Driving the F&A Technology Strategy

The unprecedented IT and Enterprise-resource Planning (ERP) investments of the 1990s have been the major investments in F&A technology over the last 15 years. The technology had to meet Y2K, Euro-currency standards and, most recently, SarbOx and Basel II compliance regulations. While some organizations moved toward standard ERP solutions across their international operations, many opted to build more customized solutions that involved multiple systems and software applications.

Chart 3 illustrates that 65% of early FAO adopters have chosen to retain the ownership and support of their existing F&A systems. Unfortunately, they have assumed the cost burden of transforming their technology to enable the FAO development.

To date, 27% of early adopters have already moved the support of their F&A systems to the FAO provider. Yet, barely a tenth have opted to convert completely onto the provider’s platform.

As customers seek more value from their FAO relationships, the necessary technology requirements bring into question how providers will deliver the technology to the customer. Customers needs to ask the following key questions:

•		Who is going to select and pay for my technology transformation?
•		Should my organization invest more internally in IT to support the outsourced F&A processes?
•		Should I engage an FAO provider that can bundle technology services with my existing business processes?
•		Should I use alternative technology services vendors?
•		Should I consider replacing my organization’s existing systems and move onto systems the BPO supplier can provide?

Bundling Options: Replace, Retain, Wrap-around

Customer organizations have three options for exploring a technology transformation.

Replace. Moving onto a provider’s F&A platform will standardize a customer’s enterprise-wide systems, applications and data. Ultimately, this will increase the dollar-velocity and quality of the F&A function. Moreover, enhanced severability of the F&A function enhances the ability to offshore ability of F&A processes.

The early adopters of FAO are predominantly large scale, Global 2000 organizations. It is unlikely these buyers will seek to bundle an entire F&A system replacement with their outsourcing deal because of issues surrounding system complexity and compliance; impact on initial cost; loss of control and admission that the massive prior investments in F&A technology are to be purged.