Introduction

The Finance and Accounting Outsourcing (FAO) market has traditionally been considered as a horizontal service offering with a value proposition driven by cost-savings and efficiency gains. However, as market requirements intensify, FAO solutions are increasingly becoming more industry-specific.  The nature of these changes can range from the adoption of industry-specific terminology to more asset-intensive approaches in the form of dedicated industry-specific platforms.  As the demarcation between horizontal and industry-specific offerings blurs the FAO value proposition is expanding beyond the bottom-line to more directly target clients’ top line performance.  This study lays out a comprehensive framework for the FAO market’s move towards industry-specificity and then applies this framework by taking an in-depth look at two key industry-segments, namely retail and healthcare providers.

As this move toward industry-specific FAO matures and evolves further, the Everest Research Institute predicts FAO offerings will increase especially in the services sector and the Order-to-Cash (O2C) process. Also, industry-specific FAO will emerge as an opportunity for FAO suppliers to create distinctive positioning in an increasingly competitive market.

The research is based on the following information sources:

• Third-party multi-process FAO contracts with a minimum of two F&A processes in outsourcing scope, over US$1 million in Annual Contract Value (ACV), and a minimum contract term of three years
• 380+ multi-process FAO contracts including 28 retail FAO and 18 healthcare provider contracts signed as of November 2008
• 750+ publicly announced industry-specific BPO contracts signed as of December 2008
• Focused executive interviews with key FAO suppliers including ACS, Cognizant, HOV, Perot Systems, VWA, and WNS

Contents

The Everest Research Institute defines industry-specific FAO offerings as involving horizontal “corporate” F&A processes integrated with elements or entire platforms of “operational” industry-specific F&A processes and activities. This research study tracks and analyzes this new development in the FAO market.

As a part of the research study, we also deep dive into two industries – healthcare providers and the retail vertical to understand the buyer pain-points, FAO trends, level of industry-specificity, and the supplier landscape.

This research study provides the reader with an in-depth and accurate overview of industry-specificity in FAO along the following dimensions:

• Understanding industry-specificity in FAO
• Industry-specific FAO in the retail space
• Industry specific FAO in the healthcare provider space
• Implications of industry-specific FAO on key stakeholders

Each dimension is discussed in detail to provide the reader an in-depth and accurate overview of the buyer and supplier trends related to industry-specific FAO solutions.  For example, the section on understanding the nature of industry-specificity in FAO offers the following insights, among others:

• There is an emerging push and pull towards increasing industry-specificity in FAO solutions. Industry-specific FAO promises to enhance the traditional FAO value proposition with the ability to influence an organization’s overall cash flow
• There are three levels of increasing industry-specificity in FAO: Industry relevant offering, industry-enabled offering, and industry platform offering
• While the CFO/controller almost always is the key decision maker, business unit and operational leaders become important influencers in key outsourcing decisions
• Industry-specific FAO solutions are more suited to the services-oriented industries. While the manufacturing industry has been at the forefront of FAO adoption, the services sector is emerging as industry-specificity in FAO has increased
• The importance, complexity, and required standardization of a process determines the level of industry specificity required. Within the services sector, the O2C process has the maximum industry specificity