in the future. We see RPAtoday primarily in accounts payable workflow, collections, reporting, and invoice processing. According to a USF&A executive, “When cognitive tools really kick in, that will change F&A. We'll be able to train software to do alot of the problem solving and error spotting that we domanually today that is so time consuming.”


How As-a-Service Is Taking Shape in F&A: Intelligent Automation (continued)

Operatingfragmentedprocessesacrossmultipletechnologieswithsignificant

manualinterventions

Usingautomationandcognitivecomputingtoblendanalytics,talent,andtechnology

Examples:§ TCShasmadethemostproactiveprogressworkingwithRPAinawaythatclientsrecognizeanddiscuss.

Examplesincludeprocure-to-pay,reconciliationinT&E,andapplicationsincollectionsandinvoicing,aswellasreconciliationandmonth-endclosetospeedtheprocessandaccuracyinrecord-to-report.TCShasshownthegreatestappetiteto“cannibalize”itsrevenuestoprovetoclientsitcanhaveweaveRPAeffectivelyintotheirprocesses.

§ HPEhasbeenaugmentingthesuccessofitsAutoflow toolbyproactivelyworkingwithRPAvendorsandconsultants,suchasVirtualOperationsacrossitsmajorF&ABPOclients.HfSisimpressedwitheffectivewayHPEhasembeddedRPAintoitsF&Adeliverysoseamlessly.

§ Clientsspecifically referencedtheautomatedoperationalsupportandchangemanagementinplaceatXchanging,withautomationappliedtotrainingandsupportaswellasfortasksandactivities thatdrivebusinessresults.

§ Xerox,EXL,Capgemini,IBM,HCL,EXL,Cognizant,andWiproarepartneringwithF&A-specificRPAvendorsandSaaS platformstohelpwithautomation,forexample:Basware foraccountspayable,BlackLine forrecord-to-report,andCoupa forspendmanagement.

§ Wiprowasearlytothegameinapplyingautomationtoordermanagementinparticular,andisexploringtheuseofartificial intelligence viaHolmes,fordynamicscanningandOCR,andtodetectfraud.

§ Inadditiontowhatweareseeingasmore“standard”automation,Accenturehaspilotsunderwayinartificialintelligence suchasusingIPSoftAmeliaasavirtualassistantattheF&AHelpDesk.


How As-a-Service Is Taking Shape in F&A: Accessible and Actionable Data

Performingad-hocanalysisofunstructureddatawithlittleintegrationor

businesscontext

Applyinganalyticsmodels,techniques,andinsightsfrombigdata in real-time

§ The most effective analytics – analysis of data for insight that leads then to plan and action – starts withaggregated, cleansed, and standardized processes and data. It typically builds on where a service hasestablished a level of trust, operational stability, and depth of industry or functional expertise. The greatest takeup of analytics in this way has in accounts receivable, financial reporting and compliance, and financial planningand analysis. Most analytics work today is building on the data presentation and reporting that’s pretty wellestablished in sourcing activity in F&A today, so we see the industry at “Expansive” stage of this Ideal. A numberof service providers are hiring data scientists, developing visualization tools with simulation capability, androlling out internal and external training programs and partnerships for talent development in specialty areas.

Examples:§ Accenture is embedding analytics into all of its F&A work, with a comprehensive suite of F&A “apps” for

analytics, including Intelligent Collections, Disputes Predictor, Period End Accelerator, and Call Flow Forecaster.It is also increasingly using its Operations Navigator as means for real-time monitoring, visualization, andanalysis. For example, analysts using Payable Optimizer can simulate payment adjustments to identifyopportunities and guide decisions onoptimizing working capital withoutharming vendorrelationships.

§ Starting with the area in which it has the deepest and broadest expertise, Sutherland has embedded predictiveanalytics into order-to-cash. For example, teams use statistical modeling, forecasting, and simulation incollections to calculate the likelihood of payment and to reduce costs by prioritizing debtors. By doing so, theservice provider can focus on high-balance, low-collectability customers while at the same time applying soft-touch treatments to high-collectible and low-balance.


How As-a-Service Is Taking Shape in F&A: Holistic Security

Respondingreactivelywithpost-eventfixes; little focusonend-to-endprocess

valuechains

Proactivelymanagingdigitaldataacrossaservicechainofpeople,systems, andprocesses

§ Holistic Security is the proactive management across internal and external people, process, and technology.Often the focus is on the systems, but in business process services and in sourcing engagements, people andprocess become a significant factor in managing and securing data. There is a very deep and ingrainedprotection of data in finance. We consider this Ideal at the “Initial” stage of development for operating in theAs-a-Service Economy, not because there is a lack of attention to security but because the desire for absolutecontrol and this almost paranoiac state about keeping service providers “away” from data is keeping theindustry from more advanced RPA, analytics, insight, and collaboration. We see increasing levels of maturityaround education, training, and compliance management, which is more and and more critical to establishingtrust and enabling more interactive and analytical based engagements. However, clients and service providersneed to jointly strategize on how to create a shared culture for holistic security in order to continue the drive to“digital F&A.”

Examples:§ TCSemploysasimple,comprehensive,andstraightforwardmodelforwhattheserviceproviderterms

“customersafety”:humansecurity(pre,during,andpostemployment),physicalsecurity(e.g.,electronicandbiometriccontrols),andITsecurity.TCSdoesperiodicinfoevaluationwithvulnerabilityassessmentstoidentifypotentialforfraud,andtokeepdataintegrityandconfidentiality.

§ Xerox shared that client concerns are primarily around the cloud security and data compliance, and it has beena particular focusof this service provider that workswith a lot of public sector organizations in particular.


How As-a-Service Is Taking Shape in F&A: Plug-and-Play Business Services

Undertakingcomplexandoftenpainfultechnologytransitionstoreachasteady

state

Plugginginto“readytogo”businessoutcome–focused,people,process, andtechnologywithsecuritymeasures

§ While Finance is heavily dependent on ERP systems, plug and play business services can unlock value byinterfacing with these systems, and making them more extensible and valuable. Plug-and-play also is wellpositioned for smaller but growing companies, and in support of replacing systems for companies going throughmergers. It does require business executives to drive the business case and coordinatewith IT and procurementto be successful. As an industry, we need to make it easier to use “plug and play,” contractually. The F&Abusiness process services is in the “Initial” stages of using Plug & Play Business Services. Many service providersare shaping, partnering, developing, and offering options, and it is a matter of readiness and momentumamong clients.

Examples:§ OneSourceVirtualisenteringthemarketasaBPaaS providerwithWorkdayatthecore.OSVcombines

Workday’sAccountsPayablefunctionalitywithaproprietaryinvoicecapturetoolandaWorkdaybasedproprietaryrulesengine.“Sharedautomation”isthefoundationoftheoffering.

§ Capgemini hasexperienced takeupofits“as-a-stack”offeringforfinancialmanagementbyclientsinthemid-tier.Thisapproachbringstogetherinfrastructure,applications,andbusinessservices forF&A.ItsacquisitionofiGATEandITOPS(frameworkforIT+businessservices)enablesCapgemini toitsextendofferingsinthisarea.

§ XeroxAccountsReceivable isavailableasSaaS orBPaaS fororder-to-cash,addressingcustomerandriskmanagementtoimproveDSOandcashflow.The“package”Includesamixofautomationandmanualactivity;apaymentapplicationforallocationbasedoncustomerprofilesandalgorithms;deductionanddisputemanagementwithaudittrails;collectionsmanagementprioritizedwithworkflowandperformancemanagement.


