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F&A Services are desperately seeking a significant shift in value proposition. CFOs are no longer focused solely on cost reduction. Labor arbitrage is tiring out and providing diminishing incremental returns. On one hand, the F&A Services market is slowing down and is in danger of commoditization, but on the other hand, emerging technologies promise credible value creation levers to make a significant difference. The predominant cost-saving focus for F&A services is shifting to doing a lot more with a lot less. We at HfS are calling it F&A 3.0 (see Exhibit 1). Uncovering F&A 3.0 solutions and services is the focus of our F&A research for 2018. One solution that typifies F&A 3.0 is the Genpact—Lease Accelerator partnership.
Exhibit 1. The Genpact—Lease Accelerator partnership typifies the HfS F&A 3.0 model
Source: HfS Research, 2018
Two market leaders—Genpact (a member of the Winner’s Circle in our recent F&A services Blueprint) and Lease Accelerator (a leading enterprise lease accounting software firm)—are combining their capabilities to help enterprises solve the ticking time bomb of complying with the new lease accounting and reporting regulations that are scheduled to kick-off on January 1, 2019. The partnership is an example of using a digital as-a-service platform (in addition to process design capabilities) to drive significant value for its clients regarding compliance in a cost effective way.
The solution also typifies the Five Ps needed to get to the promised land of F&A 3.0 services. Let’s dive in:
|IASB estimates roughly that nearly 85% of $3.3 trillion of lease commitments are off balance sheets.”|
Bottom Line: The Genpact—Lease Accelerator partnership is promising, but we need a lot more like it.
While this is a promising solution, it is not a panacea. The partnership promises to plug a market gap within only a small portion of the record-to-report (R2R) space. But, the broad set of F&A services—R2R, procure-to-pay (P2P), order-to-cash (O2C), and financial planning and analysis (FP&A)—that predominantly continue to operate in the F&A 2.0 world (cost plus value proposition) and are ripe for disruption. The partnership represents, however, the direction that the broader F&A services market needs to take. While Genpact needs to be lauded for creating this value proposition, we continue to have higher expectations from market leaders like Genpact to bell the cat and drive F&A 3.0 from an analyst’s vision to market reality.