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

The Services Research Company

Is Finance Ready To Move To As-a-Service?

An HfS Webcast, 23rd June 2016

Host:

PhilFersht,CEO&ChiefAnalyst,[email protected]@pfersht#hfsresearchWeb:www.hfsresearch.com |Blog:www.horsesforsources.com

About HfS, The Services Research Company

Overview:• 20years’business experienceintheglobalITandbusiness process

outsourcing andsharedservices industry• Coined the“As-a-Service Economy”in2014• Industryanalyst,author,speaker,strategistandblogger• Advised andcogitatedon100’s ofglobalITservices, BPOandshared

services engagements• Meddleswiththelargestglobalnetworkofenterpriseservicesand

operationsprofessionals

CareerExperience:• PracticeLead,ITServices&BPOResearch,Gartner,Inc• GlobalBPOMarketplaceLeader,DeloitteConsulting• Consulting PracticeLead,IDCAsia/Pacific• ITMarketsPracticeLead,IDCEurope

Education:• BSwithHonorsinEuropeanBusiness &Technology, CoventryUniversity,

UnitedKingdom• DiplômeUniversitairedeTechnologie inBusiness &Technology fromthe

University ofGrenoble, France

[email protected]

Phil Fersht, Founder, CEO and Analyst, HfS Research

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The HfS Service Buyers Summits…next up New York

www.hfsevents.com/new-york-2016

The As-a-Service EconomyAnd The “Intelligent OneOffice”

Digital and Cognitive are Driving Enterprise OperationsDoyouagreeordisagreewiththefollowingstatements?

24%

28%

32%

46%

44%

43%

70%

72%

75%

Deployingintelligentoperationstoalignthefrontofficewithcorebusinesswillhavethe

biggestimpact

Cognitivecomputingisbecomingacriticalcomponentofourfutureoperationsstrategy

Newdigitaltechnologyinitiativesareradicallychangingthewaywemanagebusiness

operations

StronglyAgree SomewhatAgree

Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371

Senior Management Driving Customer First Thinking

PleaseindicatewhetheryouagreeordisagreethatSourcingofexternalas-a-Servicemodelswillbedrivenbya“CustomerFirst”strategy


51%

46%

SVP+ VPandbelow

Overhalfofuppermanagement(51%)viewthisasimpactingsourcingmodel

changeandstrategymorethananyotherbusiness driver

2020 Vision: The “Intelligent OneOffice” will emerge from Digital + Automation

TheDigitally-DrivenFrontOffice

Mobile, Social/Interactive,Real-timeactionable data,DesignThinking

DigitalUnderbellyIntelligentAutomationofmanualprocessesDigitizationofdocumentsIoT

IntelligentDigital SupportFunctionFrontoffice-alignedIT,Finance,HR,Procurement,SupplyChain

IntelligentDigitalProcessesPredictive&OperationalAnalytics,Cognitive.

TheCustomer-firstDigitalOrganization

TheEnablingIntelligentOneOffice

The Nervous System, incepting & Processing

all Inputs

The Neural System

The Circular System

MovingintotheAs-a-ServiceEconomymeanschangingthenatureandfocusofengagementbetweenEnterpriseBuyers,ServiceProviders,andAdvisors

Journey to the As-a-Service Economy with Intelligent Operations

WriteOffLegacy

BrokersofCapability

DesignThinking

CollaborativeEngagement

IntelligentAutomation

Accessible&Actionable

Data

HolisticSecurity

Plug&PlayDigitalServices

CHANGEMANAGEMENT IDEALS SOLUTIONIDEALS

LEGACYOPERATIONS AS-A-SERVICEECONOMYIntelligentSimplification

Traditional and As-a-Service to Run in Parallel For Now

PleaseindicatewhetheryouagreeordisagreewiththefollowingstatementsaboutYOURIntelligentOperationsmindset today– justagree

39%

42%

46%

48%

24%

29%

42%

38%

Sourcingofexternalas-a-Servicemodelswillbedeliveredbytheexistinglandscape

oftraditionalITServiceproviders

Sourcingofexternalas-a-Servicemodelswilllargelybedeliveredbyaconstellation

ofnewbreedproviders

Sourcingofexternalas-a-Servicemodelswillhappeninparallelwithtraditional

sourcingmodels.

