Summary Report: Vertical Industry Strategies for Shared Services and Outsourcing Survey

A joint study by Shared Services &
Outsourcing Network (SSON) and
Everest Group

Summary Report
Vertical Industry Strategies for Shared Services
and Outsourcing Survey
Report: March 2012

Copyright © 2012, Everest Global, Inc.
EGR-2012-0-R-0666

Introduction and background

 Much of the growth in shared services and How to learn more
outsourcing has been oriented along traditional
horizontal functions such as finance &  Visit the websites of SSON and Everest Group for
accounting, human resources, and IT. However, more information, including fact sheets with results
with increasing maturation and innovation in for specific industries
strategies, differences across industries are
emerging, additionally, vertical functions unique  Results from the survey will be featured at Shared
to an industry are increasingly playing an Services & Outsourcing Week (SSOW) events
important role around the world in 2012

 In order to better understand these trends,
Everest Group and the Shared Services & Australasia China
Outsourcing Network (SSON) conducted the first- Melbourne Shanghai
ever survey focused on vertical industry 16-19 April 2012 23-25 October 2012
strategies in shared services and outsourcing
Europe Germany
 The survey covered 28 vertical industries, 8 Amsterdam Berlin
horizontal functions, and 164 vertical functions. It 14-16 May 2012 20-23 November 2012
addressed a wide range of topics including
scope, improvement initiatives, sourcing models, Asia India
and technology strategies Singapore Gurgaon
04-06 September 2012 04-06 December 2012
 This report summarizes the findings from over
650 responses across enterprises, service www.ssonetwork.com
providers, and industry influencers research.everestgrp.com/VISSSO-survey

2
EGR-2012-0-R-0666

Table of contents (page 1 of 2)

Topic Page no.

Section I. Executive summary 5
 Executive summary 6
 Snapshot of key analyses 7
 How to interpret this report 8

Section II. Overview of shared services and outsourcing strategies 9
 Summary 10
 Success, maturity, and focus on cost 11
 Centralization and sourcing model 13
 Improvement initiatives, ability to change, and SaaS 17

Section III: State of traditional horizontal functions 20
 Summary 21
 Scope 22
 Delivery model, offshoring, and technology 23

Section IV: Variations by industry 26
 Summary 27
 Scale and sourcing model adoption 28
 Horizontal and vertical function adoption 30
 Improvement initiatives for vertical functions 34

3
EGR-2012-0-R-0666

Table of contents (page 2 of 2)

Topic Page no.

Section V. Different approaches used by mature organizations 35
 Summary 36
 Profile of mature organizations 37
 Improvement initiatives 40
 Scope of F&A 41

Section VI. Perspectives of service providers and influencers 42
 Summary 43
 Service provider industry focus and growth 44
 Sourcing model trends 45
 Alignment of investments to improvement initiatives 46
 SaaS/cloud adoption expectations 47
 Influencer views on service provider gaps 48

Appendix
 About the survey 49
 Glossary of key terms 50

4
EGR-2012-0-R-0666

Outline

 Executive summary

 Overview of shared services and outsourcing strategies

 State of traditional horizontal functions

 Variations by industry

 Different approaches used by mature organizations

 Perspectives of service providers and influencers

5
EGR-2012-0-R-0666

Executive summary

 With the increasing maturation of shared services and outsourcing, many organizations report that their
programs are successful and able to consistently meet financial objectives

 However, far fewer organizations consider themselves to be mature in comparison to their peers and most
are still primarily focused on process improvement over other sources of value

 Further, most shared services and outsourcing groups are more oriented towards traditional horizontal
functions such as F&A and HR rather than vertical functions, which are closer to the core business
activities

 In order to deliver the required results, organizations primarily favor a shared services model. Many
organizations also state a bias for a “best-fit” sourcing model, but this is not demonstrated in reality

 Finally, although many respondents indicate technology is a key initiative, they are generally not yet
convinced that it is appropriate to adopt SaaS/cloud technology models

