Business Process as a Service: What can it do for my Mid-Market Company?


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Want to learn more about a BPaaS solution for your mid-market company?

Read this and see what the BPaaS experts from Sutherland Global Services and Everest Group have to say.

Who should read this–CEOs, CFOs, CIOs and Finance & Accounting and Info Tech executives and managers considering a BPaaS solutions for their organization.

Top 3 things you’ll learn:
1. What the value proposition of business process outsourcing and Cloud ERP is for SMBs
2. Five reasons why a BPaaS solution holds a lot of potential for SMBs
3. The pitfalls and best practices of F&A BPaaS

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  • Reliable and Scalable solution implemented at 14,000 customers2500+ Partners in over 40 Countries - ISVs developing industry-specific and horizontal product applications, creating an “app store” environment for almost any business need, no matter how specific.
  • Business Process as a Service: What can it do for my Mid-Market Company?

    1. 1. Business Process as a Service (BPaaS):What Can It Do for My Mid-Market Company?July 31, 2012
    2. 2. Today’s Speakers Saurabh Gupta leads Everest Group’s BPO research practice. His areas of expertise spans both horizontal BPO services (like F&A and procurement) as well as industry-specific BPO. Saurabh utilizes his strong analytical background and international research experience to create intellectual property and insights into outsourcing trends, implications and industry best practices. He is a published author in leading global services publications, and is a frequent speaker on the subject. He brings an all-rounded perspective on the BPO market leveraging his experience of working with all stakeholders in the global services market including end-clients, service providers, and other influencers like investors, industry associations, and technology providers. Saurabh Gupta, VP Everest Group BPO Research David is the Senior Vice President of Client Engagement for Sutherland’s Finance & Accounting Outsourcing Practice. With over 30 years of experience, David has worked as a Partner with Capgemini, and has served as General Manager of Worldwide Financial Services for Microsoft Corporation. During David’s 9 year tenure at Microsoft, his responsibilities were split between running two global businesses as Chief Credit Officer of Microsoft Corporation and President of Microsoft Capital Corporation. David and his team of 400 professionals managed a global asset of $8 billion in more than 180 countries. David Kaminski, SVPSutherland Global Services F&A Services Proprietary & Confidential. © 2012, Everest Global, Inc. 2
    3. 3. The Paradox of FAO Adoption in SMBs—BPaaS Emerging as the Answer Proprietary & Confidential. © 2012, Everest Global, Inc. 3
    4. 4. The FAO market is growing at a healthy rate Cumulative activity to date xx% Annual growth Activity in current year 80+ new FAO contract signings in 2011 FAO contract extensions in 2011 increased Number of contracts Number of contracts 13% 52% 18% 692 369 611 76% 81 243 126 95 105 516 611 243 138 2010 2011 2010 2011 Active 2011 ACV increased by 12% to US$3.9 billion Cumulative TCV in 2011 increased by 18% to US$ billion US$32.1 billion US$ billion 18% 12% 26% 18% 32.1 3.9 27.3 4.8 3.5 5.6 27.3 21.7 2010 2011 2010 2011Sample size: 692 multi-process FAO contracts signed as of December 2011 Proprietary & Confidential. © 2012, Everest Global, Inc. 4
    5. 5. FAO adoption in SMBs is starting to increaseFAO market adoption by buyer size over timeNumber of contracts100% = 341 252 70 SMB(Revenue less than 10% 9% US$1 billion 20% Mid-market(Revenue between 23% 28% US$1-5 billion)  The FAO market has been pioneered and dominated by large 36% buyers  More recently, the mid-market and SMBs has started to emerge Large buyers  SMBs accounted for 20% of the total (Revenue greater 67% 63% contracts signed in 2011 compared than US$5 billion) to ~10% in previous years 44% Up to 2007 2008-2010 2011Sample size: 672 multi-process FAO contracts signed as of December 2011 Proprietary & Confidential. © 2012, Everest Global, Inc. 5
