The Many Hats of the Finance Director & CFO: Is Outsourcing a Distraction or Solution?
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Do you find yourself wearing entirely too many hats as the CFO or Finance Director? Read this presentation to learn how Finance & Accounting outsourcing can help you manage all the many areas for which you are responsible! Who should read this—C-level executives and Finance Directors seeking to learn if outsourcing is the right solution for their organization Top 3 things you’ll learn: 1. What and where you could start in your outsourcing journey 2. How to address some of the risks 3. Look at some of the potential benefits
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The Many Hats of the Finance Director & CFO: Is Outsourcing a Distraction or Solution?
- 1. Many Hats of the CFO: Is Outsourcing a Distraction or Solution? ICAEW FD Conference 16th May 2012 Simon Speirs, Finance Solution Architect Disclaimer This document is the proprietary and exclusive property of Sutherland Global Services except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of Sutherland Global Services. The information contained in this document is subject to change without notice. The information in this document is for information purposes only. Sutherland Global Services® disclaims all warranties, express or limited, including, but not limited, to the implied warranties of merchantability and fitness for a particular purpose, except as provided for in a separate software license agreement. All confidential or proprietary information contained in Sutherland’s response shall at all times be and remain the sole and exclusive property of Sutherland Global Services, Inc. ©© 2010 Sutherland Global Services Inc., All All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 2012 Sutherland Global Services Inc., rights reserved. Privileged and confidential information of Sutherland Global Services Inc. www.sutherlandglobal.com
- 2. What are the myths and reality? www.sourcingsage.com www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 2 January 9, 2013
- 3. How many hats are you wearing today? Balancing the demands of: • INSIGHT • CONTROLS • TEAM PERFORMANCE & COST www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 3 January 9, 2013
- 4. What you’ve told us is important Most important issue Greatest challenge for facing the Finance outsourcing a Finance Function? Function Recruiting and Managing the HR retention within the 6% 0% impacts? finance function Reducing the costs of Finding a provider you 23% 23% the finance function trust Providing greater Achieving an ROI that support to business 32% justifies the transition 26% decision makers risks Establishing better 39% 51% 38% A fear of losing control 52% processes and controls Source: ICAEW & Sutherland Webcast March 2012 www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 4 January 9, 2013
- 5. Why should Finance outsourcing be a consideration? Better Access to Skills Reduced Avoid Investment Dependence costs On Key Staff Service Delivery Consistent & Guaranteed Labour Arbitrage Service Quality Improved Cost Flexibility Controls & Processes www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 5 January 9, 2013
- 6. A view on what is CORE to a Finance department..... Accounts Fixed Payable Assets Payroll Accounts Receivable Cash Financial & Banking Accounting Management F&A Reporting Outsourced 95% 95% 100% 80% 70% 70% 50% 5% 20% 5% 30% 30% F&A 50% Retained Risk Management New Skills Process Change Management for the HR Change Management Retained Organisation Service Level Management Supplier Management www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 6 January 9, 2013
- 7. Managing risk www.sourcingsage.com www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 7 January 9, 2013
- 8. The perceived risks of BPO Uncertainty Loss of Control Loss of Expertise Employee Unhappiness Difficulty in Reversing Risks of Failure www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 8 January 9, 2013
- 9. Engage and plan to mitigate the perceived risks Formal Cover everything from Readiness Review point of contract award Contracting Go Live/ to steady-state Operations Hand Off Transition Execution Baseline Solution Review Shadowing Design Hiring Go Live Training HR Planning OPS Review QA Implementation Training Planning Track/Sustain IT Deployment Process QA Planning Govern Engagement Discovery Facility Readiness IT Planning BCP / DRP Initiation/Discovery Facility Planning Process Mapping Risk Planning www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 9 January 9, 2013
- 10. Building in success for the long-term • Governance • Performance Reporting • Success criteria clearly defined www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 10 January 9, 2013
- 11. What should your objectives be? www.sourcingsage.com www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 11 January 9, 2013
- 12. Benefits: Cashable and Non-Cashable Technology Processes Policies & Controls Automation Document Harmonise & implement Visibility of KPI / SLA Convert certain fixed Create a valid audit trail Reporting costs to variable Internal controls Point Solutions for Consolidate foreign QA rigour existing ERPs offices Implement governance Greater DR / BCP Implement succession model Customisations planning • Working capital improvements • Reduced cycle time • Visibility of lifecycle costs & competition www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 12 January 9, 2013
- 13. Building the business case Typical Savings Eliminate work steps / rework 3 – 5% Streamline remaining work 2 – 5% Process Assign work to right level 3 – 5% Standard Policies/ Procedures 2 – 5% Organisation Organisation redesign 5 – 10% Automate manual processes 5 – 10% Technology Implement common systems 5 – 10% 25 – 50% Transaction 15 – 25% Optimise labour rates (off-shoring) Outsourcing 40 – 75% www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 13 January 9, 2013
