Topic: Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing Finance & Accounting Outsourcing (FAO) and Procurement Outsourcing (PO) Report: February 2013 – Preview Deck
Copyright © 2013, Everest Global, Inc.
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Background of the research The Finance & Accounting (F&A) and Procurement functions compris e three end-to-end processes – Record-to-Report (R2R), Order-to-Cash (O2C), and Source-to-Pay (S2P). This report focuses on third-party outsourcing of P2P activities – the downstream process within S2P With increasing maturity of the FAO and PO markets, FAO contracts are expanding upstream beyond Accounts Payable (AP), while PO contracts are expanding downstream beyond S2C to include broader scope of P2P activities. This is resulting in increased convergence between the FAO and PO markets. Such an end-to-end process-driven approach to outsourcing as opposed to the existi ng piecemeal and functional approach is unlocking more value creation opportunities In this study, we investigate the market state stat e of P2P outsourcing. We focus on: Definition, value proposition, and challenges of P2P outsourcing P2P outsourcing market size and growth Emerging and current solution trends P2P service provider landscape Scope of the study and sources of information The scope of this study is third-party outsourcing and does not include internal shared services The study provides global and cross-industry coverage of P2P outsourcing The study is based on Everest Group’s proprietary database of over 1,000 FAO contracts and over 300 PO contracts signed till the end of 2011, and operational capability of 25 service providers who offer P2P services
Table of content s
(page 1 of 2)
Topic
Page no.
Background and sources of information
5
Summary of key messages
6
Value proposition of P2P outsourcing Summary Definition Value proposition Typical challenges
9 10 11 14 17
P2P outsourcing market size and solution trends Summary Size and growth Adoption trends by industry, geography, and size P2P inclusion Degree of offshoring P2P delivery locations Role of technology Service levels and performance metrics Pricing models
18 19 20 22 23 26 27 28 30 31
Table of content s
(page 2 of 2)
Topic
Page no.
P2P outsourcing service provider landscape Summary Service providers classification Scale as per FTEs Delivery footprint P2P investment themes
32 33 34 35 38 39
Appendix Glossary of key terms used in the report FAO research agenda PO research agenda Additional FAO and PO research references
43 44 46 47 48
O v e r vi v i e w a n d a b b re r e v i at a t e d s u m m a r y o f k e y m e s s a ge ge s
This report analyzes the key trends in P2P outsourcing within the FAO and PO market. It provides an understanding of the business value, adoption trends, solution characteristics, and service provider capability in P2P outsourcing. Some of the findings in this report, among others, are: Value proposition Value and key challenges
P2P outsourcing solution trends
P2P outsourcing service provider capability
The P2P process typically accounts for nearly nearl y a third of the overall F&A and procurement operational costs An end-to-end P2P outsourcing approach also poses some unique challenges such as multiple stakeholders, technology fragmentation, and a more complex scope definition beyond common BPO challenges, given the overlap with both procurement and finance functions Technology is playing an increasingly important import ant role in P2P outsourcing. Beyond add-on tools, several platform-based / BPaaS solutions are emerging India has emerged as the main offshore hub for P2P delivery. However, However, an onshore-nearshore-offshore onshore-nearshore-offsho re blend is emerging
There are three emerging themes of service provider investments related to P2P outsourcing: BPaaS- / Platform-based solutions Analytics Expansion from P2P to broader S2P capabilities capabiliti es
T h i s s t u d y o f f e rs r s t h r e e d i st s t i n c t c h a p t e r s p r o v id i d i n g a d e ep ep d i v e i n t o k e y a s pe p e c t s o f t h e P 2P 2 P o u t s o u r c i n g m a r k e t ; b e l ow ow a r e f o u r c h a r t s t o i l l u st s t r a t e t h e d e p t h o f t h e r e po po r t Expected savings from the end-to-end P2P outsourcing 70-75% additional savings over AP outsourcing by leveraging an end-to-end process driven approach for P2P
P2P market size FAO & PO market size by process ACV in US$ billion
Projected CAGR
AP outsourcing savings from cost arbitrage and process efficiency Savings by outsourcing other P2P activities including greater compliance
S2C R2R
Additional business impact due to an end-to-end approach Total savings from integrated P2P approach
O2C 100%
2011
P2P outsourcing service provider landscape
2015
P2P outsourcing global footprint
1. End-to-end P2P providers with credible F&A and procurement offerings 2. FAO providers focused primarily on AP services
