Everest Group PEAK MatrixTM for FAO Service Providers ... · PDF fileEnd-to-end F&A outsourcing, P2P, O2C, and R2R . Process scope

Copyright © 2013 Everest Global, Inc. This document has been licensed for exclusive use and distribution by TCS

Topic: Everest Group PEAK MatrixTM for FAO Service Providers

Focus on TCS August 2013

EGR-2013-1-E-0934

2 Copyright © 2013, Everest Global, Inc. EGR-2013-1-E-0934

Introduction and scope

Everest Group recently released its report titled “Finance and Accounting Outsourcing (FAO) - Service Provider Landscape with PEAK Matrix™ Assessment 2013”. This report analyzes the changing dynamics of the FAO landscape and assesses service providers across several key dimensions. As a part of this report, Everest Group updated its classification of 20+ service providers on the Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for FAO into Leaders, Major Contenders, and Emerging Players. The PEAK Matrix is a framework that provides an objective, data-driven, and comparative assessment of FAO service providers based on their absolute market success and delivery capability. Based on the analysis, TCS emerged as a Leader. This document focuses on TCS’ FAO experience and capabilities and includes: TCS’ position on the FAO PEAK Matrix Detailed FAO profile of TCS

Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand the service providers’ relative strengths and gaps. However, it is also important to note that while the PEAK Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each buyer. Buyers will have to consider their unique situation and requirements, and match them against service provider capability for an ideal fit.

https://research.everestgrp.com/Product/12158






Everest Group’s research is guided by a framework that distinguishes multi-process FAO from single process Finance and Accounting (F&A) transactional services

FAO (multi-process)

F&A transactional services

(single process)

F&A strategy

Internal audit Budgeting/forecasting

Treasury & risk management

Capital budgeting

Accounts receivable

Tax Fixed assets

Payroll Accounts payable and T&E

Regulatory reporting & compliance Management reporting & analysis

General accounting

Everest Group’s analyses include multi-process FAO contracts with a minimum of two F&A processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of three years

Everest Group’s analyses include 800+ FAO contracts signed as of 2012

Strategy Judgment-intensive Transaction-intensive

Source: Everest Group (2013)


Everest Group PEAK Matrix – 2013 FAO market standing Performance | Experience | Ability | Knowledge Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for FAO

Mar

ket s

ucce

ss

25th

per

cent

ile

High

Low

FAO delivery capability

(Scale, scope, technology, delivery footprint, and buyer satisfaction)

25th percentile

75th percentile

Low High

Major Contenders

Emerging Players

Leaders

Note Service providers with a single process F&A focus, such as NCO (receivables focus), have not been featured on Everest Group’s PEAK Matrix for FAO Source: Everest Group (2013)

75th

per

cent

ile

Xerox

Aditya Birla Minacs

Cognizant

Datamatics

EXL

iGate

Serco

IQ BackOffice

Quatrro

Steria

Sutherland Global Services

Tech Mahindra

Xchanging

Aegis

Accenture

Capgemini

Genpact

HCL

HP

IBM Infosys BPO

TCS

Wipro

WNS

Leader Major Contender Emerging Player Star Performer


TCS (page 1 of 5) FAO service capabilities

Key FAO leaders Vijay Damle, Global Head, F&A Peter Salerno, Head, Sales – United States Suraj Kanoo, Head, Sales – Europe

Scale of operations Number of FAO FTEs over time

6000 7400 10075 11015

FAO service suite TCS offers FAO services in three models – platform-based:

process-as-a-service (BPaaS), SaaS-enabled technology transformation, and transactional F&A

Functional services cover AP, AR, GL, cash management, fixed asset management, payroll, management reporting & analysis, treasury & risk management, budgeting/forecasting, tax, and internal audit

TCS also offers process maturity assessment and transformation methodology called FORE to identify and implement the roadmap to the best-in-class processes

>1,500 FTEs 500-1,500 FTEs <500 FTEs

Procure-to-Pay (P2P)

Order-to-Cash (O2C)

Record-to-Report (R2R)

Financial Planning & Analysis (FP&A)

2009 2010 2011 2012

Areas Recent developments/investments

M&A/ partnership

2011: Partnered with TATA Communications Transformation Services to cater to telecom-related services

Delivery footprint

2012: Opened new delivery centers in Gandhinagar, Pune, Tianjian, and Sao Paulo

Technology and analytics

2011: Launched debt management platform for debt collection life cycle including pre-delinquent to post charge-off / litigation)

Others -



FAO revenue by buyer size1 2012

FAO revenue by signing region1 2012

FAO revenue by buyer industry1 2012

TCS (page 2 of 5) FAO client portfolio

45%

40%

13%

Recently announced FAO engagements July – 2012

Scandinavian Airlines (SAS) Multi-year agreement under which SAS will adopt F&A platform of TCS for its operations across 30 countries

