Conduent’s FastCap service covers:

• Contract audits
• AP post-payment analysis and recovery
• Vendor statement solicitation
• Freight audits
• Spend forensics.

Extending Beyond Contract Audits to Accounts Payable Recoveries

Conduent has always had a strong contract analytics group focusing on legal contracts. The company has a tool, going back to Xerox days, that can handle millions of documents and search for keywords, etc., to identify key leakage areas. Conduent used the FastCap tool for one client to identify $8m in recoveries opportunities related to contract compliance.

Conduent is now leveraging that tool to data found in finance and accounting processes to look at contracts and invoices to identify erroneous payments, duplicate payments, open/unapplied supplier credits, contract/PO terms compliance, pricing errors, and missed discounts. FastCap uses 12 different algorithms to analyze AP data.

In addition, vendor statement reconciliation is another way of reducing the level of unreconciled items between organizations and their key suppliers, resulting in working capital improvements. Here, Conduent’s accounts payable audit teams analyze statements to identify credit recovery opportunities. This can involve combing through millions of records to validate statement credits and find the root causes of issues. The level of credits that companies can be owed can be huge, with their having little or no knowledge of this. Either the client or Conduent can handle the resulting discussions with the client’s key suppliers.

With freight audits, Conduent is leveraging a third-party tool to analyze and check freight statements from major carriers to find inappropriate billingsConduent has recently done this internally and estimates it has identified over a million dollars of savings.

FastCap is also used for procurement spend forensics. With spend forensics, Conduent personnel use the FastCap tool to analyze spend in targeted categories, typically in areas such as IT, facilities, and contingent labor and then provide recommendations and opportunities for quick wins. The client typically provides 1-2 years of spend data and enables Conduent SMEs to understand the buying process and systems used.

Achieving $20m in AP Recoveries

Conduent currently has eight clients using its FastCap solution. The strongest interest has been in the AP recovery audit solution. Conduent estimates that it has delivered over $20m in recoveries for clients to date. For one client, a mid-market organization, Conduent identified 210 duplicate payments to suppliers on an analysis of 12,567 transactions over an 8-month period, preventing duplicate payments of over $3.4m. There has also been some keen interest in the freight audit service, which is similar to an AP recovery audit in being low-hanging fruit.

Perhaps the most prominent of Conduent’s FastCap clients is an auto OEM, a longstanding major F&A client, that also uses Conduent for various procurement services. In its freight audit work for GM, Conduent was able to find erroneous payments that another provider missed during their audit.  Conduent also showed the client what changes could be made to prevent these from reoccurring by working with freight carriers to make sure they are more accurate in the future.

The FastCap Service Offers a 90-Day Timeline for Initial Recovery of Funds and Zero Up-Front Costs

The FastCap proposition is based on speed of recovery and outcome-based pricing, specifically:

• Speed and minimal disruption: Conduent offers a 90-day timeline from data collection and analysis to initial recovery of funds from suppliers
• Zero up-front costs: Conduent offers the FastCap solution with a managed services wrapper on 100% outcome-based pricing. The gainshare level on recognized savings differs slightly according to the service.

There is also a growing awareness by finance organizations that AP recovery audits can be useful not only for improving working capital but also for identifying system issues or process gaps. Conduent highlights that it can use FastCap for root cause analysis and then help clients put controls in place. Within BPS, the central value proposition has long moved from solely emphasizing efficiency improvements to helping clients develop more effective business processes; FastCap can clearly be useful here.

High Relevance to Major Multinational Manufacturers

So what type of organization should consider Conduent FastCap?

Clearly, FastCap is a no-brainer for Conduent’s existing F&A client base of around 45 accounts, both within finance and accounting and for wider contract and spend analysis.

However, Conduent FastCap also offers a quick return at zero risk to organizations that have retained their finance & accounting and procurement functions in-house, but lack the tools and expertise and desire to invest in areas such as AP recovery. This service offers a way of rapidly recovering an element of working capital while also identifying loopholes in current systems and processes without the need to adopt a full finance & accounting outsource. This particularly applies to large complex companies with many accounts payable or procurement transactions,

The AP recovery and freight audit offerings are especially likely to resonate for initial engagements.

