What Are the Best Business Process Model Solutions in F&A Shared Services?

There are plenty of models, but which is right for you?




business process models

What are the optimal business process model solutions in F&A?

The key business process models prevalent in the Finance & Accounting (F&A) Shared Services realm for the past two decades are

  • Business Process Outsourcing (BPO)
  • Business Process Management (BPM)
  • Business Process Transformation (BPT)
  • Business Process Services (BPS)
  • Co-Sourcing
  • etc.

…in the third-party space (customers outsourcing work to external service providers);

  • and Global Business Services (GBS) in the captive space (outsourcing work to a different team and/or location within the same organization).


Each of these models began with certain objectives only to realize later that eventually the speed of execution with the least dependence on the customer was the key differentiator.

Given that most of the F&A processes that were being outsourced were largely transactional in nature, it was extremely difficult for service providers to transform them in shorter time frames, whilst some did succeed. That is not to say that outsourcing transactional work does not save time, in fact it is one of the primary reasons why work gets moved. However, service providers always had the objective to transform processes they were taking over by way of documentation, standardisstion, removal of non-value added steps, creation of SME’s over a period of time, etc. Despite their efforts, not all service providers were able to effect these transformations within just a few months and in many cases took longer despite claiming a Business Process Transformation model.


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In the late 90’s a pioneer in F&A outsourcing in India did extremely well in breaking down processes to the tiniest possible size, to enable easy documentation, segregation, execution and reporting. The same organization also did a world of good by introducing Six Sigma quality initiatives into the outsourcing fold, which set many benchmarks within the overall practice in India and globally. Of course the flip side of this was deployment of additional resources impacting costs and causing a major digression from the basic premise of Shared Service employees being Accountants in their truest sense.

"One of the biggest drawbacks of the business models in third-party Shared Services vis-à-vis the captive GBS is that they do not adhere to the Keeping It Simple Rule."

A major IT enterprise, which began its India back-office F&A service operations in 2003, calling it Business Process Transformation (BPT), soon realized the difficult terrain it was treading but did well to engage Boston Consulting Group to come out with a productivity measurement tool called “TVC” (Time Volume Capture), consequently patented, enabling efficiency gains and replicating these across its global centers successfully.

One of the recent models I have seen in the F&A realm is “Co-sourcing,” the premise of which is to establish a Shared Services function that aims to act like an extended arm of the customer’s Accounting department, but nosedives because of the lack of clearly defined periodic Service Level Agreements (SLA’s) that need to be reported. This model without SLA’s makes it particularly challenging for the service provider and customers to truly engage on specifics.

Summary

In the end there is no one size which fits all and outsourcing models have to evolve as businesses grow. From the beginning, the outsourcing business model name did not mean much beyond a certain point for many service providers – a clear case of misalignment of “Vision” versus “Mission”. While the third-party Shared Services brought in too many new measures around Turnaround Time (TAT), Accuracy and Completeness, it also introduced a whole bunch of metrics & dashboards, tools, automation, etc., which altered the way business processes were looked at, aka “a paradigm shift.” However, the devil lay in the details, and customers’ expectations surpassed what the industry could deliver.

Of all these business models in the third-party space, the most promising is, I believe, the “Co-sourcing” model, which, with modifications. could be a runaway success. By contrast the Global Business Services (GBS) model in captive Shared Services Organizations has been quite effective and a clear winner with most companies “raking in the moolah” as they say. The hallmark of the latter model has been its captive nature, absence of customer and service provider divide, effective communication, quicker decision-making push, agility to change tack fast etc..

One of the biggest drawbacks of the business models in third-party Shared Services vis-à-vis the captive GBS is that they do not adhere to the Keeping It Simple (“KIS”) Rule. A quick comparison shows the GBS model to be a clear winner thus far in terms of ease of functioning and services being provided as part of the value chain.


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Amidst all of these endeavors is the rapid pace of introduction of newer technologies like Robotic Process Automation (RPA), Artificial Intelligence (AI), Blockchain, etc. in business processes to further enhance improvements in the future.

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