Monday, June 20, 2011


7 tech trends shaping the future of FAO.
by Stewart Clements

There is little question that the outsourcing of finance and accounting processes has had a dramatic impact on the business world. But what will finance and accounting business process outsourcing (BPO) look like in the future? That is one of the topics we explored in researching a new book that provides a strategic guide to the fast-growing finance and accounting BPO field for CFOs and senior management. (Clements, S and Donnellan, M. CFO Insights: Achieving High Performance Through Finance Business Performance Outsourcing. John Wiley & Sons, May 2004). The book, based on interviews with more than 200 CFOs, asked a number of important questions, among them: Why are companies considering F&A shared services or outsourcing? What are they looking to centralize or outsource? How have they or how do they plan to transition and manage the outsourcing? And what business process improvements or transformations do they hope to gain?

The answers were fascinating (and will be discussed in more detail in future columns), but one of the most interesting outcomes was the belief that new business models will emerge as a result of the revolution in wireless technologies and Web-based service with remote identity tracking technologies at their core. This technology will lead to exciting developments in the burgeoning field of business analytics—a key area of growth for the refreshed, redefined finance functions of the future. 

We envision that, not far in the future, many companies will be doing their buying and selling over the Internet, with third parties handling payment and settlements. Settlement exchanges will improve cash flow and provide options for trade debt financing. 

With the development of scalable and standardized business processes, systems, data, and reporting, buyers of outsourced financial services will be purchasing complete solutions to distinct business processing requirements. Rather than being tied to any single software tool, sourcing approach, or provider, they will have the freedom to shop for the best service deliverer. This will lead to the bundling of services by best-practice outsourcing providers into fully integrated suites of finance and accounting outsourcing services. 

Technology will play a large role in the future look of BPO by freeing up both users and providers for more strategic functions. We could well see some of those strategic finance processes, such as planning and forecasting, fully integrated with the more traditional finance outsourcing services. Buyers will focus on outsourcing contracts that offer higher quality outcomes—carefully scrutinizing providers’ staff education and training, analytical capabilities, and communication skills—necessary to support effective decision-making. Technology is poised to change the face of finance BPO by delivery reduced costs, improved efficiency, and enabling enterprise-wide transformation. 


The use of new tools: Whereas most data today is formatted in tabular form and counter intuitively presented, new technologies will allow finance executives to carry out analytics and make value-added decisions using profitability analysis and pricing models that take advantage of real-time sales data--all available in the palm of the hand. 

The expansion of electronic collections: Rapid growth in e-commerce collections will deliver significant cost savings--enabling almost real-time cash conversion between buyers and sellers. 

Breakthrough processing: Electronic checks will further automate the collections process. They will not only be presented as a method of payment, but will also provide a source of information that will allow for the faster availability of funds and notification of returns, and reduced exposure to fraud. The reliability of these new systems will give companies increased confidence in outsourcing electronic collections.

Declining demand for working capital: Corporate treasury and accounts receivables departments will know exactly when debits are due to be posted to the company accounts. Funds will be available faster, and there will be quicker notifications on returns. 

The advent of intelligent and interactive information: Sensing technology and radio frequency identification (RFID) tags will allow for the monitoring of inventory throughout the supply chain. Information will be available instantly on customer preferences, loyalty, and profitability. 

A new, revolutionized connectivity: With the abundance and affordability of wireless bandwidth, fast data transfer of information will be available to mobile users. 

Closely interfaced software applications that will communicate with one another over the Internet:
The use of open standards will allow organizations to share data and software processes. [FAO]


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