What’s really on the CFO agenda?
Take a handful of senior executives from various BPO suppliers, add a dash of client-side insight, mix well, add alcohol and simmer gently for 120 minutes, questioning regularly…
As an advisory firm that helps Chief Financial Officers (CFOs) manage the wide array of challenges they face, our world intersects with that of Business Process Outsourcing (BPO) at a number of key points:
- we regularly work as BPO advisors, helping our clients determine the feasibility of BPO initiatives in Finance & Accounting (F&A) and related functions;
- on other occasions, we may be actively working in the “retained” element of a BPO deal and therefore interfacing closely with the supplier;
- or we may be helping with certain non-BPO-related items on the CFO agenda in an organisation where BPO is up-and-running or being implemented.
Given that not all BPO deals go quite as well as they could (newsflash – shock, horror), we decided to exchange views with the Finance & Accounting (F&A) BPO supplier community to see whether, together, we could come up with some insight that would be useful to the various interested parties.
So, we took a handful of executives from some of the world’s leading F&A BPO suppliers, sprinkled in some senior people operating in other BPO towers (because F&A BPO deals are often linked to other functions and because the CFO often has a pan-organisational remit for driving efficiency improvement), garnished with a couple of client-side executives, added a civilised amount of alcohol, and asked two key questions:
- What’s really on the “CFO agenda”?
- What do we really think of BPO advisors?
The remainder of this article describes the group’s outputs against the first question. A companion article looks at the second. Bit more contentious that one. That’s the main dish, this is the appetiser. But no less interesting for being less spicy.
Before we share the outputs, a thought… As “strategy-level” consultants, we might have said: “What can BPO suppliers tell us about the CFO agenda? They deal at the transactional level only”.
This position could be seen to be supported by the indubitable fact that a recurring problem in BPO is that true end-to-end transformation does not happen. All the focus of the initiative (in terms of business case, solution design, change management, benefits realisation, etc) ends up on the outsourced piece, whilst the retained piece carries merrily on its way. Is this because the BPO suppliers are only cognizant of / interested in the outsourced piece? Do they have a big-picture, end-to-end view? Are they able to support true transformation? Would they have anything to say on the question we were asking them?
Well, yes, they certainly did have something to say. They contributed, we contributed, we built on each others’ ideas. And we came up with the following output (in priority order with equal-priority items grouped):
- Regulation and risk compliance
- Increasing the productivity of finance / reduce costs
- Providing better and more information (as opposed to more data)
- Adding value (and being seen to add value) to the wider business
- Maximising shareholder value / external share price
- Driving productivity across the business
- Accessing funding for balance sheet / investments / initiatives
- Increasing the speed/ timeliness of information
- Smartsourcing / outsourcing / offshoring
- Dealing with uncertainty – geographies / commodity pricing / foreign exchange
- Reducing complexity and simplifying processes
- Protecting the value of the company – maximise brand value
- Mergers and acquisitions
- Financing scaling for growth
- Growing and sustaining Finance talent
This list is derived from the collated, combined inputs of senior executives from top BPO suppliers and major client-side organisations, and of one of the world’s leading Finance and Performance Management advisory forms (that’s us in case you’re wondering).
And what does it all mean? Well, here are a few take-outs…
CFOs have a multi-dimensional job, playing a key role in driving strategic value-creation in the organisation as a whole, acting as facilitator and/or enforcer (good cop/bad cop) to the rest of the organisation and getting the basics right with and effective and efficient service. If you’re a CFO and doing the things on the above list, you won’t be going far wrong. On the other hand, if you’re out of line, it could be a signal to re-evaluate priorities. Of course, it could also mean that you know something we don’t…
Bringing it back to a BPO angle, it’s pretty clear that F&A is one of the most mature areas of BPO. Why is this we wonder? Perhaps it’s to allow the function to concentrate on value-creating activities? Hmmm… maybe, and BPO can be a powerful facilitator of this. But most F&A BPO in our experience is cost-driven. However, saving even 40 per cent of the costs of the F&A function is very small fry in terms of organisational costs as a whole. So maybe it’s because to accountants every penny counts, anywhere it’s found? Again, maybe, but we reckon it’s for another reason – getting your own house in order is always a pretty good idea if you’re trying to give others advice.
The BPO community seems to have an excellent big-picture view and, from the comments in the session, it’s clear that it is looking to get beyond “the transaction”. For some time we have been sensing that BPO suppliers are seeking to hire line finance experience to help then get up the value chain. And why not? Even organisations that have successfully deployed F&A BPO are asking “where do we go from here?” and moving the outsourcing bar upwards is one answer.
We hope you enjoyed the first course!
The session was facilitated by Howard Spode of BPOpronet (www.bpopronet.com). BPOpronet helps BPO suppliers win, implement and deliver their contracts. The participants of the session will remain confidential. But many, many thanks to them for their time and insight.
About the Author
Roy Barden leads the Shared Services and Outsourcing Advisory practice for Novo Altum, and has spent the last 15 years as a consultant leading change within the support functions of global organisations , helping clients deliver both in-house and outsourced shared services. He has experience in both public and private sectors across industries, working with organisations including GSK, BP, Xerox, UK Department of Education, Morgan Stanley and Bayer.
Before joining Novo Altum, Roy led the Global Business Services Advisory practice for the Hackett Group. Prior to consultancy, he spent 13 years working in the finance functions of multinational firms in the paper and chemical industries based in the UK before becoming CFO of a multinational speciality chemical firm located in the Netherlands.
Roy has a degree in Economics and an MBA from the London Business School and is a Fellow of the Chartered Institute of Management Accountants.