6
EGR-2012-0-R-0666

Snapshot of key analyses

Financial and value management Representation of horizontal and vertical functions
Percent of respondents agreeing with statement Average number of functions included
Horizontal functions
Vertical functions
Cost reduction is the most
62 3.4
important objective Services industries
2.1
Consistently meet financial
76
objectives
3.3
Business cases include Product industries
87 1.2
value beyond cost savings

Shared services and outsourcing adoption by industry Relative focus of respondents by maturity level
Average shared
Percent of respondents
3.5 services adoption
Below average Above average
adoption of shared adoption of shared
services and above
Healthcare
payers
services and Collaboration with Successfully implement
average for outsourcing
Extent of third-party outsourcing

3 outsourcing business users change
Information
Media & Travel & services
entertainment transportation Banking Chemicals
Telecom Capital markets
Insurance
2.5
Average outsourcing
Engineering &
construction
Life sciences Oil & gas Mature 48 57
adoption Retail Freight & Hi-tech
Utilities
logistics
Healthcare providers CPG
Above average
2 adoption of
Below average Automotive shared services
adoption of
shared services
Government and below
average for
Less mature 31 12
Industrial products
and outsourcing outsourcing
1.5
1.5 2 2.5 3 3.5 4 4.5 5
Extent of shared services

7
EGR-2012-0-R-0666

How to interpret this report
Key definitions and visual conventions

Key definitions
 Functions: Business support activities which  Improvement initiatives: Questions about seven
encompass multiple processes improvement initiatives were asked for each function
 Horizontal functions: Activities which tend to be (horizontal and vertical functions), and also asked about
similar across industries such as finance, HR, and IT. in aggregate. These seven include the following:
Eight horizontal functions were covered in the survey – Increase consolidation/centralization
 Vertical functions: Activities which are different by – Reengineer/standardize processes
industry. Examples include order management in – Implement new tools and technologies
hi-tech, merchandise analytics in retail, and loan and – Leverage analytics and business intelligence
mortgage servicing in banking. The survey covered – Increase collaboration with business users
164 vertical functions – Increase level of offshoring/nearshoring
– Deepen talent pool/expertise

Visual conventions
Many questions in the survey were asked in terms of In order to draw attention to the most important data and
the extent to which a respondent agreed or disagreed summarize key insights, the report uses the standards
with a statement. Respondents were given seven provided below
options to select from and these are shown on charts in
this report using the color scheme provided below
Notable data findings Additional insights
Strongly Somewhat Somewhat Strongly
disagree Disagree disagree Neutral agree Agree agree

8
EGR-2012-0-R-0666

Outline







9
EGR-2012-0-R-0666

Summary of key messages
Overview of shared services and outsourcing strategies

 Respondents from enterprises report a high degree of success with their shared services and outsourcing
efforts, although only a quarter consider themselves mature in comparison to their peers. Further,
respondents demonstrate a clear focus on meeting financial objectives while also pursuing sources of
value beyond cost savings

 IT horizontal services are the most centralized, with vertical functions being the least centralized. Shared
services is the preferred sourcing model with “best-fit” as a strong second, although much less commonly
adopted when looking in detail at functional approaches

 Moving forward, respondents indicate:
– The greatest focus on process-centric improvement initiatives and lesser priority being placed on
analytics and offshoring
– In order to accomplish these improvements, respondents see their leadership as being effective in
supporting initiatives, but less confident in their effectiveness in executing change efforts
– SaaS/cloud technologies vary widely in adoption and many are undecided to slightly biased towards
increased adoption

10
EGR-2012-0-R-0666

Although over 60% of the enterprise respondents consider
their efforts to be successful, only 26% feel confident that
they are mature in comparison to their peers
Level of agreement with statement Strongly Somewhat Somewhat Strongly
Percent of enterprise respondents

Our shared services and/or
outsourcing program is generally 5 10 20 19 33 13
considered to be a success

In comparison to other organizations,
our strategy for shared services and
1 12 17 17 20 24 9
outsourcing is clear and
well-conceived

In comparison to other organizations,
we are mature users of shared 6 18 13 11 26 15 11
services and outsourcing

