A well-considered and executed transformation roadmap can help finance keep pace with emerging technologies and service delivery models, as well as advance key business objectives.

1. • Cognizant 20-20 Insights
Periodic Reassessment, Continuous
Improvement of Finance Operations
A well-considered and executed transformation roadmap can help
finance keep pace with emerging technologies and service delivery
models, as well as advance key business objectives.
Executive Summary ment for developing a transformation roadmap
is a detailed operating landscape map, including
The ever-changing needs of the business and
an in-depth understanding of the “as-is” process,
its operating environment make it imperative
available talent, organizational structure,
for organizations to continuously reassess their
technology landscape and levels of automation.
core processes, including those that pertain to
Once an in-depth understanding of the current
finance. Doing so will ensure that processes can
landscape has been developed, analysis can be
meet any new business requirement and support
performed and alternative future-state scenarios
the organization through needed change. This
developed to begin building the enterprise trans-
has led to a growing trend in recent years for
formation roadmap.
finance groups to conduct rigorous assessments
and develop multiyear transformation roadmaps. A transformation roadmap needs to be dynamic
A well-constructed and well-executed transfor- and continuously updated. Current operations
mation roadmap will address the wide swath of need to be reassessed in light of changes to the
process, people and technology issues. This will company and its environment, including:
put companies on a path to become best in class
and stay ahead of their peer group. • Availability of new software tools and solutions.
This white paper discusses the factors that • Maturing of outsourcing options.
mandate a transformation plan update and pro- • Finance operations performance.
vides a framework for a comprehensive assess-
ment and roadmap. • The advance of globalization.
• Evolving best practices.
Creating, Extending a Transformation
Roadmap
• The changing role of finance.
Finance transformation roadmaps are strategic in By continuously evaluating and updating the
nature and built for a multiyear timeframe. They transformation roadmap, companies will be able
set the transformation agenda and direction for to take advantage of the latest developments in
the organization. The critical information require- technology solutions for finance. New software
cognizant 20-20 insights | october 2012

2. tools can be leveraged to increase levels of • Consolidations: Optimize ledger consolida-
automation, eliminate non-value-added activities tions.
and help create an organization of the future with
best-in-class processes.
• Reporting: Standardize financial planning and
reporting by creating system-generated auto-
mated reports that are available centrally.
Technology Enablement
Software applications are available that lend a • FP&A: Build custom views of data and provide
analytics.
degree of automation to all finance processes.
These software technology enablers almost fully
FAO Options
automate the process, as in the case of accounts
payable invoice processing, or improve the effec- Transformation roadmaps also help companies
tiveness of the function, such as financial plan- objectively evaluate whether to retain processes
ning and analysis (FP&A). Examples of finance or take advantage of the lower labor cost and
processes for which mature technology offerings shared investments of working with a service
are available include the following: provider. This can be achieved by comparing
offerings and providers with existing cost
• Invoicing:Eliminate invoice processing with structures and service levels.
Web-based solutions that connect buyer and
supplier. The offerings of finance and accounting outsourc-
ing (FAO) providers are changing and maturing
• Order management: Optimize order manage- rapidly, moving from the provision of rules-based
ment, billing and collection functions with
transaction processing to complex judgment-
Web-based solutions.
based work. In the early days, the FAO scope
• Cash application: Automate credit card and was limited primarily to accounts payables work.
cash applications by leveraging auto-matching Successful delivery of cost savings and quality
of bank feeds with ERP. improvement from accounts payable outsourcing
• Recurring entries: Automate booking of re- quickly led to the outsourcing of other transac-
curring expenses and allocations by leveraging tion processing work, such as accounts receivable,
existing ERP functionality. fixed assets accounting, cost accounting and
routine reporting. Over time, as FAO became a
• Travel expenses: Optimize travel expense pro- more accepted and proven business practice,
cessing by integrating expense reporting with
companies expanded their outsourced work to
corporate travel cards.
include complex reconciliations, ad hoc reporting,
• Reconciliations:Optimize reconciliations by Sarbanes-Oxley compliance work and selected
auto-matching multiple feeds. treasury activities (see Figure 1).
Degree of Outsourcing of F&A Processes Over Time
High Pioneer Emerging Mature
Accounts Transaction-intensive processes
Accounts receivable payable
2009-2010
2007-2008
General
Depth of Outsourcing Scope Payroll ledger Judgment-intensive processes
(Degree of process FP&A 2009-2010
ownership transferred 2007-2008
to FAO service provider) Tax Regulatory
reporting &
Internal compliance During the past few years,
audit FP&A scope evolution was
driven more by the increasing
depth of scope than the
frequency of inclusion of FP&A
Low processes in FAO contracts.
Low Frequency of Inclusion High
(Percentage of transactions)
Sample size: 580 multiprocess FAO contracts signed as of 2010
Note: For more information, please refer to “Moving Beyond Transactional FAO:The Rise of FP&A Outsourcing,” Everest Group, December 2010.
Source: Everest Research Institute (2011)
Figure 1
cognizant 20-20 insights 2