Multi-Process F&A BPOMarket Size and Deal Trends


The Gap Between Large Enterprises (>$5B) and Mid-market Buyers Narrowing as More and More Service Providers Adopt to As-a-Service MindsetClientOrganizations’Revenueas%ofDealsNumberofDealsfrom2005to2015

Source: HfS Research, 2015, N=1,491 liveMulti-process F&A BPO ContractsBased onliveF&ABPO contractswhich areover$1m inTCVand haveaminimum of twocore F&Aprocess bundled

• LargeenterpriseshavingrevenueaboveUS$5billion(55%)arestillthebiggestuserbaseofoutsourcing.However,thenumberofdeals/yearwiththelargestcompanieshassteadiedandisnotgrowing.

• Moremid-market(enterpriseshavingrevenueslessthanUS$5billion)areengaginginoutsourcing,increasingthetotalnumberofnewcontractssignedduring2014and2015.

• Aspredictedinourlastyear’sresearch,“ProgressiveFinance&AccountingBusinessProcessOutsourcingServices,March2015,”moreserviceprovidersareofferingflexiblepricingandplatform-basedbusinessprocessAs-a-Service,whichisdrivingamorebalancedmixintermsofmid-marketandlargeoutsourcingbuyers.

• In2016andbeyond,weexpect toseemoremid-markettosmallmarketbuyersadoptingoutsourcing,especially throughBPaaS.

$20B+31%

$10- 20B7%

$5B+18%

$2.5- 5bn17%

$1- 2.5bn9%

<$1bn16%

NA2%

Enterprise Categories RangeofRevenueLargeEnterprises Revenueabove US$5billionMid-marketEnterprises RevenueFrom US$500milliontoUS$5billionSmallEnterprises Revenuebelow US$500million


17.8%

13.8%

11.2% 10.8%

8.6%7.3%

6.3% 5.8% 5.6% 4.9%

2.8% 2.5%1.7%

0.9%

Banking,

Insurance/

Financial…

Telecom,

Software&Hi-

Tech

Transportatio

n&

Logisitics

Manufacturin

g

Retail

PublicSector

Utilitie

s&

Energy

Healthcare

Others*

Med

ia/

Publish

ing

LifeSciences&

HealthCare

Consum

er

Packaged

Goo

ds

Chem

icals

Automotive

BFSI, Telecom & High-Tech, and Travel/Transport Have Had the Highest Amount of F&A BPO Activity to Date

BEHINDTHENUMBERS

• Outsideofthetop3active industries,weseesteadyincreaseofF&ABPOadoptionby:Manufacturing,Retail,Healthcare&LifeSciences, andUtilities&Energy.

• PublicSectorcontracting iscyclicalwithupsanddownsoverthepastdecade.

• Fairly smallnumberofcontacts,bycomparison,in:AutomotiveandConsumer PackagedGoods.


%ofDealsbyVerticalSegment– 2005to2015NumberofContractsto-date- 1499

*OthersincludeindustrysegmentssuchasRealEstate,ProfessionalServicessuchasManagementConsulting,Staffing&RecruitmentProvider,LegalServices,ResearchServicesandotherprofessionalservices


50.2%

17.4%

11.3%

6.5% 6.3%4.5%

1.6% 0.8% 0.7% 0.5%

NorthAmerica UK India LatinAmerica Japan

RegionContractSigned– 2005to2015NumberofContractsto-date– 1,491

While North America Continues Dominate the F&A BPO Market, Activity in Asia Pacific is Increasing

BEHINDTHENUMBERS

• AfterNorthAmerica, EuropecontinuestogeneratedemandforF&AOutsourcing—equatingtoroughly30%ofthemarket.

• DemandforF&ABPOinAPAC,EMEAandLatinAmericahassignificantlyincreasedsince2013,albeititfortransactional-basedactivitiesandservices.



11%

25%

32%

22%

8%

2%

<2Years 2- 3Years 4- 5Years 6- 7Years 8- 10Years >10Years

F&A BPO Deals Are Typically in the Range of 4 - 5 Years, and Getting Shorter

LengthofF&ABPOContractTerm– 2005to2015NumberofContractstill-date– 1,491

BEHINDTHENUMBERS

• Thenumberof2-3yeardealsbetweenisareontherise.Inourpreviousreport,” thistimeframeformed22%oftotaldeals.

• Lasttwoyears2014and2015didnotwitnessanylong-termdealsascomparedto2013.



Multi-process F&A BPO Engagements Center Heavily on Transactional Accounting Processes with Major Uptick in Reporting Activity

TRANSACTIONALACCOUNTING

REPORTING

FINANCIALPLANNINGANDTRANSFORMATION

BUSINESSINTELLIGENCE

56%

44%

29%

17%

19%

42%

31%

40%

28%

30%

36%

33%

30%

18%

23%

15%

18%

17%

20%

7%

9%

13%

13%

AccountsPayable

Travel&Expense

CreditManagement

PayrollServices

PayableAnalytics

CashApp/AccountsReceivable

Billing/Invoicing

Collections

RevenueReporting

ReceivablesAnalytics

FixedAssets

Inter-Company

ManagementAccounting

RiskManagement

TaxandTreasury

FP&A

ReportingAnalytics

FinancialProcessConsulting

F&ASystems/PlatformsDevelopment

ChangeManagement&CommunicationsSupport

FinanceAnalytics

WorkingCapitalAnalytics

Risk&ComplianceAnalytics

(Contracted aspartof deal)



Uptake in RPA Adoption Is Led by Proprietary Toolsets

BEHINDTHENUMBERS

• IBM,Capgemini,TCS,InfosysandXeroxleadinthenumber ofdeploymentofproprietaryRPAtools.

• Thethirdpartytoolsareincreasinglyusedasacomplementtoin-houseorproprietarysoftware.

• Although proprietarytoolstaketheleadinF&ABPO,off-the-shelfproducts suchasAutomationAnywhere,UiPath andBluePrismaregainingmomentum.

• SAP-Ariba,BaswareandCoupaareexamplesofthirdpartysoftwarepackagesspecifictoF&Aprocesses,aidingautomationintheprocure-to-payarea.However,HfSResearchdoesnotclassifytheseasstandaloneRPAtools.

In-HouseTools40%

AutomationAnywhere

20%

UiPath14%

BluePrism5%

OpenSpan4%

WinAutomation3%

BlueWorksLive3%

iLogic3%

Fusion2%

Simpro/Scribe1%

BPOInspect1%

RapidPaste1%

Automic1%

Others*2%

PercentageofRoboticsProcessesDeploymentbyRPAToolsNumberofContracts

*Others include toolssuch as Coupa, SAPAriba,Basware oranyothertools thatHfS does notclassify asRPA for thelackof Artificial Intelligence



OrdertoCash

RPA Deployment is High Across Repetitive and Standardized Activities in F&A BPO

ProcuretoPay

RecordtoReport

Analytics

PercentageofRoboticsProcessesDeploymentbyValueChainin2015NumberofContracts=225LiveContractsin2015

20%5%

1%

13%6%

5%4%

3%

16%3%3%3%

2%2%

1%

6%6%

1%

InvoiceProcessingTravel&Expenses

PaymentProcessing

CollectionsBilling/Invoicing

CashApp/AccountsReceivableRevenueReporting


ReportingAnalyticsFixedAssets

Inter-CompanyRiskManagement

ManagementAccountingTaxandTreasury

FP&A

FinanceAnalyticsWorkingCapitalAnalytics

Risk&ComplianceAnalytics13%

30%

30%

27%



ServiceProvidersOverallRPAActivityinF&ABPOas%ofDealsNumberofContracts=225LiveContractsin2015

RPA Adoption is Led by IBM, Genpact and Capgemini

0.8%

0.9%

1.1%

1.4%

2.1%

2.4%

2.9%

3.2%

4.9%

5.0%

6.1%

7.6%

12.9%

16.1%

21.3%

HPE

arvato

Cognizant

Sutherland

Wipro

Xchanging

EXL

Infosys

Accenture

WNS

TCS

Xerox

Capgemini

Genpact

IBM

BEHINDTHENUMBERS

IBM,Genpact,Capgemini,Xerox,TCSandInfosys havebeeninvestingheavilyondevelopingtheirin-houseproprietarytools.



