Summary Report: Vertical Industry Strategies For Shared Services and Outsourcing Survey

A joint study by Shared Services &
Outsourcing Network (SSON) and

Everest Group
Summary Report
Vertical Industry Strategies for Shared Services
and Outsourcing Survey
Report: March 2012
Copyright 2012, Everest Global, Inc.

EGR-2012-0-R-0666
Introduction and background
Much of the growth in shared services and

outsourcing has been oriented along traditional
horizontal functions such as finance &
accounting, human resources, and IT. However,
with increasing maturation and innovation in
strategies, differences across industries are
emerging, additionally, vertical functions unique
to an industry are increasingly playing an
important role
In order to better understand these trends,
Everest Group and the Shared Services &
Outsourcing Network (SSON) conducted the firstever survey focused on vertical industry
strategies in shared services and outsourcing
The survey covered 28 vertical industries, 8
horizontal functions, and 164 vertical functions. It
addressed a wide range of topics including
scope, improvement initiatives, sourcing models,
and technology strategies
This report summarizes the findings from over
650 responses across enterprises, service
providers, and industry influencers
How to learn more
Visit the websites of SSON and Everest Group for

more information, including fact sheets with results
for specific industries
Results from the survey will be featured at Shared

Services & Outsourcing Week (SSOW) events
around the world in 2012
Australasia
Melbourne
16-19 April 2012
China
Shanghai
23-25 October 2012
Europe
Amsterdam
14-16 May 2012
Germany
Berlin
20-23 November 2012
Asia
Singapore
04-06 September 2012
India
Gurgaon
04-06 December 2012
www.ssonetwork.com
research.everestgrp.com/VISSSO-survey

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Table of contents
(page 1 of 2)
Topic
Page no.
Section I. Executive summary

Executive summary
Snapshot of key analyses
How to interpret this report
5
6
7
8
Section II. Overview of shared services and outsourcing strategies

Summary
Success, maturity, and focus on cost
Centralization and sourcing model
Improvement initiatives, ability to change, and SaaS
9
10
11
13
17
Section III: State of traditional horizontal functions

Summary
Scope
Delivery model, offshoring, and technology
20
21
22
23
Section IV: Variations by industry

Summary
Scale and sourcing model adoption
Horizontal and vertical function adoption
Improvement initiatives for vertical functions
26
27
28
30
34

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Table of contents
(page 2 of 2)
Topic
Page no.
Section V. Different approaches used by mature organizations

Summary
Profile of mature organizations
Improvement initiatives
Scope of F&A
35
36
37
40
41
Section VI. Perspectives of service providers and influencers

Summary
Service provider industry focus and growth
Sourcing model trends
Alignment of investments to improvement initiatives
SaaS/cloud adoption expectations
Influencer views on service provider gaps
42
43
44
45
46
47
48
Appendix
About the survey
Glossary of key terms
49
50

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Outline
Executive summary
Overview of shared services and outsourcing strategies
State of traditional horizontal functions
Variations by industry
Different approaches used by mature organizations
Perspectives of service providers and influencers

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Executive summary
With the increasing maturation of shared services and outsourcing, many organizations report that their
programs are successful and able to consistently meet financial objectives
However, far fewer organizations consider themselves to be mature in comparison to their peers and most
are still primarily focused on process improvement over other sources of value
Further, most shared services and outsourcing groups are more oriented towards traditional horizontal
functions such as F&A and HR rather than vertical functions, which are closer to the core business
activities
In order to deliver the required results, organizations primarily favor a shared services model. Many
organizations also state a bias for a best-fit sourcing model, but this is not demonstrated in reality
Finally, although many respondents indicate technology is a key initiative, they are generally not yet
convinced that it is appropriate to adopt SaaS/cloud technology models

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Snapshot of key analyses
Financial and value management

Percent of respondents agreeing with statement
Representation of horizontal and vertical functions

Average number of functions included
Horizontal functions
Vertical functions
Cost reduction is the most

important objective
3.4
62
Services industries
2.1
Consistently meet financial

objectives
76
3.3
Product industries
Business cases include

value beyond cost savings
87
1.2
Shared services and outsourcing adoption by industry

Average shared
services adoption
Extent of third-party outsourcing
3.5
Relative focus of respondents by maturity level

Percent of respondents
Below average
adoption of shared
services and above
average for
outsourcing
Media &
entertainment
Travel &
transportation
Insurance
2.5
Above average
adoption of shared
services and
outsourcing
Healthcare
payers
Average outsourcing
adoption
Banking
Telecom
Engineering &
construction
Utilities
Healthcare providers
Information
services
Chemicals
Life sciences
Retail
CPG
Automotive
Government
Industrial products
Successfully implement
change
Capital markets
Mature
Oil & gas
Freight &
logistics
2
Below average
adoption of
shared services
and outsourcing
Collaboration with
business users
48
57
Hi-tech
Above average
adoption of
shared services
and below
average for
outsourcing
Less mature
31
12
1.5
1.5
2.5
3
3.5
Extent of shared services
4.5

