vertical industry strategies in shared services and outsourcing

Preview Summary: March 2012

A joint study by Shared Services & Outsourcing Network (SSON) and Everest Group

Copyright © 2012, Everest Global, Inc. EGR-2012-0-PS-0666

Preview Summary Vertical Industry Strategies for Shared Services and Outsourcing Survey


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How to learn more… access the full report and fact sheets, plus interact with peers at upcoming events

Additionally, fact sheets for eight industries are available on the websites

Results from the survey will be featured at Shared Services & Outsourcing Week (SSOW) events around the world in 2012

India Gurgaon 04-06 December 2012

Europe Amsterdam 14-16 May 2012

China Shanghai 23-25 October 2012

Germany Berlin 20-23 November 2012

Australasia Melbourne 16-19 April 2012

Asia Singapore 04-06 September 2012

This document is a preview summary of the overall 50+ page report, which is available on the websites of SSON and Everest Group – www.ssonetwork.com – research.everestgrp.com/VISSSO-survey Banking, Financial Services,

and Insurance Consumer goods & retail Energy & utilities Manufacturing Media & entertainment Public sector & healthcare Technology & communications Travel, transportation &

logistics

http://www.ssonetwork.com/

http://research.everestgrp.com/VISSSO-survey


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Introduction and background Preview summary

Much of the growth in shared services and outsourcing has been oriented along traditional horizontal functions such as finance & accounting, human resources, and IT. However, with increasing maturation and innovation in strategies, differences across industries are emerging, additionally, vertical functions unique to an industry are increasingly playing an important role

In order to better understand these trends, Everest Group and the Shared Services & Outsourcing Network (SSON) conducted the first-ever survey focused on vertical industry strategies in shared services and outsourcing

The survey covered 28 vertical industries, 8 horizontal functions, and 164 vertical functions. It addressed a wide range of topics including scope, improvement initiatives, sourcing models, and technology strategies. The analysis summarizes the findings from over 650 responses across enterprises, service providers, and industry influencers


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Executive summary From full report

With the increasing maturation of shared services and outsourcing, many organizations report that their programs are successful and able to consistently meet financial objectives

However, far fewer organizations consider themselves to be mature in comparison to their peers and most are still primarily focused on process improvement over other sources of value

Further, most shared services and outsourcing groups are more oriented towards traditional horizontal functions such as F&A and HR rather than vertical functions, which are closer to the core business activities

In order to deliver the required results, organizations primarily favor a shared services model. Many organizations also state a bias for a “best-fit” sourcing model, but this is not demonstrated in reality

Finally, although many respondents indicate technology is a key initiative, they are generally not yet convinced that it is appropriate to adopt SaaS/cloud technology models


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Snapshot of key analyses

Financial and value management Percent of respondents agreeing with statement

Representation of horizontal and vertical functions Average number of functions included

Shared services and outsourcing adoption by industry Relative focus of respondents by maturity level Percent of respondents

62

76

87

Cost reduction is the most important objective

Consistently meet financial objectives

Business cases include value beyond cost savings

3.4

3.3

2.1

1.2

Services industries

Product industries

Horizontal functions

Vertical functions

48

31

Collaboration with business users

Successfully implement change

57

12 Less mature

Mature

1.5

2

2.5

3

3.5

1.5 2 2.5 3 3.5 4 4.5 5Extent of shared services

Exte

nt o

f thi

rd-p

arty

out

sour

cing

Above average adoption of shared

services and outsourcing

Below average adoption of shared services and outsourcing

Below average adoption of shared services and above average for outsourcing

Above average adoption of

shared services and below

average for outsourcing

Average outsourcing adoption

Average shared services adoption

Capital markets

Oil & gas

Hi-tech

AutomotiveGovernment

Freight & logistics

Industrial products

CPG

Healthcare payers

Travel & transportation

Media & entertainment

Insurance

Chemicals

Retail

Banking

Utilities

TelecomEngineering &

construction

Information services

Life sciences

Healthcare providers


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Industry Average number of vertical functions Key vertical-specific functions

Automotive Master data, customer data, vendor data management; asset and inventory management support

Banking Retail banking account open/closure and servicing; loans & mortgage servicing; cards servicing and statement processing; transaction processing