Larger organizations demonstrated a tendency to perceive themselves as successful and mature in
comparison to peers

Source: Vertical Industry Strategies in Shared Services & Outsourcing survey, January-February 2012

11
EGR-2012-0-R-0666

Three-quarters of enterprises meet their financial objectives.
Surprisingly, almost 90% respondents reported including
sources of value other than cost in their business cases

We consistently meet our financial
13 6 14 20 34 22
objectives

Cost reduction is the most important
objective for our shared services 2 6 16 14 30 22 10
and/or outsourcing strategy

In addition to cost savings, we
consider other sources of value in our 1 3
1 8 23 45 19
business cases

We regularly refine our objectives to
target new sources of value 1 3 8 17 29 33 9

The comparatively low portion of respondents who indicated cost reduction as the most important objective
suggests that increasing maturity has led to broader value propositions


12
EGR-2012-0-R-0666

IT functions are the most centralized at 77%, comparatively
almost half of the vertical functions are centralized – which is
not far from the overall philosophy of organizations
Percentage of enterprise responses

Overall philosophy 5% Sentiment independent of
32% 40% 23%
function

Aggregate across Aggregate of over 1,000
functions 10% 31% 27% 32%
functional answers

Horizontal IT
4% 19% 32% 45%
functions

Horizontal F&A, HR, Break-out of functional
9% 30% 28% 33% answers
procurement

Vertical functions 15% 39% 23% 23%

Not Somewhat Mostly Centralized
centralized centralized centralized

Within the vertical functions, product-oriented industries were twice as likely to have decentralized delivery
as services industries


13
EGR-2012-0-R-0666

Most organizations prefer shared services, with “best-fit” in a
strong second position – and both expected to grow

Enterprise sourcing model preference Future sourcing model trend
Percentage of enterprise responses Percentage of enterprise responses

Best-fit (either shared services or Reduce shared services
outsourcing based upon and outsourcing (1%)
situation) 39%
No change
19%
Increase
Prefer third-party outsourcing 7% 45% shared
services
Increase both
third-party 23%
outsourcing and
Prefer shared services 47%
shared services
12%
Increase third-party
outsourcing
Retain in business 7%

Roughly 80% of the respondents expect to grow their use of shared services and/or outsourcing. Only one
percent expect to reduce the efforts, with 19% anticipating no change


14
EGR-2012-0-R-0666

Although respondents from shared services organizations
most heavily favored shared services, all respondents
indicated a similar preference for “best-fit” sourcing

Best fit 39% 38% 41%

Prefer third-party outsourcing 7%
18%

Prefer internal shared 56%
services/captives 47%
33%

Retain in business 7% 6% 8%
All respondents Respondents in shared Others
services/captives

Although a high portion of respondents in the “Others” category have responsibility for vendor management
and other outsourcing roles, less than 20% indicate that outsourcing is the preferred sourcing model


15
EGR-2012-0-R-0666

“Best-fit” sourcing philosophy is common, but seldom
matches reality – and being adopted less than half as often as
the overall philosophy suggests

18% 14% 14%
6% 7% 30%
Best fit 39%

14%
Prefer outsourcing 7%
55%
57% 65%

Prefer shared services 47% 47%

24%
17% 15%
Retain in business 7% 9%
Overall philosphy Aggregate of F&A, HR, Vertical functions IT infrastructure &
functional answers procurement applications
horizontals horizontals

Only IT functions which are much more centralized come close to matching the overall sourcing model
philosophy


16
EGR-2012-0-R-0666

Process-centric improvement initiatives are rated as highest
priority

Percentage of enterprise responses rating as a top 3 priority

Reengineer/standardize process 78

Increase consolidation/ Process-centric levers
53
centralization for improving
Implement new tools and
50
technologies
Increase collaboration with
38
business users
Leverage analytics and business
28
intelligence

Increase offshoring/nearshoring 19

Deepen talent pool/expertise 13

Consistent with other areas of the survey, offshoring received modest focus as being an important lever for
capturing more value