The Demand for Complex Analytics Activities Is on the Rise

BEHINDTHENUMBERS

• Since2013,thepercentageofdealswithananalyticscomponenthasincreased.

• The F&ABPOmarketisshowingahigherdemandforWorkingCapitalandRisk&Compliancetypeofanalyticswork.

• AsReceivablesAnalyticsworkisincreasinglystandardizedandautomated,itisbecominglessaccountedforasstand-aloneanalyticsandmoreas“businessasusual.”

• Theservice providerswiththehighestnumberofdealsinwhichanalyticsisspecificallycontracted:Accenture,Cognizant,Genpact,IBM,TCS,andWNS.

56%

14% 14%

6%8% 9%

40%

14%16%

7%9%

11%

30%

15%18%

9%13% 13%


FP&A ReportingAnalytics

FinanceAnalytics

WorkingCapitalAnalytics

Risk&ComplianceAnalytics

2013Survey

2014Survey

2015Survey

PercentageofFinanceAnalyticsScopeinMulti-processF&ABPODealsNumberofContracts



FTE41%

Transactional35%

Gain-sharing/Outcomebased

14%

Hybrid7%

Subscriptionbased3%

BEHINDTHENUMBERS

• ThepricinginF&ABPOcontinuesaspredominantlyFTE-based.However,buyersandserviceprovidersareincreasinglyexploringmodelsbeyondFTE-basedpricing,evenbeforerenewaldates.

• Mostofthetransaction-basedpricingmodelshaveoutcomesdefined,howeverpricingisnottiedtothebusinessoutcomes.

• Gain-share-basedpricingmodelhasbeengainingmomentumoverlasttwoyears.

• Ourdiscussionswithbuyersandserviceprovidersindicatethatserviceprovidersaremoreandmoreconfidentinrecommendinghybridorgain-share-basedpricingmodels.

• ThegrowinguseofplatformsandBPaaShasenabledmarginaluptakeinsubscription-basedpricing.

Current Pricing Models Deployed in F&A BPO

%F&ABPOContractsPricingConstruct– 2013to2015



51%

31%

16%12%

4%

FTEBased Transactional Hybrid Gain-sharing/Outcomebased

Subscriptionbased

FeeStructuresofAlltheF&ABPOContracts:2005to2015PercentageofContracts

Long-Term Contracts Keep FTE-Based Pricing Dominant, but Transaction- and Outcome-Based Are Increasingly Attractive Options for Buyers



FeeStructures(IncludingGainsharing)PercentageofContracts

54%45%

46%55%

2008 2015

%F&ABP

OCon

tracts

F&A BPO Is Shifting to Transaction and Business Outcome-Based Models from FTE-Based

Transactional/Hybrid/Gain-shareFTEExclusiveModel

BEHINDTHENUMBERS

• Weseeincreasedinterestinbreakingawayfromheadcount/FTE-basedmodelsinbusinessexecutivediscussions,however,procurementorgnazationsaretypicallystillfocusedonthismodelandlessopentoalternatives.

• Forarealstep-changehere,contractingwillneedtoberedefined—suchasownershipinthebusinessunitswithmoreofaframeworkapproachmanagedbyprocurementandlegalasstakeholdersversusdriversofcontracting.



As Relationships Get More Collaborative and Aligned on Business Outcomes, We Are Seeing an Increase in the Number of Sole-Sourced Deals Versus Competitive BidsNewF&ABPODeals,PercentageSoleSourcedvs.CompetitiveBidPercentageofDeals

NewF&ABPODeals(2015),CompetitiveBids– PercentageUseofAdvisorsPercentageofDeals

NewF&ABPODeals(2015),SoleSourced– PercentageUseofAdvisorsPercentageofDeals

25% 30% 35% 33%39%

75% 70% 66% 67%61%

2011 2012 2013 2014 2015

% F

&A

BPO

Con

trac

ts

CompetitiveBidSoleSourced No Advisor Used32%

Advisor Used68%

No Advisor Used59%

Advisor Used41%



Global F&A BPO MarketSize and Forecast


n UpdatedMarch,2016

n MarketsizingbasedonserviceproviderfinancialstoQ42015

n Sizingmethodology• HfS’smarketsizingreliesonaconsistentprimarymethodologythatisusedforeachservicecategory.HfS’sprimarymethodisasupplysidemodelthatbuildsmarketdimensions byestimating revenuesfromthemostsignificantserviceprovidersineachcategory.Thisisaugmentedbyspendingmodelsandcontracttrackingforeachspecificmarket.

n Forecastingmethodology• HfS’sforecastingcombineshistoricrevenuegrowthprojections,contractrunrateprojections,demandsidesurveydata,supplysidesurveydata,andeconomicprojections.

n Sizeandforecastupdatedquarterly

IT Services and BPO Market Sizing 2015–2020Scope and Method


n HfS’smainforecastassumptions:• GDPgrowthfor2016willbearound2.5%,witheconomicprospectsevenacrossglobalregions,andwithmorerecoveryexpected inadvancedeconomiesthanindevelopingones.

• Overall,anapproximate95%renewalrateonexistingoutsourcingdeals–renewalwithexistingornewprovider(rateofinsourcesetat5%).

• Renewalratesatapproximateaverage85%oforiginalcontractvalue(variesbytype).

• Wecurrentlyhaveavolumepredictionof15%foroveralloutsourcingduring2016.

• Weanticipatethatplatform-basedBPO/BPaaSwillcontinuetodrivenewoutsourcinginsmallandmid-sizedorganizations.

• Weexpecttoseemoreinterest inanalyticsandtheimprovementofend-to-enddatamanagementwithorganizations.Weexpectthistodriveconsultingopportunitiesandlong-termcontractswithallbackofficeBPOareas,particularlyF&A.

Main Assumptions


n ITServicestogrow2.2%in2016,2.6%CAGRto2020• Continuestobeatwo-speedmarketwithdigital-relatedtechnologiesgrowingatdoubledigitswith

traditionalservicesflatordeclining.• Consultingandintegrationspendingcontinuetocreepupdrivenbyaforementioneddigital.• ITinfrastructuremanagementcontinueswithdeclines inlegacyoutsourcingslowingbutstillnotfully

offsetbyupticksincloudadoption.• ApplicationDevelopmentandMaintenance(ADM)volumescontinuetoincrease temperedbypricing

pressureandsomeinsourcingbutthemarketcontinuestogrowfasterthanothersegmentsinITServices.

n BPOtogrowat4.2%in2016,4.0%CAGRto2020• Automationandplatform-basedAs-a-Servicemodelseatintotraditionalmarkets.• “Mid-market”F&Adealsareincreasingasseveralserviceprovidersworkwithsmaller scaledeals(sub

50FTEs).• MostF&AdealsarestartingwiththetraditionalFTE-pricingmodel,butseveralmaturingdealsare

evolvingtobecomeorincludemorevolume-basedandoutcome-basedpricing.• Wide-spreadexperimentationnowunderwaywithRoboticProcessAutomationinF&ABPO,withslow

movementtowardsadoptionacrossclientsandserviceproviders.• IncreasedbundlingofF&AandIT,especially inretailandconsumergoodsectors,howevertheindustry

isstilldominatedbymanylegacyF&ABPOdealsinneedofbetterautomationandanalytics.• ServiceProvidersunwillingtoinnovatewilllikelyexperience increase incompetitivere-bidsoverthe

next3-4years.