- 14. Key recommendations “Do I want to, or have to do it myself?” Look for benefits beyond cost Assign a owner in the business with long term ownership Create a best practice process platform – build on success Find a partner who will share the risk of the change programme Transition of knowledge is key: do not assume it has happened because you have completed the transition plan Recognise and obtain the new skills you need in-house for the retained organisation www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 14 January 9, 2013
- 15. Disclaimer This document is the proprietary and exclusive property of Sutherland Global Services except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of Sutherland Global Services. The information contained in this document is subject to change without notice. The information in this document is for information purposes only. Sutherland Global Services® disclaims all warranties, express or limited, including, but not limited, to the implied warranties of merchantability and fitness for a particular purpose, except as provided for in a separate software license agreement. All confidential or proprietary information contained in Sutherland’s response shall at all times be and remain the sole and exclusive property of Sutherland Global Services, Inc. ©© 2010 Sutherland Global Services Inc., All All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 2012 Sutherland Global Services Inc., rights reserved. Privileged and confidential information of Sutherland Global Services Inc. www.sutherlandglobal.com
- 16. Finding the Dividing Line Retained Shared Services (internal / external) • Decision Making Typical Authority • Routine & process • Acceptance and Strategy driven Approval • Rules based • Risk Management • Can’t be automated Business • Proximity to Business • Data mining Processes • Vision • Strategy Value Add ` • Policy Setting • Research Transaction • Analytics Management • Knowledge driven Finding the balance of Risk and Strategic Importance www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 16 January 9, 2013
- 17. Reasons we hear “Not interested” We’re Financials different don’t work We’re not big enough Too many We don’t systems outsource Processes Didn’t are messy work Not the elsewhere right time www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 17 January 9, 2013
- 18. How Many Hats Are You Wearing Today? My department needs new skills to help the business and they were needed yesterday? How do I change my IT systems to support me? www.sutherlandglobal.com © 2012 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. 18 January 9, 2013
Editor's Notes
- Glad to be here today and hope that following a quick presentation that we may be able to engage in a Q&A and debate on a few of the topics that we raise.I am here with David today who may join me on stage later for the Q&A.A brief introduction to me – I am a management accountant but with 20 years experience in change management and not always through outsourcing or in the Finance Function. I work with our potential and existing clients to work out what they need and what we can do to help them.Many of you will not have heard of Sutherland, but it has a rich history in customer care and technical support, employing a total of 30,000 people in 33 delivery locations and has, in the last few years, been developing its Finance and Accounting practice and is now starting to be recognised by a number of leading advisory bodies such as Everest and Gartner.In this presentation we are hoping toLook at the potential needs of YOU, the customerWhat and where you could start in your outsourcing journeyHow to address some of the risksLook at some of the potential benefitsHope to pepper this with practical examples and try to confront some of the issues that we can face
- Now I don’t think outsourcing has the best reputation in the market and there are certainly poor connotations associated with it. Bad news certainly travels fast – but there are many success stories as well. Many innovators in the market place who started with the process in the mid nineties are still there deriving quality and cost benefit. Recently a survey from KPMG showed that 96% of BPO customers aim to stay with their existing providers.But as the cartoon reminds us, the reality it is difficult to embark on the journey, people do need to be treated with care & sensitivity, with good communication plans to reduce the uncertainty of the situation. In practice however, the sky does not fall in and the outsourcers are not monsters – they are people too
- We hope that we understand some of your needs, drives and issuesIt is about providing decision making information, providing assurance to you and your business partners and operating an efficient and effective accounting team. Sometimes these are mutually exclusive and can be a real balancing actWe think that outsourcing can provide you an opportunity to share the problem of juggling the competing pressures of people, process & technology which many of you have to deal with on a day-to-day basis.It is a hope that we can provide support for you to achieve your aims in terms of managing your other many hats that Richard has been exploring of late in his series of articles.
- We recently held a webcast with the ICAEW for which a number of questions were raised. We have just two of them selected here.It was great to see some reinforcement of our beliefs that we’ve just talked about – a little surprised perhaps in terms of the focus on process refinement – but maybe as accountants we are all quite process driven and can see that more can be done. Of course, what we did see that cost does NOT appear to be the main driver and focus for change.Unsurprising, we can see the overwhelming challenge appears to be the fear of losing control. This is very much a gut feel for many people and relevant to internal shared services, not just an outsourcing model. People do get a sense of comfort from being hands on and sometimes being down in the weeds – but the question is whether this is the best value for money approach.