Capital markets Application processing, account servicing; investment operations, order management

Chemicals Master data, customer data, vendor data management

Consumer packaged goods

Master data, customer data, vendor data management; order processing and fulfillment

Education Eligibility and registration

Engineering and construction

Document and record management

Freight and logistics Document processing; billing

Government Records management; application processing

Healthcare payers Claims processing and management; claims adjudication, disbursements, subrogation; member on-boarding, records management; underwriting and risk assessment support

Healthcare providers Revenue cycle management (eligibility, billing, coding, receivables, payer services); healthcare information management (records management, electronic health record)

Key vertical-specific functions in shared services and outsourcing by industry (page 1 of 2)

0.9

2.0

3.0

1.2

1.9

0.8

1.0

1.8

1.0

2.2

1.0

Source: Vertical Industry Strategies in Shared Services & Outsourcing survey, January-February 2012


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Industry Average number of vertical functions Key vertical-specific functions

Hi-tech Master data, customer data, vendor data management; order management and fulfillment

Industrial products Master data, customer data, vendor data management; engineering support services

Information services Sales and marketing support; billing & royalty support

Insurance Underwriting and actuarial data processing and analysis; L&P policy servicing and records management; L&P claims processing and management; eligibility, verification, fraud detection and management

Life sciences Drug discovery and research support; clinical trials and pharmacovigilance administration; distribution planning and analysis, defect handling, and reverse logistics

Media and entertainment

Publishing and distribution management; advertising sales support; subscription and order management

Oil and gas Supply chain planning & support; asset and inventory management support

Retail Logistics and supply chain administration; store operations & property services

Telecom Order management and provisioning; sales and marketing support

Travel and transportation

Operations and fleet administration; records and document management; sales and reservations support

Utilities Meter-to-cash (billing, payment processing, credit and collections); field services and meter data administration

Key vertical-specific functions in shared services and outsourcing by industry (page 2 of 2)

1.2

1.3

2.4

0.8

1.7

0.8

2.0

1.1

2.9

1.1


1.6


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Having already adopted an end-to-end philosophy, mature organizations increasingly look for value beyond process improvement – instead focusing on users and driving change

F&A approach is end-to-end

48

31

Collaboration with business users

Priority initiatives

Successfully implement change

80

39

48

61

Consolidation

57

12 Less mature

Mature

Percentage of enterprise respondents



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Table of contents (page 1 of 2)

Section I. Executive summary 5 Executive summary 6 Snapshot of key analyses 7 How to interpret this report 8 Section II. Overview of shared services and outsourcing strategies 9 Summary 10 Success, maturity, and focus on cost 11 Centralization and sourcing model 13 Improvement initiatives, ability to change, and SaaS 17 Section III: State of traditional horizontal functions 20 Summary 21 Scope 22 Delivery model, offshoring, and technology 23 Section IV: Variations by industry 26 Summary 27 Scale and sourcing model adoption 28 Horizontal and vertical function adoption 30 Improvement initiatives for vertical functions 34

Topic Page no.

The full report contains additional details


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Table of contents (page 2 of 2)

Section V. Different approaches used by mature organizations 35 Summary 36 Profile of mature organizations 37 Improvement initiatives 40 Scope of F&A 41 Section VI. Perspectives of service providers and influencers 42 Summary 43 Service provider industry focus and growth 44 Sourcing model trends 45 Alignment of investments to improvement initiatives 46 SaaS/cloud adoption expectations 47 Influencer views on service provider gaps 48 Appendix About the survey 49 Terminology 50

Topic Page no.

The full report contains additional details


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About Everest Group and SSON

Everest Group Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com. The Shared Services & Outsourcing Network The Shared Services & Outsourcing Network (SSON) is the largest and most established community of shared services and outsourcing professionals worldwide, with over 60,000 members. We provide the roof under which key industry experts and organizations share their experience, knowledge and tools, and your practitioner peers connect with others all over the world, face to face, and online. SSON focuses on developing its members through providing training, tools, and networking opportunities. Our staff work from international offices in New York, London, Sao Paulo, Singapore, Sydney, Johannesburg, Berlin, and Dubai to research current trends and developments in shared services

http://www.everestgrp.com/

http://research.everestgrp.com/


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