P2P
P2P outsourcing delivery locations 3. PO providers focused primarily on upstream P2P services
Central and Eastern Europe Primarily leveraged as nearshore locations for Western Europe Leveraged for sourcing support and day-to-day purchasing
North America and Western Europe Onshore locations for client facing roles Leveraged local market knowledge for upstream P2P activities
Western Europe
Nottingham Glasgow Preston London Prague
North America Troy San Jose
Atlanta
Detroit Richmond
Mexico city Central & South America
Central and South America Primarily leveraged as nearshore locations for U.S. Domestic LATAM market also emerging Leveraged for sourcing support and day-to-day purchasing
Source:
Everest Group (2013)
Central & Eastern Europe
Belo Horizonte Sao Paulo
Wroclaw Lodz Krakow Budapest
China Sourcing support and upstream P2P and S2C activities Also supporting Japanese and Korean markets China & Southeast Asia
Dalian India Shanghai Hangzhou Gurgaon Noida Guangzhou Mumbai Pune Bangal Ban galore o re Che Chenna nnaii Manila
India Offshore hub and the most mature delivery region for P2P Leveraged for providing end-to-end P2P services
2013 FAO researc h agenda
Published
Topic
Current
Release date
FAO FA O Service Provider Compendium
July-2012
The Paradox of FAO adoption in SMBs
July-2012
Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting
October-2012
Order-to-Cash (O2C) Outsourcing Outsourc ing – Creating a Top-line Impact
January-2013
Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing
February-2013
FAO FA O Annual Report
Q1-2013
FAO FA O Service Provider Landscape
Q2-2013
FAO FA O Service Provider Compendium
Q2-2013
Role of Analytics in FA FAO O
Q3-2013
Growth of Horizontal Hori zontal BPO in i n LATAM LATAM
Q3-2013
Implications of IFRS Conversion in the United States on FAO
Q4-2013
Evaluation of BPaaS Solutions for FAO/PO
Q4-2013
2013 PO researc h agenda
Published
Topic
PO Service Provider Landscape – Investing in Building Expertise PO Service Provider Profile Compendium Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing
Current
Release date
July-2012 August-2012 February-2013
Expansion of PO Into Broader Supply Chain
Q1-2013
From Strategic Sourcing to Contracting Contrac ting – Source-to-Contract (S2C) a High Hi gh Value Value Driver in i n PO
Q1-2013
PO Annual Report
Q1-2013
Sourcing Contingent Workforce – Rise of MSP model
Q2-2013
PO Service Provider Landscape
Q2-2013
PO Service Provider Profile Compendium
Q2-2013
The Rise of Procurement and HR Collaboration – Effectively Managing HR-spend
Q3-2013
Growth of Horizontal Hori zontal BPO in i n LATAM LATAM
Q3-2013
Evaluation of BPaaS Solutions for FAO/PO/HRO
Q4-2013
Tail-end Spend Management
Q4-2013
A d d i t i o n a l FA F A O a n d PO PO r e s e a r c h r e f e r e n c e s
The following documents are recommended for additional insight into the topic covered in this report. These eit her provide additional details on the topic or complementary content that may be of interest 1. Finance and Accounting Outsourcing (FAO) Annual Report Report 2012: The FAO Market Market – Signaling Towards Maturity (EGR-2012-1-R-0680a EGR-2012-1-R-0680a). ). In this research, we review the global multi-process FAO market in 2011 and provide guidance on the market’s direction in 2012. We focus on market size and buyer adoption trends, FAO value proposition, contract characteristics across process scope, technology, global sourcing, pricing structures, and FAO service providers landscape covering service providers’ market shares and areas of investments 2. Procurement Outsourcing (PO) Annual Report 2012: The PO Market – Steadily Marching Forward (EGR-2012-1-R-0683a EGR-2012-1-R-0683a). ). This report provides an overview of the overall PO market in 2011, including the size and growth of the market, adoption trends, contract characteristics, value proposition, service provider landscape, and market outlook for 2012 3. Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting (EGR-2012-1-R-07054 EGR-2012-1-R-07054); ); 2012. This report looks at outsourcing of the judgment intensive F&A processes, Financial Planning & Analysis, regulatory reporting and compliance. compliance. Record-toReport, Order-to-Cash, and Procure-to-Pay cover the entire F&A function as three end-to-end processes 4. Order-to-Cash (O2C) – Unlocking the Revenue Potential (EGR-2013-1-R-0816 EGR-2013-1-R-0816); ); 2013. Similar to the R2R report, this report looks at outsourcing a separate end-to-end F&A process called Order-to-Cash, covering covering mostly the transactional activities within t he function on the customer side
For more information on this and other research published by Everest Gr oup, please contact us: Saurabh Gupta, Vice President: Abhishek Menon, Practice Director: Vikas Menghwani, Analyst: PO Team: Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240
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