Save time, reduce risk and improve quality: “How online accounting adds value”

TENON OUTSOURCING

Presentedby

Grant SayerNational Operations and Technical Director

14 October 2009

Agenda

� Introduction

� Tenon plc

� Tenon Outsourcing

� Tenon experience [and wisdom] of delivering online accounting solutions

� Online solution for accountants [ITIO – “Case Study”]

� Adding value - Save time, reduce risk and improve quality

� SALT – “Client Experience” [Video]

� Conclusions

� Questions & Answers

Tenon plc

� AIM Listed (Ticker:TNO)� Top 10 accountancy and business services provider� Over 1800 employees, Over 40 offices� Current run rate turnover c£151m� Purpose

� “Top quality financial, taxation and business advice to make our clients more wealthy”� Key service lines

� Business Tax & Advice� Audit & Accounts� Financial Services & Specialist tax� Outsourcing� Corporate Finance� Turnaround & Recovery

� Our clients� Self-made men and women� Growing businesses� Funders to these businesses� 30,000 clients, 10,000 corporates

� www.tenongroup.com

Business Tax &AdviceAccounts &AuditCorporateFinanceOutsourcing

Turnaround &RecoveryFS & SpecialistTax

Turnover PBTA£m £m

Underlying values, year to 30 June:2004 80.5 6.42005 100.5 7.92006 122.9 10.3200720082009

136.7 12.3160.0151.0

16.018.0

Geographical reach (UK)

1. Aberdeen2. Bacup3. Basingstoke4. Birmingham5. Bolton6. Boston7. Bournemouth8. Brighton9. Chelmsford10. Chorley11. Doncaster12. Edinburgh13. Glasgow14. Grangemouth15. Grimsby16. Harrogate17. Hull18. Inkberrow19. Inverness20. Isle of Man21. Kendal22. Leeds

23.Leicester24.London Baker Street25.London Chiltern Street26.London Finsbury Circus27.London Tavistock Place28. Manchester29.Melton30.Middlesbrough31.Nottingham32.Perth33.Portsmouth34.Preston35.Reading36.Rochdale37.Sheffield38.Southampton30.Southend on Sea40.Sunderland41. Wakefield42. Windsor43. Worcester44. York

About Tenon OutsourcingTenon Outsourcing (TO) ranks as one of the leading outsourcing providers outside the “Big 4” and sources Financial and HR solutions for businesses, ranging from owner-manager firms across the UK, through to global corporations.

TO offers a unique combination of locally delivered services, backed up by national and international expertise and experience.

This capability enables TO to deliver high-quality yet cost-effective solutions.

� A leading provider of finance, accounting & human resource outsourcing solutions to “entrepreneurial” businesses

� Range from OMBs to ‘blue chip’, listed and International� Mission: to reduce risk, improve performance… at best price� Turnover - c£10m, People - 170� Clients - 1600 (c500 “full” outsourcing clients)� Hosted accounting systems � NOA Award Winner� Strategy to build a 20 million business as soon as we can

International Links

� Strong international links and offering� 10 years of experience, helping companies move into Europe� 3 brands for dealing with Internationals….

Morison International

Pain in time turns to Wisdom

2005 was about how do we build a ‘proper’ outsourcing business

> 4 Building blocks> Excellence of solutions> Excellence of delivery> Excellence of sales and marketing> Excellence of technology

– The future was ASP, Hosted, SaaS, in cloud

> Benefits> Cost benefit to both us and the client> Efficiency benefit> Risk benefit [Resilience]

The path to wisdom> 2000 – Microsoft Dynamics GP hosted internally> 2006 – SAGE [Hosted with ITIO]> 2006 – SAGE [Proof of Concept]> 2007 – Microsoft [SaaS] in conjunction with SERVO> 2007 – Netsuite Business Partner> 2007 – Online Web Expenses> 2008 – Online Timesheet Pay & Bill> 2009 – Online HR solution> 2009 – Online Payroll services [Self service, ePayslips]> 2009 – Review of e-conomic, Xero, Dynamics AX, Aqilla + others.> 2009 – Franchise, Recruitment, VC, International + other tailored

vertical solutions> Year 2010 – More vertical solutions, including unified

communications [CRM, Mobile and email]

