is finance ready to move to as-a-service? · 2020. 6. 14. · hfs blueprint 2015: workday services...

The Services Research Company

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

An HfS Webcast, 23rd June 2016

Host:

Phil Fersht, CEO & Chief Analyst, HfS [email protected]@pfersht #hfsresearch Web: www.hfsresearch.com | Blog: www.horsesforsources.com

http://www.hfsresearch.com/

http://www.horsesforsources.com/

About HfS, The Services

Research Company

Overview:• 20 years’ business experience in the global IT and business process

outsourcing and shared services industry

• Coined the “As-a-Service Economy” in 2014

• Industry analyst, author, speaker, strategist and blogger

• Advised and cogitated on 100’s of global IT services, BPO and shared services engagements

• Meddles with the largest global network of enterprise services and operations professionals

Career Experience:• Practice Lead, IT Services & BPO Research, Gartner, Inc

• Global BPO Marketplace Leader, Deloitte Consulting

• Consulting Practice Lead, IDC Asia/Pacific

• IT Markets Practice Lead, IDC Europe

Education:• BS with Honors in European Business & Technology, Coventry University,

United Kingdom

• Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble, France

[email protected]

Phil Fersht, Founder, CEO and Analyst, HfS Research

mailto:[email protected]

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The As-a-Service Economy

And The “Intelligent OneOffice”

Digital and Cognitive are Driving Enterprise Operations

Do you agree or disagree with the following statements?

24%

28%

32%

46%

44%

43%

70%

72%

75%

Deploying intelligent operations to align thefront office with core business will have the

biggest impact

Cognitive computing is becoming a criticalcomponent of our future operations strategy

New digital technology initiatives areradically changing the way we manage

business operations

Strongly Agree Somewhat Agree

Source: “Intelligent Operations" Study, HfS Research 2016

Sample: Buyers = 371

Senior Management Driving Customer First Thinking

Please indicate whether you agree or disagree that Sourcing of external as-a-Service models will be driven by a “Customer First” strategy



51%

46%

SVP+ VP and below

Over half of upper management (51%) view this as impacting sourcing model

change and strategy more than any other business driver

2020 Vision: The “Intelligent OneOffice” will emerge from

Digital + Automation

The Digitally-Driven Front Office

Mobile, Social/Interactive, Real-time actionable data, Design Thinking

Digital Underbelly

Intelligent Automation of manual processes

Digitization of documents

IoT

Intelligent Digital Support Function

Front office-aligned IT, Finance, HR, Procurement, Supply Chain

Intelligent Digital Processes Predictive & Operational Analytics, Cognitive.

The Customer-first Digital Organization

The Enabling Intelligent OneOffice

The Nervous System,

incepting & Processing

all Inputs

The

Neural System

The

Circular System

Moving into the As-a-Service Economy means changing the nature and focus of engagement between Enterprise Buyers, Service Providers, and Advisors

Journey to the As-a-Service Economy with Intelligent

Operations

Write Off Legacy

Brokers of Capability

Design Thinking

Collaborative Engagement

Intelligent Automation

Accessible & Actionable

Data

Holistic Security

Plug & Play Digital

Services

CHANGE MANAGEMENT IDEALS SOLUTION IDEALS

LEGACY OPERATIONS AS-A-SERVICE ECONOMYIntelligent

Simplification

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

Please indicate whether you agree or disagree with the following statements about YOUR Intelligent Operations mindset today – just agree

39%

42%

46%

48%

24%

29%

42%

38%

Sourcing of external as-a-Service modelswill be delivered by the existing landscape

of traditional IT Service providers

Sourcing of external as-a-Service modelswill largely be delivered by a constellation

of new breed providers

Sourcing of external as-a-Service modelswill happen in parallel with traditional

sourcing models.

Sourcing of external as-a-Service modelswill eventually replace traditional

sourcing models

VP and below

SVP+



Introducing The Panelists

Our Webcast Panelists Today…

Michael Roseman

SVP,

F&A Outsourcing,

OneSource Virtual

Melinda Lawrence

Chief Financial Officer,

OneSource Virtual

Keith Mattioli

Principal,

Workday Practice Leader,

KPMG

John Ashworth

SVP Finance Operations,

Smith & Nephew

Reetika Joshi

Research Director,

HfS Research

What Can

Finance

Learn From

HR As-a-

Service?


The HR As-a-Service Market As A Model For Finance

HfS Blueprint 2015: Workday ServicesIN

NO

VA

TIO

N

EXECUTION

High Performers

HP

Hexaware Technologies

MercerAon Hewitt

NGA Human Resources

OneSource Virtual

MeteorixCollaborative Solutions

CPSG Partners

IBM

Sierra-Cedar

KPMG

Deloitte

Appirio

AccentureTowers Watson

AtaraxiseverBe

Winner’s Circle

Source: HfS Research 2015

What kind of

F&A buyers

are out there

today?

