The global body for professional accountants

Hello!
The global body for professional accountants
Finance Transformation:
expert insights on
shared services and
outsourcing.
The global body for professional accountants
An honest conversation.
The global body for professional accountants
1. There is no turning back
from shared services and
outsourcing.
It is an idea whose time has
come
Peter Moller, Partner, Deloitte
Consulting
The global body for professional accountants
2. Different approaches to
finance transformation are
evident.
Shared services and outsourcing
is supporting a wide range of
business objectives from the quick
wins to the game changers
Claudio Altini, Director,
Sourcing Advisory, KPMG
The global body for professional accountants
3. Transformation ambition and
sourcing strategy are linked.
We see an entirely new hybrid
organisation emerging with
innovation and end to end
integration
Austen McDonach, F&A Leader,
Europe, IBM Global Process
Services
The global body for professional accountants
4. Cost remains the starting
point.
Going in clients think they are
saving cost but losing control. They
get the cost advantage, but then
start to realise that quality is rising
Chris Stancombe, Global Head
of Finance and Accounting
Outsourcing, CapGemini
The global body for professional accountants
5. Leaders differentiate
between provider capability.
The main reason we selected our
provider was the flexibility and
ability to create business solutions
to suit our organisation
Joanna Reynolds, Global
Shared Service Lead, Marsh and
Mclennan
The global body for professional accountants
6. Transformation success
rests on change management.
The hardest part is the change
management. People dont know
what they dont know. And its
never easy to take people on this
journey
Graham Russell, Director of
BPO, WPP Group
The global body for professional accountants
7. Retained function is critical,
but it has been missed.
Its difficult to conceive you can get
a F&A operation to the right level
of efficiency and effectiveness
without consideration for the
retained function
Anoop Sagoo, Senior
Executive, BPO, Accenture
The global body for professional accountants
8. Buyer provider
relationships are misaligned.
For Pearson, cultural fit and
tough love were buying values in
our partner selection
John Ashworth, Head of
Finance Transformation,
Pearson
The global body for professional accountants
9. Service and service delivery.
Green SLAs across the board do
not necessarily mean you are a
happy customer
Pascal Henssen, Senior VP and
CEO Europe, Genpact
Finance
Transformation:
Focus on Value Assurance
Dealing with misalignment
of client and service
provider relationships
15 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved
Curriculum vitae
Claudio Altini ACA, CA(SA)
Position Head of the Business Process Sourcing practice, KPMG in the
UK
Experience Claudio is an acknowledged expert in finance and HR functional
transformation, with broad experience in support function
reorganisation and re-engineering assignments, in both pan-
European shared service centre projects and business process
outsourcing projects.
Claudio advises diverse industries including media, telecoms,
automotive, IT, manufacturing, chemical distribution,
pharmaceuticals, FMCG, leisure and central government.
Contact
details
claudio.altini@kpmg.co.uk
+44 020 7311 8873
16 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved
To what extent is the spirit of the deal being
delivered?
To what extent has the business case been achieved?
To what extent are contractual obligations
being met by both parties?
How well are services performing against
business expectation?
Is the Client-Service Provider relationship/service
right for tomorrow?
How is the service perceived at the executive
and operational levels?
What mechanisms enable the contract to grow/
adapt with both the Client and Service Provider?
CONFLICT
Expectations not in line
with delivered services
nor with agreed
services
IRRELEVANT
Agreed services not
delivered and not
expected
WASTE
Services delivered
but not expected and
not agreed
Services agreed
In contract and
expected but not
delivered
Services agreed
In contract and
delivered but not
expected
Services expected
and delivered but
not agreed In
contract
In long term deals there is often a disconnect between
expectation and delivery....
Long term contracts need mechanisms to evolve as the
relationship develops
Common Questions
To what extent are processes appropriate
and evolving to meet contractual needs?
To what extent are the capabilities able to
support the contract?
Outsourcing Relationships evolve
17 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved
Value Leakage is common
10-20%
Value Loss
Operational
Challenges
20-30%
Value Loss
Performance
Challenges
5-10%
Value Loss
Portfolio Management
Challenges
'Net' Value Gained From
the Outsourcing
Relationship
Total Potential Value Gained
From the Outsourcing
Relationship
Efforts
Duplicated Resources
Wasted
Problems
Not
Managed
Performance
Not at
Expected
Levels
Vendors
Deployed
Against
Conflicting
Or Wrong
Goal
Opportunities
Untapped
Potential loss of outsourcing value from ineffective service provider governance
18 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved
Differentiation Domains..
