1Copyright2003NelsonHallhelen.salmon@nelson-hall.comConfidential1TARGETINGFINANCE&ACCOUNTINGOUTSOURCINGNelsonHallBPO&OutsourcingSubscriptionService,Q120032Copyright2003NelsonHallhelen.salmon@nelson-hall.comContents•ChangingShapeofFinance&AccountingOutsourcing•MarketSizeandGrowth•CustomerRequirements•VendorCapabilityandPositioning•ChallengesandSuccessFactors3Copyright2003NelsonHallhelen.salmon@nelson-hall.comConfidential3ChangingShapeofFinance&AccountingOutsourcingFinance&AccountingOutsourcingGotoContents4Copyright2003NelsonHallhelen.salmon@nelson-hall.comFinanceandAccountingmarketexperiencedslowgrowthduetoexcessiveemphasisoncostreductionalone…•Strongcostreductionemphasis•Difficultyofdevelopingbeyondsingle-clientdeliverycentres•ServicedeliverybasedonindividualclientSSClocations•SingleERPplatformcapability•Limitedindustryfocus•Transactionfocused•Lowvalueadd•LowoffshorecapabilityVendorsexperiencedifficultyinmovingbeyondinitialfoundationclients.…5Copyright2003NelsonHallhelen.salmon@nelson-hall.com…butsuppliersnowdevelopingmorecoherentstrategiesfocusingontransformingfinance&accountingprocesseswhileimprovingcosts•Continuingtoofferestablishedindustrysolutionsbutdevelopingofferingsintoothersectors•Morefocuseddeliverystrategies,establishingkeydeliverycentresandNOTjusttakingonallSSCsfromclients•Establishingservicedeliverycontinuumincludingoffshoredeliverycapabilities•Abilitytooperateacrossmultipleplatforms•Emphasisstilloncostreduction,butcoupledwithprocessstandardisationandimprovement•Useoftechnologytofacilitatebothprocessimprovementandcostreduction,e.g.“toolsoftop”,EDI…nowestablishedvendorsarere-inventingthemselvestoofferwiderdeliverycapabilityandincreaseemphasisonprocessimprovement..6Copyright2003NelsonHallhelen.salmon@nelson-hall.comConfidential6MarketSizeandGrowthFinance&AccountingOutsourcingGotoContents7Copyright2003NelsonHallhelen.salmon@nelson-hall.comGlobalfinanceandaccountingoutsourcingmarketsizeis$2Bn,withanexpectedaveragegrowthrateof15%perannumYearWorldwideMarket($m)20022,00020032,20020042,64020053,17020063,64020074,080CAGR(%)158Copyright2003NelsonHallhelen.salmon@nelson-hall.comAnimmature$750mUKfinance&accountingoutsourcingmarketplacepresentsvendorswithanopportunitytodevelopmarketshareYearU.K.MarketSize($m)2002750200390020041,12520051,37520061,65020071,895AverageAnnualGrowth(%)209Copyright2003NelsonHallhelen.salmon@nelson-hall.comThetelecomsandmanufacturingsectorsshowhighlevelsofactivityglobally(57%oftotalcontractvaluein2002)withtheretailsectoremergingasafutureopportunity•EarlyF&Aoutsourcingactivityfocusedontheoilsector•Contractactivitynowcentredonmanufacturingandtelecomssectors•Manufacturingsectororganisationsneedtocentraliseandstandardisefragmentedaccountingoperations•Telecomsorganisationsareseekingtoreducecostsastheycontinuetoexperiencebalancesheetpain•FutureopportunitiesgrowingintheretailsectorasorganisationscentraliselocalisedF&AtechnologiesandprocessesIndustrySectorGlobalNewF&AContractValueJan–Dec2002($m)MarketShare(%)Telecoms37530Manufacturing31625Retail22018Utilities15012Transportation948Government*917Total1,246100*ThisincludesF&Aactivitywithinmulti-servicelocalgovernmentcontractsintheU.K.10Copyright2003NelsonHallhelen.salmon@nelson-hall.comManufacturingsectorisasakeyopportunityintheU.S.withtelecomsandretailsectorsmajorareasofactivityintheU.K.•IntheU.S.,manufacturingisemergingasthekeyopportunityareae.g.U.S.contractswereannouncedbyCGI(Graftech),ACS(IngersollRand)andAccenture(Airgas)in2002.Thisislikelytocontinueasmanufacturerscontinuetostandardiseaccountingsystemsandtoconsolidateaccountingfunctions•ThereisalreadyevidenceofF&AoutsourcingactivityinthemanufacturingsectorinEurope,e.g.Accenturesigningan$30maccountingcontractwithSlovaftin2002.WhileF&AoutsourcingactivityinEuropewillincrease,itwillbelimitedbythesmallermanufacturingeconomyintheU.K.andwillbeslowertoemergeinkeyEuropeaneconomiessuchasGermanyduetoculturalfactors•IntheU.K.,thetelecomssectorisestablishedasakeymarketopportunityasorganisationsseektoreducetheircostbase,e.g.U.K.contractsincludethosewithBTandO2announcedbyXansa•AfurtheremergingsectorwithintheU.K.isretailwhichaccountedfor27%ofU.K.F&Aoutsourcingcontractactivityin2002.ThissectorisagainexpectedtocontinuetoconsolidateU.K.accountingfunctions