17
EGR-2012-0-R-0666

Most organizations believe that their leadership is effective in
supporting initiatives, but only a quarter of them express
confidence in their effectiveness in executing change

Our senior management is effective
in supporting shared services and/or 2 6 14 12 25 28 13
outsourcing initiatives

We are effective in executing our
change management plans 3 6 18 15 31 21 6

Confidence in ability to effectively execute change varies significantly by maturity (see later section for more
details)


18
EGR-2012-0-R-0666

Current use of SaaS/cloud technologies is broadly distributed
and neutral on future plans, with a slight bias towards
increased adoption

We are currently using SaaS/cloud
16 20 7 23 15 17 2
technologies for some functions

We plan to significantly increase the
use of SaaS/cloud technologies 11 8 4 38 19 17 3

The hi-tech and travel & transport industries indicate a greater interest in these new technology models, in
contrast to more regulated or information-sensitive industries (e.g., banking, healthcare)


19
EGR-2012-0-R-0666

Outline







20
EGR-2012-0-R-0666

State of traditional horizontal functions

 The survey included a deep-dive into the traditional horizontal functions of F&A, HR, and procurement

 Although judgment-intensive processes are less commonly included, the representation is generally a
third-to-half of the respondents

 Additionally, respondents indicated a strong bias for pursuing new sources of value through changes in
delivery model such as end-to-end approach in F&A, core spend in procurement, and self service and
mobility in HR

 By contrast, respondents were more mixed in their use of offshoring and nearshoring, with a wide
distribution of approaches

 Similar to overall adoption of new technologies, respondents are often undecided on the role of
SaaS/BPaaS in their F&A, HR, and procurement strategies – with HR demonstrating a greater openness
to new technologies

21
EGR-2012-0-R-0666

Across horizontal functions, adoption of transaction-intensive
processes outpaces judgment-intensive processes

Inclusion of processes in horizontal functions Transaction-intensive Judgment-intensive
Percentage of enterprise respondents answering for function

F&A Procurement Human resources

Accounts payable 93 Day-to-day Employee data 86
66
purchasing
Account receivable 82 Payroll 81
Accounts payable 63
General ledger 82 Benefits admin 76
Vendor management 63
Fixed assets 74 Recruitment 61

Tax 50 Catalog management 53 Learning 49
Management
53 Spend analytics 56 Compensation 45
reporting
Performance
Regulatory 47 43
Strategic sourcing 52 management
Budgeting 35 Mobility 38
Compliance 50
Treasury/risk 33 Regulatory 38

Internal audit 30 Category management 38 Employee relations 34

Two-thirds of the enterprise survey respondents included F&A, whereas only half the respondents included HR and procurement.
IT infrastructure, IT applications, and contact center were included by nearly 33%, while knowledge services was included by
only 20% of the respondents


22
EGR-2012-0-R-0666

Enterprises are pulling advanced value levers to further
optimize horizontal functions


F&A
Approach to F&A shared services and
outsourcing is end-to-end process driven 4 12 15 12 26 19 12
(Order-to-Cash, Procure-to-Pay, Record-to-
Report) as opposed to function driven

Procurement
Beyond indirect or non-core spend, direct spend
5 19 10 16 19 23 8
(or core spend) is increasingly managed by our
procurement shared services and/or outsourcing

HR
A key focus for our HR services is to increase 4 2 4 31 35 24
self-service and mobility

The most common improvement initiatives for capturing more value (e.g., centralization/consolidation,
standardization/reengineering, offshoring/nearshoring, tools and technologies) are also pursued more
frequently in horizontal functions than vertical functions


23
EGR-2012-0-R-0666

A quarter of enterprises utilize offshoring as a key component
of service delivery for horizontal functions. However, a
slightly greater portion indicate the opposite

F&A 13 17 9 21 12 22 6

Offshore and nearshore
delivery is a key
Procurement 13 16 10 23 14 21 3
component of service
delivery strategy