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How to interpret this report

Key definitions and visual conventions
Key definitions
Functions: Business support activities which
encompass multiple processes
Horizontal functions: Activities which tend to be
similar across industries such as finance, HR, and IT.
Eight horizontal functions were covered in the survey
Vertical functions: Activities which are different by
industry. Examples include order management in
hi-tech, merchandise analytics in retail, and loan and
mortgage servicing in banking. The survey covered
164 vertical functions
Visual conventions
Many questions in the survey were asked in terms of
the extent to which a respondent agreed or disagreed
with a statement. Respondents were given seven
options to select from and these are shown on charts in
this report using the color scheme provided below
Improvement initiatives: Questions about seven

improvement initiatives were asked for each function
(horizontal and vertical functions), and also asked about
in aggregate. These seven include the following:
Increase consolidation/centralization
Reengineer/standardize processes
Implement new tools and technologies
Leverage analytics and business intelligence
Increase collaboration with business users
Increase level of offshoring/nearshoring
Deepen talent pool/expertise
In order to draw attention to the most important data and

summarize key insights, the report uses the standards
provided below
Notable data findings

Strongly
disagree
Disagree
Somewhat
disagree
Neutral
Somewhat
agree
Agree
Additional insights
Strongly
agree

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Outline
Executive summary

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Summary of key messages

Respondents from enterprises report a high degree of success with their shared services and outsourcing
efforts, although only a quarter consider themselves mature in comparison to their peers. Further,
respondents demonstrate a clear focus on meeting financial objectives while also pursuing sources of
value beyond cost savings
IT horizontal services are the most centralized, with vertical functions being the least centralized. Shared
services is the preferred sourcing model with best-fit as a strong second, although much less commonly
adopted when looking in detail at functional approaches
Moving forward, respondents indicate:

The greatest focus on process-centric improvement initiatives and lesser priority being placed on
analytics and offshoring
In order to accomplish these improvements, respondents see their leadership as being effective in
supporting initiatives, but less confident in their effectiveness in executing change efforts
SaaS/cloud technologies vary widely in adoption and many are undecided to slightly biased towards
increased adoption

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10
Although over 60% of the enterprise respondents consider

their efforts to be successful, only 26% feel confident that
they are mature in comparison to their peers
Strongly
disagree
Level of agreement with statement

Percent of enterprise respondents
Our shared services and/or

outsourcing program is generally
considered to be a success
In comparison to other organizations,

our strategy for shared services and
1
outsourcing is clear and
well-conceived
In comparison to other organizations,

we are mature users of shared
services and outsourcing
10
20
12
Disagree
19
17
18
Somewhat
disagree
17
13
Somewhat
agree
Agree
33
20
11
Neutral
13
24
26
Strongly
agree
15
11
Larger organizations demonstrated a tendency to perceive themselves as successful and mature in

comparison to peers
Source:
Vertical Industry Strategies in Shared Services & Outsourcing survey, January-February 2012
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11
Three-quarters of enterprises meet their financial objectives.

Surprisingly, almost 90% respondents reported including
sources of value other than cost in their business cases
Strongly
disagree

We consistently meet our financial

13 6
objectives
14
Cost reduction is the most important

objective for our shared services 2 6
and/or outsourcing strategy
In addition to cost savings, we
consider other sources of value in our 11 3
business cases
We regularly refine our objectives to

target new sources of value 1 3
Somewhat
disagree
20
16
Somewhat
agree
22
45
29
Agree
Strongly
agree
22
30
23
17
Neutral
34
14
Disagree
10
19
33
The comparatively low portion of respondents who indicated cost reduction as the most important objective
suggests that increasing maturity has led to broader value propositions
Source:
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12
IT functions are the most centralized at 77%, comparatively

almost half of the vertical functions are centralized which is
not far from the overall philosophy of organizations
Percentage of enterprise responses
Overall philosophy 5%
Aggregate across
functions
10%
Horizontal IT
4%
functions
Horizontal F&A, HR,
procurement
Vertical functions
32%
40%
31%
19%
9%
23%
27%
32%
32%
30%
Sentiment independent of
function
Aggregate of over 1,000
functional answers
45%
28%
33%
15%
39%
23%
23%
Not
centralized
Somewhat
centralized
Mostly
centralized
Centralized
Break-out of functional
answers
Within the vertical functions, product-oriented industries were twice as likely to have decentralized delivery
as services industries
Source:
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13
Most organizations prefer shared services, with best-fit in a

strong second position and both expected to grow
Enterprise sourcing model preference
Best-fit (either shared services or

outsourcing based upon
situation)
Future sourcing model trend

Reduce shared services

and outsourcing (1%)
39%
No change
19%
Prefer third-party outsourcing
Prefer shared services
Retain in business
7%
47%
45%
Increase both
third-party
outsourcing and
shared services
Increase
shared
services
23%
12%
Increase third-party
outsourcing
7%
Roughly 80% of the respondents expect to grow their use of shared services and/or outsourcing. Only one
percent expect to reduce the efforts, with 19% anticipating no change
Source:
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14
Although respondents from shared services organizations

