Outsourcing expert sees finance as key growth area

TORONTO — Finance and accounting may eventually overtake human resources as the biggest outsourcing opportunity in the enterprise, according to the author of a popular book on the topic.

Everest Group chief executive Peter Bender-Samuels

told a seminar audience Wednesday morning that technology hosted by third parties could dramatically improve the way large organizations handle finance and administration. Already, he said, some companies are experimenting with self-serve applications that allow managers to track delinquent invoices and find out why suppliers haven’t been paid. These applications could become similar to self-service HR programs that allow employees to look up their own benefits information, he said.

“”The cost savings could be greater, but it’s also more threatening,”” said Bender-Samuels, adding that CFOs sometimes shy away from allocating money for such projects. “”It’s like the cobbler’s daughter who has no shoes. They can’t get (the funding), but they don’t want to spend it on their own processes.””

Bender-Samuels is the author of Turning Lead Into Gold: The Demystification of Outsourcing. His company, the Everest Group, works with four out of the five major banks in Canada. The Everest Group was one of the consulting firms that helped broker the deal between HP and CIBC to handle the banks’ IT infrastructure last year, for example. He is also one of the forces behind The Outsourcing Center, a portal which aggregates content about best practices.

Despite its potential, Bender-Samuels said finance and accounting’s growth may be slower than HR because it requires more customization. Whereas the rise of PeopleSoft and other vendors have standardized the way HR is handled to some extent, finance and accounting remains different from vertical to vertical.

“”It doesn’t scale across industries but within industries,”” he said. “”You can do it for a railway, for example, and the benefits from outsourcing it there might be useful to a trucking company. But the banks won’t want to hear of it because they handle (finance and accounting) completely differently.””

Though it has been around for more than 50 years, outsourcing is growing more complex because almost all the outsourced processes are enabled by IT, Bender-Samuels said. Meanwhile, the industry is maturing around a “”big three”” of IBM, EDS and Computer Sciences Corp., yet is welcoming newer entrants like HP. Increased competition could mean better pricing for customers, he said.

“”What we have to avoid is this bulimia investment cycle: you under-invest in a process, then use outsourcing to fix it. Then you wait for it to amortize until it is under-invested and you sort of throw it all up again,”” he said. “”I realize this is kind of graphic picture, but it sort of works.””


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