HR 12 25 6 22 11 19 5

Among all 28 industries analyzed, respondents from government, utilities, and healthcare providers had the
lowest level of offshoring while banking, insurance, and life sciences had the highest level of offshoring


24
EGR-2012-0-R-0666

Similar to overall views on SaaS/cloud, many organizations
are undecided on newer technologies even in horizontal
functions

F&A 18 23 7 35 10 7

Our technology strategy
for involves significant
Procurement 15 16 9 41 9 10
leverage of Saas/BPaaS
based solutions

HR 10 20 4 38 15 9 4

HR is the function most open to new technologies, which is also reflected in market offerings


25
EGR-2012-0-R-0666

Outline







26
EGR-2012-0-R-0666

Variations by industry

 Looking at the responses across industries, several key themes emerge regarding scale, the level of
adoption, and approaches

 Retail & hospitality, financial services, and healthcare segments report the largest shared services and
outsourcing programs. In all industries, the relative level of adoption of shared services is higher than
outsourcing

 Services-oriented industries, such as financial services, transportation & logistics, and retail & hospitality,
include more vertical functions in their scope than product-centric industries such as manufacturing and
energy. In all industries, judgment-intensive processes in F&A are less likely to be included in the scope

 The range of vertical functions represented is very broad, tending to mostly reflect customer-related
transactional activities and supply chain-related activities. This is further reflected in the types of
improvement initiatives being pursued for various vertical functions

27
EGR-2012-0-R-0666

Healthcare, BFSI, and retail have the largest scale of shared
services and outsourcing

Overall scale of shared services and outsourcing Less than 500-1,000 1,000- 2,500-5,000 More than
Percent of enterprise respondents 500 FTEs FTEs 2,500 FTEs FTEs 5,000 FTEs

Public sector 73% 13% 7% 7% Government, non-profit / NGO, education

Aerospace and defense, automotive, chemicals,
Manufacturing 66% 10% 12% 5%7% consumer packaged goods, consumer durables,
industrial products, and engineering & construction

Transportation & logistics 69% 19% 13% Travel and transportation, freight & logistics

Technology & communications 45% 18% 11% 7% 18% Telecom, hi-tech, and information services

Energy & resources 50% 21% 7% 21% Oil and gas, metals & mining, agriculture, and utilities

Retail & hospitality 29% 24% 6% 12% 29% Retail, hospitality & tourism

BFSI 32% 22% 11% 5% 30% Banking, capital markets, and insurance

Healthcare 41% 14% 14% 32% Life sciences, Healthcare payers, Healthcare providers


28
EGR-2012-0-R-0666

The extent of shared services and third-party outsourcing
varies by industry

Extent of shared services and outsourcing adoption by industry
Average score on a five point scale for all responses per industry
Average shared
3.5 services adoption
Below average Above average
adoption of shared adoption of shared
Healthcare
services and above services and
payers
Extent of third-party outsourcing

average for outsourcing
3 outsourcing
Information
Media & Travel & services
entertainment transportation Banking Chemicals
Telecom Capital markets
Insurance
2.5 Engineering & Life sciences Oil & gas
Average outsourcing construction
adoption Freight & Hi-tech
Utilities Retail
logistics
Healthcare providers CPG
Above average
2 adoption of
Below average Automotive shared services
adoption of Government and below
shared services Industrial products average for
and outsourcing outsourcing
1.5
1.5 2 2.5 3 3.5 4 4.5 5
Extent of shared services

More than three-quarters of industries report adoption of shared services greater than the mid-point and only two industries
report greater adoption of outsourcing than shared services

29
EGR-2012-0-R-0666

Services industries have a higher representation of vertical
functions

Average number of functions
Horizontal functions Vertical functions

Banking, capital markets, & insurance 3.6 2.3

Transportation & logistics 3.2 2.3

Retail & hospitality 3.7 1.9

Healthcare payers & providers 3.0 1.4

Technology & communications 3.1 1.4

Energy & resources 3.6 1.1

Manufacturing 2.6 1.1

Public sector 4.3 1.0

Average = 3.3 Average = 1.6

Services industries have more robust mid-offices – which tie more closely to external customer service
activities with linkages to financial processes such as billing and account set-up and management