most heavily favored shared services, all respondents
indicated a similar preference for best-fit sourcing
Best fit
39%
Prefer third-party outsourcing
7%
38%
41%
18%
Prefer internal shared
services/captives
47%
Retain in business
7%
56%
33%
All respondents
6%
Respondents in shared
services/captives
8%
Others
Although a high portion of respondents in the Others category have responsibility for vendor management
and other outsourcing roles, less than 20% indicate that outsourcing is the preferred sourcing model
Source:
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15
Best-fit sourcing philosophy is common, but seldom

matches reality and being adopted less than half as often as
the overall philosophy suggests
18%
Best fit
Prefer outsourcing
39%
Retain in business
14%
6%
7%
30%
14%
7%
57%
Prefer shared services
14%
65%
55%
47%
47%
7%
Overall philosphy
17%
15%
Aggregate of
functional answers
F&A, HR,
procurement
horizontals
24%
9%
Vertical functions IT infrastructure &
applications
horizontals
Only IT functions which are much more centralized come close to matching the overall sourcing model
philosophy
Source:
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16
Process-centric improvement initiatives are rated as highest

priority
Percentage of enterprise responses rating as a top 3 priority
Reengineer/standardize process
78
Increase consolidation/
centralization
53
Implement new tools and

technologies
50
Increase collaboration with

business users
38
Leverage analytics and business

intelligence
28
Increase offshoring/nearshoring
Deepen talent pool/expertise
Process-centric levers
for improving
19
13
Consistent with other areas of the survey, offshoring received modest focus as being an important lever for
capturing more value
Source:
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17
Most organizations believe that their leadership is effective in

supporting initiatives, but only a quarter of them express
confidence in their effectiveness in executing change
Strongly
disagree

Our senior management is effective

in supporting shared services and/or
outsourcing initiatives
We are effective in executing our

change management plans
2 6
3 6
14
18
Disagree
12
Somewhat
disagree
25
15
Neutral
Somewhat
agree
28
31
Agree
Strongly
agree
13
21
Confidence in ability to effectively execute change varies significantly by maturity (see later section for more
details)
Source:
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18
Current use of SaaS/cloud technologies is broadly distributed

and neutral on future plans, with a slight bias towards
increased adoption
Strongly
disagree

We are currently using SaaS/cloud

technologies for some functions
We plan to significantly increase the

use of SaaS/cloud technologies
16
11
20
Disagree
Somewhat
disagree
23
38
Somewhat
agree
Neutral
15
19
Agree
Strongly
agree
17
17
The hi-tech and travel & transport industries indicate a greater interest in these new technology models, in
contrast to more regulated or information-sensitive industries (e.g., banking, healthcare)
Source:
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19
Outline
Executive summary

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20

The survey included a deep-dive into the traditional horizontal functions of F&A, HR, and procurement
Although judgment-intensive processes are less commonly included, the representation is generally a
third-to-half of the respondents
Additionally, respondents indicated a strong bias for pursuing new sources of value through changes in
delivery model such as end-to-end approach in F&A, core spend in procurement, and self service and
mobility in HR
By contrast, respondents were more mixed in their use of offshoring and nearshoring, with a wide
distribution of approaches
Similar to overall adoption of new technologies, respondents are often undecided on the role of
SaaS/BPaaS in their F&A, HR, and procurement strategies with HR demonstrating a greater openness
to new technologies

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21
Across horizontal functions, adoption of transaction-intensive

processes outpaces judgment-intensive processes
Transaction-intensive
Inclusion of processes in horizontal functions

Percentage of enterprise respondents answering for function
Procurement
F&A
Accounts payable
93
Account receivable
82
General ledger
Human resources
Day-to-day
purchasing
66
Accounts payable
63
74
Employee data
86
Payroll
81
Benefits admin
82
Fixed assets
Judgment-intensive
63
Vendor management
76
Recruitment
61
Tax
50
Catalog management
53
Learning
Management
reporting
53
Spend analytics
56
Compensation
45
Performance
management
43
Regulatory
47
52
Strategic sourcing
Budgeting
35
Treasury/risk
33
Internal audit
30
50
Compliance
Category management
38
49
Mobility
38
Regulatory
38
Employee relations
34
Two-thirds of the enterprise survey respondents included F&A, whereas only half the respondents included HR and procurement.
IT infrastructure, IT applications, and contact center were included by nearly 33%, while knowledge services was included by
only 20% of the respondents
Source:
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22
Enterprises are pulling advanced value levers to further

optimize horizontal functions
Strongly
disagree

F&A
Approach to F&A shared services and
outsourcing is end-to-end process driven 4
(Order-to-Cash, Procure-to-Pay, Record-toReport) as opposed to function driven
12
Procurement
Beyond indirect or non-core spend, direct spend
5
(or core spend) is increasingly managed by our
procurement shared services and/or outsourcing
HR
A key focus for our HR services is to increase 4 2 4
self-service and mobility
Disagree
15
19
Somewhat
disagree
12
10
31
Neutral
26
16
19
35
Somewhat
agree
Agree
19
Strongly
agree
12
23
24
The most common improvement initiatives for capturing more value (e.g., centralization/consolidation,
standardization/reengineering, offshoring/nearshoring, tools and technologies) are also pursued more
frequently in horizontal functions than vertical functions
Source:
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23
A quarter of enterprises utilize offshoring as a key component

of service delivery for horizontal functions. However, a
slightly greater portion indicate the opposite
Strongly
disagree