Sourcingofexternalas-a-Servicemodelswilleventuallyreplacetraditional

sourcingmodels

VPandbelow

SVP+


Introducing The Panelists

Our Webcast Panelists Today…

MichaelRosemanSVP,F&AOutsourcing,OneSourceVirtual

MelindaLawrenceChiefFinancialOfficer,OneSourceVirtual

KeithMattioliPrincipal,WorkdayPracticeLeader,KPMG

JohnAshworthSVPFinanceOperations,Smith&Nephew

ReetikaJoshiResearchDirector,HfSResearch

What Can Finance

Learn From HR As-a-Service?


The HR As-a-Service Market As A Model For FinanceHfS Blueprint 2015: Workday Services

INNOVA

TION

EXECUTION

HighPerformers

HP

Hexaware Technologies

MercerAonHewitt

NGAHumanResources

OneSourceVirtual

MeteorixCollaborative Solutions

CPSGPartners

IBMSierra-Cedar

KPMG

Deloitte

Appirio

AccentureTowersWatson

AtaraxiseverBe

Winner’sCircle

Source:HfSResearch 2015

What kind of F&A buyers are out there

today?

Proprietary│Page20©2016HfSResearch

State of the F&A As-a-Service Marketn F&A service buyers fall into three categories:

LegacyBuyers• Lookingfor“lift andshift”

•Aim isforprovider torunoperations atalowercostoveralongcontract

• Usuallywithminimalprocess transformation

Thesebuyersarebecoming fewerandfartherbetween

ProgressiveBuyers•Realizinglabor arbitragebenefitsarefinite

*Seekpartnerwithhigher qualityprocessexpertise, compliance, transparencyinoperations

*Appetitetomovetoconsumption-basedpricing•Usingacombination oftalentandtechnologythatkeeppacewithclientneedsonasustained basis

Thegrowingmajorityofservicesbuyersareatthisstage

As-a-ServiceBuyers•Eagertoworkwithastrategicpartnertodefineandexecuteagainstachievablebusinessoutcomes*Partofabroadtransformation andchangemanagementeffortwithin theirownorganization*Tappingintotalentandtechnology,bothinternally andexternally

Thesearethefuture-oriented buyersthat areintheminority

F&A Leaders Seek Rapid Cycle Time Optimization From DigitalTowhatdegreedoyouthinktheadoptionofdigitaltechnologies willimpactthefollowing inthenexttwoyears?

34%

28%

26%

26%

25%

21%

19%

53%

49%

65%

54%

62%

54%

53%

11%

20%

8%

17%

13%

21%

25%

Cycletimeoptimization

Agilityofthebusinesstodrivechangesinoperatingmodel

Costandproductivity

Userexperienceinfinanceprocesses

Leveragingfinancialandnon-financialdataforbetterdecisionmaking

Internalandexternalcustomerexperiencesoffinanceprocesses

Operationalriskmanagement

Hugeimpact Some impact Minimalimpact Noimpactatall

Source: “Finance In The Digital Age”, HfS Research 2016Sample: Enterprise Buyers = 160

F&A Leaders Have Sky High Expectations for Operations Maturity

Whichofyourbusinessfunctionsarethemostmatureintermsofintelligentoperationsnow?Wherewouldyoulikethemtobein3years?(Scale1-5,just4&5)

19%

19%

19%

23%

25%

25%

25%

26%

41%

44%

45%

50%

50%

54%

53%

50%

FinanceandAccounting

HumanResources

Procurement

SupplyChainandLogistics

ITapplicationmaintenance&development

ITandNetworkinfrastructuresupport

CustomerService

Sales/Marketing/CRM

Targetfor3years MaturityNowSource: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371

…Yet Still Looking For Legacy ContractsWhatareyourplansregardinganyoutsourcing/managedservicesagreementsyouhaveforanyofthefollowing?


