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HfS Webinar Slides: Is Finance Ready to move to As-a-Service?

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CFOs have tough decisions to make deciding when the time is right to write off legacy Finance & Accounting (F&A) technology and move to the cloud.

Experts from HfS, emerging “As-a-Service” HR and F&A provider OneSource Virtual, KPMG, and Smith & Nephew share insights into the progress of Plug and Play Digital Business Services and the considerations for the F&A function to make the leap.

The discussion includes:

- The impact of the As-a-Service Economy on today’s finance operations
- Current dynamics in F&A outsourcing and anticipated growth in the medium and long-term
- How buyers, advisors and providers are approaching change management in the finance function
- How the F&A function can follow the examples of other business functions, such as HR and insurance, which more advanced in their adoption of As-a-Service models
- The Impact of Robotic Process Automation on finance and why it’s being so rapidly implemented

View the webinar replay here: ow.ly/Cxjw301FfAt

Download your copy of "Is Finance Finally Ready To Write Off Legacy And Move To BPaaS?": ow.ly/Hcg1301FfXC

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HfS Webinar Slides: Is Finance Ready to move to As-a-Service?

  1. 1. The Services Research Company Is Finance Ready To Move To As-a-Service? An HfS Webcast, 23rd June 2016 Host: Phil Fersht, CEO & Chief Analyst, HfS Research phil.fersht@hfsresearch.com @pfersht #hfsresearch Web: www.hfsresearch.com | Blog: www.horsesforsources.com
  2. 2. About HfS, The Services Research Company
  3. 3. Overview: • 20 years’ business experience in the global IT and business process outsourcing and shared services industry • Coined the “As-a-Service Economy” in 2014 • Industry analyst, author, speaker, strategist and blogger • Advised and cogitated on 100’s of global IT services, BPO and shared services engagements • Meddles with the largest global network of enterprise services and operations professionals Career Experience: • Practice Lead, IT Services & BPO Research, Gartner, Inc • Global BPO Marketplace Leader, Deloitte Consulting • Consulting Practice Lead, IDC Asia/Pacific • IT Markets Practice Lead, IDC Europe Education: • BS with Honors in European Business & Technology, Coventry University, United Kingdom • Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble, France phil.fersht@hfsresearch.com Phil Fersht, Founder, CEO and Analyst, HfS Research
  4. 4. Get tweeting! #HfSResearch
  5. 5. Unbridled Opinion… Simply Calling It How It Is www.horsesforsources.com
  6. 6. © 2016 HfS Research Ltd. Proprietary │Page 7 …With a More Serious Side Too! www.hfsresearch.com
  7. 7. © 2016 HfS Research Ltd. The HfS Service Buyers Summits…next up New York www.hfsevents.com/new-york-2016
  8. 8. The As-a-Service Economy And The “Intelligent OneOffice”
  9. 9. Digital and Cognitive are Driving Enterprise Operations Do you agree or disagree with the following statements? 24% 28% 32% 46% 44% 43% 70% 72% 75% Deploying intelligent operations to align the front office with core business will have the biggest impact Cognitive computing is becoming a critical component of our future operations strategy New digital technology initiatives are radically changing the way we manage business operations Strongly Agree Somewhat Agree Source: “Intelligent Operations" Study, HfS Research2016 Sample: Buyers = 371
  10. 10. Senior Management Driving Customer First Thinking Please indicate whether you agree or disagree that Sourcing of external as-a-Service models will be driven by a “Customer First” strategy Source: “Intelligent Operations" Study, HfS Research 2016 Sample: Buyers = 371 51% 46% SVP+ VP and below Over half of upper management (51%) view this as impacting sourcing model change and strategy more than any other business driver
  11. 11. 2020 Vision: The “Intelligent OneOffice” will emerge from Digital + Automation The Digitally-Driven Front Office Mobile, Social/Interactive, Real-time actionable data, Design Thinking Digital Underbelly Intelligent Automation of manual processes Digitization of documents IoT Intelligent Digital Support Function Front office-aligned IT, Finance, HR, Procurement, Supply Chain Intelligent Digital Processes Predictive & Operational Analytics, Cognitive. The Customer-first Digital Organization The Enabling Intelligent OneOffice The Nervous System, incepting & Processing all Inputs The Neural System The Circular System
