Business process outsourcing
Cultural revolution Q&A
Tom Klein is head of global finance and administration (F&A) practice at Cognizant. He explains how CFOs are embracing business process outsourcing (BPO) and what they can do to ensure the success of their transformation project.
What are the key drivers behind the clients’ decision to implement a BPO strategy as part of their finance transformation journey?
This is a really interesting question given that 50% of companies don’t outsource F&A operations. Based on about 50 engagements with in-house shops over the past 18 months, two themes emerge. First is the Big C Change that forces leadership to say “we have to think differently about doing this” – whether there is M&A activity, competitive threats, top-line and bottom line pressures, or global crises that necessitate a more strategic operating model. The second is underwhelming results from internal operations and/or the promise of automation projects fails to deliver the ROI. Leadership realises a more holistic approach is required and a new F&A transformation partner with the digitisation chops to deliver the next level of innovation makes sense.
What are they looking to achieve with BPO inside and outside the finance function?
Guaranteed, continued cost reduction, better service quality and controllership are the constants I’ve seen over the past 20 years. These are table stakes – so many CFOs are asking: “what are we missing?” Value orchestration across the finance ecosystem is what we hear most CFOs require. They tell us it is very difficult to manage the complexities of implementing new processes, policies, technologies, controls and business capabilities globally. And to do it timely and cost-effectively to deliver better business results.
CFOs as enterprise transformation leads are looking for partners to enable their “finance of the future” quickly and cost-effectively while providing the sustainability and agility their stakeholders demand. Many are going beyond CX (customer experience) to include EX (employee experience), PX (partner experience) and VX (vendor experience) as part of the success quotient.
Finance Director Europe /
www.ns-businesshub.com
How important is ‘fit’ when it comes to a successful outsourcing project? We saw a pivot start to take place last year when the common theme was: ‘well, you BPO providers all sound the same, you have the same technology partners, use the same platform, the same methodology, you’re in the same cities, you’re swapping talent on a daily basis.’ So it’s difficult for them to differentiate between BPO providers. Given that, our customers’ evaluation criteria has shifted to determine who is the best fit for them. In practice, that means culture, values and whether your organisation has deeper flexibility, governance capabilities to be a long-term partner. As a result, we’re seeing fit become a more important element in this equation: do they trust you, do they like you, are you responsive, are you helping them think about things they should be thinking about? So whether it’s innovation or thought leadership, we are seeing fit as a key criteria for our clients.
What factors on the client side tend to lead to a successful project? Firstly, strong executive engagement and responsiveness, where they are involved in the detail. It could be CFO or CXO, you will sense right away if this is a top down priority for their business and that it is both critical and strategic right from the start. If they over-club due diligence, and how they want to do the transition, you know they’re very serious and they’re going to have the characteristics of somebody that’s going to be highly successful at this. And there’s an aspect of governance that I would categorise as ‘change management’ that everybody seems to trip up on. I don’t think we or anybody has really gotten change management down to a science – especially in light of “financial ecosystem transformation”.
There is always some element of whether or not that organisation is truly ready. So you can say for such-and-such a scope: how would you transition this type of work across these business entities, different
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Tom Klein is head of global F&A practice at Cognizant.
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