white paper - f&a transformation with wrapper technologies
DESCRIPTION
Datamatics, a global IT and KPO organization focused on delivering smart, next-generation business solutions that help enterprises across the world overcome their business challenges. These solutions leverage innovations in technology, knowledge of business processes, and domain expertise to provide clients a competitive edge.TRANSCRIPT
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F&A TRANSFORMATION WITH WRAPPER TECHNOLOGIESA White Paper by: Ajay Khattar & Sushil Nimkar
December, 2012
WHITEPAPER
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Table of Contents
Executive Summary ...............................................................................
Wrap-Around Approach ........................................................................
Wrap-Around Success ..........................................................................
Conclusion ................................................................................................
About the Authors ..................................................................................
About Datamatics Global Services ...................................................
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4
5
7
8
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Executive Summary
Finance & Accounting Outsourcing (FAO), historically, has never really been a technology intensive service. Typically, the formula for success has been executing repetitive tasks manually by developing efficient processes. Outsourcing has evolved a lot over the last decade with service providers looking to go beyond delivering cost savings to delivering value to customers. In this journey of transformation, infusion of technology has enabled innovation and continuous improvement. A growing number of suppliers are leveraging IT enablement for FAO engagements. Areas such as data security, ERP architecture & integration continue to be on the radar for decision makers, particularly for mid-market companies where preference is inclined towards standard solutions.
Through our several platform based FAO engagements, we have seen that strategic technology investment enables both process optimization and long term value. In the last few years the role of technology has moved on from a typical “tie-and-run” model to an “augmentation” model. A 2011 report from Everest Group suggested that technology augmentation was the new “normal”. Reports show that nearly 45 percent of the new contracts included add-on technology solutions such as workflows, interfaces, document digitization, business intelligence tools, user portals / dashboards and project management modules.
FAO service providers are adopting either a technology augmentation approach or platform-based outsourcing model. Year 2011 saw a significant increase in adoption of platform-based FAO solutions among customers, primarily in the mid-market and SMB segment (revenue < US$5B).
By augmenting capabilities to provide technology enabled solutions and consulting in addition to transactional business processes, FAO service providers are addressing value addition to business in a big way.
FAO service providers are adopting either a technology augmentation approach or platform-based outsourcing model
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Wrap-Around Approach
Replacing legacy systems is a time consuming and expensive exercise for organizations and this often becomes a roadblock for service providers. When replacement of the legacy system is not feasible, a wrapper of new technology is developed around legacy system, to enable integration with existing infrastructure. This ensures integration of technology solutions with customers’ existing F&A systems is additive and not disruptive. Most enterprises opting for incremental transition towards FAO are considering suppliers who have the capability to manage data and workflow across disparate legacy systems.
With the widespread use of embedded web services technology and the onset of the Service-Oriented Architecture (SOA), in particular the BPEL (Business Process Execution Language) workflow engine, organizations are now effectively managing their F&A business processes across customers, suppliers, and third-party applications. Many organizations are choosing to break down their business processes into manageable web services (such as “customer setup,” “deduction calculation,” and “invoice creation” in the order-to-cash cycle) rather than overhaul the entire F&A function.
The wrap-around approach is gaining popularity, particularly with large FAO buyers seeking an incremental transition towards their ideal FAO end-state. With this approach, suppliers are able to provide value-added functionalities such as integrated view of company data and working capital reduction with reduced process complexity. Adoption of wrap–around solutions that dovetail with buyers’ existing systems are fast proving to be the most desirable route for F&A transformation.
To ensure that integration of technology solutions with customers’ existing F&A systems is additive and not disruptive, a wrapper of new technology is developed around legacy system
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Wrap-Around Success
Introduction of standardized automation that complement existing ERP systems, in a shared services or an outsourced environment help deliver business outcomes that are measurable and tangible.
Data from an HfS report illustrates that a majority of F&A BPO engagements require some form of IT-enablement, especially smaller scale engagements with middle-market clients. In such engagements, the buyers leverage the outsourcing initiative to upgrade their platform or have the service provider introduce their own “wrap-around” application layer with pre-developed optimized workflows. Wrapper technologies with intelligent features are helping organizations migrate successfully to a shared services environment with an OPEX based business model.
Wrapper technologies with intelligent features are helping organizations migrate successfully to a shared services environment with an OPEX based business model
Large F&A BPO Engagements:
75+ FETs
Mid sized F&A BPO
Engagements: 30-75 FETs
Small F&A BPO Engagements:
<30 FETs
0%
20%
40%
60%
80%
100%
120% New System Implemented
Existing Sytem Upgraded/Enhanced
No Change to F&A System
Financial System Strategy with existing F&A BPO engagements
Enterprises are taking advantage of technology “wrap-around” layers to enable better integration of data in an outsourced environment.
Source: HfS Resource, 2011
52%
23%
24%
44%
34%
22%
34%
46%
21%
IT-enablement increasingly dominating mid-sized BPO engagements
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How These Wrapper Technologies Work?
Pre-Automation
For organizations looking to outsource F&A, technology wrappers are not just good-to-have anymore; they are must-haves
STATIC VISIBILITY
DOWNSTREAM MANUALANALYSIS
ERPINPUT OUTPUT
Post-Automation
MAO TIT OU NA
REALTIME VISIBILITY
READY ANALYTICAL REPORTS
ERPINPUT OUTPUT
HfS has predicted that there will be a surge in hybrid IT-BPO engagements where service providers will offer wrapper technology applications to enhance process standardization for buyers. Report further suggests that more than 50% of buyers will either enhance or replace their existing F&A IT systems in conjunction with their BPO engagement. For organizations looking to outsource F&A, technology wrappers are not just good-to-have anymore; they are must-haves.
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Conclusion
This white paper establishes that the industry is positioned for a major technology transformation, one that is poised to deliver high value in FAO engagements. To derive value beyond traditional drivers such as cost reduction in the FAO marketplace, suppliers will use technology to enable better integration and quicken the transition from buyer to supplier.
The future of wrapper technology lies in development of holistic technology in the form of virtual or real multi-client platforms that can open up a new dimension of value provision for the supplier by leveraging scale and best practices.
To derive value beyond traditional drivers suppliers will use technology to enable better integration and quicken the transition from buyer to supplier
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About the Authors
Ajay KhattarGlobal Head-F&A Solutions
Ajay drives our FAS practice and lead the function globally across all locations in India, U.S, UK & Europe. Ajay holds a Bachelor’s degree in Computer Science from the University of Delhi as well as a Master’s degree in Computer Applications from Institute of Management Technology (Ghaziabad) and an Executive MBA from Indian Institute of Management, Bangalore.
Sushil NimkarSales Head-F&A Solutions (India)
Sushil is focusing on F&A engagements in India enabling organizations to extract value out of outsourcing. Sushil holds Masters in Marketing Management from Mumbai University and Post Graduation in Advance Computing from CDAC.
About Datamatics Global Services
Global Information Technology (IT) & Knowledge Process Outsourcing (KPO) organization Delivers smart, next-generation business solutions Trusted partner to several Fortune 500 companies Capabilities built around technology, domain expertise & knowledge of business processes Featured amongst the Global Services 100 List in 2010 & 2011 Decades of global experience having executed projects across 60 countries
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