CFO Insights: Achieving High Performance Through Finance Business Process Outsourcing

330 Pages·2004·11.53 MB·English

by  Stewart Clements

CFO Insights
Achieving High Performance Through
Finance Business Process Outsourcing
STEWART CLEMENTS
MICHAEL DONNELLAN
IN ASSOCIATION WITH
CEDRIC READ
John Wiley & Sons, Ltd
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CFO Insights
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CFO Insights
Achieving High Performance Through
Finance Business Process Outsourcing
STEWART CLEMENTS
MICHAEL DONNELLAN
IN ASSOCIATION WITH
CEDRIC READ
John Wiley & Sons, Ltd
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Published in 2004 by John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester,
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Preface
In writing this book, we’ve witnessed a global phenomenon: Executives
around the world have shown an insatiable appetite for information on
business process outsourcing (BPO). This enormous interest is being
fuelled by a surge in the outsourcing of back-offi ce functions: Every
week, somewhere in the world, for example, a major new fi nance and
accounting outsourcing deal is being completed. What began as a trickle
of activity by a handful of pioneering companies in the 1990s, with BP
leading the way, has become a huge wave – a corporate tsunami.
Today, many leading companies are actually in a race to use business
process outsourcing as a means to achieve market leadership and redefi ne
their competitive position in the global economy. The CFOs of these com-
panies have made a strong commitment to BPO and moved aggressively
to exploit the benefi ts that it offers. Some see BPO primarily as a cost-
reduction tool, others as a path to radical business transformation.
Many CFOs, however, are still considering outsourcing as an option.
Whatever their goals or industry, we found that they were asking the
same fundamental questions: ‘I’ve seen so much in the news about out-
sourcing – what’s it all about?’ ‘Can you tell me who’s doing what? I hear
a lot and I want to know the truth.’ ‘What’s behind the rush to India?’
‘We already have a shared service program or we’re thinking about one
– why should we outsource?’ ‘Won’t I lose control if I take this route?’
‘Where do I actually start and how far do I go?’ ‘Can you give examples of
companies that have outsourced or even gone offshore with sophisticated
areas of their business?’
CFO Insights was written with precisely these questions in mind. It
traces the entire lifecycle of the outsourcing process, from building a
business case, achieving stakeholder buy-in, and selecting the right
outsourcing partner to pricing and shaping the deal, choosing where to
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Preface
locate outsourced business services, managing implementation, reduc-
ing risk, and keeping the deal working. By drawing on the experience of
high-performance companies with well-established programs, our goal
is to assist CFOs in moving up the outsourcing learning curve as quickly
as possible. The practical, timely information offered here provides a
strong foundation for planning a cost-effective outsourcing strategy,
winning success quickly, and avoiding the mistakes of early adopters.
This book breaks new ground in charting the outsourcing landscape.
As our case studies show, the path to success is surprisingly well traveled.
BP, for example, offers the classic case of a company that has adopted
a 24/7 ‘follow the sun’ F&A outsourcing strategy. Procter & Gamble
has gone global by outsourcing its IT, HR, and property management
functions. In North America, BC Hydro has outsourced HR and payroll.
Canada’s BC Hydro has outsourced its entire back offi ce. Neptune Orient
Lines, one of the largest logistics companies in the world, is now served
from a thriving multi-service global hub based in Shanghai.
In interviewing the CFOs of these and other leading-edge companies,
we were impressed by the innovative, far-reaching ways in which they
have used business process outsourcing as a tool to enhance overall
corporate performance. Among our most important fi ndings are the fol-
lowing.
Many companies have progressed well beyond using outsourcing simply
to reduce costs; today they are using it as a tool to promote enterprise-wide
change. Companies like BP and Thomas Cook have turned to business
transformation outsourcing, which is one step along from BPO, as a way
to generate sustained profi tability and attractive returns so that they
can invest back in their core business. In fact, mature players don’t view
outsourcing as a commodity cost play, but as a means to revitalize their
businesses and as a strategic weapon for transformational change.