Offshore and nearshore

delivery is a key
component of service
delivery strategy
Disagree
Somewhat
disagree
F&A
13
17
21
Procurement
13
16
10
23
HR
12
25
Somewhat
agree
Neutral
12
22
Agree
22
14
11
Strongly
agree
21
19
Among all 28 industries analyzed, respondents from government, utilities, and healthcare providers had the
lowest level of offshoring while banking, insurance, and life sciences had the highest level of offshoring
Source:
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24
Similar to overall views on SaaS/cloud, many organizations

are undecided on newer technologies even in horizontal
functions
Strongly
disagree

18
F&A
Our technology strategy

for involves significant
leverage of Saas/BPaaS
based solutions
Procurement
HR
15
10
Disagree
23
16
20
Somewhat
disagree
Neutral
35
Somewhat
agree
10
41
38
Strongly
agree
Agree
15
10
HR is the function most open to new technologies, which is also reflected in market offerings
Source:
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25
Outline
Executive summary

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26

Looking at the responses across industries, several key themes emerge regarding scale, the level of
adoption, and approaches
Retail & hospitality, financial services, and healthcare segments report the largest shared services and
outsourcing programs. In all industries, the relative level of adoption of shared services is higher than
outsourcing
Services-oriented industries, such as financial services, transportation & logistics, and retail & hospitality,
include more vertical functions in their scope than product-centric industries such as manufacturing and
energy. In all industries, judgment-intensive processes in F&A are less likely to be included in the scope
The range of vertical functions represented is very broad, tending to mostly reflect customer-related
transactional activities and supply chain-related activities. This is further reflected in the types of
improvement initiatives being pursued for various vertical functions

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27
Healthcare, BFSI, and retail have the largest scale of shared

services and outsourcing
Less than
500 FTEs
Overall scale of shared services and outsourcing

Public sector
69%
BFSI
Healthcare
Source:
19%
45%
Energy & resources
Retail & hospitality
Aerospace and defense, automotive, chemicals,

10% 12% 5%7% consumer packaged goods, consumer durables,
industrial products, and engineering & construction
66%
Transportation & logistics
Technology & communications
13% 7% 7% Government, non-profit / NGO, education
73%
Manufacturing
18%
50%
29%
32%
41%
500-1,000
1,0002,500-5,000 More than
FTEs
2,500 FTEs
FTEs
5,000 FTEs
11% 7%
21%
24%
22%
14%
6% 12%
11% 5%
14%
7%
13%
18%
21%
Travel and transportation, freight & logistics
Telecom, hi-tech, and information services
Oil and gas, metals & mining, agriculture, and utilities
29%
Retail, hospitality & tourism
30%
Banking, capital markets, and insurance
32%
Life sciences, Healthcare payers, Healthcare providers
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28
The extent of shared services and third-party outsourcing

varies by industry
Extent of shared services and outsourcing adoption by industry
Average score on a five point scale for all responses per industry
Extent of third-party outsourcing
3.5
Below average
adoption of shared
services and above
average for
outsourcing
Above average
adoption of shared
services and
outsourcing
Healthcare
payers
Media &
entertainment
Travel &
transportation
Insurance
2.5
Average shared
services adoption
Average outsourcing
adoption
Banking
Telecom
Engineering &
construction
Utilities
Information
services
Chemicals
Life sciences
Retail
Oil & gas
Freight &
logistics
CPG
2
Automotive
Below average
adoption of
shared services
and outsourcing
Capital markets
Government
Industrial products
Hi-tech
Above average
adoption of
shared services
and below
average for
outsourcing
1.5
1.5
2.5
3
3.5
Extent of shared services
4.5
More than three-quarters of industries report adoption of shared services greater than the mid-point and only two industries
report greater adoption of outsourcing than shared services
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29
Services industries have a higher representation of vertical

functions
Average number of functions
Horizontal functions
Banking, capital markets, & insurance
Vertical functions
3.6
Transportation & logistics
2.3
3.2
Retail & hospitality
2.3
3.7
1.9
Healthcare payers & providers
3.0
1.4
Technology & communications
3.1
1.4
Energy & resources

Manufacturing
3.6
1.1
2.6
Public sector
1.1
4.3
Average = 3.3
1.0
Average = 1.6
Services industries have more robust mid-offices which tie more closely to external customer service
activities with linkages to financial processes such as billing and account set-up and management
Source:
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30
Similar to the overall view, adoption of transaction-intensive

processes outpaces judgment-intensive inclusion across all
industries
Judgment-intensive F&A processes
Inclusion of F&A processes