IT Services and BPO Market 2016–2020 Highlights


Global F&A BPO Market 2016 (Expenditure $B)

Multi-process$6.4

O2C$16.5

P2P$1.5

R2R$0.8

S2P$2.1

Source: HfS Research, 2016

TotalMarketSize~US$27.3B


Global F&A BPO Market 2015–2020 (Expenditure $B and Growth %)

6.4 7.0 7.8 8.3 8.9 9.6

16.5 17.017.4

18.218.9

19.6

1.51.6

1.71.9

2.02.2

0.80.8

0.91.0

1.11.2

2.12.3

2.42.7

2.93.1

4.5% 4.6% 4.7%5.0% 4.8% 4.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

$0

$5

$10

$15

$20

$25

$30

$35

$40

2015 2016 2017 2018 2019 2020

Grow

th(%

)

ANNUA

LEXP

ENDITU

RE$B


P2PR2RS2P

O2CMulti-processTotalF&AGrowth


Global F&A BPO Market Growth in 2016 and CAGR for 2015–2020

10.2%

2.8%

7.1%

10.4%

8.9%

8.6%

3.5%

7.5%

8.5%

8.3%

0% 2% 4% 6% 8% 10% 12%

Multi-process

O2C

P2P

R2R

S2P


2016CAGR


F&A BPO Services Market 2015–2020 by Region(Annual Expenditure $B )

Source: HfS Research, 2016 Note: APexJ isAsia Pacific except Japan

2729

3032

3436

0

5

10

15

20

25

30

35

40

2015 2016 2017 2018 2019 2020

ANNUALEXPEN

DITURE

$B

NorthAmerica LatinAmerica APexJ Japan EMEA Global


F&A BPO Services Market 2015–2020 ($B) by Region (CAGR % over time period)

5.1%5.5% 5.7%

6.1% 6.1%

7.9%

EMEA Global NorthAmerica APexJ Japan LatinAmerica

Source: HfS Research, 2016 Note: APexJ isAsia Pacific except Japan


F&A BPO Services Market 2015–2020 by Industry Sector(Annual Expenditure $B)

4.1 4.2 4.4 4.5 4.7 4.8

4.2 4.3 4.4 4.6 4.8 4.91.4 1.6 1.7 1.8 2.0 2.14.6 4.8 5.1 5.3 5.6 5.81.1 1.2 1.3 1.3

1.4 1.5

1.3 1.3 1.4 1.51.5 1.6

1.3 1.31.4 1.5

1.5 1.63.1 3.3

3.53.7

4.04.25.2

5.76.2

6.77.3

7.9

0.90.9

1.01.1

1.11.2

$0

$5

$10

$15

$20

$25

$30

$35

$40

2015 2016 2017 2018 2019 2020

MarketExpen

diture$Billion

Transportation&Logistics

Telecom,Software&Hi-Tech

Retail&Hospitality

PublicSector

Pharma,LifeSciences&HealthCare

Other

Manufacturing

Entertainment,Media&Publishing

Energy&Utilities

Banking/Insurance



F&A BPO Services Market 2015–2020 ($B) by Industry(% Growth over time period)


8.5%8.1%

6.0% 5.8%

5.0%4.6% 4.4%

3.5% 3.5%

Telecom,Softw

are&

Hi-Tech

Entertainm

ent,Med

ia&

Publish

ing

Retail&

Hospitality

Transportatio

n&

Logistics

Pharma,LifeSciences&

HealthCare

Manufacturin

g

PublicSector

Banking/Insurance

Energy&Utilities

Research Methodology

Confidential and Proprietary │Page58©2016 HfSResearch

Research Methodology

n Data was collected in Q4 2015 and Q1 2016, coveringbuyers, providers and advisors/influencers of Finance &Accounting Business Process Outsourcing Services.

§ TalesfromtheTrenches:Interviewswithbuyerswhohaveevaluatedserviceprovidersandexperiencedtheirservices.Somecontactswereprovidedbyserviceproviders,andotherswereinterviewsconductedwithHfSExecutiveCouncilmembersandparticipantsinourextensivemarketresearch.

§ Sell-SideExecutiveBriefings:Structureddiscussionswithserviceprovidersregardingtheirvision,strategy,capability,andexamplesofinnovationandexecution.

§ PubliclyAvailableInformation:Thoughtleadership,investoranalystmaterials,websiteinformation,presentationsgivenbyseniorexecutives,industryevents,etc.

ThisReportisBasedOn:

ParticipatingServiceProviders

DataSummary


HfS Blueprint Scoring: Finance As-a-Service

EXECUTION 100%QualityofAccountManagement Team 15%IncorporateFeedback 15%Quality ofServiceDelivery 15%Embedding Automation 10%IndustryDepth/TailoredSolutions&Services 5%Analytics &GeneratingActionableData 15%Ability toAttract&RetainKeySkills 15%FlexiblePricingModelsandContracting 10%

INNOVATION 100%Strategy/MovetoIntelligentAutomationinF&A 10%InvestinginFutureTalentand Technology(staff,skills,tools) 15%Innovation 10%Usefulness&QualityofTechnologytoSupportBusinessProcesses 15%Vision fortheFutureofFinanceAs-a-Service 15%Intelligent/CollaborativeEngagement 15%Ability toFind&ArticulateProblems/UseofAnalytics 10%Strategy andCapabilityforPlug&PlayBusinessServices 10%


Execution Definitions

EXECUTION Howwelldoestheserviceproviderexecuteonitscontractualagreement,andhowwelldoestheprovidermanagetheclient/providerrelationship?

QualityofAccountManagement Team Howengagedis theexecutiveandmanagementteamindefiningandmanagingthedeliveryofbusinessservices?

IncorporateFeedback Howhas theserviceprovidertakenfeedbackandincorporateditintothesolutionanddelivery?

Quality ofServiceDelivery Whatisthe clients’overallimpressionofthequalityofservice?

GeneratingActionableData Istheserviceprovidergeneratingdatathrough clientworkthatisaccessibleandactionablebytheclientorbyitselfonbehalfoforinpartnershipwithclients?

EmbeddingAutomation Is theserviceproviderusingautomation?

Industry Depth/TailoredSolutionsandServices How welldoestheserviceprovidertapintoindustry(sameorcross)practicesandexpertise?Anyindustryspecificsolutionsorservices?

Ability toAttract&RetainKeySkillsDoservicebuyers haveaccesstotheskillsandcapabilityneededtodeliverrelevant,continuous,qualitywork?Theworkforcemanagementanddevelopmentcapabilityoftheserviceprovider.

FlexiblePricingModelsandContracting How competitiveandflexibleareserviceprovidersindeterminingcontractpricing?Aretheywillingtomakeinvestmentsinclientsforlong-termgrowth?


Innovation Definitions

INNOVATION Innovationisthecombinationofimprovingservicesandbusinessoutcomes.

Strategy/MovetoIntelligentAutomationInF&A

Is theserviceprovidermovingupthematuritycurveofautomationwithroboticprocessautomation,cognitivecomputing,artificialintelligence,etc.?

Investing inFutureTalentandTechnologyIstheservice providerinvestingindevelopingtalentwithaneyetowardcapabilitiesthatwillimpactvalueinthefuture?Istheserviceproviderinvestingintheuseofdigitaltechnologiesinsolutions?Andthetalenttouseit?