Many companies are concerned that outsourcing will lead to less control
over their business and therefore expose them to greater risk. However, the
opposite is true. Our research clearly reveals that, far from diminishing
control, outsourcing actually increases it. A company that outsources
selected functions doesn’t give anything away; instead, it is buying a set
of defi ned, measurable outcomes and a predictable service that leads to
greater control and transparency, not less.
The outsourcing industry has reached a surprising level of maturity in
its service delivery model – and emerged as an industry in its own right.
Today’s mega-service providers have at their disposal truly intercon-
nected delivery networks that provide a full spectrum of services, global
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Preface
sourcing, resilience and disaster recovery backup, and consistent, high-
quality support. We’re now seeing the death of the ‘captive’ in-house
shared services model and the rise of a global one-to-many delivery
service model, in which multiple clients and multiple industries are being
served by a network of centers.
By 2007, the outsourcing industry will double in size, driven by the
rapid innovation and large-scale investment of mega-service providers.
This rapid growth will prove enormously benefi cial to clients. It will
enable them immediately to reap the economic advantages of scaled
shared services and next-generation technologies. Companies will no
longer invest in improving back-offi ce administrative productivity and
will expect enterprise benefi ts far beyond cost reduction. Some very
sophisticated enterprises are even outsourcing their business analytics.
Soon, mega-service providers will create a new branch of fi nance BPO
around decision support and complex business analysis.
The bottom line? More and more companies will use outsourcing as a
path to greater profi tability and leaner capital consumption. They’ll redi-
rect their capital into areas that excite their customers and lead to faster
growth and more innovation than they could achieve with the drag of a
back-offi ce anchor. By cutting the links of that anchor, they will release
valuable energy and time – and free themselves so they can become far
more entrepreneurial.
CFO Insights: Achieving High Performance through Finance BPO has
been written not only to help fi nance executives, but all decision makers,
as they embark on their outsourcing journey. It offers original research,
hands-on advice from the CFOs of leading companies, detailed case stud-
ies, and a wealth of best-practice data – everything necessary for plan-
ning and implementing a successful outsourcing strategy.
Writing this book was both challenging and rewarding. We wish to
thank and acknowledge the talented CFOs and senior fi nance executives
who generously shared their insights and ideas with us: Alan Eilles of
BP, Lauralee Martin of Jones Lang LaSalle, Clayton Daley of Procter &
Gamble, Bob Davis of Dell, Dennis Kooker of BMG, Ron Dykes of Bell-
south, Wolfgang Reichenberger of Nestlé, Gary Chan and James Dollive
of Kraft, Michel-Marc Delcommune of MOL, Lim How Teck of Neptune
Orient Lines, Ian Ailles of Thomas Cook, David Harrison of Accenture
Business Services of British Columbia (ABS-BC), Pierre Prot of Rhodia
and Paul Van Beveren, formerly of Rhodia and now Accenture, Thomas
Buess of Zurich Financial Services, John Palmer of Sainsbury’s, John
Coghlan of Exel, and Peter Moore of Lincolnshire County Council.
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Preface
From Accenture, we wish to thank the following people for contribut-
ing their expertise and experience: Michael Sutcliff, Chapter 2; Adam
Johnson, Chapter 3; David Rowlands, Chapter 4; Daniel Lipson, Chapter
5; Stephen Ferneyhough, Chapter 6; J. Scott Laughner, Chapter 8; Alan
Healey, Chapter 9; Anoop Sagoo, Chapter 10 and Jane Linder; Susan
Cantrell; Justin Jenk; and Alison MacKenzie.
We must also give special acknowledgement to our external advi-
sors and contributors and to the team that helped us put this publica-
tion together. Special thanks go to Christy Kirkpatrick who produced
the diagrams for CCR Partners, and who contributed substantially to
the research and coordinated the individual chapter contributions into a
cohesive end product. In addition, we would like to thank Sarah Thomas,
Accenture Finance Solutions marketing director, and her team for their
tireless efforts on our behalf. This book would not have been completed
without their help. Finally, thanks also go to our editor, Karin Abarbanel,
and the team at John Wiley, especially Rachael Wilkie and Chris Swain.
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