Managed Services – balancing risk, powering innovation

In today's world, disruption is no longer the new normal, it has become the normal. To stay ahead of the curve, businesses are constantly adopting new models, enhancing client engagement techniques, and expanding their capabilities to win and evolve.

However, with disruption being the only constant, it's not just about adapting to change any more. Leaders must be capable of anticipating and riding the wave of change and be able to balance multiple (and sometimes conflicting) priorities.

Across the board, we are witnessing a surge of uncertainty: CFOs continue to grapple with unfavourable economic conditions, to satisfy an increasingly vocal and demanding shareholder base whilst still retaining a laser focus on driving economic growth. Chief Supply Chain Officers (CSCOs) are also not immune to the rising tide of uncertainty. Compared to the pre covid-19 era, supply chain management has changed almost unrecognisably, with rising costs, greater regulation, increased risk management and control, and the integration of emerging technologies such as AI and cloud computing now to contend with. And equally, other CXOs are grappling with similar sorts of priorities in their functions as well.

Furthermore, businesses are still dealing with cost concerns. In findings published by EY, 75% of tax and finance leaders plan to reduce costs of operating the function. Whilst many organisations may have implemented measures such as Global Business Services (GBS), they are searching for approaches and solutions to manage the high headquarter costs. What has been addressed so far has largely focused on the transactional aspects of the business value chain.

To stay ahead, enterprises need an innovative way to deliver business operations, and run their front-mid and back-office functions: one that provides a seamless user experience, allows easy adoption, provides scalability, agility and flexibility enough to change and makes quick, forward-looking decisions, delivering reimagined performance. 

As an example, in the recent EY Global Board risk survey 2023 one of the key takeaways highlighted was  that boards need to develop a strategy that proactively anticipates and adapts to emerging disruptions before they happen. This shift has placed added pressure on risk functions to stay ahead and provide a more comprehensive view of potential risks. Expectations from other client functional heads is along the same lines as well.

However, despite best intentions and a determination to get the job done, talent availability, skillsets, prior approaches and experience can be limiting factors hindering an organisation’s ability to deliver this vision. With so much at stake, organisations must ditch business as usual and adopt a different approach to transform business operations.

Delivering success through an innovative Managed Services model

But what does that new model for transformation look like and how is it different from the traditional approaches? The new, innovative Managed Services model has a set of characteristics that determine success.

1.     Leading domain capabilities around the high end, complex, analytical sub-processes that are brought forward through a highly skilled workforce, complemented by frameworks, best practices and playbooks.

2.     End-to-end ownership of the transformation, to deliver an outcome-focused solution, rather than one that addresses siloed pieces of a process and is based on the trust and ability to deliver high quality performance.

Example: Keeping abreast of the changing tax regulations and understanding the implications on the downstream processing, versus relying on the client and performing just the last mile activities.

3.     Delivers speed to outcomes through selective transformation - leverages out of the box functionality versus best-in-class customised approaches, depending on the strategic importance of the process. Also, looks at a set of utilities (or foundational processes) that can be cross functional.

Example: Customer as a Service as a utility that can be leveraged with a multitude of customer-facing processes.

4.     Platform-led approach, designed and delivered with technology at the centre – either proprietary or a partner’s – complementary to the client’s tech landscape.

Example: End-to-end Finance Operate for clients, delivered on the Microsoft platform.

5.     Supplies data and analytics to infuse intelligence, generating insights to enhance transformation outcomes, and drive continuous improvement.

Example: Planning as a Service to improve demand forecast accuracies.

6.     Is delivered through a workforce, harnessing existing skills whilst simultaneously outsourcing complementary skills to support the different capabilities mentioned above.

7.     Provides a result which is modular and inter-connected, and that can be implemented iteratively, addressing the organisation’s change needs.

8.     Presents a commercial model that supports business innovation and is based on outcomes versus efforts.

This new model gives organisations a new way of operating, one that is agile and speeds up decision-making, to better navigate more complex conditions and build a platform for long-term value creation. 

Balancing Risk

Whilst this new model for transformation offers significant opportunities for innovation, it’s important to acknowledge risks too, and plan accordingly. Here’s how a few of the top risks can be managed and mitigated: 

·       Execution risk:  Most transformation efforts don’t deliver to expectations because the change aspects are often overlooked. How many times have we come across examples where companies have invested in big technology solutions, but then struggle later with achieving the right adoption levels? Executing this new model requires strong change management and programme management capabilities.

·       Performance and controllership risk: Having the appropriate deep domain expertise and specialist talent across critical functions and jurisdictions will ensure confidence in performance, coupled with the right level of controls. 

·       Commercial risk: Designing the right model with proper safeguards to mitigate risk. Also, the commercial model must be aligned to the overall process maturity, and respond to the context in which the business operates.

Driving such transformation is a high priority for the c-suite, and the strength of a relationship really helps set the tone. EY Managed Services have strong capabilities across the advisory, transform and operate cycle, ensuring certainty of delivery for enterprises where we truly work as strategic partners aligned to the business’ overall success.

Navigating the future

Business leaders are becoming increasingly aware that current operating models are not fit for the journey ahead. Inefficient operations often trigger a crisis-driven cycle of ‘fix and repeat’, draining time, talent and budget at a time when businesses should be investing in innovation and growth. They need to search for an end-to-end Managed Services provider that seamlessly combines technology, industry and domain expertise. 

In speaking with Ross Ashbourn, the EY Managed Services Leader for UK&I, he shared the following view.

“Almost every business needs new ways of working, new solutions and capabilities, and ways to engage with their customers. We are seeing demand for a different approach to transforming the contextual, high-end activities – clients want to drive a best-in-class performance, in an accelerated fashion.”

The key to driving such transformations is trust. The EY Managed Services relationship is a trusted, collaborative and flexible approach, built on strong capabilities across the consult-to-operate cycle and dedicated to realising a shared vision of delivering measurable benefits through seamless integration of technology and processes.

To learn more about EY Managed Services and how EY teams can help, visit Managed Services | EY UK

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.