Innovation Hastheservice providersharedorrecommendedideasorinitiativesthathaveresultedinstepchange?

Usefulness &QualityofTechnologytoSupportBusinessProcesses

Howeffectivelydoestheservice providerusethedigitaltechnologiessocial,mobile,automation,andcloudtodeliversolutionsandresults?

VisionforFinanceAs-a-Service Doestheservice providerhave,share,andengageindialogueregardingthefutureofF&Ainsourcing(e.g.,FinanceAs-a-Service)?

Ability toFind&ArticulateProblems/UseofAnalytics

Howeffectivelydoestheserviceprovideridentifyandarticulateproblemsandissues,andprovidesuggestionsorpartnertoexploresolutions?Is theserviceproviderofferingorprovidinganalytics?

Collaborative/IntelligentEngagementDoestheservice providerworkasapartnerincollaborationandincreasethevalueoftheengagementovertime?OrdoesitmostlytakedirectionanddeliverbasedonKPIs?Isdesignthinkinginuse?

Strategy andCapabilityforPlugandPlayBusinessServices

WhatdigitalplatformsdoestheserviceproviderusetodeliverFinanceAs-a-Service?Aretheyintegraltotheserviceprovider ’soffering(s)oradd-ons?Howpervasiveistheuptakeofthesedigitalplatformsbyclientstoday?Whatistheserviceprovider ’sfuturedigitalplatformstrategy?Howeffectivelydoestheservice providerpartnerwiththirdpartiesorintegrateacquisitionsforimpact?


Service Provider Analysis


Todistinguishserviceprovidersthatshowcompetitivedifferentiationinaparticularlineofdeliverywithprogressinrealizingthe“As-a-ServiceEconomy”ofbusinessoutcome–oriented,on-demandtalentandtechnologyservices,HfSawardstheseprovidersthe“As-a-ServiceWinner’sCircle”designation.

Guide to the Blueprint Grid

EXECUTION INNOVATION

As-a-ServiceWinner’s Circleshowexcellence recognizedbyclientsinthe8Idealsin executionandinnovation

Collaborative relationshipswithclients,servicesexecutedwithacombinationoftalentandtechnology asappropriate,andflexiblearrangements.

Articulatevisionanda“newwayofthinking,”haverecognizableinvestments infuturecapabilities,strongclientfeedback,and aredrivingnewinsights andmodels.

HighPerformersdemonstratestrongcapabilitiesbutlackaninnovativevisionormomentuminexecutionofthevision

Executesomeofthe followingareaswithexcellence:worthwhilerelationshipswithclients,servicesexecutedwith“greenlights,”andflexibilitywhenmeetingclients’needs.

Typically, describeavisionandplanstoinvestinfuturecapabilitiesandpartnerships forAs-a-Service,andillustratean abilitytoleveragedigitaltechnologiesand/ordevelop newinsightswithclients.

High Potentialsdemonstratevisionandstrategybuthaveyettogainmomentuminexecutionofit

Earlyresultsandproof points fromexamplesinnewserviceareasorinnovativeservicemodels,butlackscale,broad impact,andmomentuminthecapabilityunder review.

Well-plotted strategyandthoughtleadership,showcaseduseofnewertechnologiesand/orroadmap,andtalentdevelopmentplans.

ExecutionPowerhousesdemonstratesolid,reliableexecutionbuthaveyet toshowsignificantinnovation orvision

Evidence ofoperationalexcellence;however, stillmoreofadirectiveengagementbetweenaserviceprovideranditsclients.

Lack ofevidentvisionandinvestmentinfuture-oriented capability,suchasskillsdevelopment, “intelligentoperations,”ordigitaltechnologies.


HfS Blueprint Grid: Finance & Accounting As-a-ServiceINNOVA

TION

EXECUTION

ExcellentatInnovationandExecutionInvestinginInnovationtoChange

BuildingAllCapabilities ExecutionIsAheadofInnovation

AS-A-SERVICEWINNER’SCIRCLE

EXECUTIONPOWERHOUSES

HIGHPOTENTIALS

HIGHPERFORMERS

Accenture

arvato

Capgemini

Cognizant

EXL

Genpact

AegisHCL

HPEIBM

Infosys

OneSourceVirtual

WNS

TCS

WiproXchanging

Xerox

Sutherland


Major Service Provider Dynamics: HighlightsEXECUTION

• ActualDeliveryofServices:Withconsistent,qualitydeliveryandawayofaddressingfeedbackandcontinuousimprovementthatclientsappreciate,arvato,HCL,HPE,andSutherland standouthere.Xchanging clientsappreciatethediagnosticsandsteadycontinuousimprovementovertime.

• UsingAutomation:Everyserviceproviderisnowcommonlyautomatingroutineactivities,introducingitintoexistingandnewaccounts.IBM,Capgemini,Genpact,andXerox arethemostadvancedinincorporatingRPAintoworktheymanage.HPE hasastandoutstrategyformovingforwardhere.

• TalentDevelopment:Foramarketthatislookingtobetterleveragedigitaltechnologiesandisalwaysonthehuntforincreasedefficiencyandproductivity,thereisasurprisinglackofuniquefocusontalentdevelopment.Accenture standsoutherewithitstraininginautomationandindustryskills,asdoesWNS inIndia,andInfosys’specificefforttochangeitsculturewithdesignthinking.

• AccessibleandActionableDataandAnalytics:Weseemomentuminthemarketaroundembeddedandanalyticsasaservice,particularlywithAccenture,Cognizant,EXL,Genpact,IBM,TCS,andWNS.Thisapproachbuildsonalong-termvalueintheengagement.

• VerticalCapabilities:Forservicebuyerslookingforproviderswithindustrydepthandcontext,anumberofserviceproviderhave,andarecontinuingtobuildout,verticalcapability.Examples:WNSinTravel/Transport,Cognizant andSutherlandinHealthcare,andAegis inmanufacturing.

INNOVATION

• VisionforFinanceAs-a-Service:Accenture,EXL,Genpact,andIBM clearlyarticulateaforward-thinkingvisionforF&Athatbringstogetheranalyticaltalentandtechnology-basedsolutions.

• UsingTechnologytoSupportBusinessProcesses:TheuseoftechnologytosupportbusinessprocesseshascomealongwayinthepastfewyearsinF&A,bothproprietary(e.g.,Infosys)andincreasinglythroughpartnership(e.g.,CognizantEXL,andXerox).

• IntroducingIntelligentAutomationintoF&A:MovingbeyondmacrosandworkflowandintoRPAandcognitiveisstillrelativelynewinF&A.Accenture,IBM,andTCS aremostadvancedinboththeuseofRPAinFinanceandexperimentingwithcognitivecomputing.

• IntelligentandCollaborativeEngagement:Cornerstoneofincreasingvalueintheengagementovertimeiscollaboration.Cognizant,EXL,and IBMclientsallgaveexamplesofalignmentandsharedobjectivesandsolutions.

• PlugandPlayBusinessServices:TheseservicesfocusontheoutsetonaddressingaspecificactivityandoutcomeinFinance,andAegis inprocure-to-payutilitymodel,CapgeminiwithAs-a-Stack,HCLwithitsFinanceEnterprise-As-a-Service,XeroxwithitsAccountsReceivableofferingareallexamplesofearlytraction.Wiprohasmadeacquisitionsforindustryspecificcapabilityinthisarea,inhealthcareandcapitalmarkets.Andnow,OneSourceVirtualisenteringthemarketwithitsWorkday-centricBPaaS solution,basedonitsownexperience.