- This is just a view and is definitely part art and science and will be different by customer. Finding the dividing line is my job with potential new and existing clientsWill assess features of processes whether Rules based, stage of process maturity, systems used, proximity to the business, language requirements, the list goes on.Ultimately it will be a decision based on Suitability, Feasibility and Acceptability for the individual firms on where they will draw the dividing line between CORE and NON-CORE. Some of our customers have started with a stance to maximise above the line and have a very lean organisation – whilst others have adopted more tactical approaches to see how this works – more of a crawl, walk, run strategy within perceived low risk transactional areas - such as Accounts Payable. For Sutherland however, we have typically always been dealing with our customers’ customer and therefore a lot more has come our way in terms of Order Management, Collections and Accounts Receivable. What is not in this slide are some of the Knowledge based services such as Research and Analytics (or even Actuarial services for one of our Lloyd syndicate customers.)There is a growing market place in these services and for those people looking to do outsourcing for the 1st time may find these areas less “transformational” with less touch-points and impacts to the business as a starting point.A frequently neglected feature of the revised organisation is the retained organisationNew skills will be required. Many in change management. Sometimes this transition is not always easy for some individuals as they have gained some level of comfortby dealing with the data from the past, rather than dealing with the potential ambiguity of the future which will feature in their new roles.In addition, a new mindset of management review, sometimes letting go, and dealing with the new dynamic of working with an organisation whose work will be clearly defined, who will have expectations of what it can and can’t do and also what it needs of the retained organisation to do its job.
- So what are the risks and how can they be managed.Should look at the planning, implementation and management to reduce risks
- These risks will surely be recognised by everyone here. The question being whether these can be realistically addressed, managed and mitigated. Are they risks that the company is willing to bear for the benefits that could potentially accrue with the programme.Uncertainty: A strong feature in any change programme. Be clear, precise and communicate where you can. Go find people that have done it, get references and visit centres. Contract with parties who will put some “skin in the game” to create more certainty for you.Loss of Control: If this more about losing decision making capacity or about losing the management of “factors of production”.I would certainly question whether the fact that an invoice is now paid by a third party team, rather than Mr or Mrs AP Clark down the hall really make a difference? There are also now big improvements in reporting portals and obligations for timely reporting, can now actually improve controls and visibility of what is actually going on in the department – it is just a different way of managing the same activitiesLoss of expertise: Whilst loss of expertise is possible before, during or following transition. Identify key processes and roles, put retention plans in place to smooth the path during these phases. It could also be argued that there is MORE access to expertise through the potential partner.It is difficult to deal with unhappiness – but regular and frequent communication can reduce this, retention plans can help – even additional budgets for socials, etc. The unhappiness is not typically translate to malicious behaviour but can manifest itself in lower productivity. Factor this in.In terms of the final items, long-term deals that are difficult to get out of are increasingly less common but consideration should be given to “what if it goes wrong”? This should, of course, be worse case as the partnership focus to make the programme a success should eliminate the need to terminate. Should look to limit contracts with penalties for termination, build in options to get out and look at length of contract terms.Ultimately, there is always the fear of failure – common to many change programmes, but contracting with people you can trust for a win:win should get both sides pulling in the same direction should reduce these threats.Planning to mitigate these risks, however, is key.......
- I think that this emphasises that the aim should not be “your mess for less”There should be bigger goals to leverage the skills of the organisation that you are now working with.
- Typical shared services save between 25-40% - outsourcers, despite the profits that there are making, can achieve more with the expertise and leverage that they can apply.Just a few examplesClient asked for lift & shift and transform – 40-50% overnight reduction BUT also a massive change in terms of stablity of process13% cost reduction through consolidation of 3 different vendors through multi-language capability in our Sofia office75% - 90% reduction in process cost through the implementation of screen scrape technology to remove the need for duplicate entry, multiple systems open at any time, redundant and wasted effortBut as I said earlier – it is not just about the cost of delivery (the efficiency) it is the effectiveness:Processes outsourced to reduce bad debt write-offs for VAT for imports in the region of £1-2m per annum who are now increasingly productive with success rates on collection calls recently gone from 16% to 28% on PCI compliant systemsNot all about the cost of delivery – but what you get beyond it.
- Write down what you would do yourself and ask the question : “Do I want to, or have to do it myself?”Benefits can go beyond cost – perhaps the cost impact is neutral but the impact on performance for the rest of the business is potentially considerable?Assign someone the practicalities ofmaking this work in the longer termGo for easy wins – make the initial steps a success and build on thatFind a provider who will share the burden of making the programme a successThis is a task done by people – formalise the knowledge capture, transfer and sign-off process to get everyone on the same page. And finally, look at the end to end process – this should include the retained organisation. Make sure that they understand what is needed of it in the “new world.”So having given you my top tips – are there any questions?