New Zealand finance bosses are apparently less willing to outsource than CFOs elsewhere in the world.
That’s a finding of an IBM survey of 36 finance heads of New Zealand organisations with an average revenue of $500 million.
A much larger survey of CFOs in 35 countries — 450 companies with average revenue of $US8.4 billion — found 60% were outsourcing some finance process or other; the figure for New Zealand was 9%. The larger survey was completed last September and the New Zealand one in January.
According to IBM business consulting services New Zealand partner Tim Ellis, the disparity probably has a number of explanations.
“The local process outsourcing market is still emerging in New Zealand. For many organisations, the spectre of moving jobs overseas, to Australia or Asia, is perceived as too radical and fraught with risk, not least in respect to the loss of control.”
Ellis thinks organisations need to get to grips with outsourcing’s potential, however, so they can take advantage of it.
Functions that they might farm out are accounts payable and accounts receivable.
“The real attractions of outsourcing are cost reduction, process efficiency and effectiveness, the promotion of organisational focus on core business — as opposed to non-core, support-style activities — and the possibility of transforming traditionally fixed overhead costs into variable costs which are bought-back from a specialist provider and paid for on a user pays basis,” says Ellis.
But he concedes that there can be tradeoffs, including loss — perceived or actual of control over processes, less close communication between everyone involved in a process and lost customer and supplier intimacy.
New Zealand finance heads have another excuse for not having joined the outsourcing bandwagon: Ellis says there isn’t yet a well-established capability in the country to provide such services.
Quite apart from outsourcing, Ellis says the most clear-cut finding of the IBM research was the widespread view among CFOs –19% of the global sample — that they’re not getting all they could be from their ERP systems. He says the question wasn’t asked of the New Zealand sample but he expects the results would be similar.
According to Ellis, many local ERP implementations are under review.