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

CustomerService/SalesSupport

Marketing

SupplyChainandLogistics

FinanceandAccounting

Procurement

HumanResources

Industry-specificProcess(i.e.claimsprocessing)

ITandNetworkinfrastructure support

ITapplicationmaintenance&development

Renew/changeprovider -Similarcontract

Renew/changeprovider -As-a-ServiceContract

40%ofITOutsourcingcontractsgoingAs-a-Service

Butonly30%ofBPO…25%ofF&A

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/SaaSplatformsuponwhichtobuildshareabledigitalcapabilities

Analyticsandbigdatatoolsandapplications

Mobilitytoolsandapplications

Interactive/collaborativetools,applicationsandsocialmedia

Cognitivecomputingplatformsandmachinelearning

Roboticprocessautomation(RPA)toolsandapplications

Investingheavilytogetaheadofthecurve Abouttherightamountfortoday'sneeds

Someinvestment,butnotenough Minimal/noinvestment

Whathavebeenyourinvestmentssofarinembedding Digitalcomponents intoyourF&Aprocesses?

Source: “Finance In The Digital Age”, HfS Research 2016Sample: Enterprise Buyers = 160

What is really holding back

BPaaS in F&A?


How As-a-Service Is Taking Shape in F&A: Plug-and-Play Business Services

Undertakingcomplexandoftenpainfultechnologytransitions toreachasteady

state

Plugginginto“readytogo”businessoutcome–focused, people, process, andtechnologywithsecuritymeasures

§ While Finance is heavily dependent on ERP systems, plug and play business servicescan unlock value by interfacing with these systems, and making them more extensibleand valuable.

§ Plug-and-play also is well positioned for smaller but growing companies, and insupport of replacing systems for companies going through mergers. It does requirebusiness executives to drive the business case and coordinate with IT and procurementto 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 & PlayBusiness Services.

§ Many service providers are shaping, partnering, developing, and offering options, andit is a matter of readiness and momentum among clients.

What has to change to make this a reality?

(In technology, enterprise behavior, the market overall, the economy)

What kind of service

provider will it take to deliver?


HfS Blueprint Grid: Finance & Accounting As-a-ServiceINNOVA

TION

EXECUTION

ExcellentatInnovationandExecutionInvestinginInnovationtoChange

BuildingAllCapabilities ExecutionIsAheadofInnovation

AS-A-SERVICEWINNER’SCIRCLE

EXECUTIONPOWERHOUSES

HIGHPOTENTIALS

HIGHPERFORMERS

Accenture

arvato

Capgemini

Cognizant

EXL

Genpact

AegisHCL

HPEIBM

Infosys

OneSourceVirtual

WNS

TCS

WiproXchanging

Xerox

Sutherland

Downloadyourcopynow!

Is Finance Finally Ready To Write Off Legacy And Move To BPaaS? | 1

© 2016, HfS Research, Ltd | www.hfsresearch.com | www.horsesforsources.com

HfS R e se arc h | T h e Se rv ic es Re s earc h Com pa ny™

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.

Questions?

Appendix


Workday Services: OneSource Virtual

Relevant Acquisitions/Partnerships KeyClients Staff& Operations TechnologyTools andPlatforms

• OSVhaspartnershipswithothermembersoftheWorkdaypartnerecosystemincludingPwC,Meteorix,CPSG,Appirio,DayNineandSafeGuardWorld.Thesepartnershipscanbetoteam-up onopportunitieswhereBPaaSservicesarepartofthesale,staffingsupport,orinthecaseof OSVandPwC,provideaunifiedsalesstrategyaroundWorkdayFinancials..

• WorkdayinvestedinOneSourceVirtualafteritsfounding, andcurrentlyholdslessthana4%stake.HalyardCapitalhasinvested$22millionandOneSource Virtualislookingforadditionalinvestmentin2015.

• Morethan300clients.,whichismorethan30%Workdaycustomerpenetration.Thecompany boastsmorethan300initialdeploymentsandmorethan603follow-onprojects.

• Historic focuswasonresellingtosmallorganizationsoflessthan1,000employees

• Averagesizeofclientorganizationnowis5,000employees.

• Clientsinclude: Chiquita,GENBAND,GoPro,Uber,JuniorAchievementandMichael&SusanDellFoundation

• Partnersince:2008• Number ofWorkdaycertifiedconsultants:

266• Totalnumberinpractice:564.Expectsto

have650-700byyearend2015.

