Finance and Accounting (F&A) Transformation - Les Mara, HP

Responding to the demands of globalisation and compliance, technology, outsourcing and innovation are shaping the new F&A organisation, writes Les Mara, HP's head of BPO, EMEA.

HP has the strong opinion that, in the longer term, world-class levels of Finance and Accounting (F&A) performance will be delivered through technology enablement, and not as a result of the movement of processes and processing to lower cost locations (labour arbitrage). The goal and vision that HP has for high-performance F&A shared services is built upon a strategy of automated straight-through processing, using smart technologies.

RESPONDING TO CHANGE

CFOs have led their F&A organisations through some significant changes over the past ten years, learning to ride out what seems like a never-ending succession of waves of change: ERP implementations, consolidation, re-engineering and endless total quality initiatives. However, we have recently seen the emergence of what is being labelled 'finance transformation' to describe the latest wave of F&A development, and in terms of the scale, ambition and holistic approach that CFOs are adopting, this differs fundamentally from the nature and purpose of previous change initiatives.

RESPONDING TO PRESSURE

The need for these comprehensive changes to the corporate role, purpose and organisation of F&A is in direct response to the set of universal challenges facing CFOs today:

• Globalisation: responding to a paradigm shift in cost competitiveness, the emergence of new market opportunities and the ability to source services from the best combination of lower cost nearshore and offshore locations
• Pervasive computing: increasingly real-time connected supply chains, creating the emergence of powerful trading ecosystems, tackling standards and financial controls while retaining the ability to respond with agility
• Compliance: corporate responsibility for increasingly transparent controls and commercial assurance, and the documentation and implementation of more robust policies and procedures in the light of SOX-type requirements
• Data overload: business customers struggle to extract valuable information, and make insightful judgements from the sheer quantity and speed of data now directly available from the last decade's investments in ERP, data warehouses and system integration

CHANGING ROLE OF FINANCE

CFOs are increasingly creating coherent and consistent finance transformation programmes in order to tackle the main challenges listed above and communicate clearly – down, through and across their organisation. The general direction of these journeys indicates another boost to the role-shift from scorekeeper to business partner and corporate change agent. This presents enormous opportunities to today's CFO, as well as some not insignificant challenges.

FINANCE EVOLUTION

Finance transformation is an ongoing process that takes place one step and one solution at a time. Projects that promise to facilitate transformation must have both near-term and long-term benefits. The real key to success is the ability to pick the right projects to execute at the right time, ensuring that they deliver both short- and long-term business value. This ability comes only from the combination of transformation experience and a thorough understanding of the existing business needs and priorities.

Increasingly, CFOs are looking to Business Process Outsourcing (BPO) providers as an alternative route to achieving world-class F&A operations. By leveraging the best people, processes and technology for finance transformation, BPO providers can help CFOs achieve process consistency, compliance with regulatory mandates, better governance and increased control and visibility. Alongside significant cost savings, an outsourced arrangement also brings with it the rigour of benchmarking and performance measurement.

ALIGNING IT AND BUSINESS

An integral part of the journey towards world-class F&A operations is the alignment of IT and business processes. BPO providers such as HP use Service-Oriented Architecture (SOA) to bridge the gap between services and technology, by supplying the underlying tools and technology to deliver seamless global processing. The use of SOA as a foundation for BPO customer solutions represents a leap forward in transformational outsourcing, allowing providers to connect with their customers and rapidly deploy BPO services in a less invasive, less costly and less time-consuming manner.

Deploying such technology-enabled services creates an environment in which business and IT are synchronised. While every F&A organisation has unique needs, and each is starting from a different foundation, there are four principles that should be applied to guide the design of such an approach:

• Simplification: simplifying complex IT environments, through the consolidation of applications and infrastructures and the automation of processes eases management burdens and allows organisations to respond faster to change.
• Standardisation: standard processes, technologies and interfaces are at the heart of a well-run F&A organisation. Common enterprise architectures and business processes reduce costs and facilitate change. Standardisation eases the integration of new technology and reduces training costs.
• Modularity: an adaptive organisation breaks down monolithic infrastructures and processes into modular components that can easily be redeployed based on changing business needs. IT assets are virtualised to increase utilisation and enable the agility that is required to meet changes in business demand.
• Integration: business processes, applications and infrastructure components are connected to synchronise business and IT. Integration ensures that IT delivers the resources to keep critical applications and services running at peak performance.

Ultimately, creating a world-class finance organisation is an evolutionary process, and the path and shape of the finance trans-formation journey will differ for each organisation. Some organisations will choose to first establish a more stable IT infrastructure, then work to become more efficient, and later adaptive, by aligning key processes and synchronising business and IT. Others will look to BPO providers to get them there faster. Either way, the desired end result is an adaptive F&A organisation that is better able to address core business needs, maximise return, mitigate risk, improve performance and increase business agility.

AUTHOR PROFILE

Les Mara has worked for 25 years in the services industry, with deep knowledge and expertise in consulting, systems integration and outsourcing. Over this time, he has worked in most industry sectors and with many significant organisations throughout Europe on challenging business change and outsourcing programmes. For the past five years, he has focused his efforts on developing the BPO services market in Europe.

ABOUT HP

HP is one of the premier services providers for shared services and outsourcing in the world. Based on first-hand experience and insights, HP has successfully led strategic assessments for numerous enterprises, and has transformed Fortune 100 companies commonly regarded as leaders in their industries.

The HP business transformation journey began in the early 1990s when the company set a strategic goal to reduce operating costs by 30% in three years. As a result, HP embarked on an initiative to consolidate current centralised processes to offshore services centres situated in strategic locations throughout the world. This initiative enabled the company to achieve its cost reduction goals, as well as to improve service levels well within the allotted timeframe. More importantly, centralisation provided a springboard for further process improvement through the use of technology.

Today, HP is recognised for its successful business transformation journey and is viewed as a thought leader in the shared services and outsourcing space. Having transformed its own business and with over 15 years of shared services experience, HP is uniquely positioned to understand the challenges of shared services and help companies navigate the strategic and operational obstacles to building world-class processes.

As a result, HP is frequently approached by Fortune 500 companies to conduct shared services and outsourcing feasibility studies, prepare business cases, establish service level agreements, develop detailed implementation plans and lead implementations of shared services centres and outsourcing arrangements.

Beyond serving clients as a consulting partner and BPO service provider, HP is a well-respected and active member of several shared services associations and is regularly asked to speak at conferences on both shared services and outsourcing topics. Underlining its business process excellence, HP was recently honoured as one of the 'Top Ten most admired shared services organisations' by Shared Services News for the second year in a row.