In our previous post – Where will your 2020 Back Office be? Part I – we looked at the adoption of Shared Services and Outsourcing for enterprise back office functions. In Part II of this series, we continue to focus on back office functions and the business drivers for change relating to Shared Services and Outsourcing.
Competitive advantage brings the imperative to change
While some firms continue to delay the inevitable change, their competitors may well be strengthening their position with efficiency and lower costs.
Deloitte finds that many C-level executives are questioning their continued investment in an in-house back office when these services are now highly commoditised and standardised.
It is increasingly difficult to quantify what competitive advantage is delivered by a back office function that is in house such as: Payroll, Finance, Human Resources and Information Technology. With the potential cost savings and the uplift in capability on offer, more firms are prepared to compromise on the level of customisation that they need.
Each year the adoption of Shared Services and Outsourcing continues to rapidly increase. The Deloitte 2015 Global Shared Services Survey found that most organisations are investing heavily in extending their Shared Services strategies.
The adoption of Shared Services continues to increase, with Finance (91%) and Human Resources (66%) being the two most included functions in Shared Services Centres. The study further found that 52% of organisations were already leveraging a Shared Services strategy for IT.
Cutting-edge Tech Trends will change the decision dynamics
Participants at the 2015 Deloitte Annual Global Finance Transformation Conference highlighted that Big Data and Cloud is now a significant factor in their sourcing decisions. Disruptors that are having a big impact on the back office are Software as a Service, In-Memory computing and Robotic Process Automation:
- Software as a Service (SaaS) examples include Workday, an enterprise cloud application that assists with greater real-time information; Anaplan a cloud-based enterprise modelling and planning platform for complex calculations
- In-memory computing examples include SAP’s S/4 HANA Finance leveraging in-memory computing on a single platform
- Robotic Process Automation (RPA) is software that replaces humans in performing rule-based, repetitive tasks and cross-functional & cross-application macros. Automation has already impacted many visible processes, removing the need for human intervention, e. g. self check-outs at supermarkets, airports and petrol bowsers.
- Organisations are embracing Shared Services and Outsourcing, and non-Adopters may lose advantage to competitors by failing to act to reduce costs and improve efficiencies.
- Service providers are leveraging the latest emerging technologies and innovations to improve the attractiveness of their Shared Services and Outsourcing offerings.
- The latest technology trends are playing a significant role in influencing strategic sourcing decisions of organisations and bringing disruption to the traditional back office.
Did you miss Part I of this blog series? Read it here.