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7/31/2019 Periodic Reassessment, Continuous Improvement of Finance Operations
http://slidepdf.com/reader/full/periodic-reassessment-continuous-improvement-of-finance-operations 1/5
Periodic Reassessment, Continuous
Improvement o Finance OperationsA well-considered and executed transormation roadmap can help
fnance keep pace with emerging technologies and service deliverymodels, as well as advance key business objectives.
Executive Summary
The ever-changing needs o the business and
its operating environment make it imperative
or organizations to continuously reassess their
core processes, including those that pertain to
fnance. Doing so will ensure that processes can
meet any new business requirement and support
the organization through needed change. This
has led to a growing trend in recent years orfnance groups to conduct rigorous assessments
and develop multiyear transormation roadmaps.
A well-constructed and well-executed transor-
mation roadmap will address the wide swath o
process, people and technology issues. This will
put companies on a path to become best in class
and stay ahead o their peer group.
This white paper discusses the actors that
mandate a transormation plan update and pro-
vides a ramework or a comprehensive assess-
ment and roadmap.
Creating, Extending a Transormation
Roadmap
Finance transormation roadmaps are strategic in
nature and built or a multiyear timerame. They
set the transormation agenda and direction or
the organization. The critical inormation require-
ment or developing a transormation roadmap
is a detailed operating landscape map, including
an in-depth understanding o the “as-is” process,
available talent, organizational structure,
technology landscape and levels o automation.
Once an in-depth understanding o the current
landscape has been developed, analysis can be
perormed and alternative uture-state scenarios
developed to begin building the enterprise trans-ormation roadmap.
A transormation roadmap needs to be dynamic
and continuously updated. Current operations
need to be reassessed in light o changes to the
company and its environment, including:
• Availability o new sotware tools and solutions.
• Maturing o outsourcing options.
• Finance operations perormance.
• The advance o globalization.
• Evolving best practices.
• The changing role o fnance.
By continuously evaluating and updating the
transormation roadmap, companies will be able
to take advantage o the latest developments in
technology solutions or fnance. New sotware
• Cognizant 20-20 Insights
cognizant 20-20 insights | october 2012
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cognizant 20-20 insights 2
tools can be leveraged to increase levels o
automation, eliminate non-value-added activities
and help create an organization o the uture with
best-in-class processes.
Technology Enablement
Sotware applications are available that lend a
degree o automation to all fnance processes.
These sotware technology enablers almost ullyautomate the process, as in the case o accounts
payable invoice processing, or improve the eec-
tiveness o the unction, such as fnancial plan-
ning and analysis (FP&A). Examples o fnance
processes or which mature technology oerings
are available include the ollowing:
• Invoicing: Eliminate invoice processing with
Web-based solutions that connect buyer and
supplier.
• Order management: Optimize order manage-
ment, billing and collection unctions with
Web-based solutions.
• Cash application: Automate credit card and
cash applications by leveraging auto-matching
o bank eeds with ERP.
• Recurring entries: Automate booking o re-
curring expenses and allocations by leveraging
existing ERP unctionality.
• Travel expenses: Optimize travel expense pro-
cessing by integrating expense reporting with
corporate travel cards.
• Reconciliations: Optimize reconciliations by
auto-matching multiple eeds.
• Consolidations: Optimize ledger consolida-
tions.
• Reporting: Standardize fnancial planning and
reporting by creating system-generated auto-
mated reports that are available centrally.
• FP&A: Build custom views o data and provide
analytics.
FAO Options
Transormation roadmaps also help companies
objectively evaluate whether to retain processes
or take advantage o the lower labor cost and
shared investments o working with a service
provider. This can be achieved by comparing
oerings and providers with existing cost
structures and service levels.
The oerings o fnance and accounting outsourc-
ing (FAO) providers are changing and maturing
rapidly, moving rom the provision o rules-based
transaction processing to complex judgment-based work. In the early days, the FAO scope
was limited primarily to accounts payables work.
Successul delivery o cost savings and quality
improvement rom accounts payable outsourcing
quickly led to the outsourcing o other transac-
tion processing work, such as accounts receivable,
fxed assets accounting, cost accounting and
routine reporting. Over time, as FAO became a
more accepted and proven business practice,
companies expanded their outsourced work to
include complex reconciliations, ad hoc reporting,
Sarbanes-Oxley compliance work and selected
treasury activities (see Figure 1).
