In this day and age, finance executives find themselves swimming in turbulent waters, forced to navigate major disruptions from macroeconomic shifts, regulatory uncertainty and other hard-to-predict events. To stay afloat, they need to be able to operate smarter in an environment that has become increasingly complex and volatile.
The good news is that many CFOs have indeed been successful, according to a recent survey of both senior finance executives and C-level finance customers (CXOs) conducted by us. They can point to having become true business partners within their companies, report advanced capabilities and a record of solidly integrating finance with other areas of the business.
Nearly three-quarters of CXOs say their finance organisation contributes to the companyï¿½s overall strategy and provides timely, responsive and accurate services. At the same time, the research stresses that finance organisations continue to struggle in certain areas.
For example, four of five respondents cited complexity as a major factor likely to have a significant impact on the finance function. Other concerns included regulation, permanent volatility, the management of talent within the finance organization, and the sheer volume of data.
Similarly, in another report, our finance and risk services identified the following priorities for this group in 2013:
Reduce costs. This remains a constant theme, as CFOs and senior leaders at banks are looking for new and innovative ways to do more with less.
Manage risk and regulatory compliance. Senior banking leaders want to reduce their chances of mishandling their business, operational and regulatory risks, and are focused on developing risk management capabilities that will promote long term and sustainable profitability.
Simplify processes. To challenge their organisation's concept of 'business as usual', these CFOs are searching for ways to eliminate complexity while making it easier to do business with their stakeholders. This initiative is aimed at realising improvements in productivity while increasing the capacity of highly skilled resources to improve quality, cut cycle time for certain activities and enable technology to reduce complexity.
Expand analytics capabilities. Banks recognise the need to increase their analytical capabilities to derive more actionable customer and business insights. In many cases, they have implemented 'big data'technology solutions to enable analytics, but lack the resources to develop and manage the process.
BPO: A Potential Solution
Many CFOs are using Business Process Outsourcing (BPO) as a potential solution to these challenges. While BPO providers in the past were largely limited to offering solutions that reduced costs, their services today are more complex and deliver greater value.
Finance organisations can still realise cost reductions, but they can now benefit from advanced analytics that use data to enhance specific business outcomes. This better integrates finance organisations with the operational elements of the company, empowering CFOs to become key partners with others in the C-suite.
The Evolution of BPO
Back in the 1990s, finance and accounting BPO was focused primarily on reducing costs through 'lift and shift' strategies that moved transaction reporting and other recurring finance and accounting functions out of the company, and later to offshore markets.
Subsequent generations of BPO have evolved to increase efficiencies within the operations of the finance organisation. These include procurement and sourcing capabilities that have been comprehensively integrated into the finance function to enable certain global strategies.
Today, BPO gives finance organisations far greater visibility into current financial and enterprise performance through analytics, which allow organisations to capture and leverage data far more effectively.
As they once did for such corporate functions as inventory management, marketing and promotions, and generating actionable consumer insights, analytics now support finance and accounting by transforming data from an information-processing burden into an asset.
With this information availed to them through BPO, CFOs can now take specific steps to, for example, reduce day(s) sales outstanding or shorten the closing time for a given cycle. Rather than react to events, they can address those key challenges that were identified in our research with the right BPO arrangement.
Complexity and Volatility
In an increasingly complex and volatile world, with events ranging from natural disorders to economic crises, companies have little choice but to develop a strategy for managing it. In the past, the full impact from such events could take weeks to unfold, putting CFOs in a reactive mode. Now, the use of analytic tools enables the organisation to become far more forward-thinking and proactive in implementing strategic measures that can mitigate the repercussion of such events.
Without the capability of managing the tremendous amount of data now available to organisations, key insights can be overlooked. BPO solutions give companies a much better way of handling data in two ways: by optimising core back-office functions with streamlined finance and accounting processes that help create an environment of integrity, compliance, transparency and control; and, by providing a strong analytics function that delivers insights from the data that can substantially increase visibility into financial and enterprise performance (e.g. dashboards to get a quick visual summary of consolidated financial data by function, region or business unit).
Retention and Development
An analytics-based BPO partnership can also enable a finance organisation's workforce, one armed with advanced processes and technology, to function at a higher level and become more integrated with the operations of the enterprise. This helps facilitate greater development and retention of individuals at all levels of the department.
In addition to analytics, technologies like software-as-a-service and mobility are enabling the further evolution of BPO, one characterised by on-demand services applied across multiple clients through flexible software platforms.
With the business world growing ever more interconnected and dynamic, finance organisations have been required to respond with greater capabilities. This includes the ability to deal with increasing complexity, handle enormous amounts of data, and understand the current performance of both the finance organisation and the enterprise as a whole. It's within this environment that more and more CFOs are entering into BPO partnerships that will help them meet these daunting challenges.
Tony Chambliss is global offering lead for finance & accounting BPO at Accenture.