Business Process as a Service ( BPaaS ): What Can It Do for My Mid-Market Company?

1. Business Process as a Service (BPaaS):What Can It Do for My Mid-Market Company? July 31, 2012

2. Today’s Speakers Saurabh Gupta leads Everest Group’s BPO research practice. His areas of expertise spans both horizontal BPO services (like F&A and procurement) as well as industry-specific BPO. Saurabh utilizes his strong analytical background and international research experience to create intellectual property and insights into outsourcing trends, implications and industry best practices. He is a published author in leading global services publications, and is a frequent speaker on the subject. He brings an all-rounded perspective on the BPO market leveraging his experience of working with all stakeholders in the global services market including end-clients, service providers, and other influencers like investors, industry associations, and technology providers. Saurabh Gupta, VP Everest GroupBPO Research David is the Senior Vice President of Client Engagement for Sutherland’s Finance & Accounting Outsourcing Practice. With over 30 years of experience, David has worked as a Partner with Capgemini, and has served as General Manager of Worldwide Financial Services for Microsoft Corporation. During David’s 9 year tenure at Microsoft, his responsibilities were split between running two global businesses as Chief Credit Officer of Microsoft Corporation and President of Microsoft Capital Corporation.  David and his team of 400 professionals managed a global asset of $8 billion in more than 180 countries.  David Kaminski, SVPSutherland Global ServicesF&A Services

3. The Paradox of FAO Adoption in SMBs—BPaaS Emerging as the Answer

4. The FAO market is growing at a healthy rate xx% Annual growth Cumulative activity to date Activity in current year 80+ new FAO contract signings in 2011 Number of contracts FAO contract extensions in 2011 increased Number of contracts 52% 13% 18% 369 692 76% 611 243 Active 2011 ACV increased by 12% to US$3.9 billion US$ billion Cumulative TCV in 2011 increased by 18% to US$32.1 billion US$ billion 18% 12% 26% 18% 32.1 27.3 Sample size: 692 multi-process FAO contracts signed as of December 2011

5. The FAO market has been pioneered and dominated by large buyers More recently, the mid-market and SMBs has started to emerge SMBs accounted for 20% of the total contracts signed in 2011 compared to ~10% in previous years FAO adoption in SMBs is starting to increase FAO market adoption by buyer size over time Number of contracts 100% = 341 252 70 SMB (Revenue less than US$1 billion Mid-market (Revenue between US$1-5 billion) Large buyers (Revenue greater than US$5 billion) Sample size: 672 multi-process FAO contracts signed as of December 2011

6. FAO offers an attractive value proposition to SMBs Typical F&A related challenges faced by SMBs How FAO helps SMBs to overcome these challenges Twin pressures of revenue growth and cost reduction Flexible, scalable and low cost option Stable F&A operational environment with structured pricing, contracted service levels, and KPIs Unpredictable operational environment both in terms of costs and service quality Low F&A maturity; fragmented and broken processes Best practice F&A process with built-in productivity gains Manual processes with lack of robust technology Access to best-in-class F&A tools and technology with minimal upfront costs Cash flow issues combined with low levels of data visibility and compliance resulting in unfavorable business outcomes (sub-optimal DSO, EPD, and closing of books) Decision-making support leveraging the power of analytics. Potential to create positive business and cash flow impact Resource constraints in both recruitment and retention. F&A leadership involved in operational F&A Access to new talent pools and greater ability to focus on core area of business

7. While SMBs account for 85% of all organizations across the globe, the contribution of SMBs to the global FAO market is only 10% Total number of organizations1 by size Number of companies Total number of FAO contracts by size Number of contracts 100% = ~116,000 100% = 672 Large buyers2 SMB4 Mid-market3 Mid-market3 Large buyers2 SMB4 1 Companies with revenue greater than ~US$100 million, subsidiaries in other businesses and countries have been considered as separate companies 2 Revenue greater than US$5 billion 3 Revenue between US$1 billion and US$5 billion 4 Revenue less than US$1 billion