Source: Everest Research Institute (2011)
Figure 1
Degree o Outsourcing o F&A Processes Over Time
Emerging Mature
Accountspayable
Generalledger
Accounts receivable
FP&A
Regulatoryreporting &
complianceInternalaudit
Payroll
Tax
Low High
Low
High Pioneer
Frequency of Inclusion
(Percentage of transactions)
Transaction-intensive processes
2009-2010
2007-2008
Judgment-intensive processes
2009-2010
2007-2008
Depth of Outsourcing Scope
(Degree of process
ownership transferred
to FAO service provider)
During the past few years,
FP&A scope evolution was
driven more by the increasing
depth of scope than the
frequency of inclusion of FP&A
processes in FAO contracts.
Sample size: 580 multiprocess FAO contracts signed as of 2010
Note: For more information, please refer to “Moving Beyond Transactional FAO:The Rise of FP&A Outsourcing,” Everest Group, December 2010.
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cognizant 20-20 insights 3
Service Level Expectations
In-house levels o service perormance also
change over time, or better or worse, as do per-
ormance requirements. Several actors can drive
the need or a change in service levels, including
new expectations, accounting standards and
technology, as well as changes in the operating
or regulatory environment. I current process
perormance levels are not meeting the new
demands, this calls or a process reassessment in
order to achieve compliance.
Consider the ollowing scenario: The end-to-end
cycle time or Company XYZ, rom request receipt
to order ulfllment, is 12 working days. The best-
in-class cycle time is our days. The company,
thereore, must reassess the process with a
target o getting close to best-in-class to stay
competitive.
Globalization also impacts the fnance transor-
mation roadmap. As companies expand globallyto access new markets, or get closer to the
existing markets they serve, the demands on
fnance change. In the traditional model, organi-
zations tended to create inrastructure and back-
ofce support in new markets, including fnance.
With the maturity o today’s FAO oerings, it is no
longer a requirement to build all o the necessary
support. Organizations are now able to operate in
multiple new markets with minimum investment
by partnering with established providers that
oer global F&A services. Companies that have
successully adopted this model are able to
quickly ramp up in new markets, get closer to the
markets they serve and ocus on core business.
As the World Turns
Best practices are changing rapidly. In response
to changing technologies, maturing o outsourc-
ing and changing regulations, approaches and
activities that were best practice just a year
ago may no longer hold that status. Organiza-
tions are leveraging the power o inormation
and developing a greater understanding o the
fnance back-ofce unction and converting it into
value or the organization. This has led to a newtrend, in which back-ofce unctions are trans-
orming into revenue-generating unctions:
• Order management: This unction is now used
by companies to cross-sell and upsell prod-
ucts and services. This has a direct impact on
revenue. The processes and skill sets o the
people managing this unction are changing
to accommodate the expanded agenda. Order
management is transorming itsel rom being
a back-ofce unction to a ront-ofce sales
channel.
• Accounts payable: Improving discount capture
and recovering debit balances are now increas-
ingly being built into the standard accounts
payable process and are key deliverables or
most accounts payable managers.
• Sourcing: With changing expectations,
sourcing teams are now being measured on
actual savings delivered. They are expected
to leverage spend analytics
and new technologies to
take advantage o scale and
negotiate better rates and
terms o credit.
The goals and aspirations o
fnance are also changing over
time. As fnance organizations
are transormed, goals are evolving rom predict-
ability, efciency and accuracy to business impact,
predictive analytics and business partnering.
These evolving goals also orce revisions to
fnance’s transormation roadmap. Increasingly,
corporations want fnance to not only record trans-
actions and report accurately but also be a true
business partner supporting overall enterprise
strategy and growth.
A fnal actor is the progress toward the existing
transormation roadmap itsel. Progress may be
lagging or exceeding the
original plan; i it is lagging,
what are the actors that
are slowing progress? Was
the original plan realistic? I
the answers are no, then the
plan needs to be revisited
and updated to ensure that
the objectives are met.
FAO providers are also not
immune to the need to
reassess operations and
revise transormation plans.
A service provider that only
implements the transorma-
tive changes identifed at the start o the rela-
tionship is ailing its client. For all o the aore-
mentioned reasons — technology, regulation,
perormance, etc. — FAO service providers must
also step back and periodically reassess.
With changingexpectations, sourcteams are now beinmeasured on actuasavings delivered.
As fnanceorganizations aretransormed, goalsare evolving rompredictability,efciency andaccuracy to businessimpact, predictiveanalytics and
business partnering.
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cognizant 20-20 insights 4
Figure 2
Creating a Transormation Roadmap
The required periodic reassessment o fnance
is not a cursory, surace-level activity; it must be
both objective and comprehensive. At a minimum,
a reassessment must include:
• Benchmarking internal costs against the
market price o external service providers.
• Benchmarking perormance (productivity,
accuracy, timeliness, cycle time, stakeholder
satisaction, etc.) against the perormance o
external service providers.
