Value Creation through FAO - Perspectives of Mature Buyers

8 Sep 2010

$2,999.00

Introduction

Cost arbitrage continues to be an important value-creation lever in FAO. However, a focus on impacting process effectiveness and strategic objectives is increasingly becoming part of the FAO value proposition. Per Everest’s Total Value Equation (TVE), companies increasingly evaluate value created by FAO at three levels – direct-cost impact, process impact, and strategic impact. This research highlights the drivers, challenges, and benefits of outsourcing F&A. It also provides details around criteria for supplier selection and highlights innovative and progressive solutions, advanced value propositions, and best practices.

In this study, we focus on:

  • Drivers for outsourcing and expectations from FAO
  • Value-creation elements of FAO
  • Supplier selection process and criteria
  • Typical challenges and best practices
  • Buyer engagement profiles

Key drivers to outsource F&A 

Scope

This study is driven by one-on-one executive-level buyer interviews and case studies of 25 post-contract FAO buyers. We focused on interviewing mature and sophisticated FAO buyers to understand the full potential of FAO and also develop key learnings and best practices for the market.

FAO value creation across the three dimensions of Everest’s TVE 

Content

This report details buyer response into four distinct chapters focusing on drivers behind FAO, value created from FAO, key criteria for supplier selection, and typical challenges faced en-route the FAO journey. Based on the interviews, Everest has developed a set of best practices and learnings to manage these challenges associated with an expanded FAO value proposition. Some of the findings in this report, among others, are:

  • While cost reduction continues to be an important aspect of any FAO initiative, the drivers to outsource F&A are no longer purely cost-focused. Beyond cost reduction, process optimization, consolidation and standardization, and focusing on core business emerge as the top three drivers for outsourcing F&A
  • FAO buyers are evaluating value creation across three levels – direct-cost impact, process/business impact, and strategic impact
  • Given that FAO is a mature market today, pricing and delivery capability are no longer the “deal-clinchers”. As the value proposition from outsourcing elevates from mere cost reduction to a strategic partnership, buyers’ criteria for supplier selection also become sophisticate
  • Everest identified the Top 10 “winning themes” in FAO based on buyer responses. Understanding of buyer’s businesses, relationships, comfort in service delivery, and cultural fit are more important than pricing and delivery capability
  • While most mature FAO buyers want an expanded value proposition, they are constrained by internal challenges that need to be carefully managed
  • Stakeholder management, cultural integration, and transition-related issues are the top three challenges faced in a FAO initiative
 

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