...transform an outsourcing
relationship to a real partnership.....
generally support constant
improvement
Foundation Domains
... must be in place for basic
expectations of outsourcing
relationship to be met ...... the modus
operandi of the contract
A Route to Optimising the Outsourcing Relationship....Value Assurance
A framework for the holistic review of contracts, service performance,
expectations and level of partnership in outsourcing arrangements
19 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved
Performance
Excessive number of performance
metrics
- Administrative burden
- Barrier to global process
standardisation
Opportunities to optimise
performance metrics
- Metrics often not end to end, output
focused or aligned to business
objectives
Challenges with the credibility of
performance metrics.
- Insufficient pre-contract base-lining.
- Frustration that SLAs do not reflect
reality
Process
Drive towards Global Process
Standardisation
- Key to achieving next level of benefits
- Global Process Ownership
Need for Collaborative Approach
- Providers struggling to independently
optimise processes
Completeness of scope and scale
increase chances of success.
- Hand offs and process breaks limit
end to end optimisation.
Price & Commercials
Source of next wave of savings
unclear
- Productivity commitments often do not
reflect reality
- Capital investment continue to be a
challenge
Desire to drive fixed to variable costs
- Client desire for increased flexibility
and reduced volume commitments
- Transaction pricing constrained by
process standardization
Opportunities for greater alignment of
incentives
- e.g. outcomes based gain share
Value Assurance
Insights from Recent Engagements
20 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved
Plan & Potential
Performance against objectives
- Business case cost reduction
objectives typically achieved
- Process standardisation objectives
more challenging
Forward Planning
- Overarching strategy and vision for
BPO relationships often not clearly
defined or communicated.
Challenges in delivering Innovation
- Turning contractual obligations into
tangible improvements
People & Governance
Challenges with clients ability to
adopt and implement change globally
- Next level of savings and benefits
require significant change
Alignment of local and global
objectives key to success of a BPO
relationship
- Service providers often struggle with
mixed messages
Global Business Services
- Centralization and integration of
support services to drive value and
deliver business strategy
Perception
Opportunities to better communicate
successes
- Negative perceptions often amplified further
away from the operation.
Change management is key to the success
of a BPO relationship.
- Negative perceptions often linked to a need
for improved change and stakeholder
management
Value Assurance
Insights from Recent Engagements
21 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved
Nine Factors to Successful Relationship Governance
It is never too late to establish a leading practice outsourcing governance team; a lack of governance
erodes the deal value by as much as 15 to 20 percent.
!
Realise that effective operating managers usually dont make effective governance executives.
!
Shadow organisations likely exist in your organisation creating redundancies and increasing costs.
Root out these teams and right-size your organisation.
!
Outsourcing governance teams should ebb and flow as needs change throughout the transition
and ongoing, or steady-state, phase. Make sure your teams flex and contract accordingly.
!
Learn how to track the value of your outsourcing relationship. Focus on the what and not the how.
!
Make sure your enterprise business intelligence and knowledge management initiatives include all the
data and information related to outsourced processes, and that its tracked throughout the lifecycle of
the relationship.
!
Track and measure internal client satisfaction. Keeping an open dialogue and obtaining regular
feedback from internal clients is key to managing expectations.
!
Ensure you and your provider have aligned goals, or risk failure to deliver on the intent of the deal.
!
Determine your organisations level of trust toward its provider.
Do whatever is necessary to maintain or regain trust to avoid diminishing value.
!
KPMG Advisory Services
The information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. Although we endeavour to provide
accurate and timely information, there can be no guarantee that such information is accurate
as of the date it is received or that it will continue to be accurate in the future. No one should
act on such information without appropriate professional advice after a thorough examination
of the particular situation.
2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP
and a member firm of the KPMG network of independent member firms affiliated with KPMG
International Cooperative (KPMG International), a Swiss entity. All rights reserved.
The KPMG name, logo and cutting through complexity are registered trademarks or
trademarks of KPMG International Cooperative (KPMG International).
Thank you!
claudio.altini@kpmg.co.uk
+44 (0)20 7311 8873
The global body for professional accountants
Questions.
The global body for professional accountants
Thanks!