Percentage of enterprise respondents
Transaction-intensive F&A processes
93%
85%
84%
66%
65%
75%
73%
70%
46%
41%
39%
39%
39%
42%
33%
30%
BFSI
Transportation
and logistics
Public sector
Retail and
hospitality
Technology & Manufacturing

communications
Healthcare
Energy and
resources
Industries that consider F&A to be vertical-specific are less likely to include F&A in shared services and outsourcing
initiatives. For example, nearly 30% of the BFSI respondents consider F&A to be industry-specific highest across all
industries. Consequently, BFSI has a relatively lower degree of F&A inclusion in shared services and outsourcing
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31
Key vertical-specific functions in shared services and

outsourcing by industry (page 1 of 2)
Industry
Automotive
Average number of
vertical functions
0.9
Banking
2.0
Capital markets
Chemicals
Consumer packaged
goods
Education
Engineering and
construction
Freight and logistics
Government
3.0
1.2
1.9
0.8
1.8
2.2
Source:
Document processing; billing

Records management; application processing
1.0
1.0
Master data, customer data, vendor data management; order processing and
fulfillment
Eligibility and registration
Document and record management
1.0
Healthcare payers
Key vertical-specific functions

Master data, customer data, vendor data management; asset and inventory
management support
Retail banking account open/closure and servicing; loans & mortgage servicing;
cards servicing and statement processing; transaction processing
Application processing, account servicing; investment operations, order
management
Master data, customer data, vendor data management
Claims processing and management; claims adjudication, disbursements,

subrogation; member on-boarding, records management; underwriting and risk
assessment support
Revenue cycle management (eligibility, billing, coding, receivables, payer services);
healthcare information management (records management, electronic health record)
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32
Key vertical-specific functions in shared services and

outsourcing by industry (page 2 of 2)
Industry
Hi-tech
Industrial products
Information services
Average number of
vertical functions
1.6
1.2
Sales and marketing support; billing & royalty support
1.3
Insurance
2.4
Life sciences
0.8
Media and
entertainment
Oil and gas
1.7
0.8
Retail
Travel and
transportation
Utilities
Source:
Order management and provisioning; sales and marketing support
1.1
2.9
1.1
Underwriting and actuarial data processing and analysis; L&P policy servicing and
records management; L&P claims processing and management; eligibility,
verification, fraud detection and management
Drug discovery and research support; clinical trials and pharmacovigilance
administration; distribution planning and analysis, defect handling, and reverse
logistics
Publishing and distribution management; advertising sales support; subscription and
order management
Supply chain planning & support; asset and inventory management support
Logistics and supply chain administration; store operations & property services
2.0
Telecom
Key vertical-specific functions

Master data, customer data, vendor data management; order management and
fulfillment
Master data, customer data, vendor data management; engineering support services
Operations and fleet administration; records and document management; sales and
reservations support
Meter-to-cash (billing, payment processing, credit and collections); field services and
meter data administration
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33
Improvement initiatives reflect business context of a vertical

function
Five most common vertical functions for each improvement initiative
Reengineer &
standardize
Centralization
Banking:
Loan & mortgage
servicing
Check
processing,
remittances, lockbox
Hi-tech: Order man.
and fulfillment
Telecom: Sales and
marketing support
Healthcare
providers: Revenue
cycle management
Manufacturing:
Vendor/customer
master data
management
Capital markets:
Order management,
investment ops
Freight & logistics:
Billing
Information services:
Billing & royalty
support
Media: Subscription
and order
management
Manufacturing:
Order processing
and fulfillment
Healthcare
providers: Revenue
cycle management
Link to revenue management

Source:
Technology &
analytics
Offshoring
Banking
Loans and
mortgage
servicing
Transaction
processing
Cards servicing
and statement
processing
Insurance
L&P and P&C
claims processing
and management
Claims
adjudication,
disbursements,
subrogation
Transactionintensive
Oil & Gas: Asset

and inventory
management
Manufacturing:
Engineering
support services
Order processing
and fulfillment
Hi-tech:
Vendor/customer
master data
management
Banking: Risk, FX,
regulatory, fraud
Retail:
Merchandising
analytics support
Link to supply chain /

business decisions
Talent pools &

collaboration
Retail: Advertising
and marketing
support
Manufacturing:
Engineering support
services
Banking:
Commercial banking
operations
Insurance
Underwriting and
actuarial support
Claims
adjudication,
disbursements,
subrogation
Judgment-intensive
with unique skills
EGR-2012-0-R-0666
34
Outline
Executive summary

EGR-2012-0-R-0666
35

Mature organizations were identified based upon their self-reported maturity in comparison to peers. On
average, they are slightly more centralized and notably larger than their peers
Further, these organizations have adopted a greater end-to-end mindset, but focus more of their energy on
non-process improvement themes such as increasing collaboration with business users and being
effective at change
Despite their focus on factors beyond process, mature organizations are more oriented to focus on cost
and meet financial objectives. Interestingly, they are not notably more oriented towards adopting
SaaS/cloud technologies, but are more likely to implement new tools
These mature organizations also include more scope in their service delivery models, moving beyond
transactional processes in F&A and also greater inclusion of vertical-specific functions

