Stan Lepeak, Director, Advisory Research
Cliff Justice, US National Leader, Shared Services and Outsourcing Advisory

On Tuesday, February 22, KPMG LLP (US), KPMG Holdings Limited (UK) and KPMG International announced an agreement to acquire the business and subsidiaries of EquaTerra Inc. This combination creates a global shared services and sourcing advisory offering that is aligned with a much larger global network of KPMG talent offering audit, tax and advisory services. The reasons for the acquisition are compelling, strategic and reflect the shifts occurring in the overall global business and IT services marketplace.

There is increasing evidence that leading buyer organizations are changing their approach to optimizing their internal operations, and are changing their delivery of internal support using a combination of external providers and internal staff. Fierce global competition and difficult economic times require radical improvements but with new constraints that do not allow significant investments and elongated time frames (e.g., ERP implementation or 10 year outsourcing deals.)  There is a renewed focus on optimizing services and driving process improvement across all the enterprise using shared services organizations augmented, extended and often improved by external service providers. It is no longer an either/or approach.

The value proposition and success metrics for shared services operations are evolving. Leading organizations today receive measureable business value from shared services – above and beyond driving costs down via consolidation, automation and labor arbitrage – in areas such as IT, F&A, HR and procurement. These organizations are assuming a more commercial orientation to the business. This involves driving and improving overall business performance as well as competing for internal business on level ground with external service providers.

The outsourcing market has also materially evolved and matured. A growing number of service providers are demonstrating advanced capabilities enabling them to move up the value chain in terms of services offered. They are better able to integrate into existing business operations to provide more high value and strategic services. As a result outsourcing today is moving beyond just an alternative service delivery strategy to become an enabling lever of an overall transformation agenda and one that is closely aligned with internal shared services delivery capabilities. Commonly, this transformation agenda is targeted at improving global competitiveness by better leveraging global resources, talent, and markets via a global business services model.

What constitutes outsourcing is also evolving. Cloud computing as manifested in software and infrastructure as a service (SaaS/IaaS)  is  heavily impacting all aspects of outsourcing and the way IT and business services are designed, purchased and consumed. Cloud has the potential to help buyers and providers standardize services while simultaneously improving price performance, long an elusive outsourcing holy grail.

Buyers today are demanding more, better and different services from sourcing advisors. They seek mature combinations of outsourcing experience, operational skills, industry knowledge and implementation capabilities underpinned by strong market data, information and knowledge. Clients seek flexibility in the types of support they receive from advisors ranging from deep dive to lighter touch models to support the entire sourcing lifecycle and ongoing process improvement. Advisors play a critical role in helping buyers design, enable and optimize a portfolio of services without bias to internal or external provisioning.

The addition of EquaTerra into KPMG’s existing SSOA practice provides it with a deep team of additional seasoned outsourcing advisors with extensive hands-on sourcing and service delivery and transformation experience. The acquisition arms KPMG member firms with extensive market data and insights, intellectual property, and supporting sourcing tools and technologies. Through this combination KPMG has created a global sourcing and shared services platform on a scale that clients can leverage to transform services delivery capabilities from the multiple dimensions of IT, enterprise systems, HR, finance, supply chain, tax, and risk.

Learn more by reading these related articles:
The Extended Global Enterprise Advantage
Sustain Competitive Advantage by Rethinking Your Business Services Models

Filed under: Market Trends and News, Outsourcing, Process Transformation, Shared Services by EquaTerra