From one-off to always-on – the future of managed services

Today‘s business leaders face opportunities to reimagine a very different future. Those that accelerate transformative changes have the potential to gain a competitive advantage, generating long-term value for their organisation and its stakeholders.

This push to innovate is on the minds of CFOs, according to our recent discussions. It’s clear they feel the need to do more and transform faster, which is accelerating a change in their perception of managed services. CFOs are driven by both rational needs – to reduce operating costs through handing over non-core processes and embedding technology – and emotional triggers. Many cite a fear of falling short of profitability targets. And, as reporting requirements increase in complexity, the risk of non-compliance is a growing threat.

Changing perceptions of managed services are perhaps also linked to the CEO agenda, which I explored in my previous blog. CEOs are keen to let go of some non-core tasks to spend more time on activities that generate growth.

Putting in place a framework for change

 As CFOs respond to this need for pace, many are changing their approach to managed services. Instead of one-off projects, they aim to build momentum through a framework that creates an ‘always-on’ approach to shared and managed services. And they want to feel that their managed service provider is on the journey with them – a trusted partner in transformation. 

 As the leader of managed services at EY UK&I, some might think this is a rather convenient argument for me to make. But the external forces piling pressure on CFOs are clear. Businesses must act with more agility amid rapidly changing markets, economic conditions and emerging technologies, whilst facing greater complexity – in everything from ESG reporting to cyber security – that threatens to slow them down. These are challenges no one business can tackle alone, especially with resourcing pressures and talent shortages. CFOs simply don’t have the luxury of building an in-house team with all the skills and time to tackle everything, everywhere, all at once.

By building the right framework with the right partner, CFOs can move from making incremental operational changes to fundamentally shifting end-to-end tasks. By transforming operations, the CFO can continue to unlock new ways to innovate non-core tasks, allowing them to focus on growth whilst also keeping a tight rein on costs.

So what does this framework look like and how does it work?

It’s about more than delivery. It must be able to identify potential tasks, evaluate the financial case for change, and then execute effectively to release value.

Key aspects include:

•  A common, data-driven platform, that can be easily added to or expanded as business needs evolve.
• A commercial and operational clarity that delivers contracted services with reduced on-boarding time and creates value quickly.
• Agreed investment and exclusivity principles that work for both parties.
• High-performing teams with the skills to create change effectively.
• Repeatable, low-risk, low-cost process to explore potential areas for the transition to shared or managed services.

 Clearly, it’s a solution that must work right across the business because, with much of the low-hanging fruit already plucked, it is often the more complex, cross-cutting activities that are left unaddressed. These are likely to involve multiple business units, requiring the need to build a compelling case for change, manage stakeholders and agree a clear course of action, which must, in turn, draw on the best available methodologies.

This means an effective framework creates an ecosystem of providers and skillsets that can work together. Instead of a one-off project which loses people and learnings on completion, an over-arching framework creates ongoing benefits for the CFO – accumulated knowledge, repeatable processes and long-term relationships.

Four signs that CFOs need to act now

Is it time to adopt the always-on managed services framework? CFOs that recognise these signs should move now:

1. Tasks aren’t transitioning as scheduled into shared service centres or global business services because of a lack of available technical skills or confidence in outputs.
2. Head office is continuing to deliver non-core tasks, because the CFO is told they “won’t work” in a shared services or global business services environment.
3. Incremental compliance, risk management and reporting activities are being routinely added to the CFO’s workload, without exploration of alternative models that could provide secure, efficient delivery.
4. Multiple managed service providers are working separately, not within a considered ecosystem that can create efficiencies, pace and certainty.  

Businesses and CFOs that shift their mindset from celebrating single successes to creating a framework for continuous improvement can deliver the transformative change that drives competitive advantage.

To learn more about EY managed services and how EY teams can help, get in touch 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.