30
EGR-2012-0-R-0666

Similar to the overall view, adoption of transaction-intensive
processes outpaces judgment-intensive inclusion across all
industries
Inclusion of F&A processes Judgment-intensive F&A processes
Percentage of enterprise respondents Transaction-intensive F&A processes

93%
84% 85%

73% 75%
70%
65% 66%

46%
41% 39% 39% 42%
39%
33%
30%

BFSI Transportation Public sector Retail and Technology & Manufacturing Healthcare Energy and
and logistics hospitality communications resources

Industries that consider F&A to be vertical-specific are less likely to include F&A in shared services and outsourcing
initiatives. For example, nearly 30% of the BFSI respondents consider F&A to be industry-specific – highest across all
industries. Consequently, BFSI has a relatively lower degree of F&A inclusion in shared services and outsourcing

31
EGR-2012-0-R-0666

Key vertical-specific functions in shared services and
outsourcing by industry (page 1 of 2)

Average number of
Industry vertical functions Key vertical-specific functions
Automotive Master data, customer data, vendor data management; asset and inventory
0.9
management support
Banking Retail banking account open/closure and servicing; loans & mortgage servicing;
2.0
cards servicing and statement processing; transaction processing
Capital markets Application processing, account servicing; investment operations, order
3.0
management
Chemicals Master data, customer data, vendor data management
1.2

Consumer packaged Master data, customer data, vendor data management; order processing and
1.9
goods fulfillment
Education Eligibility and registration
0.8

Engineering and Document and record management
1.0
construction
Freight and logistics Document processing; billing
1.8

Government Records management; application processing
1.0

Healthcare payers Claims processing and management; claims adjudication, disbursements,
2.2 subrogation; member on-boarding, records management; underwriting and risk
assessment support
Healthcare providers Revenue cycle management (eligibility, billing, coding, receivables, payer services);
1.0
healthcare information management (records management, electronic health record)


32
EGR-2012-0-R-0666

Key vertical-specific functions in shared services and
outsourcing by industry (page 2 of 2)

Average number of
Industry vertical functions Key vertical-specific functions
Hi-tech Master data, customer data, vendor data management; order management and
1.6
fulfillment
Industrial products Master data, customer data, vendor data management; engineering support services
1.2

Information services Sales and marketing support; billing & royalty support
1.3

Insurance Underwriting and actuarial data processing and analysis; L&P policy servicing and
2.4 records management; L&P claims processing and management; eligibility,
verification, fraud detection and management
Life sciences Drug discovery and research support; clinical trials and pharmacovigilance
0.8 administration; distribution planning and analysis, defect handling, and reverse
logistics
Media and Publishing and distribution management; advertising sales support; subscription and
1.7
entertainment order management
Oil and gas Supply chain planning & support; asset and inventory management support
0.8

Retail Logistics and supply chain administration; store operations & property services
2.0

Telecom Order management and provisioning; sales and marketing support
1.1

Travel and Operations and fleet administration; records and document management; sales and
2.9
transportation reservations support
Utilities Meter-to-cash (billing, payment processing, credit and collections); field services and
1.1
meter data administration

33
EGR-2012-0-R-0666

Improvement initiatives reflect business context of a vertical
function

Five most common vertical functions for each improvement initiative

Reengineer & Technology & Talent pools &
Centralization Offshoring
standardize analytics collaboration

 Banking:  Capital markets:  Banking  Oil & Gas: Asset  Retail: Advertising
– Loan & mortgage Order management, – Loans and and inventory and marketing
servicing investment ops mortgage management support
– Check  Freight & logistics: servicing  Manufacturing:  Manufacturing:
processing, Billing – Transaction – Engineering Engineering support
remittances, lock-  Information services: processing support services services
box Billing & royalty – Cards servicing – Order processing  Banking:
 Hi-tech: Order man. support and statement and fulfillment Commercial banking
and fulfillment  Media: Subscription processing  Hi-tech: operations
 Telecom: Sales and and order  Insurance Vendor/customer  Insurance
marketing support management – L&P and P&C master data – Underwriting and
 Healthcare  Manufacturing: claims processing management actuarial support
providers: Revenue Order processing and management  Banking: Risk, FX, – Claims
cycle management and fulfillment – Claims regulatory, fraud adjudication,
 Manufacturing:  Healthcare adjudication,  Retail: disbursements,
Vendor/customer providers: Revenue disbursements, Merchandising subrogation
master data cycle management subrogation analytics support
management