Confidential and Proprietary │Page66©2016 HfSResearch

Strengths Challenges

• Industry-Led Solutions: With 18years intheF&Amarket,Genpact hasmovedup thevalue chain byautomating within over100processes and developingdeep industry expertise thatclients appreciate, particularly inmanufacturing,pharma, and consumer products. Genpact’s “CFO andTransformation Services”approach, forexample, addresses keyneeds of CFOs in pharma and financialservices,which iscriticalin newrelationships.

• ExtremelyCompetent Sales Capability: Genpact hasbeen onamajor upswing,winning asuccession of recent deals inEurope and the USbynurturingconsultative sales executives.

• Focus onGlobal Business Services: Genpact’s iGBS, now adopted by severalclients, isfocused on embedding analytics, process integration and innovationinto GBSoperations toprovide ongoing support inan “As-a-Service” model.

• “Feel Good” Culture: HfS heard from clients thattheyfeel astrongculturalalignment withGenpact. Theyappreciate theinteraction withleaders anddeliveryteams, and canworkwith Genpact for thelong term. This hasbuilt alotof “forgiveness” factor from clients thatoften struggled intheearlydays ofF&A,where client expectations wereoften misaligned withoverly-aggressivepromises (an issue not unique toGenpact).

• LeanDigital: Genpact has evolved its traditional Lean SixSigma focus withDesign Thinking asamethod for identifying, aligning and addressing issues andopportunities. HfSsees LeanDigital as atransformative approach toaligndigitaltechnology and talentwithdesired business outcomes from F&Adelivery.Earlyfeedback from clients isencouraging.

• Challenge Legacy Clients and LegacyMindsets: While Genpact hasmade serious strides inacquiring newclients withatransformation-led approach, itneeds toalso besure toinfusefresh thinking and challenge thestatus quo inmany aging long-termclient engagements, whichwereconstructed during thelegacyera of labor-arbitrage deals atlowprice-points. Being abletoshift themodel and share theproductivity savingswith clients,while being apublic company, requires realfinesse and smartinvestments.

• TooMany Solution Offerings Confuse Clients: Genpact hasatendency toover-engineer itsservice offerings withrecentlaunches (for example) of “SmartEnterprise Processes,” “IntelligentOperations” and now“LeanDigltal.” Theservice provider needs tosimplify itsofferings andmarketmessages and stayconsistent.

• Break FromThe Culture of“Yes”: The valueof collaborativeengagements in theindustry isincreasing, and some of Genpact’sdeliveryteams, in thehabit ofworkingtofix problems and do“what isasked,” need tofindwaystoput requests andissues intocontext, separating outwhattheycan fix versuswhatshould beaddressed withthe client.

• Internal Communications: Some clients feel itcan takealongtimetogetananswer from Genpact, thattheorganization has toomanytowers thatneed toimprove interaction, such asbetween accountmanagement and delivery.

Genpact

Acquisitions /Partnerships Client Profile Service DeliveryOperations ProprietaryTechnologies

Acquisitions:• StrategicSourcing Excellence (2016)• Servicedelivery inBratislava, Slovakia

(2015)• Endeavour Software Technologies (2014)• HitachiManagement Partners (2014)Partnerships:• Arria NLG• Decisyon, Inc.• Top Image Systems• ATungsten Network• Automation Anywhere• RAGE Frameworks• OneNetwork Enterprises

Clientswithrevenue ranging from $1Bn–$100+ Billion

140+ F&ABPO clients, including: AircraftManufacturing Company, Leading BreweryCompany, Leading Energy Company, LeadingRetail Drugstores, Food& Beverage Company,Global Pharmaceutical Company

TargetIndustries:

CPG/ Retail, IndustrialManufacturingServices, HighTech, Healthcare ,LifeSciences, Banking, Financial Services,Insurance, CapitalMarkets

Headcount: ~25,000

Delivery Centers (47):• USA– 5%• UK• Latin America – 4%(Guatemala, Mexico, Brazil)

• Continental Europe – 11%(Czech Republic, Poland,Romania, Slovakia)

• India – 71%• China – 6%• Philippines – 2%• Others – 1%(Kenya, Japan)

• dSEP: DigitalSmartEnterprise Processes• ProcIndex: performs diagnostics• GenTrac: manages transition programs• SmartModeler: generates standard operating procedures• Financial Controllership Suite(FCS): for record-to-report• Accounts Receivable Management Suite(ARMS): forcollections

• Enterprise SupplierManagement (ESM): for accounts payable• Lifecycle Manager (PLM): casemanagement inGBS• Rapid Automation and Genpact’s Robotic Process Automation(RPA) Solutions

• Intelligent Process Insights Engine (IPIE)• Akritiv EnterprisePerformance Analytics (EPA)

BlueprintLeadingHighlights

• Collaborative Engagement• Incorporating Feedback• Delivering Industry-Specific

Solutions• Investing inFuture Talent&

Technology• Use of Technology toSupport

Business Processes

MakingstrategicinvestmentsthatclientsappreciatebybringingtogetherLean,Digital,andAnalyticsthandrivebusinessresultsintargetedindustriesWinner’s Circle

ValueChainCoverage:

ProcuretoPay

OrdertoCash

RecordtoReport

Finance Transformation

Analytics

• Automic• OmPrompt• BlackLine• Rosslyn Analytics• Deloitte• SAP• Oracle


Market Direction and Recommendations


Where to Next for F&A As-a-Service

n Increasing Interest in Making A “Cultural Match”: Companies will always be subject to changes inleadership, and as service providers are an increasingly integral part of a company’s operations, it’scritical to have alignment over time on the context, direction, and alignment between the servicebuyer and the service provider. As one executive put it, “we will have change in our leadership andthe challenge is to have new leaders on both sides continue to build on what we have started…thatwe don’t have to start over.”

n Investments in Talent and Technology: Effective use of technology to drive new business results andimpact is in the appropriate combination with talent. We see an increasing number of serviceproviders offering education and training opportunities to increase analytical, industry, andautomation capability of BPO professionals. This investment will pay off in driving new levels ofvalue with clients, and also in better engaging and retaining staff who tend to turnover quite quicklyin this industry.

n Analytics Embedded and As-a-Service: Where service buyers and service providers have partneredto stabilize and standardize processes, with the increasing use of automation to integrate datasources and drive predictable and higher quality data, and noting the increase in sophistication invisualization and reporting tools, we see an increasing number of both service provider-driven andcollaborative efforts to embed and better drive analytical insights and action plans in F&Aengagements.

WeseethefollowingasthemajortrendsthatwillfosterthefutureevolutiontoFinanceAs-a-Serviceoverthenext2–3years:


Where to Next for F&A As-a-Service (continued)

n Continued Centralization and Standardization: Over the next few years, more F&A work will getcentralized and include hybrid delivery. A number of service providers have been working withshared services centers for years (e.g., Accenture, Capgemini), and others have recently gainedmomentum and experience (e.g., Wipro). Across the board, we see service providers investing andpartnering for transformation capbility and tools and technology for dealing with disparatemanagement information systems, better visualization tools and partnerships, and more automationand real-time reporting capability.

n BPaaS Rising: The mid-market and smaller companies are already starting to transition to true“finance in the cloud” solutions, such as Workday or Salesforce FinancialForce. Process standards,security controls, workflows, and automation are native to these solutions, and enable companies tobe up and running with finance platforms quickly, and with much less of a capital outlay. As theindusty gets more experience and comfort in defining shared business outcomes, these SaaSofferings are forming the basis for the rise of “business process as a service” (BPaaS): solutions thatare designed and contracted to deliver specific business outcomes by a provider that defines andmanages the processes, supporting technology, and the talent executing the work. These solutionscan be attractive options to established enterprises looking for a new standard because of M&A orfaster access to a ready service for regional expansion, for example.