EGR-2012-0-R-0666
36
Mature organizations were identified based upon their

response to the survey; they have a greater representation of
large organizations and also more centralization
Degree of centralization
Definition of mature
organizations
Maturity is defined based upon

self-reported maturity in
comparison to peers
Mature organizations are
defined as those indicating
they agree or strongly
agree that they are mature in
comparison to peers
Less mature organizations are
those that strongly disagree,
disagree, somewhat
disagree, or neutral that they
are mature in comparison to
peers
Fully
centralized
Somewhat
centralized
Not structured to
centralize
Sourcing model preference
15%
27%
8%
Less mature
Annual revenue of organization

US$ billion
31%
10-50
20%
1-10
<1
39%
Prefer outsourcing
6%
6%
Prefer shared
services
48%
46%
5%
Mature
9%
Less mature
Retain in business
Scale of shared services/outsourcing

FTEs
14%
>50
41%
77%
68%
5%
Mature
Best fit
12%
>5,000
29%
1,000-5,000
18%
500-1,000
12%
<500
41%
18%
39%
30%
19%
Mature
29%
Less mature

EGR-2012-0-R-0666
Mature
15%
16%
57%
Less mature
37
Having already adopted an end-to-end philosophy, mature

organizations increasingly look for value beyond process
improvement instead focusing on users and driving change
Priority initiatives
F&A approach is
end-to-end
Mature
Less mature
Source:
80
39
Consolidation
Collaboration with
business users
48
61
Successfully
implement change
48
31
57
12
EGR-2012-0-R-0666
38
Mature organizations show greater financial orientation and

are somewhat more interested in new technologies
Financials
Cost reduction is most important

Disagree
5%
Somewhat agree/disagree
56%
Consistently meet financial objectives

12%
Disagree
2%
22%
6%
52%
60%
Agree
Agree
39%
Mature
SaaS/cloud
42%
28%
Less mature
Currently use SaaS/cloud
Disagree
76%
Mature
Less mature
Plan to increase use of SaaS/cloud
43%
Disagree
19%
54%
Agree
27%
35%
35%
48%
Agree
22%
17%
Mature
Less mature

EGR-2012-0-R-0666
Mature
20%
64%
16%
Less mature
39
Mature organizations have a relatively higher focus on

technology, collaboration, and offshoring and less focus on
reengineering and consolidation
Mature
Important actions for optimizing current service delivery

Less mature
70%
Re-engineer/standardize processes
86%
48%
Increase consolidation/centralization
58%
57%
Implement new tools and technologies
46%
48%
Increase collaboration with business users
Increase level of offshoring/nearshoring
31%
22%
17%
27%
28%
Leverage analytics / business intelligence
Deepen talent pool / expertise
Source:
13%
10%
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40
Within F&A, mature organizations include greater scope,

particularly in areas beyond traditional accounts payable and
receivable
Mature
Scope of F&A shared services and outsourcing

Less mature
93%
91%
Accounts payable
84%
78%
Accounts receivable
General ledger
73%
Fixed assets
59%
39%
Management reporting and analytics
47%
Budgeting/forecasting
Treasury and risk management
66%
42%
Regulatory reporting and compliance
Internal audit
86%
58%
Tax
30%
71%
50%
34%
26%
91%
39%
43%
In addition to including more processes within the F&A function, mature organizations include 10-20% greater scope in HR,
procurement, and vertical functions
Source:
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41
Outline
Executive summary

EGR-2012-0-R-0666
42

Service providers report the greatest focus and growth in more mature industries such as banking,
insurance, telecom, and hi-tech
Both influencers and service providers believe that a best-fit sourcing strategy is the prevalent trend,
largely similar to the overall reported philosophy of enterprises
Although service providers are often investing in the areas where enterprises are focusing their
improvement initiatives, there are notable misalignments such as underestimating the importance of
increasing collaboration with business users and over-emphasizing analytics and offshoring
For new technologies such as SaaS/cloud, service providers are notably more optimistic about the future
level of adoption by enterprises, although few strongly agree adoption is increasing
The advice of influencers to service providers most strongly emphasizes increasing understanding of
business context and developing the required capabilities to truly provide the desired scope of services.
Other areas for improvement include performance management, change management, and innovation

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43
Banking emerges as the most important and fastest growing

industry for service providers
Ranking of industries in terms of importance for
third-party service providers
Weighted score1
Banking
Relative growth of third-party outsourcing

services in last 12 to 18 months by industry
347
Insurance
184
Telecom
154
#1
#2
#3
Hi-tech
110
#4
Retail
107
#5
Industries with fastest growth

1.
2.
3.
4.
5.
Banking
Telecom
Insurance
Consumer packaged goods
Hi-tech
Industries with slowest growth

