Topic: Procure-to-Pay (P2P) Outsourcing Unlocking Value from End-to-End Process Outsourcing

Finance & Accounting Outsourcing (FAO) and Procurement Outsourcing (PO) Report: February 2013 Preview Deck

Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a

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Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a

Background and sources of information

Background of the research The Finance & Accounting (F&A) and Procurement functions comprise three end-to-end processes Record-to-Report (R2R), Order-to-Cash (O2C), and Source-to-Pay (S2P). This report focuses on third-party outsourcing of P2P activities the downstream process within S2P With increasing maturity of the FAO and PO markets, FAO contracts are expanding upstream beyond Accounts Payable (AP), while PO contracts are expanding downstream beyond S2C to include broader scope of P2P activities. This is resulting in increased convergence between the FAO and PO markets. Such an end-to-end process-driven approach to outsourcing as opposed to the existing piecemeal and functional approach is unlocking more value creation opportunities In this study, we investigate the market state of P2P outsourcing. We focus on: Definition, value proposition, and challenges of P2P outsourcing P2P outsourcing market size and growth Emerging and current solution trends P2P service provider landscape Scope of the study and sources of information The scope of this study is third-party outsourcing and does not include internal shared services The study provides global and cross-industry coverage of P2P outsourcing The study is based on Everest Groups proprietary database of over 1,000 FAO contracts and over 300 PO contracts signed till the end of 2011, and operational capability of 25 service providers who offer P2P services

Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a

Table of contents

(page 1 of 2)

Topic Background and sources of information Summary of key messages Value proposition of P2P outsourcing Summary Definition Value proposition Typical challenges P2P outsourcing market size and solution trends Summary Size and growth Adoption trends by industry, geography, and size P2P inclusion Degree of offshoring P2P delivery locations Role of technology Service levels and performance metrics Pricing models
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Table of contents

(page 2 of 2)

Topic

Page no.

P2P outsourcing service provider landscape Summary Service providers classification Scale as per FTEs Delivery footprint P2P investment themes Appendix Glossary of key terms used in the report FAO research agenda PO research agenda Additional FAO and PO research references

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Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a

Overview and abbreviated summary of key messages

This report analyzes the key trends in P2P outsourcing within the FAO and PO market. It provides an understanding of the business value, adoption trends, solution characteristics, and service provider capability in P2P outsourcing. Some of the findings in this report, among others, are: Value proposition and key challenges

The P2P process typically accounts for nearly a third of the overall F&A and procurement operational costs An end-to-end P2P outsourcing approach also poses some unique challenges such as multiple stakeholders, technology fragmentation, and a more complex scope definition beyond common BPO challenges, given the overlap with both procurement and finance functions Technology is playing an increasingly important role in P2P outsourcing. Beyond add-on tools, several platform-based / BPaaS solutions are emerging India has emerged as the main offshore hub for P2P delivery. However, an onshore-nearshore-offshore blend is emerging

P2P outsourcing solution trends

P2P outsourcing service provider capability

There are three emerging themes of service provider investments related to P2P outsourcing: BPaaS- / Platform-based solutions Analytics Expansion from P2P to broader S2P capabilities
Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a 6

This study offers three distinct chapters providing a deep dive into key aspects of the P2P outsourcing market; below are four charts to illustrate the depth of the report
Expected savings from the end-to-end P2P outsourcing
70-75% additional savings over AP outsourcing by leveraging an end-to-end process driven approach for P2P AP outsourcing savings from cost arbitrage and process efficiency Savings by outsourcing other P2P activities including greater compliance Additional business impact due to an end-to-end approach Total savings from integrated P2P approach

P2P market size

FAO & PO market size by process ACV in US$ billion Projected CAGR

S2C R2R O2C 100% P2P 2011 2015

P2P outsourcing service provider landscape

1. End-to-end P2P providers with credible F&A and procurement offerings 2. FAO providers focused primarily on AP services 3. PO providers focused primarily on upstream P2P services

P2P outsourcing global footprint

P2P outsourcing delivery locations
Central and Eastern Europe Primarily leveraged as nearshore locations for Western Europe Leveraged for sourcing support and day-to-day purchasing

North America and Western Europe Onshore locations for client facing roles Leveraged local market knowledge for upstream P2P activities

Western Europe

North America Troy San Jose Detroit Richmond

Central & Eastern Europe Nottingham Wroclaw Glasgow Lodz Preston London Krakow Prague Budapest

