Business Process as a Service: What can it do for my Mid-Market Company?1. Business Process as a Service (BPaaS):
What Can It Do for My Mid-Market Company?
July 31, 2012
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, SVP
Sutherland Global Services
F&A Services
Proprietary & Confidential. © 2012, Everest Global, Inc. 2
3. The Paradox of FAO Adoption in SMBs—
BPaaS Emerging as the Answer
Proprietary & Confidential. © 2012, Everest Global, Inc. 3
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 2011
Sample size: 692 multi-process FAO contracts signed as of December 2011
Proprietary & Confidential. © 2012, Everest Global, Inc. 4
5. FAO adoption in SMBs is starting to increase
FAO market adoption by buyer size over time
Number of contracts
100% = 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 2011
Sample size: 672 multi-process FAO contracts signed as of December 2011
Proprietary & Confidential. © 2012, Everest Global, Inc. 5
6. FAO offers an attractive value proposition to SMBs
Typical F&A related challenges faced by How FAO helps SMBs to overcome these
SMBs challenges
Twin pressures of revenue growth and cost
Flexible, scalable and low cost option
reduction
Stable F&A operational environment with
Unpredictable operational environment both in
structured pricing, contracted service
terms of costs and service quality
levels, and KPIs
Low F&A maturity; fragmented and broken Best practice F&A process with built-in
processes productivity gains
Manual processes with lack of robust Access to best-in-class F&A tools and
technology technology with minimal upfront costs
Cash flow issues combined with low levels of
Decision-making support leveraging the power
data visibility and compliance resulting in
of analytics. Potential to create positive
unfavorable business outcomes (sub-optimal
business and cash flow impact
DSO, EPD, and closing of books)
Resource constraints in both recruitment and
Access to new talent pools and greater ability
retention. F&A leadership involved in
to focus on core area of business
operational F&A
Proprietary & Confidential. © 2012, Everest Global, Inc. 6
7. While SMBs account for 85% of all organizations across the
globe, the contribution of SMBs to the global FAO market is
only 10%
Total number of organizations1 by size Total number of FAO contracts by size
Number 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%
SMB4
1 Companies with revenue greater than ~US$100 million, subsidiaries in other businesses and countries have been considered as separate companies
2 Revenue greater than US$5 billion
3 Revenue between US$1 billion and US$5 billion
4 Revenue less than US$1 billion
Proprietary & Confidential. © 2012, Everest Global, Inc. 7
8. Lack of scale economies is the single biggest
reason behind low FAO adoption in SMBs
Factors influencing savings1 Factors influencing costs
Costs Centralization
Standardization
Productivity
Transition
Scale
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 management
1 Assumes no constraints on use of off-shore solutions
Proprietary & Confidential. © 2012, Everest Global, Inc. 8
9. F&A BPaaS offerings hold a lot of potential
especially for SMBs
Lower
TCO
Single Faster
throat to payback
choke period
Access to
best Flexibility
practices
Proprietary & Confidential. © 2012, Everest Global, Inc. 9
10. BPaaS is fundamentally different from traditional
FAO 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. BPaaS offers a 30-40% reduction in TCO over
traditional FAO for SMBs
TCO comparison between traditional vs. BPaaS
model 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 SMBs
services 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. Beyond TCO reduction, BPaaS offers additional
benefits
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. Best-practices in leveraging a BPaaS solution for
F&A
Brief description
Consider a holistic framework that includes all three layers –
Build a TCO infrastructure, application, and business processes
business case However, magnitude of savings depends on various other factors
Trade-off between Understand limitations of standardized solutions. BPaaS model imposes some
TCO reduction and constraints on service delivery flexibility
flexibility Industry / client-specific customization would increase cost and
implementation time
Be ready for change Implementation involves significant changes at both technology and
and have realistic operational level, requiring a strong governance process with strong
expectations stakeholder alignment, top-management buy-in, and focus on change
management
Holistic assessment Evaluate service provider carefully across each BPaaS component
of 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
15. Efficient Processes & a Lowered Cost Base with
Adequate Support Systems are Pressing Needs
Key Concerns Solutions
• Inadequate systems to support business
1 • Next-generation solutions with scalable
process for growth strategies systems & processes designed to catapult
growth
• Employees, customers and partners need
2
remote access (mobile, web) • Cloud systems for anywhere, anytime data
access; Integrated systems providing real time
visibility to processes
• Require expertise across transformed
3
functions and controls • Partner with specialized entities to leverage
expertise
• Require Business Insights through Analytics
4
• Function specific tools to aid decision making
with key insights
• Need optimized & transformational business
5
processes • Implement best-practice processes with higher
efficiency
• Need to control costs across the enterprise
6
• Explore outsourcing activities to lower costs
• Need to enable global/regional expansion with and complexity
7
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. CLARITY es Addresses Real SMB Market Needs by Combining
ERP, 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. CLARITY es Delivers Significant Additional Benefits
Compared 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. What Differentiates Microsoft Dynamics AX
Familiar 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 product's 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. 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. 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. Thank You for Your Time & Please Download Our
Most Recent Whitepaper
David Kaminski—Moderator
Senior Vice President,
Client Engagement
Finance & Accounting Outsourcing
Sutherland Global Services
david.kaminiski@sutherlandglobal.com
Saurabh Gupta—Speaker
Vice President
BPO Research Practice
Everest Group
saurabh.gupta@everestgrp.com
The Paradox of FAO Adoption in SMBs: BPaaS Emerging as the Answer
Proprietary & Confidential. © 2012, Everest Global, Inc. 21
Editor's Notes 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.