Posts Tagged ‘Deloitte’
The Taulia webinar took place this week and the content was remarkable.
What is so apparent is that multi nationals are currently in a unique position. Consider the following:
Context
The world economy is slowing down.
The Bank of England interest rate has remained at 0.5% for 34 months in a row. Markets now forecast the increase to come in 2014.
Safe havens for financial investments have become ‘volatile’.
Banks are not lending to small businesses and UK banks are expected to miss their small business lending targets in 2012.
What does this mean for large corporations?
Multi nationals are withdrawing investments from markets now considered ‘volatile’.
This means large corporations are sitting on the highest levels of cash on record. A Deloitte report talked of UK non financial companies holding cash reserves of £731.4 billion in the 3rd quarter of 2011.
In this report a third of the 136 large companies interviewed said they were ‘holding on’ to the cash as insurance against unknowns, like the Iranian blockade of oil supplies.
According to the Federal Reserve, in the US corporate cash balances have reached $2.12 trillion (an increase of 33% from 2009).
What does this mean for suppliers?
Financing costs. Because banks are lending to SMEs at either high rates or not at all, it puts a typical SME requiring capital in a position of need.
This is why dynamic discounting is becoming a huge topic. And interestingly it’s becoming a huge opportunity for those shared services organisations that can actually process and pay invoices quickly.
If you have a process in place where you can approve and post an invoice within a few days, pay early and take a 2.25% discount, you would be reaping huge reward for having an efficient process.
In financial terms, investing your cash in your supply chain is low risk (you placed the order with them, and you’re going to be paying the invoice… so it’s low risk), and the return is higher than sitting in a ‘high interest’ bank account.
To put it crudely, getting on with dynamic discounting a ‘no brainer’.
Business cases for any project concerning P2P process automation should be factoring in supply chain financing returns as this is what these projects enable. This in itself should accelerate the speed of getting this automation project done.
The opportunity is golden. But jump on it now – the influencing factors may look very different in 24 months time.
To watch the Taulia webinar, click here
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Matt Garrow-Fisher, our Head of Research, is attending Deloitte’s Annual Shared Services and Business Process Outsourcing. He has been sharing some valuable knowledge on twitter and we would like to do the same with our community via our Blog. Following are some highlights of what’s been said.
– Migration strategies: Most companies (51%) move to shared services Centre then standardise processes
– Many shared services centre are now looking at having 2 shared services Centre: 1 standardised, vanilla shared services Centre and 1 centre of excellence
– The tipping point for a final decision for site selection is down to the cooperation of the regional development agencies – this is key.
– Site selection: Corruption and operating environment need to be considered
– Access to location is key for shared services centre: employees need to commute, otherwise they may go to a better accessible competitor
On location selection
– 170 shared services centre location decisions were made over 2008-2011 in over 105 cities globally. Decisions based mainly around cities rather than countries.
– Top shared services centre destinations in 2008-11 were Dublin and Budapest.
– Top number of jobs created between 2008-2011 were from these countries: 1. India 2. US 3. The Philippines 4. Poland 5. China
– Ireland is known for being great at delivering on higher value activities.
– North America and West Europe are back in shared services Centre site popularity due to their capabilities to host CoEs and higher value-added activities
– Speaking in the right culture – ‘cultural speak’ and training on this is more important that having a good accent.
– H.R. skills / talent is the most important aspect of choosing a site if you want to move up the value chain
– Location is never fixed and usually shared services Centre move or expand every 5-7 years. This is due to scalability needs and sustainability
On change Management
– To enable change management: 1. Customer satisfaction 2. Ability to grow business through better buy-in and business engagement
– Deloitte global survey finds that 59% of shared services organisation have learnt that increased change management would have improved their shared services journey
– That will create, that will not forget” – people involved in the creation of your shared services organisation will take far more ownership of running it
– Site visits are the most effective way to connect with business units
– Governance: Performance metrics are the top part of a company’s governance structure (78%). “What gets measured gets done”
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Most professionals in shared services will be able to mention 5 BPOs without too much effort. This is because BPOs are increasing their hold over the transaction processing market. And in the past 3 years, the grip and reach of this hold has strengthened and widened.
There is a general appreciation that, if you don’t add value to an activity, and it doesn’t add value to it, it is a prime activity to be outsourced. According to Peter Moller, Head of the UK Shared Services Practice, around 400 F&A BPO arrangements have been struck since 2001. And 200 of these deals have been realised in the last 3 years. So although we may not be on a hockey-stick curve just yet, we’re certainly experiencing an accelerated upward curve.
The reason for this is that most shared services today see BPO fitting in to their shared services delivery model to some degree. Should your service delivery model be multi-tiered, chances are you have outsourced or off shored the transaction-processing piece of AP. Or perhaps you have outsourced the whole of AP. What shared services organisations are considering when they look at outsourcing is service and continuous improvements. It is no longer just about cost, and a BPO won’t naturally win a client just because they are the cheapest. Nissan is very open about its lessons learnt on outsourcing. For them first time around, the only driver was cost. As a result some unacceptable practices came into play, and the service standard dropped considerably. This resulted in an entire review of the outsourcing approach, and how enhanced service delivery must be a key reason to outsource the activity.
Because service delivery, as well as cost, is driving the actions of many SSOs today, there needs to be absolute comfort that your BPO can deliver the job better than you can. Seeing that you have had staff in AP for 20 or so years, who have a deep knowledge of the process, people and organisation, expecting outsiders, often thousands of miles away to do the job better is a big ask. So investing significant energy and attention into service provider selection, transition, and post transition support will mean your BPO project should be a success.
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