The pandemic has changed organizations’ attitudes towards the need for change, greatly increasing their emphasis on adopting new digital process models and digital transformation. Partly this is driven by the need to enhance their transactional efficiency and effectiveness rapidly, but at least equally importantly, it has brought a much greater requirement for real-time information and analytics to drive the business. All these pressures are keenly felt within the finance department.

WNS introduces Quote-to-Sustain

In response, WNS has looked to reinvent order-to-cash in the form of Quote-to-Sustain. Some of the issues that WNS is aiming to address with its Quote-to-Sustain offering include:

• Improving billing timeliness and accuracy by improving the integration and consistency of data between quotations, digital contracts, order management & fulfillment, and billing systems
• Maximizing revenue by releasing credit holds for good customers
• Protecting the enterprise with more dynamic credit control than periodic credit review
• Improving collections by cleansing master data in real-time.

In addition to delivering enhanced end-to-end visibility, stakeholder experience, and analytics, WNS has also reimagined its Quote-to-Sustain service to deliver greater variability in F&A process costs as business volumes fluctuate and become more unpredictable as a result of the pandemic. Its new Quote-to-Sustain offering bundles technology and services and allows clients to “pay by the drink”.

Specifically, the goal is for clients to remain cash neutral and, subject to some volume commitment, to pay only for transactions, with a decrease in costs emerging from year two onwards. WNS funds all change management.

Quote-to-Sustain modules

The Quote-to-Sustain module structure is:

• Quote-to-Order: consisting of unified master data, cognitive credit, digital contracts, and smart orders
• Bill-to-Cash: consisting of integrated billing, intelligent collections, predictive dispute management, touchless cash applications, and predictive deduction management
• Report-to-Sustain: consisting of digital dashboards, botified queries, analytics-as-a-service, and revenue assurance.

Each of these modules takes the form of a system of engagement sitting on top of the client’s existing ERP systems and systems of record.

In this respect, the use of unified master data is important in bringing together the various commercial and financial elements from multiple databases to ensure accuracy, for example, in billing the right person and identifying the appropriate person for each type of query. The unified master data aims to be a single source of the truth using data authentication from external sources and providing an element of real-time data cleansing.

WNS’ cognitive credit offering aims to take credit management beyond the periodic review of credit bureau reports and base its recommendations for credit eligibility on its own analyses of financial ratios, customer behavior (including any changes in payment pattern), and news triggers from external sources. WNS believes this approach to be particularly effective in addressing credit management within small businesses. The service incorporates technology from HighRadius and Emagia.

WNS’ digital contracts and smart orders modules utilize its Skense and Agilius platforms to combine and analyze data from various sources and integrate quotations, orders, contracts, and billing to reduce the errors that typically arise between disparate sources of information.

WNS’ Revenue Assurance and Analytics modules include some industry-specific modules to monitor and minimize revenue dilution, using analytics for improved collections and to reduce revenue losses arising from upstream process errors.

Quote-to-Sustain adoption plan

WNS has always approached F&A from a sector-specific viewpoint. Having developed all the modules within Quote-to-Sustain, WNS is now in the process of integrating this capability with its industry-specific processes in line with client demand. Powered by an exclusive partnership with EvoluteIQ, WNS’ domain-led hyperautomation platform suite is designed to accelerate the adoption of process automation and drive enterprise-wide digital transformation. The sectors WNS will focus on are the ones where it has already developed industry-specific expertise and IP and include airlines, travel agencies, trucking, shipping & logistics, insurance, telecom, media, CPG, manufacturing, and utilities.

Nonetheless, the initial clients of WNS Quote-to-Sustain have typically started by purchasing a single module such as cognitive credit & collections, and WNS expects a typical sequence of deployment to be cognitive credit & collections, followed by unified master data, followed by revenue assurance.

WNS has already applied its cognitive credit, touchless cash applications, botified queries, and analytics-as-a-service modules of Quote-to-Sustain for a media client. This company’s cash application process was automated but only achieved a 75% auto-match rate due to delays in the receipt of remittance advice notes. WNS deployed touchless cash apps via EIPP (electronic invoice presentment and payments) to achieve an auto-match rate of 88% and introduced intelligent chatbots and predictive disputes management to reduce the time for resolution significantly. The chatbots resolve most disputes without human intervention, with all trade promotion issues resolved through chatbots.