• Assessing fnance operations against leading
best practices.
• Assessing the deployment and eective utiliza-
tion o technology.
Getting Started
A disciplined, successul implementation o the
fnance transormation roadmap will enable
organizations to build fnancial organizations
o the uture with best-in-class processes at
an optimized cost. Based on our experience
with large global companies, a well-drated and
executed transormation roadmap can reduce
program costs by 30% to 50% over a three- to
fve-year timerame, as was achieved by one large
hospitality industry client (see Figure 2).
Any business that has not reassessed its fnance
organization and revised its transormation
roadmap within the past 24 months needs to get
started. To truly achieve an objective and rigorousreview, and a roadmap that is actionable and
pragmatic, outside assistance is recommended.
When seeking help with assessing and transorm-
ing fnance, we suggest choosing a partner that
not only provides consulting but also operates
large-scale fnancial operations or others. A
provider o fnance and accounting outsourced
services will be best positioned to know the real
timerames, costs, benefts and risks associated
with alternative transormation initiatives.
Client: Large U.S.-based hospitality chain
Challenges:
• Large-scale operations with complex ran-
chising and reranchising relationships.
• Fragmented fnancial processes and systems.
• Poor knowledge management; highly
resource centric.
• No ormal business metrics program.
• High process variation rom one business
unit to another.
Our Approach:
• Current-state assessment (people, process,
technology).
• Analysis o multiple uture-state scenarios.
• Development o transormation roadmapand business dcase.
Client Benefts:
• Five-year transormation roadmap, with
identifed quality and business impact
benefts.
• Identifcation o 35% savings on current
total cost.
• Identifcation o 5% year-over-year ongoing
productivity improvements.
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About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider o inormation technology, consulting, and business process out-
sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in
Teaneck, New Jersey (U.S.), Cognizant combines a passion or client satisaction, technology innovation, deep industry
and business process expertise, and a global, collaborative workorce that embodies the uture o work. With over 50delivery centers worldwide and approximately 145,200 employees as o June 30, 2012, Cognizant is a member o the
NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top perorming
and astest growing companies in the world. Visit us online at www.cognizant.com or ollow us on Twitter: Cognizant.
World Headquarters500 Frank W. Burr Blvd.Teaneck, NJ 07666 USAPhone: +1 201 801 0233Fax: +1 201 801 0243Toll Free: +1 888 937 3277Email: inquiry@cognizant.com
European Headquarters1 Kingdom StreetPaddington CentralLondon W2 6BDPhone: +44 (0) 20 7297 7600Fax: +44 (0) 20 7121 0102Email: inouk@cognizant.com
India Operations Headquarters#5/535, Old Mahabalipuram RoadOkkiyam Pettai, ThoraipakkamChennai, 600 096 IndiaPhone: +91 (0) 44 4209 6000Fax: +91 (0) 44 4209 6060Email: inquiryindia@cognizant.com
© Copyright 2012, Cognizant. All rights reserved. No part o this document may be reproduced, stored in a retrieval system, transmitted in any orm or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission rom Cognizant. The inormation contained herein is
subject to change without notice. All other trademarks mentioned herein are the property o their respective owners.
About the Authors
Paul Nowacki, CFA, is Leader o Finance and Accounting Transormation Services, within Cognizant’s
Business Process Services Business Unit. In this role, Paul oversees all F&A consulting activities. He
also serves as a thought leader in F&A and helps identiy market trends and shape new Cognizant
oerings. He is a requent conerence and webinar speaker and author o numerous articles and white
papers on various fnance and accounting topics. By combining his industry experience in IT and fnance
leadership roles with a background in transormational consulting, Paul looks holistically at fnance
and accounting organizations and blends process and systems with an organizational design perspec-
tive. He has a B.S. in quantitative business analysis and an M.B.A., with a concentration in operations
research. Paul also holds the Chartered Financial Analyst proessional designation. He can be reached at
Paul.Nowacki@cognizant.com .
Mathew George, CPA, is a Solutions Leader within the Finance and Accounting Practice o Cognizant’s
Business Process Services Business Unit. In this role, Mathew works closely with clients on strategic
fnance and accounting deals. He also leads strategic assessments and develops optimal solutions that
ocus on the redesign and reengineering o critical processes. Moreover, Mathew has led the global con-
solidation and standardization o F&A processes across multiple countries and languages, into oshore
and near-shore delivery centers. He is a Chartered Accountant, a Certifed Public Accountant and a
Certifed Internal Auditor and holds a certifed Six Sigma Green Belt rom GE. Mathew can be reached at
Mathew-3.George-3@cognizant.com .
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