    6. 6. FAO offers an attractive value proposition to SMBsTypical F&A related challenges faced by How FAO helps SMBs to overcome theseSMBs challengesTwin pressures of revenue growth and cost Flexible, scalable and low cost optionreduction Stable F&A operational environment withUnpredictable operational environment both in structured pricing, contracted serviceterms of costs and service quality levels, and KPIsLow F&A maturity; fragmented and broken Best practice F&A process with built-inprocesses productivity gainsManual processes with lack of robust Access to best-in-class F&A tools andtechnology technology with minimal upfront costsCash flow issues combined with low levels of Decision-making support leveraging the powerdata visibility and compliance resulting in of analytics. Potential to create positiveunfavorable business outcomes (sub-optimal business and cash flow impactDSO, EPD, and closing of books)Resource constraints in both recruitment and Access to new talent pools and greater abilityretention. F&A leadership involved in to focus on core area of businessoperational F&A Proprietary & Confidential. © 2012, Everest Global, Inc. 6
    7. 7. While SMBs account for 85% of all organizations across theglobe, the contribution of SMBs to the global FAO market isonly 10%Total number of organizations1 by size Total number of FAO contracts by sizeNumber of companies Number of contracts 100% = ~116,000 100% = 672 Large buyers2 SMB4 Mid-market3 3% 11% 10% Mid- 27% market3 63% Large buyers2 86% SMB41 Companies with revenue greater than ~US$100 million, subsidiaries in other businesses and countries have been considered as separate companies2 Revenue greater than US$5 billion3 Revenue between US$1 billion and US$5 billion4 Revenue less than US$1 billion Proprietary & Confidential. © 2012, Everest Global, Inc. 7
    8. 8. Lack of scale economies is the single biggestreason behind low FAO adoption in SMBsFactors influencing savings1 Factors influencing costsCosts Centralization StandardizationProductivity TransitionScale Systems The right balance between savings and investments is a major challenge in mid market Client acquisition and cost of sales for a service provider is also relatively high for SMBs as compared to large clients SMBs often lack expertise and maturity required for successful transition and change management1 Assumes no constraints on use of off-shore solutions Proprietary & Confidential. © 2012, Everest Global, Inc. 8
    9. 9. F&A BPaaS offerings hold a lot of potentialespecially for SMBs Lower TCO Single Faster throat to payback choke period Access to best Flexibility practices Proprietary & Confidential. © 2012, Everest Global, Inc. 9
    10. 10. BPaaS is fundamentally different from traditionalFAO models Traditional FAO IT+FAO F&A BPaaS BPaaS layers  Responsibility is  Responsibility is  Responsibility is on on service on service service provider provider provider Business processes  Owned and  Owned by buyer  Owned and maintained by and maintained by maintained by buyer service provider service provider Application  Owned and  Owned by buyer  Owned and Infrastructure maintained by and maintained by maintained by buyer service provider service provider Degree of standardization Low High Proprietary & Confidential. © 2012, Everest Global, Inc. 10
    11. 11. BPaaS offers a 30-40% reduction in TCO overtraditional FAO for SMBsTCO comparison between traditional vs. BPaaSmodel for SMBs Factors contributing to lower TCO in a BPaaS model versus traditional FAO  Access to technology that would Process 30-40% otherwise be expensive to implement 45% for SMBsservices costs  Minimizes ongoing support, maintenance, and software upgrade costs 80% Technology  Ability to leverage cloud economics costs 55%  Greater leverage of shared resources 20% across clients Traditional FTE-driven BPaaS  Higher offshoring potential given model greater standardization Proprietary & Confidential. © 2012, Everest Global, Inc. 11
    12. 12. Beyond TCO reduction, BPaaS offers additionalbenefits Faster Access Single payback Flexibility to best throat to period practices choke Reduction in  Pay-as-you-drink  Combines best-in-  Single hand-off deployment time allows SMBs class process with service because of highly – Scale up / down services with best-in- provider reduces standardized based on class technology governance and solution changing business solutions integration effort needs Consequently, SM – Minimize CAPEX  Earlier difficult for  Perfect for SMBs Bs start realizing and makes OPEX SMBs to procure that lack scale benefits quickly – proportional to these more relevant in business volumes services/solutions  Additionally, enabl the current – Accommodate es SMBs to economic scenario rapid growth and redeploy their proactively resources to more downturns critical activities Proprietary & Confidential. © 2012, Everest Global, Inc. 12
