Dwayne Prosko, Director, KPMG Shared Services and Outsourcing Advisory

As CFOs are increasingly chartered with identifying cost savings opportunities without undermining the core finance and accounting (F&A) function, and helping move the company forward while driving revenue growth, a growing number of leading organizations are adopting strategies that leverage a global footprint combined with an Extended Global Enterprise (EGE.) The EGE depends on the ability to dynamically assemble a variety of capabilities – regardless of where those capabilities reside – into a smooth process that is focused on a specific business outcome.

In effect, with EGE, companies reach beyond the four walls of the enterprise to access a global network of capabilities and a pool of resources that can be rapidly provisioned and released on demand to meet ever-changing market conditions and evolving business objectives. The EGE enables the organization to balance the supply and demand sides of services, all driven by customer need instead of organizational expedience.

On the supply side, the extended enterprise utilizes external service providers more effectively. This allows internal resources to focus on value-add initiatives and access better, more-advanced tools and capabilities, without reinventing the wheel.

Supply “levers” that are critical to realizing new value generators for the F&A function include:

• Consolidation – take advantage of scale and scope economies, especially in low complexity services
• Standardization – standard processes and systems are the basis upon which to drive consolidation and eliminate waste
• Leverage global delivery models – go beyond just the traditional transaction processing services
• Access advanced tools and capabilities – replace blunt force, labor intensive processes with advanced toolkits

The demand side extends far beyond demand management into development of a deeper, more sophisticated understanding of demand including fit-for-purpose delivery models, market-back segmentation, affordability analysis and service expectation rebasing.

Demand “levers” include:

• Segment users for tailored services – tailored, fit-for-purpose strategies
• Eliminate “good-to-have” offerings – keep only what is a core activity; eliminate contextual services
• Align capabilities with business demands – invest in capabilities that could unlock upside potential
• Align finance investments with business priorities – keep only what is a core activity; eliminate contextual services

Top performing companies are not satisfied with the traditional transaction processing arrangements with external service providers. And both external service providers and their clients have progressed to more advanced capabilities and teaming arrangements to build an extended enterprise, with the ultimate goals of increasing agility and competitive advantage while decreasing costs. The EGE approach can significantly enhance their ability to achieve these goals.

For more details on the extended global enterprise, please read our paper, The Finance & Accounting Function and the Extended Global Enterprise.

Filed under: Finance & Accounting, Global Business Services, Outsourcing, Shared Services by EquaTerra