WeseethefollowingasthemajortrendsthatwillfosterthefutureevolutiontoFinanceAs-a-Serviceoverthenext2–3years:


Service Providers Need to “Reimagine” Finance and Be Willing to Take Risks to Move into Finance As-a-ServiceServiceProviders:Howaggressivelyisyourcompanytakingthefollowingmeasurestogeneratemoredigitally-alignedengagementswithyourclients?



Focus On How to Better Use Digital To Impact Business Outcomes Will Drive Take Up of Finance As-a-Service

IDEAL AS-A-SERVICEIDEALDEFINITION

NONEXISTENT

INITIAL EXPANSIVE EXTENSIVE ALLPERVASIVE

WriteOffLegacyUsingplatformbasedsolutions,DevOps,andAPIecosystemsformoreagile,lessexceptionorientedsystemsandprocesses 2016 2019

DesignThinkingUnderstandingthebusinesscontexttoreimagineprocessesalignedwithmeetingclientneeds 2016 2019

Brokers ofCapability

Orientinggovernance tosourceexpertisefromallavailablesources,bothinternallyandexternally,toaddresscapabilitygaps 2016 2019

CollaborativeEngagement

Ensuring relationshipsarecontractedtodrivesustainedexpertiseanddefinedoutcomes 2016 2019

IntelligentAutomation

Using ofautomationandcognitivecomputingtoblendanalytics,talent,andtechnology 2016 2019

Accessible&ActionableData

Applyinganalyticsmodels,techniquesandinsightsfrombigdata,real-time 2016 2019

HolisticSecurityProactivelymanagingdigitaldataacrossservicechainofpeople,systems&processes 2016 2019

Plug andPlayDigitalBusinessServices

Plugginginto“readytogo”business-outcomefocused, people/process/technologysolutionswithsecuritymeasures 2016 2019


2016-17 Recommendations: Enterprise Buyers

n MoveFasterandDeepertoAs-a-ServiceOfferingsfromServiceProviders:Asanenterprisebuyerkeeppushingyourserviceprovider(s)tomovetoanAs-a-Servicemodelthatgoesbeyondlaborarbitragetoincludeandofferyouabroadersetofchoicesforwhatsolutionsyouadoptandhowtheyinteractwithyourownretainedorganization.Don’tsettleforalong-termfixedmodelofsolutiondeliveryforfinanceservices,butpushyourserviceprovider(s)tobeflexibleandagilesothatfutureservicesofferingsbetteraligntoyourownpotentialfutureneeds.

n AdoptDesignThinking:Don’tdismissdesignthinkingassomethingthatisafadwithlittlebenefitforyourownoperations.Theopportunitiestositdownwithyourserviceprovider(s)tobetterunderstandthebusinesscontextinwhichyourcurrentprocessesoperateandwhatcanbedonetorealignorreimaginetheseprocessestoachievedifferentand/orbetterresultsisalwaysanexerciseworthundertaking.

n IncreasetheTrust:Pushyourserviceprovider(s)tobemorecollaborative,morevisionary,moreinclusiveandsharewithyou.Inturn,providethatsameapproachtotheserviceprovider(s).Extendthissamenewmindsettohowyouthinkofdataandphysicalsecuritytomakesurethatyourpoliciesonsecurityaren’tkeepingyoufromincreasingthevalueofyoursourcingengagements.Realizethatachievingtheresultingbusinessoutcomesiseasierinaclosepartnershipthaninaclosed-offzero-summindsetrelationship.So,workwithyourserviceprovider(s)inamannerthatfacilitateslong-termsuccessaswellandaskforitinreturn.


2016-17 Recommendations: Service Providers

n Be Proactive With As-a-Service Offering Design and Execution: At HfS,we are strong believers in the rapid move of BPO away from legacy “liftand shift” models toward an As-a-Service solution design and deliveryworld. As shown in our recent study, Finance In The Digital Age Financeexecutives are challenged to better manage regulatory compliance andfinancial reporting, better use financial and non-financial data, make theclose cycle more efficient, and have paperless audit trails. Work withthem to broker better combinations of talent and technology to drivebusiness results.

n Take A Chance With Design Thinking:While we have seen very little takeup of Design Thinking in Finance, it is a way to bring together servicebuyers and service providers to refresh or reimagine an existing/legacyengagement. It also is a way to set the scene with a new client. As weexplored in an HfS webinar panel discussion, you don’t need to be adesigner to do design thinking. You do need to be willing to take a risk.

n Implement Robotic Process Automation in Finance: Robotic processautomation (RPA) is certainly the topic of the moment in process deliverycircles, but other than invoicing and order management, the applicationof RPA inside end-to-end processes remains limited in finance andaccounting. HfS believes that RPA is a means to an end for financedelivery by decoupling labor and growth, especially in transactionalsupport, and service providers that adopt these technologies extensivelywill gain traction in the next few years.

AsaFinanceexecutiverationalized,“Whileinfinancewecancreatethemostcompellingbusiness casesfordigital,theorganizationismorelikelytochannelinvestmentintothingsthatmoredirectlytranslatetorevenuegrowth.”

Thiscreatesmoreofanimperativeforserviceproviderstohelpdefineanddrivethebusiness case,andalsoshowvaluebybeingwillingtoputthefirstfootforwardandinvestinupgradingtheirowndigital-drivenF&Acapabilitiestoshowimpact.

Formoreinsightonchallengesservicebuyersarefacing,refertotheHfSstudy,FinanceInTheDigitalAge, April2016.


Additional Materials: F&A Blogs, Webinars, and Research

Note:Morethan75%ofourpublishedresearchisaccessible forfreeandrequiresjustafewcheckboxesinoursimpleregistrationtodownload.ViewallofourF&Aresearchhere.

BLOGS

ShortReadOnline:

• Rescuing BPOFromIt’sTroughofBPOBoredom• It’sTimeWeStartedBeingAs-a-Service• WhyIt’sTimeForRoboticBPOToBreakTheMoldofLegacy

BPOEngagements• ConfusionAs-a-Service:TheMassiveDisconnectBetween

VisionandReality• AreServiceProvidersandAdvisorsDoingEnoughtoGetDigital

IntoF&A?

POVs(POINTS OFVIEW)

DownloadWithFreeRegisteredAccess:

• The Current Impact Of RPA in F&A BPO Engagements• F&A BPO ServiceMetric Analysis• The Role of Analytics for The CFO: A #CFOEXCHANGE SessionThe Road Less Traveled:Getting on the Path toAs-a-Service

• TheRiseofDesignThinking• InsightsFromEarlyBPOAdoptersofRoboticProcessAutomation

RESEARCHPAPERS

DownloadWithFreeRegisteredAccess:

• FinanceInTheDigitalAge• BewareoftheSmoke:YourPlatformisBurning

TheEvolutiontotheAs-a-ServiceEconomyPosesMajorOpportunitiesandThreatstoEnterprises

• TheBPOProfessionin2015:Today’sAccidentalCareerPath,Tomorrow’sCapabilityBroker

• HfSBlueprint2015:ProgressiveFinance&AccountingBusinessProcess

WEBINARREPLAY

• EvolvingtoaBalancedFinanceAsAServiceModel

• WhereistheActionTodayinIntelligentAutomation?