Government
106
#6
105
#7
Information services
91
#8
Consumer packaged goods
89
#9
Capital markets
1
Source:
78
24.
25.
26.
27.
28.
Metals and mining

Automotive
Engineering & construction
Hospitality & tourism
Non-profit / NGO
#10
Score is a weighted calculation. Items ranked first are valued higher than the following ranks, the score is the sum of all weighted rank counts
EGR-2012-0-R-0666
44
Enterprises, service providers, and influencers consider

best-fit to be the preferred sourcing model
Sourcing model expectation for enterprises
Percentage responses
Best-fit (either shared

services or outsourcing,
based upon situation)
39%
Prefer third-party
outsourcing
7%
Prefer shared
services
44%
54%
15%
41%
47%
24%
Retain in business
7%
Enterprises
10%
6%
5%
Influencers (perception of
Service providers
trend of clients)
(perception of trend of
clients)
Nearly 40% of the service providers consider third-party outsourcing to be the preferred sourcing model, compared to
only 7% of the enterprises. Influencers report a mix most similar to the non-shared services respondents in the
enterprises
Source:
EGR-2012-0-R-0666
45
Service providers perceptions are not completely aligned

with clients priorities
Enterprise and service provider perceptions on shared services and outsourcing initiatives
Percentage responses
High
Service provider
Areas over-emphasized by
service providers
Offshoring/
nearshoring
Analytics and
business
intelligence
Consolidation/
centralization
Reengineering/
standardization
Tools and
technologies
Areas under-invested by
service providers
Talent pools /
expertise
Collaboration with
business users
Low
Low
Enterprise / service recipient
High
Influencer perspectives mirror enterprises more closely than service providers. While the overall ranking of initiatives
remains similar, influencers place greater emphasis on centralization/consolidation and analytics
Source:
EGR-2012-0-R-0666
46
There is a significant adoption gap in the use of SaaS/cloud

technologies
Service providers
Plans to increase the use of SaaS/cloud technologies

Percentage of responses
45%
Enterprises
Adoption lag
between supply
and demand
30%
15%
0%
1. Strongly
disagree
4. Neither
agree nor
disagree
7. Strongly
agree
Most enterprises continue to sit on the fence regarding the use of SaaS/cloud technologies demand (enterprises /
service recipients) is trailing supply (service providers)
Source:
EGR-2012-0-R-0666
47
Service providers inability to understand the client context

emerges as the biggest capability gap
Service provider capability gaps identified by influencers for F&A, HR, and procurement
Degree of inclusion
Client context
Scope of services
Performance management
Change management support
Innovation and continuous improvement
Talent and expertise
Technology
Source:
Tailoring cookie cutter solutions to fit client needs

Understanding the impact on business
Knowledge of specific industry processes
Moving up the value chain; providing R2R analysis capability
Consolidate procurement and sourcing platforms
Being good enough in all transactional HR services
Business outcome, definition, and transaction pricing
Track, manage, and report KPIs... and the savings created
Review services and service levels annually to adapt to client needs
Strategic advice is absent too much off the shelf solutioning
Team continuity from sales cycle into operations
Transitions people transfers and industry-specific requirements
Lack in proactive innovation and proactive process reengineering
Not looking for innovations and continuous improvements to add
more value to the customer
Leadership skills of middle management
Lack of senior professional people to support the business focus
Ability to provide adequate subject matter expertise
Platform-based offerings with transaction pricing
Tools to ensure value-added sourcing
Do not provide enough SaaS services for HR
EGR-2012-0-R-0666
48
About the survey
The 10 to15 minute survey was

conducted via the Internet and
collected responses from enterprises,
third-party outsourcing service
providers, and industry influencers
each with different, but parallel sets of
questions. The length of survey varied
significantly, based upon the number of
functions for which a respondent chose
to provide input
SSON and Everest Group jointly
promoted the survey globally with
email invitations, newsletters, social
media, and websites
The survey collected over 650
responses across enterprises (272),
service providers (210), and industry
influencers (181). A profile of the roles
of respondents is provided below
Roles of enterprise respondents
Mix of respondents
100% = 272
100% = 663
Industry
influencers
27%
Enterprises
41%
32%
Service
providers
Roles of service provider respondents

100% = 210
Service Other
delivery
8%
7%
Solution
design
Marketing
9%
Respondents were distributed across

all sizes of organizations
60%
Shared
services/
captive
Roles of influencer respondents