Overall, the media company has achieved a potential $38m uplift in free cash flow by optimizing payments from late-paying customers and an 11% reduction in bad debts by improving late-stage collection.

In addition to this modular approach being taken with mid-sized organizations, WNS is also targeting start-ups, where the company is in discussion with some organizations for the entire suite of end-to-end services.

Conclusion

Many existing F&A operations have incorporated best-of-breed point solutions and subsequently applied RPA in support of point automations. However, these organizations are often still using disparate data sources and have not fully reimagined their F&A processes into an integrated framework using a single source of the truth and analytics for improved operational and business intelligence. WNS’ Quote to Sustain offering aims to provide this reimagined finance model and help organizations become more agile and analytical in their approach to order-to-cash.

Organizations starting on RPA are initially faced with the challenges of understanding RPA tools and approaches and typically lack the internal skills necessary to undertake automation initiatives. Once these skills have been acquired, RPA is then often applied in a piecemeal fashion, with each use case considered by a governance committee on its own merits. However, once a number of deployments have been achieved, organizations then look to scale their automation initiatives across the finance function and are confronted by the sheer complexity, and impossibility, of managing the scaling of automation while maintaining a ‘piecemeal’ approach. At this point, organizations realize they need to modify their approach to automation and adopt a guiding framework and target operating model if they are to scale automation successfully across their finance & accounting processes.

In response to these needs, Capgemini has introduced its Digital Global Enterprise Model (D-GEM to assist organizations in scaling automation across processes such as finance & accounting more rapidly and effectively.

Introducing D-GEM

The basic premise behind D-GEM is that organizations need both a vision and a detailed roadmap if they are to scale their application of automation successfully. Capgemini is taking an automation-first approach to solutioning, with the client vision initially developed in “Five Senses of Intelligent Automation” workshops. Here, Capgemini runs workshops for clients to demo the various technologies and the possibilities from automation, and to establish their new target operating model taking into account:

• The key outcomes sought within finance & accounting under the new target operating model. For example, key outcomes sought could be reduced DSO, increased working capital, and reduced close days
• How the existing processes could be configured and connected better using “five senses”:
  • Act (RPA)
  • Think (analytics)
  • Remember (knowledge base)
  • Watch (machine vision & machine learning)
  • Talk (chatbot technology).

However, while the vision, goals, and technology are important, implementing this target operating model at scale requires an understanding of the underlying blueprint, and here Capgemini has developed D-GEM as the “practitioners’ guidebook, a repository showing (e.g., for finance & accounting) what can be achieved and how to achieve it at a granular level (process level 4).

D-GEM essentially aims to provide the blueprint to support the use of automation and deliver the transformation. It is now being widely used within Capgemini and is being made available not just to the company’s BPO clients but for wider application by non-BPO clients within their SSCs and GBS organizations.

From GEM to D-GEM

Capgemini’s original GEM (Global Enterprise Model) was used for solutioning and driving transformation within BPO clients prior to the advent of intelligent automation technologies. Its transformation focus was on improving the end-to-end process and eliminating exceptions. It aimed to introduce best-in-class processes while optimizing the location mix and improving domain competencies and reflected the need to drive standardization and lean processes to deliver efficiency.

While the focus of D-GEM remains the introduction of “best-in-class” processes, best-in-class has now been updated to take into account Intelligent Automation technologies, and the transformation focus has changed to the application of automation to facilitate best-in-class. For example, industrialization of the inputs needs to be taken into account at an early stage if downstream processes are to be automated at scale. Alongside the efficiency focus on eliminating waste, it also looks to use technology to improve the user experience. For instance, rather than eliminating non-standard reporting as has often been a focus in the past, deployment of reporting tools and services on top of standardized inputs and data can enhance the user experience by allowing them to produce their own one-off reports based on consistent and accurate information.

D-GEM provides a portal for practitioners using the same seven levers as GEM, namely:

• Grade Mix
• Location Mix
• Competencies
• Digital Global Process Model
• Technology
• Pricing and Cost Allocations
• Governance.

However, the emphasis within each of these levers has now changed, as explained in the following sections.

Role of the Manager Changes from Managing Throughput to Eliminating Exceptions

Within Grade Mix, Capgemini evaluates the impact of automation on the grade mix, including how to increase the manager’s span of control by adding bots as well as people, how to use knowledge to increase the capability at different grades, and how to optimize the team structure.