Transaction- Link to supply chain / Judgment-intensive
Link to revenue management
intensive business decisions with unique skills

34
EGR-2012-0-R-0666

Outline







35
EGR-2012-0-R-0666

Different approaches used by mature organizations

 Mature organizations were identified based upon their self-reported maturity in comparison to peers. On
average, they are slightly more centralized and notably larger than their peers

 Further, these organizations have adopted a greater end-to-end mindset, but focus more of their energy on
non-process improvement themes such as increasing collaboration with business users and being
effective at change

 Despite their focus on factors beyond process, mature organizations are more oriented to focus on cost
and meet financial objectives. Interestingly, they are not notably more oriented towards adopting
SaaS/cloud technologies, but are more likely to implement new tools

 These mature organizations also include more scope in their service delivery models, moving beyond
transactional processes in F&A and also greater inclusion of vertical-specific functions

36
EGR-2012-0-R-0666

Mature organizations were identified based upon their
response to the survey; they have a greater representation of
large organizations and also more centralization
Degree of centralization Sourcing model preference

Fully 15%
27%
centralized Best fit 41% 39%
Definition of mature
organizations
Prefer outsourcing 6% 6%
 Maturity is defined based upon Somewhat 77%
68% Prefer shared
self-reported maturity in centralized 46%
48%
comparison to peers services
Not structured to
centralize 5% 8% Retain in business 5% 9%
 Mature organizations are
defined as those indicating Mature Less mature Mature Less mature
they “agree” or “strongly
agree” that they are mature in Annual revenue of organization Scale of shared services/outsourcing
comparison to peers US$ billion FTEs

 Less mature organizations are
14% 12%
those that “strongly disagree,” >5,000 29%
>50 31% 15%
“disagree,” “somewhat 18%
disagree,” or “neutral” that they 16%
20% 1,000-5,000 18%
are mature in comparison to 10-50
peers 39% 500-1,000 12%
1-10 30%
57%
<500 41%
<1 29%
19%
Mature Less mature Mature Less mature

37
EGR-2012-0-R-0666

Having already adopted an end-to-end philosophy, mature
organizations increasingly look for value beyond process
improvement – instead focusing on users and driving change
Percentage of enterprise respondents

Priority initiatives
F&A approach is Collaboration with Successfully
end-to-end Consolidation business users implement change

Mature 80 48 48 57

Less mature 39 61 31 12


38
EGR-2012-0-R-0666

Mature organizations show greater financial orientation and
are somewhat more interested in new technologies

Cost reduction is most important Consistently meet financial objectives
Financials
Disagree 5% Disagree 2% 6%
12%
Somewhat agree/disagree 22%

Somewhat agree/disagree 56% 52%
60%

Agree 76%

Agree 39% 42%
28%


Currently use SaaS/cloud Plan to increase use of SaaS/cloud
SaaS/cloud

Disagree 19% 20%
35%
Disagree 43%

Somewhat agree/disagree 54%
64%
Somewhat agree/disagree 35% 48%

Agree Agree 27%
22% 17% 16%

39
EGR-2012-0-R-0666

Mature organizations have a relatively higher focus on
technology, collaboration, and offshoring and less focus on
reengineering and consolidation
Important actions for optimizing current service delivery Mature
Percentage of enterprise respondents Less mature

