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Build a Successful F&A Outsourcing Contract
Once the decision to outsource has been made, the client is faced with a host of issues and concerns. Relationships, and managing those relationships, are just a piece of the puzzle and a cornerstone in any outsourcing agreement. Sourcing relationships must be sustainable to ensure successful outsourcing. However, many finance and accounting (F&A) relationships turn sour, and the value the chief executive officer expects to receive falls short.
Alsbridge, Inc. has found that many deals fall outside of the ideal “landing zone” for a sustainable relationship. Using the Market Reality Assessment (MRA) tool, Alsbridge has benchmarked hundreds of outsourcing solutions along 100 different attributes in nine categories. If the solution is too “high” in any category, the deal is too stifling for the provider. If the solution is too low in any category, the deal is too favorable for the provider and may be disadvantageous for the client. Neither is sustainable.
Alsbridge research indicates that between 40% and 70% of outsourcing value may be lost due to unsustainable contract terms and poor relationship management on the part of the client organization. Understanding these factors, and their impact on value leakage over time, is absolutely essential to maximizing the value of a finance and accounting outsourcing partnership.
What every chief financial officer wants is a sustainable and “good,” market-based outsourcing contract that delivers expected benefits and value. The key is a solution that is performance-based, meaning the solution is based on outsourced responsibilities that are clearly delineated and produce outcomes at defined service levels.
Four steps, if taken by both the client and provider, can ensure successful, sustainable sourcing in F&A deals:
Step 1: Constructing Sound Statements of Work
Step 2: Constructing the Resource Baseline
Step 3: Constructing the Service Levels
Step 4: Governance
Sound statements of work, service level agreements, resource units and governance are critical components of a sustainable F&A outsourcing relationship. Properly constructed and linked together they form the basis for a performance-based deal. The details and work associated with structuring these are much more complex and typically take four to five months to work through. To efficiently get through the process and mitigate risk, an outsourcing advisory firm philosophically aligned with structuring a “win-win” relationship is recommended to assist clients in structuring a “deal shape” that is fair and market-based. Hiring a sourcing advisor who has seen and been through the process several hundred times will provide a strategic advantage and protect against value leakage over the term of the relationship.
For further details on how you can ensure successful, sustainable sourcing in F&A deals, download the complete whitepaper below.
Alsbridge, Inc. has found that many deals fall outside of the ideal “landing zone” for a sustainable relationship. Using the Market Reality Assessment (MRA) tool, Alsbridge has benchmarked hundreds of outsourcing solutions along 100 different attributes in nine categories. If the solution is too “high” in any category, the deal is too stifling for the provider. If the solution is too low in any category, the deal is too favorable for the provider and may be disadvantageous for the client. Neither is sustainable.
Alsbridge research indicates that between 40% and 70% of outsourcing value may be lost due to unsustainable contract terms and poor relationship management on the part of the client organization. Understanding these factors, and their impact on value leakage over time, is absolutely essential to maximizing the value of a finance and accounting outsourcing partnership.
What every chief financial officer wants is a sustainable and “good,” market-based outsourcing contract that delivers expected benefits and value. The key is a solution that is performance-based, meaning the solution is based on outsourced responsibilities that are clearly delineated and produce outcomes at defined service levels.
Four steps, if taken by both the client and provider, can ensure successful, sustainable sourcing in F&A deals:
Step 1: Constructing Sound Statements of Work
Step 2: Constructing the Resource Baseline
Step 3: Constructing the Service Levels
Step 4: Governance
Sound statements of work, service level agreements, resource units and governance are critical components of a sustainable F&A outsourcing relationship. Properly constructed and linked together they form the basis for a performance-based deal. The details and work associated with structuring these are much more complex and typically take four to five months to work through. To efficiently get through the process and mitigate risk, an outsourcing advisory firm philosophically aligned with structuring a “win-win” relationship is recommended to assist clients in structuring a “deal shape” that is fair and market-based. Hiring a sourcing advisor who has seen and been through the process several hundred times will provide a strategic advantage and protect against value leakage over the term of the relationship.
For further details on how you can ensure successful, sustainable sourcing in F&A deals, download the complete whitepaper below.