  12. 12. Moving into the As-a-Service Economy means changing the nature and focus of engagement between Enterprise Buyers, Service Providers, and Advisors Journey to the As-a-Service Economy with Intelligent Operations Write Off Legacy Brokers of Capability Design Thinking Collaborative Engagement Intelligent Automation Accessible & Actionable Data Holistic Security Plug & Play Digital Services CHANGE MANAGEMENT IDEALS SOLUTION IDEALS LEGACY OPERATIONS AS-A-SERVICE ECONOMY Intelligent Simplification
  13. 13. Traditional and As-a-Service to Run in Parallel For Now Please indicate whether you agree or disagree with the following statements about YOUR Intelligent Operations mindset today – just agree 39% 42% 46% 48% 24% 29% 42% 38% Sourcing of external as-a-Service models will be delivered by the existing landscape of traditional IT Service providers Sourcing of external as-a-Service models will largely be delivered by a constellation of new breed providers Sourcing of external as-a-Service models will happen in parallel with traditional sourcing models. Sourcing of external as-a-Service models will eventually replace traditional sourcing models VP and below SVP+ Source: “Intelligent Operations" Study, HfS Research 2016 Sample: Buyers = 371
  14. 14. Introducing The Panelists
  15. 15. Our Webcast Panelists Today… Michael Roseman SVP, F&A Outsourcing, OneSource Virtual Melinda Lawrence Chief Financial Officer, OneSource Virtual Keith Mattioli Principal, Workday Practice Leader, KPMG John Ashworth SVP Finance Operations, Smith & Nephew Reetika Joshi Research Director, HfS Research
  16. 16. What Can Finance Learn From HR As-a- Service?
  17. 17. © 2015 HfS Research Ltd. Proprietary │Page 18 The HR As-a-Service Market As A Model For Finance HfS Blueprint 2015: Workday Services INNOVATION EXECUTION High Performers HP HexawareTechnologies Mercer Aon Hewitt NGA Human Resources OneSource Virtual Meteorix Collaborative Solutions CPSG Partners IBM Sierra-Cedar KPMG Deloitte Appirio Accenture Towers Watson Ataraxis everBe Winner’s Circle
  18. 18. What kind of F&A buyers are out there today?
  19. 19. Proprietary │Page 20© 2016 HfS Research State of the F&A As-a-Service Market n F&A service buyers fall into three categories: Legacy Buyers • Looking for “lift and shift” •Aim is for provider to run operations at a lower cost over a long contract • Usually with minimal process transformation These buyers are becoming fewer and farther between Progressive Buyers •Realizing labor arbitrage benefits are finite *Seek partner with higher quality process expertise, compliance, transparency in operations *Appetite to move to consumption-based pricing •Using a combination of talent and technology that keep pace with client needs on a sustained basis The growing majority of services buyers are at this stage As-a-Service Buyers •Eager to work with a strategic partner to define and execute against achievable business outcomes *Part of a broad transformation and change management effort within their own organization *Tapping into talent and technology, both internally and externally These are the future-oriented buyers that are in the minority
  20. 20. F&A Leaders Seek Rapid Cycle Time Optimization From Digital To what degree do you think the adoption of digital technologies will impact the following in the next two years? 34% 28% 26% 26% 25% 21% 19% 53% 49% 65% 54% 62% 54% 53% 11% 20% 8% 17% 13% 21% 25% Cycle time optimization Agility of the business to drive changes in operating model Cost and productivity User experience in finance processes Leveraging financial and non-financial data for better decision making Internal and external customer experiences of finance processes Operational risk management Huge impact Some impact Minimal impact No impact at all Source: “Finance In The Digital Age”, HfS Research 2016 Sample: Enterprise Buyers = 160
  21. 21. F&A Leaders Have Sky High Expectations for Operations Maturity Which of your business functions are the most mature in terms of intelligent operations now? Where would you like them to be in 3 years? (Scale 1-5, just 4&5) 19% 19% 19% 23% 25% 25% 25% 26% 41% 44% 45% 50% 50% 54% 53% 50% Finance and Accounting Human Resources Procurement Supply Chain and Logistics IT application maintenance & development IT and Network infrastructure support Customer Service Sales / Marketing / CRM Target for 3 years Maturity Now Source: “Intelligent Operations" Study, HfS Research 2016 Sample: Buyers = 371
  22. 22. …Yet Still Looking For Legacy Contracts What are your plans regarding any outsourcing / managed services agreements you have for any of the following? Source: “Intelligent Operations" Study, HfS Research 2016 Sample: Buyers = 371 29% 38% 37% 34% 40% 36% 38% 41% 44% 47% 16% 15% 16% 20% 13% 19% 19% 18% 30% 27% 45% 52% 53% 53% 54% 55% 56% 59% 74% 74% Sales Customer Service / Sales Support Marketing Supply Chain and Logistics Finance and Accounting Procurement Human Resources Industry-specific Process (i.e. claims processing) IT and Network infrastructure support IT application maintenance & development Renew / change provider - Similar contract Renew / change provider - As-a-Service Contract 40% of IT Outsourcing contracts going As-a-Service But only 30% of BPO… 25% of F&A