    13. 13. Best-practices in leveraging a BPaaS solution forF&A Brief description  Consider a holistic framework that includes all three layers –Build a TCO infrastructure, application, and business processesbusiness case  However, magnitude of savings depends on various other factorsTrade-off between  Understand limitations of standardized solutions. BPaaS model imposes someTCO reduction and constraints on service delivery flexibilityflexibility  Industry / client-specific customization would increase cost and implementation timeBe ready for change  Implementation involves significant changes at both technology andand have realistic operational level, requiring a strong governance process with strongexpectations stakeholder alignment, top-management buy-in, and focus on change managementHolistic assessment  Evaluate service provider carefully across each BPaaS componentof BPaaS provider individually as well as collectively  Things to consider – underlying software application, workflows / application wrappers, look-and-feel, service provider’s commitment and financial stability Proprietary & Confidential. © 2012, Everest Global, Inc. 13
    14. 14. CLARITY es—A Practical Solution for SMBs Proprietary & Confidential. © 2012, Everest Global, Inc. 14
    15. 15. Efficient Processes & a Lowered Cost Base withAdequate Support Systems are Pressing Needs Key Concerns Solutions• Inadequate systems to support business1 • Next-generation solutions with scalable process for growth strategies systems & processes designed to catapult growth• Employees, customers and partners need2 remote access (mobile, web) • Cloud systems for anywhere, anytime data access; Integrated systems providing real time visibility to processes• Require expertise across transformed3 functions and controls • Partner with specialized entities to leverage expertise• Require Business Insights through Analytics4 • Function specific tools to aid decision making with key insights• Need optimized & transformational business5 processes • Implement best-practice processes with higher efficiency• Need to control costs across the enterprise6 • Explore outsourcing activities to lower costs• Need to enable global/regional expansion with and complexity7 cross-culture & multi-jurisdiction business • Partner with an entity with global network, processes expertise and the right solution portfolio Proprietary & Confidential. © 2012, Everest Global, Inc. 15
    16. 16. CLARITY es Addresses Real SMB Market Needs by CombiningERP, Outsourcing & Procurement Optimization Cloud ERP BPO Services FINANCIAL MANAGEMENT • General Ledger • Accounts Receivable & Payable • Bank Management Cloud ERP • Budgetary Control • Shared Service Support • Compliance Management… Regional HUMAN CAPITAL MANAGEMENT outlets • Organizational & Workforce Management • Recruitment & Selection Corporate • Development, Training & Performance center Management • Employee Self Service Portal • Expense Management… CLARITY es Cloud SOLUTION • ERP Modules: - Financial Management PROCUREMENT & SOURCING - Human Capital Management - Procurement & Sourcing • Direct & Indirect Procurement - Sales & Marketing (CRM) • Purchase Requisitions - Project Management & Accounting • Supplier Relationship Management - Project Management • Vendor Self Service Portal… - Supply Chain Management - Production/Manufacturing CUSTOMER CARE - Business Intelligence & Reporting • Inbound/ Outbound Sales • Managed Network Services • Help Desk • Infrastructure Services • Collections… Proprietary & Confidential. © 2012, Everest Global, Inc. 16
