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.

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.