Locations:• Irving(US):Headquarters• Mesa,Arizona(US):processingcenter• Derry(Ireland):openingin2015

• Atmosphere:proprietaryplatformbuiltonForce.com toautomateactivitiesaroundmultipleWorkdaytenantsandAPIs.

• Inspect:proprietaryautomatedtestingtool.

• Insight:proprietarycustomerprojectandconsultantmanagementtool

Strengths Challenges

• First HCM BPaaS service provider. OneSource Virtual was the first Workday partner tooffer business process as a service “BPaaS” capabilities in addition to its professionalimplementation services. It has the ambition to become the leading BPaaS provider forbest-of-breed SaaS application vendors over the next decade. Focused on the WorkdayHCM product today, OneSource Virtual reports the most number of total customers inthe Workday ecosystem, at more than 300.

• Focus on talent acquisition and training. The service provider is focused on diversityamong its workforce, which spans 25 different nationalities and a healthy mix of maleand female employees, it says. In 2014, senior leadership underwent training to helpguide the company to the next level of growth. Middle management will undergotraining in 2015.

• Atmosphere: OneSource Virtual's proprietary in-tenant BPaaS platform provides centralvisibility of all client activities in one place and automated enterprise service bus (ESB)processing helps deliver business solutions a cross tenants. While this tenancy access isno longer exclusive to OneSour ce Virtual, the service provider has a head start over itscompetition for building similar scalable support solutions in the emerging area ofrobotic process automation.

• Converged implementation and outsourcing services. Virtual understands theimportance of converging technical and outsourcing skills in engagements to bettermeet the real needs of customers in the cloud today. It is common for customers toengage OneSource Virtual for 2-3 short projects throughout the year, for examplealigning on using new Workday software updates, in addition to payroll finishingservices. Moreover, it is one of the few partners running its own Workday regional usergroups to share on-going operational learnings.

• Focus on BPaaS. “Business process as a service” may bethe latest buzzword to describe the evolution orintersection of software as a service (SaaS) and outsourcingand go out of favor quickly as business processesthemselves are less of the service focus. Others are alsoaggressively wrapping services around Workday and couldsurpass OneSource Virtual with their broader experiencesin delivering services worldwide.

• Workday limitations. Focused on following in Workday’sown footsteps leave OneSource primarily US-based todayand could mean missed opportunities in other regions inthe next few years. While it is opening an office andoperating capabilities in the United Kingdom in 2015, it isnot recognised as a global provider and will meet fiercecompetition in other areas as global expectations increase.

• Services menu approach. OSV services offerings arestandardized and customers can select from preconfiguredoptions. Services providers have always standardizedofferings but they typically haven’t presented it in this wayto customers,. They focus on discussing the customer’spain points and business objectives and then fit them intothe appropriate service offering. It seems that OSV is askingcustomers to do this fit themselves with a in-houseconsultative, high value approach seeming to be missing.

BlueprintLeadingHighlights

• QualityofAccountManagement• IncorporateFeedback• FlexibilitytoDeliverBothEnd-to-

EndSolutionsandPointSolutions• TailortoBusiness/industry• ValueBeyondCostSavings• IntegrateTechnologyinto

Business Process• Vision

PLAN

IMPLEMENT

MANAGE

OPERATE

OPTIMIZE

Winner’s Circle CloseWorkdayBPaaSpartnercombining consultingandmanagementservicescapabilitiesforcustomers


OneSource VirtualEnteringtheF&AbusinessprocessservicesmarketasWorkday-basedBPaaS provider,startingwithAccountsPayableandstrongpotential

Acquisitions/Partnerships Client Profile Service DeliveryOperations ProprietaryTechnologies

Acquisitions:• NA

Partnerships:• NA

OneSource Virtualtargetsanichecustomerbase:companies thatuseWorkdayFinancialManagement solutionsintheU.S.,Canada,UK,andEMEA

TargetIndustries:

OneSource Virtualhasplatformbasedapproach, nottargetingorlimitingitselftoanyvertical.However,theserviceproviderdoesnotoffer servicestotheFederalGovernment.