China Sourcing support and upstream P2P and S2C activities Also supporting Japanese and Korean markets China & Southeast Asia

Atlanta

Mexico city Central & South America

Dalian India Shanghai Hangzhou Gurgaon Noida Guangzhou Mumbai Pune Bangalore Chennai Manila

Central and South America Primarily leveraged as nearshore locations for U.S. Domestic LATAM market also emerging Leveraged for sourcing support and day-to-day purchasing

Belo Horizonte Sao Paulo

India Offshore hub and the most mature delivery region for P2P Leveraged for providing end-to-end P2P services

Source:

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2013 FAO research agenda

Published

Current

Topic FAO Service Provider Compendium The Paradox of FAO adoption in SMBs Record-to-Report (R2R) Outsourcing Moving Beyond General Accounting Order-to-Cash (O2C) Outsourcing Creating a Top-line Impact Procure-to-Pay (P2P) Outsourcing Unlocking Value from End-to-End Process Outsourcing FAO Annual Report FAO Service Provider Landscape FAO Service Provider Compendium Role of Analytics in FAO Growth of Horizontal BPO in LATAM Implications of IFRS Conversion in the United States on FAO Evaluation of BPaaS Solutions for FAO/PO
Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a

Release date July-2012 July-2012 October-2012 January-2013 February-2013 Q1-2013 Q2-2013 Q2-2013 Q3-2013 Q3-2013 Q4-2013 Q4-2013
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2013 PO research agenda

Published

Current

Topic PO Service Provider Landscape Investing in Building Expertise PO Service Provider Profile Compendium Procure-to-Pay (P2P) Outsourcing Unlocking Value from End-to-End Process Outsourcing Expansion of PO Into Broader Supply Chain From Strategic Sourcing to Contracting Source-to-Contract (S2C) a High Value Driver in PO PO Annual Report Sourcing Contingent Workforce Rise of MSP model PO Service Provider Landscape PO Service Provider Profile Compendium The Rise of Procurement and HR Collaboration Effectively Managing HR-spend Growth of Horizontal BPO in LATAM Evaluation of BPaaS Solutions for FAO/PO/HRO Tail-end Spend Management
Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a

Release date July-2012 August-2012 February-2013 Q1-2013 Q1-2013 Q1-2013 Q2-2013 Q2-2013 Q2-2013 Q3-2013 Q3-2013 Q4-2013 Q4-2013
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Additional FAO and PO research references

The following documents are recommended for additional insight into the topic covered in this report. These either provide additional details on the topic or complementary content that may be of interest 1. Finance and Accounting Outsourcing (FAO) Annual Report 2012: The FAO Market Signaling Towards Maturity (EGR-2012-1-R-0680a). In this research, we review the global multi-process FAO market in 2011 and provide guidance on the markets direction in 2012. We focus on market size and buyer adoption trends, FAO value proposition, contract characteristics across process scope, technology, global sourcing, pricing structures, and FAO service providers landscape covering service providers market shares and areas of investments 2. Procurement Outsourcing (PO) Annual Report 2012: The PO Market Steadily Marching Forward (EGR-2012-1-R-0683a). This report provides an overview of the overall PO market in 2011, including the size and growth of the market, adoption trends, contract characteristics, value proposition, service provider landscape, and market outlook for 2012 3. Record-to-Report (R2R) Outsourcing Moving Beyond General Accounting (EGR-2012-1-R-07054); 2012. This report looks at outsourcing of the judgment intensive F&A processes, Financial Planning & Analysis, regulatory reporting and compliance. Record-toReport, Order-to-Cash, and Procure-to-Pay cover the entire F&A function as three end-to-end processes 4. Order-to-Cash (O2C) Unlocking the Revenue Potential (EGR-2013-1-R-0816); 2013. Similar to the R2R report, this report looks at outsourcing a separate end-to-end F&A process called Order-to-Cash, covering mostly the transactional activities within the function on the customer side For more information on this and other research published by Everest Group, please contact us: Saurabh Gupta, Vice President: Abhishek Menon, Practice Director: Vikas Menghwani, Analyst: PO Team: Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240
Copyright 2013, Everest Global, Inc. EGR-2013-1-PD-0819a

saurabh.gupta@everestgrp.com abhishek.menon@everestgrp.com vikas.menghwani@everestgrp.com POresearch@everestgrp.com Phone: Email: +1-214-451-3110 info@everestgrp.com

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