Wisdom

> Hosted model is here to stay> Demand is increasing – culture of ‘plug and play’> We need to remain close to our clients> Clients want choice as to what elements to outsource> Technology is key in driving out cost and streamlining business

processors> The price of accounting and other infrastructure is becoming

immaterial> Contractual elements remain vague

> Bureau licensing> Sharing risk> Liability clauses> Data protection

> Pricing and service elements need to be transparent to clients

Wisdom

> Technology drives changes in our working practices> Still a resistance to change > Services are increasingly interlinked> Requires skills to connect applications together> We need to offer solutions at different levels, one size does

not fit all> Solutions need to be tailored to specific vertical markets and

provide an end-to-end solution> Many new entrants [Need resource to evaluate]> Stay strong, be clear on your strategy [Remember,

functionality over form]

Wisdom - Restructuring to deliver online services

>Consolidation of process centres>National Framework for quality control>Specialisation of tasks and process>Product / vertical market development>Academy training>Sourcing technology partners>Focus on technology and integration>Simple messaging and structured marketing campaigns>Develop channel (eg. REC, BFA)

Core Service

HR•Tenon Employer Protect•Staff Portal

Payroll•Self Service•ePayslips

Finance•Sage•E-conomic•Netsuite•Dynamics GP

TimesheetPay & Bill

Web Expenses

Wisdom - Simple communication

Wisdom – right partner for the right vertical

>Microsoft [Client experience to come]>Our experience of ITIO> ITIO [Sage – smaller client]> Case study by Rob Lambden[Delivering services to accounting practices]

Recap – save time, reduce risk, improve quality, best price

“We need to match our offering to the clients needs and ROI requirement”

Clients focus:> we must find ways to increase revenues”> “we must continue to control and reduce costs”> “we must identify, understand and reduce risk”> “we must find better ways to support business change”> “we must improve service levels”> “we must get better value from our finance and HR

function”

The business case for an Online solution

1.Build base case components- Understand business issues/strategy- Cost today and tomorrow

- People - cost, sick, hols etc- Composite skills requirements- Technology- Space etc

Strong methodologiesStrong methodologies(devil in detail)(devil in detail)

Document processesCompare apples and apples

Working up a business case

2. Highlight barriers and agree solutions3. Design best technology and delivery solution4. Specify the services

Table of responsibilities5. Create a pricing model

Predictability, variability, scalabilityPricing structurePer head/divisionVolume

6. Final business case prepared7. All of this culminates in the best solution, with the

best service delivery team to back it up.

SALT video

> Tenon, Microsoft, Servo – Client case study

SALT – Key messages

Started in 2003 – 1st year Turnover = £600k & 8 employees2009 Turnover = c£2.2m & 25 employees> Owner manager time saved> Access to a breadth of expertise> Systems that grow with you> Big business solution – small business cost> Saving on high cost of investment in accounting systems> Low cost hosting solution – gives security of data> Local & Global – access anywhere in the world> Helps owner manager drive value into the business> A Perfect Partnership!

Conclusion…more or less pain?

> We believe online proposition adds value….and so do our clients [eg. SALT]> Time, risk, quality……..quantifiable ROI

> The online community will get stronger, broader and cheaper….the differentiator will be those who can glue the applications together

> Google, Microsoft, SalesForce, Oracle, SAP, IBM,…will drive change…..do we really care?

> We all need a differentiator……Tenon’s is adding in specific financial [Tax, Financial services and Compliance] outsourcing products into the mix

> We all need a friend…..partnerships and alliance are key

Proof Outsourcing ‘can’ be more Cost Efficient

Model based on a company with £2m turnover with 10 staff

In-house Accounts Costs Outsourcing Costs

Bookkeeper / Accountant

£28,000 Annual fee (based on £2,150 per month)

£25,800

ERS NI (12.8%) £3,584

Pension (3%) £840

Management Time £3,500 Training - systems £350

Plus SSP, SMP, admin, software, hardware

£5,000Remote access (1 user)

£1,250

Recruitment costs (25%)**

£7,000 Set up fee** £2,100

TOTAL – one off £ 7,000 TOTAL – one off £2,100

TOTAL - ongoing £40,924 pa TOTAL - ongoing £27,400 pa

Total annual savings of £13,524 per annum

Questions