Manufacturers Gain Flexibility, Velocity by Running Finance/Accounting as a Service
Contributed by Srinivas Pingali
Finance and accounting can be attractive areas for manufacturers to begin experiencing the benefits of business process as a service (BPaaS).
Global manufacturers have long used global sourcing (including offshore production and IT outsourcing) to drive cost efficiencies. BPaaS is another form of global sourcing. It offloads non-core operations to a provider that can reduce costs and optimize processes using best-in-class, industry-specific practices and technologies.
BPaaS for Manufacturers
BPaaS combines IT infrastructure, software and applications and human talent to perform knowledge work and deliver business outcomes to customers. Paying a provider to manage accounting processes, for example, creates efficiencies that can be used to differentiate the manufacturer as it looks to grow.
We recommend a stepped approach to BPaaS. Beginning with accounts payable and/or payroll processes provides a cost advantage because the provider can process larger volumes than an individual company. Once these benefits are proven, many executives are ready to broaden their BPaaS effort.
BPaaS Entry Approaches
Figure 1
In our work with clients we find four basic approaches to moving to BPaaS (see Figure 1).
Tailored processes. This outsources non-core, easily separable processes such as travel and expense, dealer commissions, warranty administration and reconciliations, adding value with minimum risk of disruption.
Regional integration. Here, organizations adopt BPaaS for smaller markets that may not have the critical mass to justify deploying the corporate accounting platform, and are perhaps using
Excel or a homegrown system instead. Moving such regions to a BPaaS model presents a low-risk entry point.
Vendor-client partnership. In this fairly unique approach, we take the technology tools and best-in-class processes developed by a client and offer them to others. This allows our client to monetize the processes and business functions it has optimized and convert cost centers to revenue centers.
Leverage Vendor Tools
Third-party service vendors who provide BPaaS solutions for many customers often develop best-of-breed processes and tools. Manufacturers can benefit from using these technologies and skills that were developed among multiple engagements in multiple industries.
Cognizant, for example, has developed three tools that can ease an organization's migration to BPaaS.
The first is in the area of reconciliation, which tends to be a challenge for clients who are using inefficient Excel or core ERP systems. Here at Cognizant, we have developed a cloud-enabled balance sheet reconciliation application that can automate, standardize and globalize the reconciliation, process, enabling significant cost reductions. Procure to Pay is another example. Often hobbled by a lack of visibility into when materials were ordered and payments were generated, manufacturers find it hard to ensure proper pricing and payment. Our tools can help ensure that pricing is correct, the purchase order was transmitted correctly, the invoice matches and the supplier is properly paid.
Yet another example is the interfaces with multiple core ERP systems in our BPaaS offering. Developed by Cognizant in partnership with Oracle, these interfaces allow manufacturers to immediately gain the benefits of the vendor's technical expertise and scale.
Gradual Approach
A stepped approach to BPaaS implementation can help manufacturers prove the benefits of running finance and accounting as a service before making a major commitment to it.
Read the complete white paper, Manufacturers Gain Flexibility,Velocity by Running Finance,Accounting as a Service (PDF), and learn more about Cognizant's BPaaS Solutions.
About the Author:
Srinivas Pingali is a key member of the team responsible for Cognizant’s BPO and BPaaS solutions and works closely with the Cognizant cloud initiative. Prior to joining Cognizant, he was a founding member of Quatrro BPO, where his primary focus was product development, business development, marketing and investor’s management. Prior to Quatrro, Srinivas was a partner at Accenture and was part of the management team that built Accenture’s BPO capabilities in India. He is a chemical engineer with an MBA in marketing from the University of Illinois, Champaign-Urbana.