Global Finance & Accounting Outsourcing Trends Revealed in New EquaTerra Study
Usage Continues to Grow and Satisfaction is High
Houston and London (3 November, 2010)
— Achieving cost savings is the primary driver in the Finance & Accounting Outsourcing (FAO) market today, say 92 percent of study respondents, and ninety-one percent are satisfied with the service providers delivering their Finance and Accounting (F&A) services. These are findings from EquaTerra’s inaugural Global Finance & Accounting Outsourcing Service Provider Performance and Satisfaction Study, which investigated 110 F&A outsourcing contracts held by over 90 of the top F&A spending organizations worldwide. The total annual value of the contracts included in this study is over $1 billion in terms of annual contract value.
The importance of F&A organizations being satisfied with their outsourcing arrangements is underlined by the findings on respondents’ future FAO plans. Eighty-five percent of all respondents involved in this study confirmed that they will continue to outsource at the same or higher levels, with 72 percent indicating they will probably or certainly outsource more. While these results are an endorsement for the outsourcing of F&A processes, it doesn’t mean that all clients are uniformly happy, or more importantly, that all providers performed equally well in each area evaluated. Not surprisingly, the gap between providers viewed as outstanding and those viewed as merely competent is noticeable for most factors, but significantly 97% of FAO buyers surveyed said they would recommend their service provider to a peer. For organizations in the throes of choosing a provider, the study confirms the importance of aligning selection criteria priorities with a careful evaluation of demonstrated provider differentiators.
The study also identified a tight, positive linkage between a client organization’s capabilities in managing outsourcing relationships and their belief that outsourcing was delivering against the primary benefits sought at the outset of the relationship. In effect, clients that govern their relationships well are generally much more satisfied with outcomes than those that don’t. Generally speaking, the study found that clients were more satisfied with outsourcing outcomes when translatable to clear metrics such as savings and service level achievement and less satisfied with more qualitative outcomes such as degree of innovation provided. This further underscores the importance of effective governance in terms of setting clear expectations with providers and jointly managing to deliver against a spectrum of objectives.
Stan Lepeak, EquaTerra’s director of global research, commented, “CFOs today have many items on their agendas and many business tools to choose from to use to help achieve their transformation and cost reduction objectives. Alternative service delivery models such as shared services centers (SSC) and outsourcing are increasingly popular tools.
“Like any business tool or change agent, however, their users must tailor their usage to the specific tasks at hand and make sure that once selected, appropriate attention and resources are applied to ensure their successful execution, including expert advisory services. In this respect a solid F&A sourcing execution plan is equally as important and in some cases more so than a sourcing strategy.”
Organizations in this study have undertaken F&A outsourcing extensively across all three major F&A process areas. Procure to Pay (P2P) is the most frequently outsourced process, outsourced by 85 percent of participants. Sixteen percent of these organizations have plans to outsource more in this process. P2P is followed by Order to Cash (O2C) and Record to Report (R2R) which are both outsourced by 69 percent of respondents. Twenty-two percent of these organizations are considering increasing their outsourcing levels for both O2C and R2R.
“The results bode well for the outsourcing industry as a whole with generally high satisfaction and growth projections,” said Bob Cecil, EquaTerra executive director, Business Process Advisory. “The variation in service provider performance on various dimensions means you need to carefully sort out real expectations and needs and then do your homework to understand which providers best meet those expectations and needs.”
Notes for Editors
EquaTerra will produce a series of deliverables in the coming months that explore the results from this market study. Click here for a copy of the 2010 Global Finance & Accounting Outsourcing Service Provider Performance and Satisfaction Study Management Summary, or to schedule an interview please contact:
North American Media Contact:
Kim Messerschmitt
Director of Marketing
+1 972 987 1686
mailto:kim.messerschmitt@equaterra.com
Europe/Asia Pacific Media Contact:
Melissa Gardiner
Director of Marketing
Europe and Asia Pacific
+44 (0) 20 7347 5101
mailto:melissa.gardiner@equaterra.com
For more information on the full report please contact:
Rick Bertheaud
Managing Director
M: +1 413 427 9952
mailto:rick.bertheaud@equaterra.com
Claudio Altini
Managing Director
M: +44 (0)7530 991 541
mailto:claudio.altini@equaterra.com
About EquaTerra's 2010 Global Finance and Accounting Service Provider Performance and Satisfaction Study
Since 2002, EquaTerra's research team has been conducting Service Provider Performance and Satisfaction Studies, unique market studies that explore, assess, and interpret buyer satisfaction with the performance of their outsourcing service providers. There are no other market studies that provide this level of in-depth information on the outsourcing market and performance of individual service providers. These comprehensive ‘perception studies' on the issues of information technology (IT) sourcing in the marketplace today have been conducted in a number of European countries using a common format to enable Europe-wide analysis and conclusions.
In 2010, the Service Provider Performance and Satisfaction Study model was applied for the first time to the finance and accounting outsourcing (FAO) market and on a global scale. The global FAO study investigates 110 F&A outsourcing contracts held by more than 90 of the top F&A spending organizations worldwide. The total annual value of the contracts included in this study exceeds $1 billion in terms of annual contract value (ACV). All industries are represented in the study, as is the public sector, including both central and local government organizations. Click here for a copy of the management summary.
About EquaTerra
EquaTerra advisors help clients achieve sustainable value in IT and business processes. Our advisors average over 20 years of industry experience and in the last five years have supported more than 2,000 transformation and outsourcing projects across more than 60 countries. Supporting clients throughout the Americas, Europe, Middle East, Africa and Asia Pacific, EquaTerra has deep functional knowledge in Finance and Accounting, HR, IT, Procurement, Real Estate and Facilities Management, and other key business processes. EquaTerra helps clients achieve significant cost savings and performance improvement through internal transformation, shared services and outsourcing initiatives. For further information visit: www.equaterra.com
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