8. The right balance between savings and investments is a major challenge in mid market Client acquisition and cost of sales for a service provider is also relatively high for SMBs as compared to large clients SMBs often lack expertise and maturity required for successful transition and change management Investments Savings Lack of scale economies is the single biggest reason behind low FAO adoption in SMBs Factors influencing savings1 Factors influencing costs Costs Centralization Standardization Productivity Transition Scale Systems 1 Assumes no constraints on use of off-shore solutions

9. Lower TCO Faster payback period Single throat to choke Access to best practices Flexibility F&A BPaaSofferings hold a lot of potential especially for SMBs

10. Owned by buyer and maintained by service provider Responsibility is on service provider Responsibility is on service provider Responsibility is on service provider Owned and maintained by service provider Owned by buyer and maintained by service provider Owned and maintained by buyer Owned and maintained by service provider Owned and maintained by buyer BPaaS is fundamentally different from traditional FAO models Traditional FAO IT+FAO F&A BPaaS BPaaS layers Degree of standardization Business processes Application Infrastructure Low High

11. Factors contributing to lower TCO in a BPaaS model versus traditional FAO Access to technology that would otherwise be expensive to implement for SMBs Minimizes ongoing support, maintenance, and software upgrade costs Ability to leverage cloud economics Greater leverage of shared resources across clients Higher offshoring potential given greater standardization BPaaS offers a 30-40% reduction in TCO over traditional FAO for SMBs TCO comparison between traditional vs. BPaaS model for SMBs 30-40% Process services costs Technology costs

12. Reduction in deployment time because of highly standardized solution Consequently, SMBs start realizing benefits quickly – more relevant in the current economic scenario Pay-as-you-drink allows SMBs Scale up / down based on changing business needs Minimize CAPEX and makes OPEX proportional to business volumes Accommodate rapid growth and proactively downturns Combines best-in-class process services with best-in-class technology solutions Earlier difficult for SMBs to procure these services/solutions Single hand-off with service provider reduces governance and integration effort Perfect for SMBs that lack scale Additionally, enables SMBs to redeploy their resources to more critical activities Beyond TCO reduction, BPaaS offers additional benefits Faster payback period Flexibility Access to best practices Single throat to choke

13. Best-practices in leveraging a BPaaS solution for F&A Brief description Build a TCO business case • Consider a holistic framework that includes all three layers – infrastructure, application, and business processes • However, magnitude of savings depends on various other factors Trade-off between TCO reduction and flexibility • Understand limitations of standardized solutions. BPaaSmodel imposes some constraints on service delivery flexibility • Industry / client-specific customization would increase cost and implementation time Be ready for change and have realistic expectations • Implementation involves significant changes at both technology and operational level, requiring a strong governance process with strong stakeholder alignment, top-management buy-in, and focus on change management Holistic assessment of BPaaS provider • Evaluate service provider carefully across each BPaaS component individually as well as collectively • Things to consider – underlying software application, workflows / application wrappers, look-and-feel, service provider’s commitment and financial stability

14. CLARITY es—A Practical Solution for SMBs

15. Efficient Processes & a Lowered Cost Base with Adequate Support Systems are Pressing Needs Key Concerns Solutions • Next-generation solutions with scalable systems & processes designed to catapult growth • Cloud systems for anywhere, anytime data access; Integrated systems providing real time visibility to processes • Partner with specialized entities to leverage expertise • Function specific tools to aid decision making with key insights • Implement best-practice processes with higher efficiency • Explore outsourcing activities to lower costs and complexity • Partner with an entity with global network, expertise and the right solution portfolio • Inadequate systems to support business process for growth strategies • Employees, customers and partners need remote access (mobile, web) • Require expertise across transformed functions and controls • Require Business Insights through Analytics • Need optimized & transformational business processes • Need to control costs across the enterprise • Need to enable global/regional expansion with cross-culture & multi-jurisdiction business processes 1 2 3 4 5 6 7

