Finance & Accounting Outsourcing (FAO) - A CEO Perspective

In a rapidly evolving competitive environment, the primary challenge that CEO's face today is increasing costs and increasing complexity. We found that many top CEO's believe they gain major competitive advantages from outsourcing. They identified functions like logistics, manufacturing, customer support and service, research & development, and human resource management.

Of greater relevance to this topic is that we found CEO's placing great emphasis on the growing importance of Finance & Accounting Outsourcing, as a way to mitigate complexity, reduce transaction costs and gain competitive advantages.

However, it is imperative that every CEO gets his F&A team to do a thorough situation analysis and a detailed evaluation, before taking the decision to outsource.

The first thing that should be initiated is the development of a comprehensive business case. An ideal business case should cover the following aspects...

- Provide a background and context to the proposal

- Communicate business needs and the available alternative solutions, together with their costs & benefits

- Estimate the costs, benefits & related financial metrics of the proposed solution

- Provide a baseline for cost management during development and future benefit tracking

- Develop a compelling case for change that will secure the required executive support

- Establish the key success criteria

- Secure approval to move forward with the program

- Obtain support from key stake holders

This process clearly this highlights the importance of understanding and interpreting the corporate agenda when putting together the F&A sourcing strategy to support it. The above may be a time-consuming and tedious task, but will be infinitely rewarding.

Driving corporate cost cutting initiatives, but in sync with the broad strategy is perhaps the greatest challenge that every CEO faces today. While cost reduction is perhaps the most voiced issue, in many situations, it need not be greatest 'need of the hour'. Which is why, one must always be vigilant about overemphasizing on cost cutting to the detriment of other strategic needs.

Today, the operational complexities that every CEO faces are formidable. They often are faced with varied goals and objectives, which sometimes may be in conflict with each other.

Driving cost cutting efforts – and cutting F&A costs along the way – while simultaneously supporting corporate strategic agendas that include goals, such as growing the business and competing against new competition, can easily lead to establishment of agenda items that are at cross purposes. The challenge is to do more with less. It is also to continue to drive new ways and means to conduct the business of F&A.

There are a variety of tools at CEOs’ disposal to affect change. Some are internally focused, such as process improvement and reengineering efforts, or quality initiatives such as Six Sigma. Investing more in new, and ideally better, IT software applications and systems is a perennial favorite but one that has fallen from favor not only due to tight economic times but also because many F&A organizations have already made extensive IT investments. Relatively new and more dramatic tactics involve the expansion of shared services centers (SSCs) or the increased use of FAO.

F&A organizations have been implementing both captive SSCs and FAO for a number of years. What has changed over the past five-10 years is the scale and scope of SSC and FAO efforts – and their usage to support more strategic F&A activities.

For more information about our services please contact:

Hanno de Vriend
BPO Director
H.deVriend@amicorp.com

Fernando Cancino
BPO Sales Executive
F.Cancino@amicorp.com