Effectively transitioning your finance processing activities to offshore<br />CFO Event, Celtic Manor, 5 July 2011<br />Da...
SESSION OBJECTIVES<br />Through a case study on Logica’s finance processing transformation programme and sharing your own ...
Resolving the common problems that arise from the offshore transition.
How does one best cope with transitioning unaligned processes and structures to shared service centres?</li></ul>© Copyrig...
LOGICA’S FINANCE PROCESSING CHANGE PROGRAMME OVERVIEW<br />In 2009, Logica commenced a global transition programme to stan...
Accounts receivable (customer set up, billing, cash allocation, reporting)
Timesheets & expenses (processing and queries)
Intercompany (reconciliation, postings, invoice creation)
Banking (manual payments, reconciliations, reporting)
General ledger (fixed assets, payroll journals)
Management reporting</li></ul>© Copyright Logica 2011.  All rights reserved<br />
Morocco<br />Philippines<br />India  Chennai, Bangalore<br />LOGICA’S OFFSHORE CENTRES<br />© Copyright Logica 2011.  All ...
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Effectively transitioning your finance processing activities to offshore

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Effectively transitioning your finance processing activities to offshore

By Dave Humphries, Logica plc

www.CFOevent.com

Published in: Economy & Finance, Business
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Effectively transitioning your finance processing activities to offshore

  1. 1. Effectively transitioning your finance processing activities to offshore<br />CFO Event, Celtic Manor, 5 July 2011<br />Dave Humphries, Logica plc<br />
  2. 2. SESSION OBJECTIVES<br />Through a case study on Logica’s finance processing transformation programme and sharing your own experiences, we will explore:<br /><ul><li>The benefits (financial and otherwise) of moving your finance processing activity to offshore shared service cost centre(s).
  3. 3. Resolving the common problems that arise from the offshore transition.
  4. 4. How does one best cope with transitioning unaligned processes and structures to shared service centres?</li></ul>© Copyright Logica 2011. All rights reserved<br />
  5. 5. LOGICA’S FINANCE PROCESSING CHANGE PROGRAMME OVERVIEW<br />In 2009, Logica commenced a global transition programme to standardise finance transaction processes and move as much as possible offshore.<br />Scope:<br /><ul><li>Accounts payable (invoice processing, payment, queries)
  6. 6. Accounts receivable (customer set up, billing, cash allocation, reporting)
  7. 7. Timesheets & expenses (processing and queries)
  8. 8. Intercompany (reconciliation, postings, invoice creation)
  9. 9. Banking (manual payments, reconciliations, reporting)
  10. 10. General ledger (fixed assets, payroll journals)
  11. 11. Management reporting</li></ul>© Copyright Logica 2011. All rights reserved<br />
  12. 12. Morocco<br />Philippines<br />India Chennai, Bangalore<br />LOGICA’S OFFSHORE CENTRES<br />© Copyright Logica 2011. All rights reserved<br />
  13. 13. CHANGE PROGRAMME OVERVIEW (CONTINUED)<br /><ul><li>Multiple ledger systems and processes a legacy of acquisition
  14. 14. Businesses have completed phase 1 – core service transition; phase 2 being implemented to (a) mop up non-core; and (b) standardise processes that have been transitioned
  15. 15. Around 70% of all such processing activity is now undertaken offshore (270 pp)
  16. 16. Annual cost savings of £5 million realised; one-off costs of transition and restructuring of £2 million
  17. 17. Further benefits to be realised through process standardisation
  18. 18. Governance through programme team supported by local CFO’s and via SLA’s
  19. 19. Offshore finance processing led by global director; local FC responsible for onshore relationship with offshore</li></ul>© Copyright Logica 2011. All rights reserved<br />
  20. 20. BENEFITS EXAMPLE<br /><ul><li>Illustrative costs above relate to annualised salary and benefits and social security but not infrastructure.
  21. 21. Social security costs in certain European countries significantly impact on the overall cost of service provision.
  22. 22. Transfer costs typically equate to 3-4 months of offshore salary for process documentation, knowledge transfer, training of the team offshore and exclude onshore retention payments and restructuring costs.
  23. 23. Retention costs can vary significantly according to custom and practice.
  24. 24. Restructuring costs depend on service, contract, jurisdiction, custom and practice.</li></ul>© Copyright Logica 2011. All rights reserved<br />
  25. 25. OTHER BENEFITS<br /><ul><li>Headcount arbitrage from work quality and process improvement (20-40% lower headcount; 50% lower cost of service)
  26. 26. Control improvement and risk reduction
  27. 27. Process expertise
  28. 28. Rigour to workflow and control including separation of responsibilities
  29. 29. Reduced onshore management time
  30. 30. Special tax treatments and/or preferential cost rates</li></ul>© Copyright Logica 2011. All rights reserved<br />
  31. 31. COMMON OFFSHORE CHALLENGES<br /><ul><li>Restructuring costs and long service entitlements
  32. 32. Inflation, FX and attrition
  33. 33. Cultural differences and pro-activity
  34. 34. Language
  35. 35. Effective process transfer
  36. 36. Local risk profile – political volatility, climate
  37. 37. Local resistance to change
  38. 38. Whole business change (not just finance)
  39. 39. Move to “gold standard” service</li></ul>© Copyright Logica 2011. All rights reserved<br />
  40. 40. RECOMMENDED GOOD PRACTICE<br /><ul><li>Use existing near shore and offshore locations
  41. 41. Importance of local management/leadership
  42. 42. Offshore is an extension of your team
  43. 43. Accept but manage attrition – training and documentation
  44. 44. Multiple sites for resilience
  45. 45. Invest in process and knowledge transfer
  46. 46. Experienced change programme leadership
  47. 47. Maintain onshore/offshore relationships
  48. 48. Business ownership
  49. 49. Benchmark existing performance before you transfer</li></ul>© Copyright Logica 2011. All rights reserved<br />
  50. 50. TRANSITIONING UNALIGNED PROCESSES AND SYSTEMS<br /><ul><li>Processes do not have to be perfect to transfer BUT should not be broken
  51. 51. “Ship then Fix” “Fix then Ship” “Ship and fix”
  52. 52. Offshore starts with mirror systems and processes
  53. 53. Alignment versus cost benefit?
  54. 54. Change programme both onshore and offshore</li></ul>© Copyright Logica 2011. All rights reserved<br />
  55. 55. RECAP ON OFFSHORE TRANSITION<br /><ul><li>Substantial benefits are available from offshore provision of finance processing activity
  56. 56. 50% plus cost benefit, process rigour and control improvement, local cost/tax benefits
  57. 57. Generally not something to be undertaken lightly as there are many challenges
  58. 58. Cost/benefit, cultural difficulties, local risk (onshore and offshore)
  59. 59. Implementing good practise can underpin success
  60. 60. Know the environment, invest in leadership and process transfer, locate for the long term
  61. 61. Can move unaligned processes but recommend don’t fix andship simultaneously</li></ul>© Copyright Logica 2011. All rights reserved<br />
  62. 62. Thank you<br />© Copyright Logica 2011. All rights reserved<br />

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