September – 2011

Telstra TCS to provide F&A services to the Australian telecom major under the multi-year agreement

September – 2011

15-year contract with Friends Life

43%

27%

12%

6% 5% 4%

55% 20%

12%

11% 2%

Manufacturing & retail

<US$1 billion

>US$50 billion

North America

UK

Asia Pacific

Other services

Energy & utilities

Latin America (1%)

Rest of Europe (1%) Travel & logistics

Major FAO clients

Financial services

Media Hospitality (1%) Government (1%)

Healthcare (1%) US$1-5 billion

US$5-10 billion

US$10-50 billion

1 Everest Group estimate based on contractual and operational information Source: Everest Group (2013)


TCS (page 3 of 5) FAO delivery locations

Onshore locations Nearshore locations Offshore locations

Delhi

Mumbai Bangalore Chennai

Hyderabad Kolkata Gandhinagar

Pune

Hangzhou

Tianjian

Onshore locations Nearshore locations Offshore locations

Delhi

Mumbai Bangalore Chennai

Hyderabad Kolkata Gandhinagar

Pune

Hangzhou

Manila

Tianjian

Santiago

Sao Paulo

Buenos Aires

Quito

Montevideo

Budapest

Peterborough

Midland



FAO technology approach: Pursues both augmentation and platform approach for FAO technology

TCS (page 4 of 5) FAO technology solutions

Technology augmentation solutions F&A platform BPO solutions


Transaction pricing Add-on cost per FTE

Pay-per-transaction, bundled-in FTE pricing, minimal upfront fees, bundled price for FTE + price for client-users access includes, transformation, service delivery, support, and maintenance

Delivery model & pricing

Add-on solutions that can integrate with customer environment

Industry-agnostic

Complete ownership undertaken by TCS, including applications, infrastructure, and F&A business process services

Hosted multi-client Enables reduced CAPEX and provides utility-based OPEX

model Focused on serving mid-market and large buyers in the

United Stated, United Kingdom, and Rest of Europe

Solution description

Utilities for reconciliation, planning, and analytics

Automation within payables and receivables

Enabler functions such as document management and OCR

End-to-end F&A outsourcing, P2P, O2C, and R2R Process scope

HFM for planning Multiple other tools leveraged

including homegrown solutions

Oracle EBS for core F&A platform; other Oracle technologies include AME, OBIEE, API/interfaces, and 10g

Technology leveraged


Global multi-process FAO market share1 Percentage

Market share in key buyer segments1

Percentage share by ACV By signing region By industry By client size 5-10% in U.S. 15-20% in financial services <5% in enterprise

<5% in UK 5-10% in energy and utility 10-15% in large buyers

<5% in Rest of Europe

5-10% in manufacturing & retail

<5% in mid-market

25-30% in Asia Pacific

5-10% in professional services

15-20% in SMB

Overall remarks With a scale of over 11,000 FAO FTEs and 40+ FAO clients, TCS emerged as

a Leader on Everest Group’s FAO PEAK Matrix Technology-led solutions combined with strong industry orientation in FAO

solutions are the key differentiators for TCS. It is amongst the few FAO providers with the experience and capability to work across all different technology flavors – tie-and-run, augmentation, and BPaaS

While TCS invested in building its capabilities in judgment-intensive F&A processes (such as FP&A) and creating a truly global delivery footprint, it continues to be India-centric and transaction-intensive from an FTE-mix perspective

Delivery capability assessment1

Assessment dimension Rating Remarks Scale Nearly 40 active multi-process contracts; FAO FTE headcount

reached to 11,000+ Scope Robust capabilities across entire F&A value chain. Built strong

capabilities in industry-specific F&A. Increased analytics FTEs from ~75 to ~500

Technology capability

Continues to make investments in add-on tools and platform solutions with industry-specific functionality to uphold its leadership position in technology

Delivery footprint

Building a balanced delivery model. Established a center in the United States, expanded Latin America capabilities with a center in Argentina

Buyer satisfaction

Satisfied clientele; buyers feel a need for improvement in attrition and exception handling / issue resolution / escalations

Global multi-process FAO market share over time1 Percentage share by ACV

Market success assessment

2010 2012 2012

Number of contracts ACV TCV

5-10% 5-10%

5-10%

5-10%

5-10% <5%

TCS is a Leader on the Everest Group PEAK Matrix for FAO

TCS (page 5 of 5) Everest Group assessment

1 Everest Group estimate based on contractual and operational information Source: Everest Group (2013)

High Medium-high Low Medium

25th

per

cent

ile

High

Low 25th percentile

75th percentile

Low High

Major Contenders

Emerging Players

Leaders

75th

per

cent

ile

TCS

Mar

ket s

ucce

ss

FAO delivery capability

(Scale, scope, technology, delivery footprint, and buyer satisfaction)


Appendix


The scope of FAO services includes both transaction-intensive and judgment-intensive processes

