Jamie Lyon, head of employer
services at the Association of Chartered Certified Accountants,
talks through the findings of a report on the ongoing challenges
faced by the accounting profession. A finance role in shared
services is evolving, and accountants need to learn new skills to
benefit from the transformation.

Photograph of Jamie Lyon, ACCASimply put, there is
no turning back from shared services and outsourcing as a
transformation tool. However, the transformation journey continues
to be a significant challenge for many businesses and there is
significant potential for businesses to unlock more value moving
forward.

Businesses have increasingly sought
out the benefits that can be gleaned from outsourcing and shared
services over the past few decades.

This is particularly true in financial
services where, over the past decade, finance leaders have looked
to shared services and outsourcing to deliver greater efficiencies,
better decision-making or an improved service. For example, data
from advisory firm Everest Group states that more than 70% of
Fortune 500 companies now use shared services or outsourcing models
for their finance functions.

Implementing an effective outsourcing
strategy, however, requires clearing numerous hurdles. This
includes: managing the transformation change process; articulating
a purpose and vision for the retained finance function; and
aligning the client and provider’s transformation objectives.

Adding value

Various types of shared services and
outsourcing processes can be used for a business’ financial
functions. For some, it is simply a case of improving financial
processes. For others, it’s about improving business performance
and impacting business processes beyond the financial function.

In outsourcing, the key point as Simon
Newton, vice-president of shared services at Kimberly-Clark, says
is: “Do shared services and outsourcing [lead to better
performance] and create more value?”

Even if they get the scope of their
finance transformation right, the biggest potential obstacle for
many businesses’ adventures in shared services and outsourcing is
failing to manage change effectively. Ineffective communication
plans, a lack of programme management skills and insufficient
resources to manage change have all been cited by providers as
problems they come across frequently.

Terry Balzanella, vice-president for
the EXL centre of excellence for finance and accounting in Europe,
says: “More often than not, we find clients ill-prepared for change
management.”

This, and any ambivalence from senior
non-finance leaders, can mean new rules are ignored and the change
process stalls. For George Connell, Shell’s head of strategy for
finance operations and its centre finance lead, “having a strategic
mandate supported from the top [is] crucial”.

Even if there is leadership backing,
businesses will still need to grapple with projects that could
cross borders and cultures. Bridging the gap between cultures is
important too.

As Patrick van Hoegaerden, finance
transformation director at Coca-Cola, says: “Developing a
communication and change approach that recognises everybody is
quite different, is critical. Patience is important.”

Even if a business cracks all of the
problems above, too often transformation has taken place without
enough consideration given to the role and purpose of a business’
retained finance function and how it fits within the shared service
or outsourced operation.

Anoop Sagoo, senior executive for
business process outsourcing at Accenture, says: “It is difficult
to conceive when you are designing a shared service model that you
can get finance and accounting operation to the right level of
efficiency and effectiveness without considering the retained
function.”

Overstaffing, motivational problems,
disengagement, duplication of effort and a lack of focus are all
potential problems that can affect the retained finance function of
a business. This matters because this departmental area ought to be
providing the insight to boost business performance.

A business’ ability to adapt to the
changes driven by outsourcing largely depends on the skills and
resources within the retained finance function. This is because
shared services or outsourcing typically shifts a retained team’s
focus from processes to management. This creates the need for a new
skill-set for those in the retained function, which involves
problem-solving skills, communication skills; and influencing
skills.

The final piece in the jigsaw for an
effective outsourcing strategy concerns the relationship between
the client and the provider. The achievement of Service Level
Agreements (SLAs) does not necessarily mean a customer is
satisfied.

Strong client-provider relationships
go beyond the tactical delivery of SLAs. Misalignment can occur
across a broad range of areas such as cultural values, targets and
incentives, as well as expectations on the pace of change. These
are not easy problems to avoid and they only serve to underline why
building trust between the client and provider is very
important.

It also means that choosing the right
provider in the first place is critical. Some industry observers
emphasise the importance of businesses selecting providers with
experience in their sector.

Outsourcing and shared services offer
numerous advantages for businesses and their finance departments
but success does not happen overnight. It requires both the client
and provider to make the right choices, manage the change process
effectively, and build a strong relationship.

Moreover, transforming a business’
financial department is not so much about financial change as it is
about employees embracing change.