Effectively transitioning your finance processing activities to offshore By Dave Humphries, Logica plc www.CFOevent.com

1. Effectively transitioning your finance processing activities to offshore CFO Event, Celtic Manor, 5 July 2011 Dave Humphries, Logica plc

3. Resolving the common problems that arise from the offshore transition.

4. How does one best cope with transitioning unaligned processes and structures to shared service centres?© Copyright Logica 2011. All rights reserved

6. Accounts receivable (customer set up, billing, cash allocation, reporting)

7. Timesheets & expenses (processing and queries)

8. Intercompany (reconciliation, postings, invoice creation)

9. Banking (manual payments, reconciliations, reporting)

10. General ledger (fixed assets, payroll journals)

11. Management reporting© Copyright Logica 2011. All rights reserved

12. Morocco Philippines India Chennai, Bangalore LOGICA’S OFFSHORE CENTRES © Copyright Logica 2011. All rights reserved

14. Businesses have completed phase 1 – core service transition; phase 2 being implemented to (a) mop up non-core; and (b) standardise processes that have been transitioned

15. Around 70% of all such processing activity is now undertaken offshore (270 pp)

16. Annual cost savings of £5 million realised; one-off costs of transition and restructuring of £2 million

17. Further benefits to be realised through process standardisation

18. Governance through programme team supported by local CFO’s and via SLA’s

19. Offshore finance processing led by global director; local FC responsible for onshore relationship with offshore© Copyright Logica 2011. All rights reserved

21. Social security costs in certain European countries significantly impact on the overall cost of service provision.

22. Transfer costs typically equate to 3-4 months of offshore salary for process documentation, knowledge transfer, training of the team offshore and exclude onshore retention payments and restructuring costs.

23. Retention costs can vary significantly according to custom and practice.

24. Restructuring costs depend on service, contract, jurisdiction, custom and practice.© Copyright Logica 2011. All rights reserved

26. Control improvement and risk reduction

27. Process expertise

28. Rigour to workflow and control including separation of responsibilities

29. Reduced onshore management time

30. Special tax treatments and/or preferential cost rates© Copyright Logica 2011. All rights reserved

32. Inflation, FX and attrition

33. Cultural differences and pro-activity

34. Language

35. Effective process transfer

36. Local risk profile – political volatility, climate

37. Local resistance to change

38. Whole business change (not just finance)

39. Move to “gold standard” service© Copyright Logica 2011. All rights reserved

41. Importance of local management/leadership

42. Offshore is an extension of your team

43. Accept but manage attrition – training and documentation

44. Multiple sites for resilience

45. Invest in process and knowledge transfer

46. Experienced change programme leadership

47. Maintain onshore/offshore relationships

48. Business ownership

49. Benchmark existing performance before you transfer© Copyright Logica 2011. All rights reserved

51. “Ship then Fix” “Fix then Ship” “Ship and fix”

52. Offshore starts with mirror systems and processes

53. Alignment versus cost benefit?

54. Change programme both onshore and offshore© Copyright Logica 2011. All rights reserved

56. 50% plus cost benefit, process rigour and control improvement, local cost/tax benefits

57. Generally not something to be undertaken lightly as there are many challenges

58. Cost/benefit, cultural difficulties, local risk (onshore and offshore)

59. Implementing good practise can underpin success

60. Know the environment, invest in leadership and process transfer, locate for the long term

61. Can move unaligned processes but recommend don’t fix andship simultaneously© Copyright Logica 2011. All rights reserved

62. Thank you © Copyright Logica 2011. All rights reserved