    17. 17. CLARITY es Delivers Significant Additional BenefitsCompared to Any Other Competing Solution Cloud ERP BPO Services• Faster implementation due to the ‘Rapid On’ • Gain simplicity, agility and efficiency model - Adoption of best practices based on a proven - ‘Go Live’ in as little as 30 days methodology• Reduced IT costs, complexity and maintenance • Significantly reduced ERP implementation risk - Elimination of all on-premise ERP hardware - Business processes will be handled by trained personnel• Anywhere, anytime access to critical information • Labor cost arbitrage and perpetual operational efficiency• Greater control resulting from improved real- - Ongoing cost reduction time visibility • Access to insightful and powerful F&A• Global, scalable and customizable to system technology, resulting in a platform for rapid growth Sutherland will contract to agreed business case savings Proprietary & Confidential. © 2012, Everest Global, Inc. 17
    18. 18. What Differentiates Microsoft Dynamics AXFamiliar Look and Feel  ―Enterprise applications have traditionally been at cross purposes: the more complex the processes they support, the more difficult they are for users to learn and adopt. With Dynamics AX 2012, Microsoft adds support for greater complexity while making work simpler for administrators, developers, and end users.‖ Nucleus Research (April 2011)Named an ERP Leader  ―Microsoft Dynamics AX is positioned as one of two solutions in the Leaders quadrant of this Magic Quadrant. Its ability to execute is proven by a long track record and above-average growth rates in the midmarket, its intuitive and easy-to-learn and use Microsoft Office-like UI, and by its functionality, which is a healthy mix of strong out-of-the-box functionality for the selected industries, combined with industry- and customer-specific functionality built by or together with partners.‖ Gartner Inc. (Dec. 2010)  ―Microsoft (Dynamics AX) enters the Leader band for the first time based principally on the strength of its strategy, including a top three product and go-to-market strategy as well as market-leading ownership costs.‖ Forrester Research (August 2010)Targeting Tier 1 ERP  ―The products enhanced flexibility and usability will position it well in deals at the margins of the enterprise category—companies with $500 million to $2 billion in revenues.‖ Forrester Research (May 2011) Proprietary & Confidential. © 2012, Everest Global, Inc. 18
    19. 19. Why CLARITY es? Established Partner Guaranteed Solution• Leading provider of BPO services since 1986 for Retail, • Time-tested solution Microsoft Dynamics AX from trusted Tech., Telecommunications, Financial Services and other vendor with full service support from Microsoft Gold certified industry verticals partner - Profitable and strong balance sheet; zero debt • Easy integration with MS Windows; convenience of - Globally distributed delivery capacity across four upgrades geographies • 12,000 installations globally• ~3000 FTE across Finance & Accounting, Human Capital • 50+ installations on cloud growing at triple digit rates Mgmt. & Procurement, ~30K FTE in CRM practice delivering services from four geographies with industry • Industry specific Dynamics AX solutions certifications • Familiar to your people, easy to adopt, enjoyable to use PCI Impeccable Industry References “After working with Sutherland for the past year I am extremely impressed with their ability to provide great talent and world class results. Sutherland has proven committed, reliable and greatly increased our efficiency.” Leading Global Software Solution provider “As a CFO, it is easy to be drawn into the day to day back office activities when I really need to be focused on our core competencies to grow the business, and our partnership with Sutherland allows me to focus more on strategy.” Leading Real Estate Firm Proprietary & Confidential. © 2012, Everest Global, Inc. 19
    20. 20. What CLARITY es Can Do for YouLower TCO for ERP due to elimination of on-premise hardware costsGreater control through ―on-demand‖ reports across activitiesBetter planning leading to consolidated procurement and reduced indirect spendHigher centralization eliminating regional FTEsG&A reduction due to outsourcing of back office operationsLean corporate office reducing FTE costs and associated overheadsAccess to state-of-the-art technology Proprietary & Confidential. © 2012, Everest Global, Inc. 20
    21. 21. Thank You for Your Time & Please Download OurMost Recent Whitepaper David Kaminski—Moderator Senior Vice President, Client Engagement Finance & Accounting Outsourcing Sutherland Global Services Saurabh Gupta—Speaker Vice President BPO Research Practice Everest Group The Paradox of FAO Adoption in SMBs: BPaaS Emerging as the Answer Proprietary & Confidential. © 2012, Everest Global, Inc. 21