Finance and Accounting Outsourcing (FAO)
Market Update: February 2009 – Preview Deck
Topic: Moving Beyond the Bottom-Line: Industry-
Specific FAO Solutions
Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0322

Table of contents (page 1 of 2)
Topic Page no.
Section I: Background and scope of research 4
Section II: Summary of key messages 5
Section III: Understanding industry-specific FAO 8
Summary 9
Definition of industry-specific FAO 10
Key differences between industry-specific and traditional FAO 13
Buyer and supplier drivers for industry-specific FAO 14
Levels of industry-specificity 18
Adoption of industry-specific FAO on a goods-services spectrum 20
Nature and type of industry-specific F&A processes 22
Section IV: Industry-specific FAO in the retail space 24
Summary 25
FAO adoption in retail 26
Retail pressures supporting FAO adoption 27
Retail FAO case study 28
Corporate and operational retail F&A processes 29
Buyer adoption trends and retail FAO contract characteristics 31
FAO supplier landscape in retail 33
Level of industry-specificity in retail FAO offerings 34
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0322

Table of contents (page 2 of 2)
Topic Page no.
Section V: Industry specific FAO in the healthcare provider space 35
FAO adoption in healthcare 37
Healthcare provider pressures supporting FAO adoption 39
Healthcare provider FAO case study 40
Corporate and operational healthcare provider F&A processes 41
Buyer adoption trends and healthcare provider FAO contract characteristics 43
FAO supplier landscape in healthcare provider 45
Level of industry-specificity in healthcare provider FAO offerings 47
Section VI: Implications of industry-specific FAO on key stakeholders 48
Implications for suppliers 49
Implications for buyers 51
Section VII: Appendix 52
Glossary of key terms 53
Additional FAO research recommendations 57
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0322

Background and scope of the research
The Finance and Accounting Outsourcing (FAO) market has traditionally been considered as a
horizontal service offering with a value proposition driven by cost-savings and efficiency gains. However,
as market requirements intensify, FAO solutions are increasingly becoming more industry specific. The
nature of these changes can range from the adoption of industry-specific terminology to more
asset-intensive approaches in the form of dedicated industry-specific platforms.
As the demarcation between horizontal and industry-specific offerings blurs, the FAO value proposition
is expanding beyond the bottom line to more directly target clients’ top-line performance. This study lays
out a comprehensive framework for the FAO market’s move toward industry specificity and then applies
this framework by taking an in-depth look at two key industry segments, namely retail and healthcare
providers.
As this move toward industry-specific FAO matures and evolves further, the Everest Research Institute
predicts FAO offerings will increase especially in the services sector and the Order-to-Cash (O2C)
process. Also, industry-specific FAO will emerge as an opportunity for FAO suppliers to create
distinctive positioning in an increasingly competitive market.
Scope of the research:
Third-party multi-process FAO contracts with a minimum of two F&A processes in outsourcing scope,
over US$1 million in Annual Contract Value (ACV), and a minimum contract term of three years
380+ multi-process FAO contracts including 28 retail FAO and 18 healthcare provider contracts
signed as of November 2008
750+ publicly announced industry-specific BPO contracts signed as of December 2008
Focused executive interviews with key FAO suppliers including ACS, Cognizant, HOV, Perot
Systems, VWA, and WNS
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0322

Abbreviated summary of key messages
The Everest Research Institute defines industry-specific FAO offerings as
Understanding
involving horizontal “corporate” F&A processes integrated with elements or
industry-
entire platforms of “operational” industry-specific F&A processes and activities
specific FAO
There is an emerging push and pull towards increasing industry-specificity in
FAO solutions. Industry-specific FAO promises to enhance the traditional FAO
value proposition with the ability to influence an organization’s overall cash flow
There are three levels of increasing industry-specificity in FAO: Industry relevant
offering, industry-enabled offering, and industry platform offering
While the CFO/controller almost always is the key decision maker, business unit
and operational leaders become important influencers in key outsourcing
decisions
Industry-specific FAO solutions are more suited to the services-oriented
industries. While the manufacturing industry has been at the forefront of FAO
adoption, the services sector is emerging as industry-specificity in FAO has
increased
The importance, complexity, and required standardization of a process
determines the level of industry specificity. Within the services sector, the O2C
process has the maximum industry specificity
The research study also describes the buyer pain-points, FAO trends, level of industry-specifity, and
The research study also describes the buyer pain-points, FAO trends, level of industry-specifity, and
the FAO supplier landscape for two industries ––healthcare providers and retailers
the FAO supplier landscape for two industries healthcare providers and retailers
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0322