  23. 23. Low Investments Thus Far, But SaaS Tops The List 14% 15% 11% 10% 10% 9% 43% 39% 41% 42% 33% 26% 30% 38% 36% 35% 23% 34% 13% 8% 11% 14% 35% 31% Cloud-based / SaaS platforms upon which to build shareable digital capabilities Analytics and big data tools and applications Mobility tools and applications Interactive / collaborative tools, applications and social media Cognitive computing platforms and machine learning Robotic process automation (RPA) tools and applications Investing heavily to get ahead of the curve About the right amount for today's needs Some investment, but not enough Minimal / no investment What have been your investments so far in embedding Digital components into your F&A processes? Source: “Finance In The Digital Age”, HfS Research 2016 Sample: Enterprise Buyers = 160
  24. 24. What is really holding back BPaaS in F&A?
  25. 25. Proprietary │Page 26© 2016 HfS Research How As-a-Service Is Taking Shape in F&A: Plug-and-Play Business Services Undertaking complex and often painful technology transitions to reach a steady state Plugging into “ready to go” business outcome–focused, people, process, and technology with security measures § While Finance is heavily dependent on ERP systems, plug and play business services can unlock value by interfacing with these systems, and making them more extensible and valuable. § Plug-and-play also is well positioned for smaller but growing companies, and in support of replacing systems for companies going through mergers. It does require business executives to drive the business case and coordinate with IT and procurement to be successful. § As an industry, we need to make it easier to use “plug and play,” contractually. § The F&A business process services is in the “Initial” stages of using Plug & Play Business Services. § Many service providers are shaping, partnering, developing, and offering options, and it is a matter of readiness and momentum among clients.
  26. 26. What has to change to make this a reality? (In technology, enterprise behavior, the market overall, the economy)
  27. 27. What kind of service provider will it take to deliver?
  28. 28. Proprietary │Page 29© 2016 HfS Research HfS Blueprint Grid: Finance & Accounting As-a-Service INNOVATION EXECUTION Excellent at Innovation and ExecutionInvesting in Innovation to Change Building All Capabilities Execution Is Ahead of Innovation AS-A-SERVICE WINNER’S CIRCLE EXECUTION POWERHOUSES HIGH POTENTIALS HIGH PERFORMERS Accenture arvato Capgemini Cognizant EXL Genpact Aegis HCL HPE IBM Infosys OneSource Virtual WNS TCS Wipro Xchanging Xerox Sutherland
  29. 29. Download your copy now! Is Finance Finally Ready To Write Off Legacy And Move To BPaaS? | 1 IS FINANCE FINALLY READY TO WRITE OFF LEGACY AND MOVE TO BPAAS? Authors: Reetika Joshi, Research Director, HfS Research Barbra Sheridan McGann, EVP, Business Operations Research, HfS Research May 2016 Grappling with change has always been hard for the finance function and “legacy” has plagued finance and accounting operations for many years now. Major enterprises have started to realize the potential for step change in operational performance with the advent of digital technologies. In the past, the watchwords for financial processes were “operationally stable and efficient.” However, today’s ambitious enterprises look to high value services and real-time, actionable data that is readily accessible in the emerging As-a-Service Economy. Our research shows that major enterprises’ F&A operations are delivered using a hybrid network of distributed internal business units, shared services and outsourcing centers. This diversified spread of global operations took shape over the last two decades, in many enterprises, in a bid to contain labor costs, centralize delivery staff and create standard processes and greater controls. So, while the operational engine has seemingly been assembled to hum along smoothly, the reality, today, is that the engine is clunky and broken, leading enterprise F&A leaders to want “something different.” Exhibit 1, from HfS Research’s recent survey of 160 global F&A leaders, captures the current state—F&A leaders are largely underwhelmed, with only 9% being Very Satisfied with the operational performance of F&A processes as of today.
  30. 30. Questions?
  31. 31. Appendix
