John is CEO of NelsonHall, the leading business process services (BPS) and IT services (ITS) research and analysis firm, and is widely regarded as one of the world's leading authorities on achieving business transformation through the application of BPS.
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Rachael Stormonth, Senior Vice President at BPS analyst house NelsonHall, discusses the latest business trends in F&A BPS with Professional Outsourcing magazine, and describes how some companies are using it as a platform for business transformation.
published on Apr 08, 2013
NelsonHall's market analysis of the multi-process F&A Outsourcing industry and MP FAO trends consists of 85 pages. One page profiles of 15 MP FAO service providers are also included.
NelsonHall's "Targeting Multi-Process F&A Outsourcing (MP FAO) Services" report is a comprehensive market assessment report designed for:
The report analyzes the global market for multi-process F&A outsourcing (MP FAO) services and addresses the following questions:
While cost reduction remains important to buyers, significant secondary or tertiary criteria underpin customer purchasing behaviors in MP FAO.
NelsonHall has grouped buyers of MP FAO services into four broad segments. In order of size these are 'process optimizers', 'captive transformers', 'Second Generation' and 'platform consolidators'.
The 'Platform Consolidators' segment describes clients that have opted for an outsourcing led finance transformation program motivated by a company-wide finance ERP or similar platform implementation or upgrade. This platform approach, typically results in a 'big bang' MP FAO contract under which substantially all F&A processes are outsourced to a single provider. The segment is dominated by BPO providers with an IT services heritage and finance transformation consulting capability.
The two largest segments however are 'Process Optimizers' and 'Captive Transformers' which represent 40% and 30% respectively of the MP FAO market.
Customers that sit in the "Process optimizer" segment have grown their FAO contracts from standalone F&A outsourcing engagements into MP FAO contracts over time. The segment is therefore serviced by vendors with medium to long term investment horizons, who leverage service innovation and dedicated customer management teams to build long term client relationships.
The 'Captive Transformers' segment describes organizations that have established captive finance shared services operations but leverage the outsourcing model to monetize their SSC investments, adopt a variable cost structure and invest cost savings in other core business activities.
Many of the factors that are driving current take up of MP FAO services (for example the need for global standardization and consolidation of F&A processes, or gain better visibility and control of financial processes) will continue to drive future growth of the market. In addition, growing competition is not only providing greater choice and increasing service delivery capacity into the market, it is also driving down service delivery costs making it easier for organizations to make the business case for outsourcing.
Whilst the MP FAO market is dominated by the large enterprise segment (organizations with >$5bn in revenues and >10k employees), vendor capability to serve the mid-market has evolved significantly with the roll-out of new BPaaS solutions and greater industrialization of process delivery.