Under D-GEM, the role of the manager fundamentally changes. With the emphasis on automation-first, the primary role of the manager is now to assist the team in eliminating exceptions rather than managing the throughput of team members. Essentially, managers now need to focus on changing the way invoices are processed rather than managing the processing of invoices.

The needs of the agents also change as the profile of work changes with increased levels of task automation. Typically, agents now need to have a level of knowledge that will enable them to act as problem-solvers and trainers of bots. Millennials typically have great problem-solving skills, and Capgemini is using Transversal and the process knowledge base within D-GEM to skill people up faster and ensure Process Champions are growing within each delivery team, so knowledge management tools have a key role to play in ensuring that knowledge is effectively dispersed and able junior team members can expand their responsibility more quickly.

The required changes in competency are key considerations within digital transformations, and it is important to understand how the competencies of particular roles or grades change in response to automation and how to ensure that the workforce knows how automation can enrich and automate their capabilities.

The resulting team structure is often portrayed as a diamond. However, Capgemini believes it is important not to end up with a top-heavy organization as a result of process automation. The basic pyramid structure doesn’t necessarily change, but the team now includes an army of robots, so while the span of managers will typically be largely unchanged in terms of personnel, they are now additionally managing bots. In addition, tools such as Capgemini’s “prompt” facilitate the management of teams across multiple locations.

Within Location Mix, as well as evaluating that the right processes are in the right locations and how the increased role of automation impacts the location mix, it is now important to consider how much work can be transitioned to a Virtual Delivery Center.

Process & Technology Roadmaps Remain Important

Within Digital Global Process Model, D-GEM provides a roadmap for best-practice processes powered by automation with integrated control and performance measures. Capgemini firmly believes that if an organization is looking to transform and automate at scale, then it is important to apply ESOAR (eliminate, standardize, optimize, automate, and then apply RPA and other intelligent automation technologies) first, not just RPA.

Finance & accounting processes haven’t massively changed in terms of the key steps, but D-GEM now includes a repository for each process, based on ESOAR, which shows which steps can be eliminated, what can be standardized, how to optimize, how to automate, how to robotize, and how to add value.

Within the Technology lever, D-GEM then provides a framework for identifying suitable technologies and future-proofing technology. It also indicates what technologies could potentially be applied to each process tower, showing a “five senses” perspective. For example, Capgemini is now undertaking some pilots applying blockchain to intercompany accounting to create an internal network. Elsewhere, for one German organization, Capgemini has applied Tradeshift and RPA on top of the organization’s ERP to achieve straight-through processing.

In addition, as would be expected, D-GEM includes an RPA catalog, listing the available artifacts by process, together with the expected benefits from each artifact, which greatly facilitates the integration of RPA into best practices.

Governance is also a critical part of transformation, and the Governance lever within D-GEM suggests appropriate structures to drive transformation, what KPIs should be used to drive performance, and how roles in the governance model change in the new digital environment.

Summary

Overall, D-GEM has taken Capgemini’s Global Enterprise Model and updated it to address the world of digital transformation, applying automation-first principles. While process best practice remains key, best practice is now driven by a “five senses” perspective and how AI can be applied in an interconnected fashion across processes such as finance and accounting.

For example, within F&A BPS, Hewlett Packard Enterprise (HPE) is investing in a tool to assess the automation potential of organizations’ finance & accounting processes, which is being built into HPE’s FIT (Framework for Innovation & Transformation) framework, and HPE is now developing automation and digitization assessments and roadmaps at the front-end of F&A BPS contracts.

In its targeting of F&A BPS, HPE is becoming more sector specific and incorporating metrics specific to target sectors within FIT, starting with the telecoms and oil & gas sectors.

HPE is also becoming more business metric focused in its approach to F&A BPS and highlighting that the benefits of automation extend way beyond process cost take-out. Cash acceleration and cash utilization are major areas of focus for HPE within F&A BPS. In particular, HPE is stressing that the benefits of source-to-pay automation go beyond halving the S2P headcount and start to open the door to profit improvement opportunities through dynamic discounting. HPE formerly used to advise its clients on negotiating longer payment terms with their suppliers; the company has now changed its focus to encouraging its clients to negotiate early payment discounts and automate/digitize their P2P processes to achieve rapid approval of purchase invoices so that they can optimize their early discounts against these invoices. In many cases, the purchase invoice approval process has been too slow and the knowledge of potential discounts too inaccessible to take advantage of what could amount to a profit improvement opportunity equal to up to 2% of total goods purchased. For example, HPE estimates that the HP GBS organization has saved $2.7bn in early payment discounts over the past three years by taking this approach.

