Financial Asset Management Systems:
How Okay Are You Outsourcing Them?

The issue of outsourcing financial asset management systems is an important one.

It generally leads to outsourcing other finance related applications. So keep a close eye on those dominoes!

Is this a good application to start outsourcing? Or are there other finance and accounting related applications that would be better as a pilot outsourcing project that would show positive results quickly, be easy to implement and manage?

From an IT project outsourcing perspective, the process of outsourcing financial systems is considered as a business process outsourcing.

Part of the goal is to reduce costs, but the larger benefit comes from the transition process. Let's examine some of the issues.

General Considerations

• If this is your first outsourcing initiative, it is important to focus on developing and maintaining the relationship between you and the service provider.

  The quality of this partnership and the relationship will have significant impact on the financial success of this deal.

• It is important the supplier understand your business at the strategic level, so their proposal should aim to add value.
• Outsourcing suppliers can perform back office functions related to finance and accounting systems more efficiently and less expensive than you can do in-house. It makes investing in back office functions more affordable.
• Good outsourcing providers invest in leading edge high performing technology that will enable you to direct investments into your core business initiatives and provide you with a competitive advantage.
• It is important that contracts contain precise details outlining your needs and the responsibilities of the supplier. Fees should be performance based, with incentives established to ensure continuous improvement.
• Mutual trust is another key component to finance outsourcing.
• Company leaders must remain committed if they are to overcome cultural resistance and people pushing to defend jobs, budgets and power.

Specific Finance And Accounting Issues

Here are some of the specific issues related to outsourcing financial asset management systems.

• Companies with metrics say that outsourcing their finance and accounting systems enabled them to reduce costs by 30%.
• Outsourcing relieved finance managers of repetitive and generic business tasks allowing them to concentrate on high-level core issues therefore increasing productivity.
• Most finance executives have reported increased control, yet initially they were concerned about the potential of their data falling into the wrong hands.
• Most organizations began their outsourcing project with payroll because it was a quick easy application that produced immediate benefits. Then moved on to tax planning and compliance.
• If you need to transfer some finance and accounting staff to the outsource provider, this will likely cause problems with other staff. Firm management is needed to ensure the service provider receives the data and help he requires.

Perceived Risks In Outsourcing

Interviews with senior finance executives reveal much about outsourcing their financial asset management systems.

• Valuable data falling into the hands of the competition.
• The cost of outsourcing exceeding expectations.
• In-house level of expertise and knowledge being depleted.
• The potential for quality of service will deteriorate over time.
• Potential problems in switching service providers at a later date.
• Problems in monitoring the services of the provider.
• Governance and compliance issues more difficult to monitor and control.
• Potential for the service provider to go bankrupt at some point in the future.
• How to effectively measure in-house performance.

Outsourcing "Money" Successfully

Here's the sequence in which finance executives have usually outsourced financial asset management systems.

• Employee Payroll
• Tax compliance and planning
• Financial systems applications support
• General and financial accounting
• Travel and expense processing
• Accounts receivable and collections
• Accounts payable and vendor management
• Financial reporting
• Other finance functions
• Management report preparation and analysis
• Treasury and cash management
• Financial risk management
• Budget and forecasting

Still Considering Outsourcing?

Are you still considering outsourcing financial asset management systems? If so, we can help!

Our offer of professional help is a serious one. First of all, you'll find that while the site information is exhaustive, it appears in a brief, easy-to-read, often bulleted, executive style.

You won't get bogged down in details while browsing this site, but we DO have extensive in-depth information for you if you want or need it. It's free and all you have to do is ask!

Start right now by going to the Contact Us page and completing the simple online form. You'll receive immediate access to two authoritative industry books, which our site sponsor will mail to you at no cost.

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