100% = 181
Senior
management
32%
16%
Business/equity Other
analyst
10%
5%
Technology
provider 15%
70%
28%
Business COE Other

user of
9%
services
5%
Corporate
5%
strategy 6%
Vendor 7%
mgmt. 10%
Strategic
sourcing/
procurement
Sales and business

development

EGR-2012-0-R-0666
Consultant/
advisor
49
Glossary of key terms
Term
Definition
BPaaS
Combined technology and service delivery solution which provides business outputs (e.g., paycheck)
Captive
Entity in the offshore location that provide services exclusively to the parent company
Cloud
Services delivered to match variable volumes through a virtualized model, particularly as it relates to the
underlying technology infrastructure
Horizontal function
Activity which tends to be similar across industries such as finance, HR, procurement, and IT infrastructure
Nearshore
Delivery of services from a location which tends to be physically and culturally similar to the region
receiving the services, motivated primarily by a desire to utilize easily accessible talent pools
Process
The operational flows of activities within a function. For example, within the F&A function, processes include
accounts payable, accounts receivable, general ledger, management reporting, and others.
Offshore
Delivery of services from a location which tends to be physically and culturally remote from the region
receiving the services, motivated primarily by a desire to access lower cost talent pools
Outsourcing
Contracting with a third-party to provide a defined service
SaaS
Software as a service (SaaS) is software that is deployed over the internet and/or is deployed to run behind
a firewall in the local area network or personal computer
Shared services
Separate internal entity within the company to perform specific services across business units. Shared
services can be located in onshore or offshore geographies
Vertical function
Activity which is notably unique to an industry. Examples include order management in hi-tech, merchandise
analytics in retail, and loan and mortgage servicing in banking
Function
Business support activities which encompass multiple processes. Examples include F&A, HR, order
management in hi-tech, and loan and mortgage servicing in banking
EGR-2012-0-R-0666
50
About Everest Group and SSON
Everest Group
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide
reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and
middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels
organizations with complex challenges related to the use and delivery of global services in their pursuits to
balance short-term needs with long-term goals. Through its practical consulting, original research, and industry
resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing
models, technologies, and management approaches. Established in 1991, Everest Group serves users of
global services, providers of services, country organizations, and private equity firms in six continents across
all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com.
The Shared Services & Outsourcing Network

The Shared Services & Outsourcing Network (SSON) is the largest and most established community of shared
services and outsourcing professionals worldwide, with over 60,000 members. We provide the roof under
which key industry experts and organizations share their experience, knowledge and tools, and your
practitioner peers connect with others all over the world, face to face, and online. SSON focuses on developing
its members through providing training, tools, and networking opportunities. Our staff work from international
offices in New York, London, Sao Paulo, Singapore, Sydney, Johannesburg, Berlin, and Dubai to research
current trends and developments in shared services

EGR-2012-0-R-0666
51
Everest Group
Leading clients from insight to action
Everest Group locations
Dallas (Headquarters): info@everestgrp.com

+1-214-451-3000
New York:
info@everestgrp.com
+1-646-805-4000
Toronto:
canada@everestgrp.com
+1-416-865-2033
London:
unitedkingdom@everestgrp.com
+44-207-887-1483
Delhi:
india@everestgrp.com
+91-124-496-1000
www.everestgrp.com | research.everestgrp.com | www.sherpasinblueshirts.com

EGR-2012-0-R-0666
52

Summary Report: Vertical Industry Strategies For Shared Services and Outsourcing Survey

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A joint study by Shared Services &

Outsourcing Network (SSON) and

Copyright 2012, Everest Global, Inc.

Introduction and background

Much of the growth in shared services and

How to learn more

Visit the websites of SSON and Everest Group for

Results from the survey will be featured at Shared

Copyright 2012, Everest Global, Inc.

Section I. Executive summary

Section II. Overview of shared services and outsourcing strategies

Section III: State of traditional horizontal functions

Section IV: Variations by industry

Copyright 2012, Everest Global, Inc.

Section V. Different approaches used by mature organizations

Section VI. Perspectives of service providers and influencers

Copyright 2012, Everest Global, Inc.

Overview of shared services and outsourcing strategies

State of traditional horizontal functions

Different approaches used by mature organizations

Perspectives of service providers and influencers

Copyright 2012, Everest Global, Inc.

Copyright 2012, Everest Global, Inc.

Snapshot of key analyses

Financial and value management

Representation of horizontal and vertical functions

Cost reduction is the most

Consistently meet financial

Business cases include

Shared services and outsourcing adoption by industry

Extent of third-party outsourcing

Relative focus of respondents by maturity level

Oil & gas

Copyright 2012, Everest Global, Inc.

How to interpret this report

Improvement initiatives: Questions about seven

In order to draw attention to the most important data and

Notable data findings

Copyright 2012, Everest Global, Inc.

Overview of shared services and outsourcing strategies

State of traditional horizontal functions

Different approaches used by mature organizations

Perspectives of service providers and influencers

Copyright 2012, Everest Global, Inc.

Summary of key messages

Moving forward, respondents indicate:

Copyright 2012, Everest Global, Inc.

Although over 60% of the enterprise respondents consider

Level of agreement with statement

Our shared services and/or

In comparison to other organizations,

In comparison to other organizations,

Larger organizations demonstrated a tendency to perceive themselves as successful and mature in

Three-quarters of enterprises meet their financial objectives.

Level of agreement with statement

We consistently meet our financial

Cost reduction is the most important

We regularly refine our objectives to

IT functions are the most centralized at 77%, comparatively

Most organizations prefer shared services, with best-fit in a

Best-fit (either shared services or

Future sourcing model trend

Reduce shared services