Proprietary │© 2016 HfS Research

State of the F&A As-a-Service Market

F&A service buyers fall into three categories:

Legacy Buyers

Looking for “lift and shift”

Aim is for provider to run operations at a lower cost over a long contract

Usually with minimal process transformation

These buyers are becoming fewer and farther between

Progressive Buyers

Realizing labor arbitrage benefits are finite

*Seek partner with higher quality process expertise, compliance, transparency in operations

*Appetite to move to consumption-based pricing

Using a combination of talent and technology that keep pace with client needs on a sustained basis

The growing majority of services buyers are at this stage

As-a-Service Buyers

Eager to work with a strategic partner to define and execute against achievable business outcomes

*Part of a broad transformation and change management effort within their own organization

*Tapping into talent and technology, both internally and externally

These are the future-oriented buyers that are in the minority

F&A Leaders Seek Rapid Cycle Time Optimization From

Digital

To what degree do you think the adoption of digital technologies will impact the following in the next two years?

34%

28%

26%

26%

25%

21%

19%

53%

49%

65%

54%

62%

54%

53%

11%

20%

8%

17%

13%

21%

25%

Cycle time optimization

Agility of the business to drive changes in operatingmodel

Cost and productivity

User experience in finance processes

Leveraging financial and non-financial data for betterdecision making

Internal and external customer experiences of financeprocesses

Operational risk management

Huge impact Some impact Minimal impact No impact at all

Source: “Finance In The Digital Age”, HfS Research 2016

Sample: Enterprise Buyers = 160

F&A Leaders Have Sky High Expectations for Operations

Maturity

Which of your business functions are the most mature in terms of intelligent operations now? Where would you like them to be in 3 years? (Scale 1-5, just 4&5)

19%

19%

19%

23%

25%

25%

25%

26%

41%

44%

45%

50%

50%

54%

53%

50%

Finance and Accounting

Human Resources

Procurement

Supply Chain and Logistics

IT application maintenance & development

IT and Network infrastructure support

Customer Service

Sales / Marketing / CRM

Target for 3 years Maturity Now



…Yet Still Looking For Legacy Contracts

What are your plans regarding any outsourcing / managed services agreements you have for any of the following?



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

Customer Service / Sales Support

Marketing

Supply Chain and Logistics

Finance and Accounting

Procurement

Human Resources

Industry-specific Process (i.e. claims processing)

IT and Network infrastructure support

IT application maintenance & development

Renew / change provider -Similar contract

Renew / change provider -As-a-Service Contract

40% of IT Outsourcing contracts going As-a-Service

But only 30% of BPO… 25% of F&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 / SaaS platforms upon which to buildshareable digital capabilities

Analytics and big data tools and applications

Mobility tools and applications

Interactive / collaborative tools, applications andsocial media

Cognitive computing platforms and machinelearning

Robotic process automation (RPA) tools andapplications

Investing heavily to get ahead of the curve About the right amount for today's needs

Some investment, but not enough Minimal / no investment

What have been your investments so far in embedding Digital components into your F&A processes?

Source: “Finance In The Digital Age”, HfS Research 2016

Sample: 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

Undertaking complex and often painful technology transitions to reach a steady

state

Plugging into “ready to go” business outcome–focused, people, process, andtechnology with security measures

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 & Play

Business Services. Many service providers are shaping, partnering, developing, and offering options, and

it 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-ServiceIN

NO

VA

TIO

N

EXECUTION

Excellent at Innovation and ExecutionInvesting in Innovation to Change

Building All Capabilities Execution Is Ahead of Innovation

AS-A-SERVICEWINNER’S

CIRCLE

EXECUTIONPOWERHOUSES

HIGHPOTENTIALS

HIGHPERFORMERS

Accenture

arvato

Capgemini

Cognizant

EXL

Genpact

Aegis

HCL

HPEIBM

Infosys

OneSource Virtual

WNS

TCS

WiproXchanging

Xerox

Sutherland

Download your copy now!

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

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

HfS Research | The Services Research Company™

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.

http://www.hfsresearch.com/pov/finance-finally-ready-write-legacy-and-move-bpaas

Questions?

Appendix


Workday Services: OneSource Virtual

Relevant Acquisitions/Partnerships Key Clients Staff & Operations Technology Tools and Platforms

• OSV has partnerships with other members of the Workday partner ecosystem including PwC, Meteorix, CPSG, Appirio, DayNine and SafeGuard World. These partnerships can be to team-up on opportunities where BPaaS services are part of the sale, staffing support, or in the case of OSV and PwC, provide a unified sales strategy around Workday Financials..

• Workday invested in OneSource Virtual after its founding, and currently holds less than a 4% stake. Halyard Capital has invested $22 million and OneSource Virtual is looking for additional investment in 2015.

• More than 300 clients., which is more than 30% Workday customer penetration. The company boasts more than 300 initial deployments and more than 603 follow-on projects.