  32. 32. © 2015 HfS Research Ltd. Proprietary │Page 33 Workday Services: OneSource Virtual Relevant Acquisitions/Partnerships Key Clients Staff & Operations Technology Tools and Platforms • OSV has partnerships with other members of the Workday partner ecosystem including PwC, Meteorix, CPSG, Appirio, DayNine and SafeGuard World. These partnerships can be to team-up on opportunities where BPaaS services are part of the sale, staffing support, or in the case of OSV and PwC, provide a unified sales strategy around Workday Financials.. • Workday invested in OneSource Virtual after its founding, and currently holds less than a 4% stake. Halyard Capital has invested $22 million and OneSource Virtual is looking for additional investment in 2015. • More than 300 clients., which is more than 30% Workday customer penetration. The company boasts more than 300 initial deployments and more than 603 follow- on projects. • Historic focus was on reselling to small organizations of less than 1,000 employees • Average size of client organization now is 5,000 employees. • Clients include: Chiquita, GENBAND, GoPro, Uber, Junior Achievement and Michael & Susan Dell Foundation • Partner since: 2008 • Number of Workday certified consultants: 266 • Total number in practice: 564. Expects to have 650-700 by year end 2015. Locations: • Irving (US): Headquarters • Mesa, Arizona (US): processing center • Derry (Ireland): opening in 2015 • Atmosphere: proprietary platform built on Force.com to automate activities around multiple Workday tenants and APIs. • Inspect: proprietary automated testing tool. • Insight: proprietary customer project and consultant management tool Strengths Challenges • First HCM BPaaS service provider. OneSource Virtual was the first Workday partner to offer business process as a service “BPaaS” capabilities in addition to its professional implementation services. It has the ambition to become the leading BPaaS provider for best-of-breed SaaS application vendors over the next decade. Focused on the Workday HCM product today, OneSource Virtual reports the most number of total customers in the Workday ecosystem, at more than 300. • Focus on talent acquisition and training. The service provider is focused on diversity among its workforce, which spans 25 different nationalities and a healthy mix of male and female employees, it says. In 2014, senior leadership underwent training to help guide the company to the next level of growth. Middle management will undergo training in 2015. • Atmosphere: OneSource Virtual's proprietary in-tenant BPaaS platform provides central visibility of all client activities in one place and automated enterprise service bus (ESB) processing helps deliver business solutions across tenants. While this tenancy access is no longer exclusive to OneSour ce Virtual, the service provider has a head start over its competition for building similar scalable support solutions in the emerging area of robotic process automation. • Converged implementation and outsourcing services. Virtual understands the importance of converging technical and outsourcing skills in engagements to better meet the real needs of customers in the cloud today. It is common for customers to engage OneSource Virtual for 2-3 short projects throughout the year, for example aligning on using new Workday software updates, in addition to payroll finishing services. Moreover, it is one of the few partners running its own Workday regional user groups to share on-going operational learnings. • Focus on BPaaS. “Business process as a service” may be the latest buzzword to describe the evolution or intersection of software as a service (SaaS) and outsourcing and go out of favor quickly as business processes themselves are less of the service focus. Others are also aggressively wrapping services around Workday and could surpass OneSource Virtual with their broader experiences in delivering services worldwide. • Workday limitations. Focused on following in Workday’s own footsteps leave OneSource primarily US-based today and could mean missed opportunities in other regions in the next few years. While it is opening an office and operating capabilities in the United Kingdom in 2015, it is not recognised as a global provider and will meet fierce competition in other areas as global expectations increase. • Services menu approach. OSV services offerings are standardized and customers can select from preconfigured options. Services providers have always standardized offerings but they typically haven’t presented it in this way to customers,. They focus on discussing the customer’s pain points and business objectives and then fit them into the appropriate service offering. It seems that OSV is asking customers to do this fit themselves with a in-house consultative, high value approach seeming to be missing. Blueprint Leading Highlights • Quality of Account Management • Incorporate Feedback • Flexibility to Deliver Both End-to- End Solutions and Point Solutions • Tailor to Business/industry • Value Beyond Cost Savings • Integrate Technology into Business Process • Vision PLAN IMPLEMENT MANAGE OPERATE OPTIMIZE Winner’s Circle Close Workday BPaaS partner combining consulting and management services capabilities for customers