Capital budgeting Strategy Administer approval process Project reporting

Strategy Judgment-intensive Transaction-intensive

Regulatory reporting and compliance Strategy Data extraction Analysis and MD&A

Regulatory reporting Compliance program

Management reporting and analysis Strategy Regular reporting Data extraction Analysis

– Ad hoc analysis and special projects

– Cost accounting

Payroll Strategy Earnings Deductions Checks and EFT

Reconciliation Third-party payments Tax reporting and filing Vendor management

Budgeting/forecasting Strategy Budget analysis and approval process Build-line item budget Forecast roll-ups and consolidation Forecast analysis and approval

process

Treasury and risk management Strategy Bank relations and administration Cash management and forecasting Investments Debt management Foreign exchange Treasury risk management

Accounts payable Strategy Maintain master data Process payment requests Process T&E claims Administer EDI/P-card Month-end close Vendor inquiries Reporting

Accounts receivable Strategy Customer set-up Billing Cash applications Credit and collections Customer inquiries Reporting

General accounting Strategy Process general entries Account reconciliations Inter-company accounting Prepare trial balances Perform closings Manage consolidations Cost accounting

Tax Strategy Tax accounting Tax planning and

analysis Tax compliance Tax audit

Fixed assets Maintain master data M/A/C of assets Post depreciation

Internal audit Strategy Establish annual

audit plan Conduct audits Reports and

recommendations

F&A strategy

Internal audit Budgeting/forecasting

Treasury & risk management Management reporting & analysis

Capital budgeting

General accounting Accounts receivable

Tax Payroll Accounts payable and T&E

Fixed assets Regulatory reporting & compliance

Strategy F&A strategy including

tax and risk position Accounting policy and

control Shareholder relations M&As/divestitures External reporting



Top quartile performance across market success and capability

2nd or 3rd quartile performance across market success and capability

4th quartile performance across market success and capability

High

Low

25th

per

cent

ile

75th

per

cent

ile

75th percentile

Mar

ket s

ucce

ss

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix

Emerging Players

Leaders

Major Contenders

Delivery capability

Low High 25th percentile

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix classifies service providers into Leaders, Major Contenders, and Emerging Players


Service providers are positioned on the PEAK Matrix based on evaluation across two key dimensions

Measures the scope of services provided across segments, processes, industries, geographies, etc.

Measures the capability and investment in tools and technologies that help deliver better services

Measures the delivery footprint across regions and the global sourcing mix

Measures success achieved in the market. Captured

through active ACV as of December 2012

Measures ability to deliver services successfully. Captured through five subdimensions

Measures the scale of operations (revenue, number of FTEs, etc.)

Scale Scope Technology Delivery footprint

Emerging Players

Leaders

Major Contenders

Mar

ket S

ucce

ss

Delivery capability

1 Measured through responses from two/three referenced buyers for each service provider Source: Everest Group (2013)

Measures the satisfaction levels1 of buyers across: Goal realization Process delivery Implementation Relationship

management

Buyer satisfaction


FAQs (page 1 of 2)

Does the PEAK Matrix assessment incorporate any subjective criteria? Everest Group’s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service

provider RFIs and Everest Group’s proprietary databases containing providers’ deals and operational capability information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction, and provider briefings

Is being a “Major Contender” or “Emerging Player” on the PEAK Matrix, an unfavorable outcome? No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical

services area. There are a number of providers from the broader universe that are assessed and do not make it to the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is itself a favorable recognition

What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the “PEAK Matrix position”? PEAK Matrix position is only one aspect of Everest Group’s overall assessment. In addition to assigning a “Leader”,

“Major Contender”, or “Emerging Player” title, Everest Group highlights the distinctive capabilities and unique attributes of all the PEAK Matrix providers assessed in its report. The detailed metric level assessment and associated commentary is helpful for buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas

What are the incentives for buyers and providers to participate/provide input to PEAK Matrix research? Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment Participation incentives for providers include adequate representation and recognition of their capabilities/success in

the market place, and a copy of their own “profile” that is published by Everest Group as part of the “compendium of PEAK Matrix providers” profiles


FAQs (page 2 of 2)

What is the process for a service provider to leverage their PEAK Matrix positioning status ? Providers can use their PEAK Matrix positioning rating in multiple ways including:

– Issue a press release declaring their positioning/rating – Customized PEAK Matrix profile for circulation (with clients, prospects, etc.) – Quotes from Everest Group analysts could be disseminated to the media – Leverage PEAK Matrix branding across communications (e-mail signatures, marketing brochures, credential

packs, client presentations, etc.) The provider must obtain the requisite licensing and distribution rights for the above activities through an agreement

with the designated POC at Everest Group


Everest Group Leading clients from insight to action

Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com.

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Everest Group PEAK MatrixTM for FAO Service Providers ... · PDF fileEnd-to-end F&A outsourcing, P2P, O2C, and R2R . Process scope