• WhyDesignThinkingCanSavetheServiceIndustryFromObsolescence


About the Authors


Phil Fersht

[email protected]

FounderandCEO,HfSResearch– Cambridge,MA

Overview§ PhilFershtisFounder andChief ExecutiveOfficerofleadingglobalanalystauthorityfortheservicesindustry, HfS

Research.Heisanacclaimedauthor, analystandvisionaryinGlobalBusinessServicesandOutsourcing, theDigitalTransformation ofenterprise operations andtalentstrategies.Fershtcoined theterm"TheAs-a-ServiceEconomy"whichisHfSResearch'svisionforthefutureoftheglobalservicesandoutsourcing industryandhasbecomewidelyadoptedbytheglobalservicesindustry.

§ Fershtfounded HfSResearchin2010andhasmasterminded thedevelopmentoftheHfSorganization asaleadinganalystforthefirm,inaddition tosteeringthebusinessoperations. Heisalsoauthor andcreator ofthemostwidely-readandacclaimedblogintheglobalservicesindustry, entitled “HorsesforSources”andnowenteringitsninth year,attractingoveramillion visitsperyearacrosstheglobe.AtHfS,hedirects thefirm’sresearch, advisoryandglobalknowledgecommunity, whichtodaytotalsover100,000 professionals andisservedbyarespected globalanalystteam.

§ Under Fersht'sstewardship, HfSResearch hasbecometheleadingindustry analystfirmforgrowinginfluence andvalue,basedontheresults of1093industryparticipants inthe2014AnalystValueSurvey.Hewasnamed"AnalystoftheYear2011”bytheInstituteofIndustryAnalystRelations(IIAR),winning thepremieranalystawardforasecondsuccessiveyear- themostcovetedglobalawardforindustry analystsintechnology andservicesindustry.In2012,theInternationalInstituteofAnalystRelations (IIAR)awardedHfSresearch asMostInnovativeAnalystFirm.

§ Fershtcontributes regularlytomediasuchasWallStJournal, BusinessWeek,Economist, TheTimesofIndiaandCIOMagazineandisaregularkeynotespeakeratmajorindustryevents,suchasNASSCOM,SourcingInterestsGroup andtheHfSBlueprint Sessions.

PreviousExperience§ Overthepast20years,FershthaslivedandworkedinEurope, North AmericaandAsia,wherehehasadvisedon

hundreds ofoperations strategy,outsourcing, andglobalbusinessservicesengagements.Duringhiscareer,PhilFershthasworkedatGartnerInc.(AMRResearch), directing thefirm’sBPOandITServicespractices andservedasmarketleaderforDeloitte Consulting’s BPOAdvisoryServices,wherehelednumerous outsourcing andoffshoring advisoryengagementswith Fortune500enterprises.HebeganhiscareerwithITanalystIDC.

Education• HereceivedaBachelor ofScience,withHonors, inEuropean Business&TechnologyfromCoventryUniversity, United

KingdomandaDiplôme Universitaire deTechnologie inBusiness &TechnologyfromtheUniversityofGrenoble, France.Healsohasadiploma fromtheMarketResearch SocietyintheUnitedKingdom.


OverviewBarbraSheridanMcGannisExecutiveVicePresident,BusinessOperationsResearch,atHfSResearch.Barbra’sscopeofworkcoversthebusinessprocessoutsourcingandemerging“As-a-ServiceEconomy,”aswelldivingintothemessuchastalentanddesignthinking,andindustryandfunctionalareasofHealthcare,LifeSciences,andPublicSector.

Barbra’sexperienceinthisindustryincludes:

§ Researching,analyzingandadvisingonmarketandcompetitivemovesandmeaning

§ Developingorganicandinorganicstrategiestodrivegrowthofnewandmatureofferingswithbusinessprocessservices

§ Buildingpartnershipsandstrategiesforjointsuccess

Herworkhistoryincludes20yearsatAccenture;andprioryearsinmarketingandnot-for-profitmanagement.

EducationBarbraearnedaBachelorofArtsdegreeinEnglishwithHonors,andwasrecognizedforoutstandingleadershipinVolunteerismwiththeChetPagniServiceAward,fromtheUniversityofSanDiego.She’salsocompletedpost-graduateexecutiveleadershipworkatNorthwesternUniversityandSmithCollege.

Barbra Sheridan McGannExecutiveVicePresident,HfSResearch– Chicago,IL

[email protected]


[email protected]

Overview

§ HemaSantoshisaPrincipalAnalystatHfSsupportingresearchinfinanceandaccountingandrelatedbusinessservices,andglobalin-housedeliverycenters.Shehasheldseniorresearchpositionsfororganizationssuchas,InformationServicesGroup,Accenture,WiproandITFinity Solutions.Herjourneyasaresearchprofessionalhasevolvedover14yearsbyworkingacrossfacetsofMIS,businessplanning,marketforecast,marketanalysis,competitiveintelligenceandlargestrategicinitiatives.

§ HemaunderstandsthenuancesanddynamicsoftheBPOandTechnologyindustry.Herexperiencerangesfromcustomresearch,quantitativestudiestoqualitativesecondaryresearchconductedamongfinancialservices,governmentandmedia&telecommunicationindustries.

Education§ SheholdsaBachelor ’sdegreeinCommercefromtheUniversityofMumbai,anMBA

specializinginMarketingfromManipal Universityandacertificateinfulltime‘ManagementProgramforWomenEntrepreneurs’fromtheIndianInstituteofManagement(IIM),Bangalore.

Hema SantoshPrincipal Analyst,HfSResearch– Bangalore,India


About HfS ResearchHfSResearch isTheServicesResearchCompany™—theleadinganalystauthorityandglobalcommunityforbusinessoperationsandITservices.Thefirmhelpsenterprisesvalidatetheirglobaloperatingmodelswithworld-classresearchandpeernetworking.

HfSResearchcoinedthetermTheAs-a-ServiceEconomy toillustratethechallengesandopportunitiesfacingenterprisesneedingtore-architecttheiroperationstothriveinanageofdigitaldisruption,whilegrapplingwithanincreasinglycomplexglobalbusinessenvironment.HfScreatedtheEightIdealsofBeingAs-a-Service asaguidingframeworktohelpservicebuyersandprovidersaddressthesechallengesandseizetheinitiative.

Withspecificfocusonthedigitizationofbusinessprocesses,intelligentautomationandoutsourcing,HfShasdeepindustryexpertise inhealthcare,lifesciences,retail,manufacturing,energy, utilities, telecommunications andfinancialservices. HfSusesitsgroundbreakingBlueprintMethodology™toevaluatetheabilityofserviceandtechnologyproviderstoinnovateandexecutetheEightIdeals.

HfSfacilitatesathrivinganddynamicglobalcommunityofmorethan100,000activesubscribers,whichaddsrichnesstoitsresearch.Inaddition,HfSholdsseveralServiceLeadersSummits everyyear,bringingtogetherseniorservicebuyers,providersandtechnologysuppliersinanintimateforumtodevelopcollective recommendationsfortheindustryandadddepthtothefirm’sresearchpublicationsandanalystofferings.

Nowinits tenthyearofpublication,HfSResearch’sacclaimedblogHorsesforSources isthemostwidelyreadandtrusteddestinationforunfetteredcollective insight,researchandopendebateaboutsourcingindustryissuesanddevelopments.HorsesforSourcesandtheHfSnetworkofsitesreceivemorethanamillionwebvisitsayear.

HfSwasnamedAnalystFirmoftheYearfor2016,alongsideGartnerandForrester,byleadinganalystobserverInfluencerRelations.

Finance & Accounting As-a-Service Business Process Outsourcing ... · benefitsachievedthrough BPO,...

Documents

Transcript of Finance & Accounting As-a-Service Business Process Outsourcing ... · benefitsachievedthrough BPO,...