• Historic focus was on reselling to small organizations of less than 1,000 employees

• Average size of client organization now is 5,000 employees.

• Clients include: Chiquita, GENBAND, GoPro, Uber, Junior Achievement and Michael & Susan Dell Foundation

• Partner since: 2008• Number of Workday certified consultants:

266• Total number in practice: 564. Expects to

have 650-700 by year end 2015.

Locations:

• Irving (US): Headquarters • Mesa, Arizona (US): processing center • Derry (Ireland): opening in 2015

• Atmosphere: proprietary platform built on Force.com to automate activities around multiple Workday tenants and APIs.

• Inspect: proprietary automated testing tool.

• Insight: proprietary customer project and consultant management tool

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 across tenants. While this tenancy access isno longer exclusive to OneSource 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.

Blueprint Leading Highlights

• Quality of Account Management• Incorporate Feedback• Flexibility to Deliver Both End-to-

End Solutions and Point Solutions• Tailor to Business/industry• Value Beyond Cost Savings• Integrate Technology into

Business Process• Vision

PLAN

IMPLEMENT

MANAGE

OPERATE

OPTIMIZE

Winner’s CircleClose Workday BPaaS partner combining consulting and management services capabilities for customers


OneSource VirtualEntering the F&A business process services market as Workday-based BPaaS provider, starting with Accounts Payable and strong potential

Acquisitions / Partnerships Client Profile Service Delivery Operations Proprietary Technologies

Acquisitions:• NA

Partnerships: • NA

OneSource Virtual targets a niche customer base: companies that use Workday Financial Management solutions in the U.S., Canada, UK, and EMEA

Target Industries:

OneSource Virtual has platform based approach, not targeting or limiting itself to any vertical. However, the service provider does not offer services to the Federal Government.

Headcount: <50

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

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

• OneSource Virtual’s AP Automation

• Atmosphere: a central processing system• INspect: an automated testing system

Strengths Challenges

• First-mover Advantage: OSV is truly a “born in the cloud” service provider, and is an option for companies that are looking for finance operations that are digitally-led and not digitally transformed (the starting point of legacy BPO providers). It offers business process services for Workday Financial Management customers.

• Its Own Niche Market Segment In F&A: Building off a strong start in HR, for Workday-based BPaaS, OSV can easily add F&A to its large base of existing HR clients. Refer to the HfS Workday Services Blueprint (link) for additional insight on OSV. HfS tapped into client feedback from HR experience since there are no F&A clients to date.

• Unique P2P Offering: OSV combines Workday’s Accounts Payable functionality with a proprietary invoice capture tool as well as a Workday based proprietary rules engine. “Shared automation” is the foundation of the offering; OSV has created a platform for the extraction – and then automation of – recurring processes, starting with P2P. Even though invoices are processed by OSV, clients can access the data through standard or custom reports.

• RPA Is “Native” to its Atmosphere Development Environment: OSV has expertise to standardize and automate the transactional side of AP management within a cloud specific application while leveraging all of its security and data protection.

• Early Adopter of Workday FM and Forward Thinking Internal Approach to F&A: OSV uses Workday internally, and the CFO provides input on how the BPaaS services should support the Finance function. Principles include a focus on data accuracy and accessibility for decision making, self-service, automated workflow, and collaboration not just in finance but with HR and business leads throughout the company. OSV is Workday customer #67, and the service provider has been investing in scoping and scaling the BPaaS F&A services within its own walls before launching it in September 2015. Straightforward Transaction Based Pricing: All contracts are only based on a "per invoice” processed.

• Build a Credible F&A Brand: OSV has to help F&A prospects and clients understand the value of shared automation and BPaaS, and is tied to Workday FM success. However, we see increasing interest in this approach from the Finance world, and OSV has a strong position in HR and partnership with Workday to leverage.

• Expand Beyond Limited P2P Scope: Although OSV has plans of extending its offerings to the entire value chain of F&A BPO, today, only support for Procure to Pay is available. It has a long way to go to have a full suite of financial management support and there is no analytics capability.

• Tough Competition: Legacy service providers are fast catching up with as-a-service offerings and capability, and have established relationships and global presence. F&A is a competitive market, and slow to change. OSV needs to be very targeted in its customer base selection and investment.

• Limited Ecosystem: OSV does not have the extensive ecosystem of partners in Finance & Accounting that we see with its competitors, beyond KPMG. The service provider is focused on supporting what it does with its own resources, and has yet to build an ecosystem to move beyond it.

Blueprint Leading Highlights

• Quality of Account Management

• Incorporates Feedback

• Strategy for Intelligent Automation

• Use of Technology to Support

Business Processes

• Vision for Finance As-a-Service

• Plug and Play Digital Business

Services

Value Chain Coverage:

Procure to Pay

Order to Cash

Record to Report

Finance Transformation

Analytics

High Potential

is finance ready to move to as-a-service? · 2020. 6. 14. · hfs blueprint 2015: workday services...

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