Enterprises are automating financial processes and adding analytics tools, elevating FAO partners to more strategic roles, ISG Provider Lens report says
Finance and accounting departments around the world are carrying out digital transformations to make processes more frictionless and automated, according to a new research report published by Information Services Group, a leading global technology research and advisory firm.
AiThority Interview Insights: AiThority Interview with Matthew Tillman, CEO and Co-founder at OpenEnvoy
“FAO providers are becoming strategic partners that collaborate with clients in addition to delivering services”
The 2023 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report finds that COVID-19 lockdowns accelerated the digitalization trend, as many companies were forced to abandon traditional processes to accommodate remote work requirements. As this trend spreads, more enterprises are turning to outside providers for services and help in planning digital strategies.
“Organizations are creating connected finance teams with the technology to collect and analyze larger data sets for long-term decision-making,” said Robert Stapleton, partner and Business Operations Services lead with ISG. “CFOs, with the added power of technology, have increasingly strategic roles in the leadership of their organizations.”
Many companies are pivoting toward new ways of operating in response to constant business disruptions since the pandemic, especially those caused by ongoing macroeconomic challenges, including inflation and supply-chain issues, the report says. Providers are helping these companies understand and adopt new financial operations technologies to make these transitions successful.
The flood of new technologies affecting finance and accounting has become overwhelming for some organizations, ISG says. Many are implementing major new capabilities, including SAP S/4HANA, while making early investments in generative AI and evaluating the potential of other tools, such as blockchain and the metaverse. Leading providers are developing expertise in these areas to guide clients toward effective plans for modernization.
Seeing the danger of vulnerabilities that could come with introducing new technologies in their financial operations, enterprises are also stepping up cybersecurity projects, often with assistance from service providers, the report says. These initiatives aim both to protect privacy and business continuity and to comply with the growing number of regulations in these areas.
Companies engaging with FAO providers increasingly are seeking outcome-based contracts in which the providers share the risks and rewards of digital transformation, ISG says. These are taking the place of traditional engagements based on service-level agreements or the number of full-time employees available for projects.
Read More about AiThority Interview: AiThority Interview with Rebecca Jones, General Manager at Mosaicx
“FAO providers are becoming strategic partners that collaborate with clients in addition to delivering services,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “These engagements are starting to include outsourcing of higher-level processes such as record-to-report and financial planning and analysis.”
The report also explores other FAO trends, including the importance of global delivery models for FAO services and the growing need for clarity and effective strategies around environmental, social and governance (ESG) initiatives.
For more insights into financial and accounting challenges, such as a shortage of skills for some high-level processes, and advice on how to work with providers to address them, see the ISG Provider Lens™ Focal Points briefing here.
The 2023 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report evaluates the capabilities of 28 providers across four quadrants: Procure to Pay (P2P), Order to Cash (O2C), Record to Report (R2R) and Financial Planning and Analysis (FP&A).
The report names Accenture, Capgemini, Cognizant, Deloitte, EXL, Genpact, HCLTech, IBM, Infosys, TCS, Wipro and WNS as Leaders in all four quadrants. It names Sutherland as a Leader in two quadrants.
In addition, Conduent and Tech Mahindra are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.
Latest AiThority Interview Insights : AiThority Interview with Dan O’Connell, Chief AI & Strategy Officer at Dialpad
[To share your insights with us, please write to sghosh@martechseries.com]
Comments are closed.