3. Service Level Expectations to accommodate the expanded agenda. Order
management is transforming itself from being
In-house levels of service performance also
a back-office function to a front-office sales
change over time, for better or worse, as do per-
channel.
formance requirements. Several factors can drive
the need for a change in service levels, including • Accounts payable: Improving discount capture
new expectations, accounting standards and and recovering debit balances are now increas-
technology, as well as changes in the operating ingly being built into the standard accounts
or regulatory environment. If current process payable process and are key deliverables for
performance levels are not meeting the new most accounts payable managers.
demands, this calls for a process reassessment in
order to achieve compliance.
• Sourcing: With changing expectations,
sourcing teams are now being measured on
Consider the following scenario: The end-to-end actual savings delivered. They are expected
cycle time for Company XYZ, from request receipt to leverage spend analytics
to order fulfillment, is 12 working days. The best- and new technologies to With changing
take advantage of scale and
negotiate better rates and expectations, sourcing
in-class cycle time is four days. The company,
therefore, must reassess the process with a
target of getting close to best-in-class to stay terms of credit. teams are now being
competitive. The goals and aspirations of measured on actual
finance are also changing over savings delivered.
Globalization also impacts the finance transfor-
time. As finance organizations
mation roadmap. As companies expand globally
are transformed, goals are evolving from predict-
to access new markets, or get closer to the
ability, efficiency and accuracy to business impact,
existing markets they serve, the demands on
predictive analytics and business partnering.
finance change. In the traditional model, organi-
These evolving goals also force revisions to
zations tended to create infrastructure and back-
finance’s transformation roadmap. Increasingly,
office support in new markets, including finance.
corporations want finance to not only record trans-
With the maturity of today’s FAO offerings, it is no
actions and report accurately but also be a true
longer a requirement to build all of the necessary
business partner supporting overall enterprise
support. Organizations are now able to operate in
strategy and growth.
multiple new markets with minimum investment
by partnering with established providers that A final factor is the progress toward the existing
offer global F&A services. Companies that have transformation roadmap itself. Progress may be
successfully adopted this model are able to lagging or exceeding the
quickly ramp up in new markets, get closer to the original plan; if it is lagging,
markets they serve and focus on core business. what are the factors that As finance
are slowing progress? Was organizations are
As the World Turns the original plan realistic? If transformed, goals
Best practices are changing rapidly. In response the answers are no, then the
to changing technologies, maturing of outsourc- plan needs to be revisited are evolving from
ing and changing regulations, approaches and and updated to ensure that predictability,
activities that were best practice just a year
ago may no longer hold that status. Organiza-
the objectives are met. efficiency and
tions are leveraging the power of information FAO providers are also not accuracy to business
and developing a greater understanding of the immune to the need to impact, predictive
finance back-office function and converting it into reassess operations and
value for the organization. This has led to a new revise transformation plans.
analytics and
trend, in which back-office functions are trans- A service provider that only business partnering.
forming into revenue-generating functions: implements the transforma-
tive changes identified at the start of the rela-
• Order management: This function is now used tionship is failing its client. For all of the afore-
by companies to cross-sell and upsell prod- mentioned reasons — technology, regulation,
ucts and services. This has a direct impact on performance, etc. — FAO service providers must
revenue. The processes and skill sets of the also step back and periodically reassess.
people managing this function are changing
cognizant 20-20 insights 3