  33. 33. © 2015 HfS Research Ltd. Proprietary │Page 34 OneSource Virtual Entering the F&A business process services market as Workday-based BPaaS provider, starting with Accounts Payable and strong potential Acquisitions / Partnerships Client Profile Service Delivery Operations Proprietary Technologies Acquisitions: • NA Partnerships: • NA OneSource Virtual targets a niche customer base: companies that use Workday Financial Management solutions in the U.S., Canada, UK, and EMEA Target Industries: OneSource Virtual has platform based approach, not targeting or limiting itself to any vertical. However, the service provider does not offer services to the Federal Government. Headcount: <50 Delivery Centers (3): • USA – 89% (Irving, Texas; Mesa, Arizona) • UK & Ireland – 11% (Derry, Ireland) • OneSource Virtual’s AP Automation • Atmosphere: a central processing system • INspect: an automated testing system Strengths Challenges • First-mover Advantage: OSV is truly a “born in the cloud” service provider, and is an option for companies that are looking for finance operations that are digitally-led and not digitally transformed (the starting point of legacy BPO providers). It offers business process services for Workday Financial Management customers. • Its Own Niche Market Segment In F&A: Building off a strong start in HR, for Workday- based BPaaS, OSV can easily add F&A to its large base of existing HR clients. Refer to the HfS Workday Services Blueprint (link) for additional insight on OSV. HfS tapped into client feedback from HR experience since there are no F&A clients to date. • Unique P2P Offering: OSV combines Workday’s Accounts Payable functionality with a proprietary invoice capture tool as well as a Workday based proprietary rules engine. “Shared automation” is the foundation of the offering; OSV has created a platform for the extraction – and then automation of – recurring processes, starting with P2P. Even though invoices are processed by OSV, clients can access the data through standard or custom reports. • RPA Is “Native” to its Atmosphere Development Environment: OSV has expertise to standardize and automate the transactional side of AP management within a cloud specific application while leveraging all of its security and data protection. • Early Adopter of Workday FM and Forward Thinking Internal Approach to F&A: OSV uses Workday internally, and the CFO provides input on how the BPaaS services should support the Finance function. Principles include a focus on data accuracy and accessibility for decision making, self-service, automated workflow, and collaboration not just in finance but with HR and business leads throughout the company. OSV is Workday customer #67, and the service provider has been investing in scoping and scaling the BPaaS F&A services within its own walls before launching it in September 2015. Straightforward Transaction Based Pricing: All contracts are only based on a "per invoice” processed. • Build a Credible F&A Brand: OSV has to help F&A prospects and clients understand the value of shared automation and BPaaS, and is tied to Workday FM success. However, we see increasing interest in this approach from the Finance world, and OSV has a strong position in HR and partnership with Workday to leverage. • Expand Beyond Limited P2P Scope: Although OSV has plans of extending its offerings to the entire value chain of F&A BPO, today, only support for Procure to Pay is available. It has a long way to go to have a full suite of financial management support and there is no analytics capability. • Tough Competition: Legacy service providers are fast catching up with as-a-service offerings and capability, and have established relationships and global presence. F&A is a competitive market, and slow to change. OSV needs to be very targeted in its customer base selection and investment. • Limited Ecosystem: OSV does not have the extensive ecosystem of partners in Finance & Accounting that we see with its competitors, beyond KPMG. The service provider is focused on supporting what it does with its own resources, and has yet to build an ecosystem to move beyond it. Blueprint Leading Highlights • Quality of Account Management • Incorporates Feedback • Strategy for Intelligent Automation • Use of Technology to Support Business Processes • Vision for Finance As-a-Service • Plug and Play Digital Business Services Value Chain Coverage: Procure to Pay Order to Cash Record to Report Finance Transformation Analytics High Potential

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