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
Phil Fersht, Founder, CEO and Analyst, HfS Research
Gettweeting!
#HfSResearch
Unbridled Opinion… Simply Calling It How It Is
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©2016HfSResearchLtd. Proprietary│Page7
…With a More Serious Side Too! www.hfsresearch.com
©2016HfSResearchLtd.
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
Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371
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+
Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371
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?
©2015HfSResearchLtd. Proprietary│Page18
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?
Source: “Intelligent Operations" Study, HfS Research 2016Sample: 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
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?
Proprietary│Page26©2016HfSResearch
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?
Proprietary│Page29©2016HfSResearch
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
©2015HfSResearchLtd. Proprietary│Page33
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
©2015HfSResearchLtd. Proprietary│Page34
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