4. Creating a Transformation Roadmap
Client: Large U.S.-based hospitality chain Our Approach:
Challenges: • Current-state assessment (people, process,
technology).
• Large-scale operations with complex fran-
chising and refranchising relationships. • Analysis of multiple future-state scenarios.
• Fragmented financial processes and systems. • Development of transformation roadmap
and business dcase.
• Poor knowledge management; highly
resource centric. Client Benefits:
• No formal business metrics program. • Five-year transformation roadmap, with
identified quality and business impact
• High process variation from one business benefits.
unit to another.
• Identification of 35% savings on current
total cost.
• Identification of 5% year-over-year ongoing
productivity improvements.
Figure 2
The required periodic reassessment of finance an optimized cost. Based on our experience
is not a cursory, surface-level activity; it must be with large global companies, a well-drafted and
both objective and comprehensive. At a minimum, executed transformation roadmap can reduce
a reassessment must include: program costs by 30% to 50% over a three- to
five-year timeframe, as was achieved by one large
• Benchmarking internal costs against the hospitality industry client (see Figure 2).
market price of external service providers.
Any business that has not reassessed its finance
• Benchmarking performance (productivity,
organization and revised its transformation
accuracy, timeliness, cycle time, stakeholder
roadmap within the past 24 months needs to get
satisfaction, etc.) against the performance of
started. To truly achieve an objective and rigorous
external service providers.
review, and a roadmap that is actionable and
• Assessing finance operations against leading pragmatic, outside assistance is recommended.
best practices. When seeking help with assessing and transform-
• Assessing the deployment and effective utiliza- ing finance, we suggest choosing a partner that
tion of technology. not only provides consulting but also operates
large-scale financial operations for others. A
Getting Started provider of finance and accounting outsourced
A disciplined, successful implementation of the services will be best positioned to know the real
finance transformation roadmap will enable timeframes, costs, benefits and risks associated
organizations to build financial organizations with alternative transformation initiatives.
of the future with best-in-class processes at
cognizant 20-20 insights 4

5. About the Authors
Paul Nowacki, CFA, is Leader of Finance and Accounting Transformation Services, within Cognizant’s
Business Process Services Business Unit. In this role, Paul oversees all F&A consulting activities. He
also serves as a thought leader in F&A and helps identify market trends and shape new Cognizant
offerings. He is a frequent conference and webinar speaker and author of numerous articles and white
papers on various finance and accounting topics. By combining his industry experience in IT and finance
leadership roles with a background in transformational consulting, Paul looks holistically at finance
and accounting organizations and blends process and systems with an organizational design perspec-
tive. He has a B.S. in quantitative business analysis and an M.B.A., with a concentration in operations
research. Paul also holds the Chartered Financial Analyst professional designation. He can be reached at
Paul.Nowacki@cognizant.com.
Mathew George, CPA, is a Solutions Leader within the Finance and Accounting Practice of Cognizant’s
Business Process Services Business Unit. In this role, Mathew works closely with clients on strategic
finance and accounting deals. He also leads strategic assessments and develops optimal solutions that
focus on the redesign and reengineering of critical processes. Moreover, Mathew has led the global con-
solidation and standardization of F&A processes across multiple countries and languages, into offshore
and near-shore delivery centers. He is a Chartered Accountant, a Certified Public Accountant and a
Certified Internal Auditor and holds a certified Six Sigma Green Belt from GE. Mathew can be reached at
Mathew-3.George-3@cognizant.com.
About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-
sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in
Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry
and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50
delivery centers worldwide and approximately 145,200 employees as of June 30, 2012, Cognizant is a member of the
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and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.
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