Accordingly, HPE has established a center of excellence for automation in F&A, and is beginning to encourage use of data pdf technology to reduce the need for OCR or manual rekeying of invoices. The company has a number of pilots in this area.

In terms of robotics, the company is currently using UiPath and Blue Prism, the latter particularly for connecting with ERP software, and Redwood for support for R2R and month-end close, and has built-up a library of ~750 accelerators. The company is also extensively using PDF Cloud, and its own Vertica software. HPE’s Business Process Analytics Tool (BPAT) is based on Vertica, which is used to provide an F&A dashboard covering both an executive view of KPIs and drill-downs into service performance.

For example, within P2P, HPE is aiming to digitize F&A processes by:

• Reducing use of paper and scanning through use of PDF data capture and its partnerships with Tungsten and Tradeshift
• Further automation of invoice data entry and processing using RPA
• Identifying further opportunities for automation via BPAT.

Overall HPE is increasingly seeking to place automation strategy and vision at the forefront of F&A process design, with automation and digitization leading the way in identifying possibilities for straight-through processing. Indeed, based on HPE’s F&A services transformation journey diagram, the company expects ~60% of future F&A BPS productivity improvements to be driven by automation and 40% to be driven by process change and staff reallocation & best-shoring.

Contrary to some expectations, RPA is only one automation component. In HPE’s automation journey in F&A BPS, RPA is expected to deliver around a quarter of the total productivity benefits to be achieved from automation, with a whole range of tools and platforms contributing around 75% of the automation benefits to be achieved.

As usual, one of the major challenges over the past year has been in training the company’s solution architects in thinking digital and identifying benefits beyond those previously achievable. As HPE suggested, many of the existing F&A process benchmarks may need to be rewritten over the next 12-months.

F&A BPS is arguably the most mature of all the BPS services. However, with real-time analytics increasingly identifying the opportunities, RPA lowering the barriers to process improvement, and organizations increasingly willing to automate, F&A BPS is now off on a new journey that promises a step change in productivity. Automation plays to the strengths of HPE, and F&A digitization is an area where the company is intending to strongly invest and compete.

That vision was followed up with a strategy called “Next Generation Shared Services” published in December 2012. This has backing at the most senior level of government, having been signed off by a cross-ministerial committee. The Cabinet Office, which has the responsibility for implementing the strategy, has set up the Crown Oversight Function (COF) to implement it. Activities include the setting up of two independent shared service centres (ISSCs), and to monitor progress and benefits.

Major progress has been made since the strategy was fully outlined in December 2012:

• ISSC1 was created when the DfT’s shared service centre was divested to arvato in March 2013. Services will be delivered to the government as part of a 10 year (7-year base plus 3-year options). Around 200 DfT SSC staff transferred to arvato
• arvato has already taken over the delivery of the existing services. It is also working on  a new Unit 4 Agresso build
• Steria has been appointed as the partner in a JV to run ISSC2. The government has a minority share (25%) in the JV called Shared Services Connect Ltd.

ISSC2 is initially a much larger proposition than ISSC1:

• It will provide  back-office services for departments which initially have three times as many staff as those using ISSC 1
• ISSC 1 services are run from one main centre in Swansea, the model for delivering ISSC2 services is yet to be decided. To commence with, Steria will be taking over the current existing internal departmental SSCs.

ISSC2 operations will be completely separate from Steria’s other existing government JV, NHS SBS.

Within the Cabinet Office, COF has responsibility for:

• The ISSCs, their contracts, governance, supplier relationships, performance, benchmarking, and benefit realization
• Quality, service standards and efficiency of the remaining internally run government SSCs. These include:
  • MoJ and HO
  • MOD
  • HMRC.
• As the executer of the Government’s Next Generation Shared Services strategy, the COF will also be monitoring performance to increase back office efficiencies
• Change management.

The COF currently has ~30 staff and is likely to grow over time with potential extension of portfolio of services.