Headcount: <50

DeliveryCenters(3):• USA– 89%(Irving,Texas;Mesa,

Arizona)• UK&Ireland– 11%(Derry,Ireland)

• OneSource Virtual’s AP Automation• Atmosphere: a centralprocessingsystem• INspect:anautomatedtestingsystem

Strengths Challenges

• First-moverAdvantage:OSVistrulya“borninthecloud”serviceprovider,andisanoptionfor companies thatarelookingforfinanceoperationsthataredigitally-ledandnotdigitallytransformed(thestartingpointoflegacyBPOproviders).Itoffersbusinessprocess servicesforWorkdayFinancialManagementcustomers.

• ItsOwnNicheMarketSegmentInF&A:BuildingoffastrongstartinHR,forWorkday-basedBPaaS,OSVcaneasilyaddF&AtoitslargebaseofexistingHRclients.RefertotheHfSWorkdayServicesBlueprint(link)foradditionalinsightonOSV.HfStappedintoclientfeedbackfromHRexperience sincetherearenoF&Aclientstodate.

• Unique P2POffering:OSVcombinesWorkday’sAccountsPayablefunctionalitywithaproprietaryinvoicecapturetoolaswellasaWorkdaybasedproprietaryrulesengine.“Sharedautomation”isthefoundation oftheoffering; OSVhascreatedaplatformfortheextraction– andthenautomationof– recurringprocesses,startingwithP2P.Eventhoughinvoicesareprocessed byOSV,clientscanaccessthedatathroughstandardorcustom reports.

• RPAIs“Native”toitsAtmosphereDevelopmentEnvironment:OSVhasexpertisetostandardizeandautomatethetransactionalsideofAPmanagementwithinacloudspecific applicationwhileleveragingallofitssecurityanddataprotection.

• EarlyAdopterofWorkdayFM andForwardThinkingInternalApproachtoF&A:OSVusesWorkdayinternally,andtheCFOprovidesinputonhowtheBPaaSservicesshouldsupporttheFinancefunction. Principlesinclude afocus ondataaccuracyandaccessibilityfordecisionmaking,self-service,automatedworkflow,andcollaborationnotjustinfinancebutwithHRandbusinessleadsthroughoutthecompany. OSVisWorkdaycustomer#67,andtheserviceproviderhasbeeninvestinginscopingandscalingtheBPaaSF&AserviceswithinitsownwallsbeforelaunchingitinSeptember2015.StraightforwardTransactionBasedPricing:Allcontractsareonlybasedona"perinvoice”processed.

• Build aCredibleF&ABrand: OSVhastohelpF&Aprospects andclientsunderstandthevalueofsharedautomationandBPaaS,andistiedtoWorkdayFMsuccess. However,weseeincreasinginterestinthisapproach fromtheFinanceworld,andOSVhasastrongpositioninHRandpartnershipwithWorkdaytoleverage.

• ExpandBeyond LimitedP2PScope:AlthoughOSVhasplansof extendingitsofferingstotheentirevaluechainof F&ABPO,today,onlysupportforProcuretoPayisavailable.Ithasalongwaytogotohaveafullsuiteoffinancialmanagementsupportandthereisnoanalyticscapability.

• ToughCompetition: Legacyserviceprovidersarefastcatchingupwithas-a-serviceofferings andcapability,andhaveestablishedrelationshipsandglobalpresence.F&Aisacompetitivemarket,andslowtochange.OSVneedstobeverytargetedinitscustomerbaseselectionandinvestment.

• LimitedEcosystem: OSVdoesnothavetheextensiveecosystemof partnersinFinance&Accountingthatweseewithitscompetitors,beyondKPMG.Theserviceproviderisfocused onsupportingwhatitdoeswithitsownresources,and hasyettobuildanecosystemtomovebeyondit.

BlueprintLeadingHighlights

• QualityofAccountManagement• IncorporatesFeedback• StrategyforIntelligentAutomation• Useof TechnologytoSupport

Business Processes• VisionforFinanceAs-a-Service• PlugandPlayDigitalBusiness

Services

ValueChainCoverage:

ProcuretoPay

OrdertoCash

RecordtoReport

Finance Transformation

Analytics

High Potential

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

Economy & Finance