Finance and accounting departments worldwide are undergoing a digital transformation, with the aim of streamlining and automating processes, as highlighted in the 2023 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report. The push for digitization was particularly accelerated by the COVID-19 lockdowns, which necessitated a shift away from traditional methods to meet remote working requirements.
The research points to a growing reliance on third-party providers to help formulate digital strategies. Robert Stapleton, a partner at ISG, said, “Organizations are creating connected finance teams with the technology to collect and analyze larger data sets for long-term decision-making.” This technology empowerment has positioned CFOs to play more strategic roles within their organizations.
The report also sheds light on the challenges businesses face due to disruptions since the pandemic, such as inflation and supply chain issues. To overcome these challenges, many are turning to new operational methods and technologies. In particular, there is an increase in the adoption of tools such as SAP S/4HANA, generative AI, blockchain and the metaverse. Recognizing the potential vulnerabilities of integrating these new technologies, emphasis is placed on strengthening cybersecurity measures.
A major shift in the FAO industry is the preference for outcome-based contracts, where both the risks and benefits of digital transformation are shared between companies and FAO providers. Jan Erik Aase, world leader at ISG Provider Lens Research, stated: “FAO providers are becoming strategic partners, working with customers in addition to providing services.”
In addition, the report explores the importance of global delivery models for FAO services and highlights the need for clear strategies around environmental, social and governance (ESG) initiatives.
The comprehensive 2023 ISG Provider Lens™ report evaluates 28 providers across four key areas: Procure to Pay (P2P), Order to Cash (O2C), Record to Report (R2R), and Financial Planning and Analysis (FP&A). Leading companies such as Accenture, Capgemini and Cognizant are recognized as leaders in all quadrants.
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