70%
Re-engineer/standardize processes
86%

48%
Increase consolidation/centralization
58%

57%
Implement new tools and technologies
46%

48%
Increase collaboration with business users
31%

22%
Increase level of offshoring/nearshoring
17%

27%
Leverage analytics / business intelligence
28%

13%
Deepen talent pool / expertise
10%


40
EGR-2012-0-R-0666

Within F&A, mature organizations include greater scope,
particularly in areas beyond traditional accounts payable and
receivable
Scope of F&A shared services and outsourcing Mature
Percentage of enterprise respondents Less mature

Accounts payable 93%
91%

Accounts receivable 84%
78%

General ledger 91%
73%

Fixed assets 86%
58%

Tax 66%
42%

Regulatory reporting and compliance 59%
39%

Management reporting and analytics 71%
47%

Budgeting/forecasting 50%
34%

Internal audit 39%
26%

Treasury and risk management 43%
30%

In addition to including more processes within the F&A function, mature organizations include 10-20% greater scope in HR,
procurement, and vertical functions

41
EGR-2012-0-R-0666

Outline







42
EGR-2012-0-R-0666

Perspectives of service providers and influencers

 Service providers report the greatest focus and growth in more mature industries such as banking,
insurance, telecom, and hi-tech

 Both influencers and service providers believe that a “best-fit” sourcing strategy is the prevalent trend,
largely similar to the overall reported philosophy of enterprises

 Although service providers are often investing in the areas where enterprises are focusing their
improvement initiatives, there are notable misalignments such as underestimating the importance of
increasing collaboration with business users and over-emphasizing analytics and offshoring

 For new technologies such as SaaS/cloud, service providers are notably more optimistic about the future
level of adoption by enterprises, although few strongly agree adoption is increasing

 The advice of influencers to service providers most strongly emphasizes increasing understanding of
business context and developing the required capabilities to truly provide the desired scope of services.
Other areas for improvement include performance management, change management, and innovation

43
EGR-2012-0-R-0666

Banking emerges as the most important and fastest growing
industry for service providers

Ranking of industries in terms of importance for Relative growth of third-party outsourcing
third-party service providers services in last 12 to 18 months by industry
Weighted score1

#1 Industries with fastest growth
Banking 347
1. Banking
Insurance 184 #2
2. Telecom
3. Insurance
Telecom 154 #3 4. Consumer packaged goods
5. Hi-tech
Hi-tech 110 #4

Retail 107 #5
Industries with slowest growth
Government 106 #6
24. Metals and mining
Healthcare providers 25. Automotive
105 #7
26. Engineering & construction
27. Hospitality & tourism
Information services 91 #8 28. Non-profit / NGO

Consumer packaged goods 89 #9

Capital markets 78 #10

1 Score is a weighted calculation. Items ranked first are valued higher than the following ranks, the score is the sum of all weighted rank counts

44
EGR-2012-0-R-0666

Enterprises, service providers, and influencers consider
“best-fit” to be the preferred sourcing model

Sourcing model expectation for enterprises
Percentage responses

Best-fit (either shared
services or outsourcing, 39% 44%
based upon situation) 54%

Prefer third-party
outsourcing 7%

15% 41%
Prefer shared
47%
services
24%
10%
Retain in business 7% 6% 5%
Enterprises Influencers (perception of Service providers
trend of clients) (perception of trend of
clients)

Nearly 40% of the service providers consider third-party outsourcing to be the preferred sourcing model, compared to
only 7% of the enterprises. Influencers report a mix most similar to the non-shared services respondents in the
enterprises


45
EGR-2012-0-R-0666

Summary Report: Vertical Industry Strategies for Shared Services and Outsourcing Survey

Summary Report: Vertical Industry Strategies for Shared Services and Outsourcing Survey

Recommandé

Recommandé

Contenu connexe

En vedette

En vedette (8)

Similaire à Summary Report: Vertical Industry Strategies for Shared Services and Outsourcing Survey

Similaire à Summary Report: Vertical Industry Strategies for Shared Services and Outsourcing Survey (20)

Plus de Everest Group

Plus de Everest Group (20)

Dernier

Dernier (20)

Summary Report: Vertical Industry Strategies for Shared Services and Outsourcing Survey