The industry-specific FAO report has over 50 pages of
relevant information; below are four charts to illustrate
the depth of the report ILLUSTRATIVE
Industry-specific process requirements in FAO Level of industry-specificity in FAO
Industry-specific requirements
Pure services
Corporate F&A in corporate F&A
Increasing level of
Process 1 Process A
Sub-process 1 Sub-process A
industry-specificity
Sub-process 2 Sub-process B
Sub-process 3 Sub-process C
Services-goods spectrum
Level 3:
Process 2 Process B
Level 2:
Sub-process 1 Sub-process A
Level 1: Industry platform
Sub-process 2 Sub-process B
Industry enabled
Sub-process 3 Sub-process C
Industry relevant
Process 3 Process C
Sub-process 1 Sub-process A
Retail
Supplier 1 Supplier 3 Supplier 5 Supplier 7
Sub-process 2 Sub-process B
Sub-process 3 Sub-process C
Operational F&A
Supplier 2 Supplier 4 Supplier 6
Process 1 Process 2 Process 3 Process 4
Sub-process 1 Sub-process 1 Sub-process 1 Sub-process 1
Sub-process 2 Sub-process 2 Sub-process 2 Sub-process 2
Sub-process 3 Sub-process 3 Sub-process 3 Sub-process 3
Pure products
Adoption of FAO and industry-specific BPO on a FAO supplier landscape by industry
services-goods spectrum 100% = xx xx
Pure services Others
100% = xx xx
VWA
Financial services
Services-goods spectrum
Healthcare
Travel & logistics
ACS
Telecom
Retail
Energy & utilities
Hi-tech Accenture
Active ACV as of Nov Active ACV as of Nov
Manufacturing
2008 2008
Healthcare providers Overall FAO market
FAO Industry-specific BPO
Pure products
Source: Everest Research Institute (2009)
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0322

Appendix: Additional FAO research recommendations
The following documents are recommended for additional insight on the topic covered in this Research Report. The recommended
documents either provide additional details on the topic or complementary content which may be of interest
1. Understanding the Waking Giant: The Mid-Market and FAO (ERI-2008-1-R-0279); 2008. The emerging mid-market in FAO presents a new
set of challenges and opportunities for both buyers and suppliers. The objective of this report is to assist key stakeholders in understanding the
changing dynamics of the mid-market for FAO and help them identify value creation opportunities as well as identify potential risks involved
2. FAO Market Growth Targets a Broader Value Proposition – A mid year review (ERI-2008-1-W-0278); 2008. Over the past several years
we have seen the market expand its circle of appeal to include a wide-range of industries, geographies, and buyer sizes. Driven by evolving
market circumstances, the FAO curve has lasted longer than expected. This whitepaper summarizes the highlights of the FAO market in the
first half of 2008 and offers some guidance on what to expect in 2009
3. Finance & Accounting Outsourcing (FAO) Contract Characteristics (ERI-2008-1-R-0259); 2008. This research provides a comprehensive
coverage of the characteristics of FAO contracts. The report includes detailed analyses of FAO market size and buyer adoption, FAO contract
profiles and FAO solution design. Finally, the report discusses key implications for buyers and suppliers
4. Finance & Accounting Outsourcing (FAO) Annual Report (ERI-2008-1-R-0245); 2008. This research includes comprehensive coverage of
the 2007 FAO market including market size and buyer adoption, current contracts characteristics, supplier landscape, emerging growth drivers.
The report also summarizes the key insights and implications for the stakeholders
For more information on this and other research published by the Everest Research Institute,
please contact us:
Katrina Menzigian, Vice President: kmenzigian@everestgrp.com
Saurabh Gupta, Research Director: sgupta@everestgrp.com
Ateendra Dabas, Senior Research Analyst: adabas@everestgrp.com
asahni@everestgrp.com
Ankur Sahni, Research Analyst:
FAOresearch@everestgrp.com
FAO team:
Everest Research Institute
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13455 Noel Road, Suite 2100 Phone: +1-214-451-3110
Dallas, TX 75240 E-mail: info@everestresearchinstitute.com
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ERI-2009-1-PD-0322

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