The COF works in three streams:

• A central function with on-going overall reporting
• ISSC1 management
• ISSC2 management.

This is a major change in the way that departmental functions are run with the Cabinet Office taking a direct role in governance and standards of the back-office functions. The Cabinet Office today plays a key role in two of the largest shared service centre/operations in the country and these can deliver shared services to the private sector as well as the public sector.

While the price of the spun off ISSC1 will have reflected this, with ISSC2, the government has opted for a JV in order to maintain its share of future growth and revenue opportunities that this very large entity is likely to bring.

There is often fear of losing skills when services are outsourced; the COF counters that by maintaining the oversight function in-house.

In terms of contract opportunity, the back-office market in central government has now become somewhat limited. The focus of the programme is currently on the main departments and so perhaps some opportunities might still exist among departments’ Arm’s Length Bodies (ALB).

Although extending the services delivered is expected, the plans for this are not currently in place.

This is a plug the gap acquisition for Xerox, bringing in IP to help it better manage the end to end O2C process, especially in the collections domain. With CVG already attracting attention from other BPO providers including Infosys and EXL, the acquisition can be seen as both an offensive and defensive play. In June, Xerox signed an ~200 FTE MP FAO contract with a Swiss headquartered CPG manufacturer, beating the incumbent, Genpact. Half of the services in scope are related to O2C (order management, MDM, collections and cash application) - and the platform used to support those processes was the CVG Value+ platform.

CVG will continue to operate from its London office.

As part of the agreement, Accenture will create a new business service,  Accenture Hospitality Services (AHS), built in part around the operations and capabilities coming from Marriott’s MBS unit, including also Accenture software and analytics capabilities for the hospitality sector. Services to be offered by AHS to the hospitality sector will include management consulting, technology and BPO services.

MBS was set up in 2001.  The intention is that Accenture will not only enhance MBS’ operations but also attract new clients in the leisure and hospitality sector.

The acquisition of MBS' operations is a further evolution of Accenture’s relationship with Marriott International that has seen Accenture provide a number of services over the years including:

• Management consulting, including on process initiatives
• A range of IT projects, for example around the marriott.com website platform
• Enterprise applications services: for example Accenture implemented Marriott's Oracle-based accounting platform. The relationship around financial processes and systems goes back to around 2002.

The Louisville center has ~560 employees currently, and will provide Accenture with another sizeable rural onshore U.S. BPO capability. But this is more than the transfer of an onshore captive to a BPO provider, a known and trusted partner for other services, who then proceeds to offshore part of the operation in a standard F&A outsource. The stated rationale is to commercialize the transferred operation and potentially build an integrated services offering for the hospitality sector that could also include industry-specific HR, business analytics and procurement services. This is a well trodden path for Accenture with examples in F&A dating back to its acquisition of BP's accounting centers in the 1990's in order to serve the oil & gas sector.

This is not Accenture's first attempt to build a back-office BPO business in the U.S. hospitality sector: anyone remember its acquisition of Savista back in 2006?

Accenture has had a long history of providing FAO services to manufacturing companies in the Scandinavian market including Finnish steel manufacturer Outo Kumpu. Other clients have included Yara and Volvo. NelsonHall is seeing increased interest by organizations for multi-tower outsourcing, in particular that spans F&A and procurement, especially by organizations such as SSAB (a $6bn group that is currently loss-making) that urgently need to strip out costs.

SSAB is headquartered in Stockholm, and employs ~9,000 FTEs in 45 countries. The Scandinavian market, which the scope of this contract covers, accounts for ~70% (6,500 FTEs) of the workforce and 38% of global revenues.

Weakening of steel markets globally, following reduced demand from China, has led to pricing pressures, and the European market is also challenged with over-capacity. SSAB has gone from being one of the more profitable steel manufacturers in the world to reporting significant operating losses since H2 2012.

In 2012 SSAB introduced an efficiency program for its EMEA operations targeting annual cost savings of SEK 800m from 2014. The program is also intended to increase flexibility to better address market fluctuations. Outsourcing is clearly seen as the lever needed to help address both these challenges: to strip costs and to increase flexibility.

Accenture, like IBM and Capgemini are one of very few organizations globally that have the capability to provide all the three BPO service areas in scope in this contract. The appetite for multi-process outsourcing deals, including in northern Europe, remains undiminished.