16. CLARITY es Addresses Real SMB Market Needs by Combining ERP, Outsourcing & Procurement Optimization Cloud ERP BPO Services • FINANCIAL MANAGEMENT • General Ledger • Accounts Receivable & Payable • Bank Management • Budgetary Control • Shared Service Support • Compliance Management… Cloud ERP • HUMAN CAPITAL MANAGEMENT • Organizational & Workforce Management • Recruitment & Selection • Development, Training & Performance Management • Employee Self Service Portal • Expense Management… Regionaloutlets Corporate center • CLARITY es Cloud SOLUTION • ERP Modules: • Financial Management • Human Capital Management • Procurement & Sourcing • Sales & Marketing (CRM) • Project Management & Accounting • Project Management • Supply Chain Management • Production/Manufacturing • Business Intelligence & Reporting • Managed Network Services • Infrastructure Services • PROCUREMENT & SOURCING • Direct & Indirect Procurement • Purchase Requisitions • Supplier Relationship Management • Vendor Self Service Portal… • CUSTOMER CARE • Inbound/ Outbound Sales • Help Desk • Collections…

17. CLARITY es Delivers Significant Additional Benefits Compared to Any Other Competing Solution Cloud ERP BPO Services • Faster implementation due to the ‘Rapid On’ model • ‘Go Live’ in as little as 30 days • Reduced IT costs, complexity and maintenance • Elimination of all on-premise ERP hardware • Anywhere, anytime access to critical information • Greater control resulting from improved real-time visibility • Global, scalable and customizable to system • Gain simplicity, agility and efficiency • Adoption of best practices based on a proven methodology • Significantly reduced ERP implementation risk • Business processes will be handled by trained personnel • Labor cost arbitrage and perpetual operational efficiency • Ongoing cost reduction • Access to insightful and powerful F&A technology, resulting in a platform for rapid growth Sutherland will contract to agreed business case savings

18. What Differentiates Microsoft Dynamics AX • Familiar Look and Feel • “Enterprise applications have traditionally been at cross purposes: the more complex the processes they support, the more difficult they are for users to learn and adopt. With Dynamics AX 2012, Microsoft adds support for greater complexity while making work simpler for administrators, developers, and end users.” Nucleus Research (April 2011) • Named an ERP Leader • “Microsoft Dynamics AX is positioned as one of two solutions in the Leaders quadrant of this Magic Quadrant. Its ability to execute is proven by a long track record and above-average growth rates in the midmarket, its intuitive and easy-to-learn and use Microsoft Office-like UI, and by its functionality, which is a healthy mix of strong out-of-the-box functionality for the selected industries, combined with industry- and customer-specific functionality built by or together with partners.” Gartner Inc. (Dec. 2010) • “Microsoft (Dynamics AX) enters the Leader band for the first time based principally on the strength of its strategy, including a top three product and go-to-market strategy as well as market-leading ownership costs.” Forrester Research (August 2010) • Targeting Tier 1 ERP • “The product's enhanced flexibility and usability will position it well in deals at the margins of the enterprise category—companies with $500 million to $2 billion in revenues.” Forrester Research (May 2011)

19. Why CLARITY es? Established Partner Guaranteed Solution • Leading provider of BPO services since 1986 for Retail, Tech., Telecommunications, Financial Services and other industry verticals • Profitable and strong balance sheet; zero debt • Globally distributed delivery capacity across four geographies • ~3000 FTE across Finance & Accounting, Human Capital Mgmt. & Procurement, ~30K FTE in CRM practice delivering services from four geographies with industry certifications • Time-tested solution Microsoft Dynamics AX from trusted vendor with full service support from Microsoft Gold certified partner • Easy integration with MS Windows; convenience of upgrades • 12,000 installations globally • 50+ installations on cloud growing at triple digit rates • Industry specific Dynamics AX solutions • Familiar to your people, easy to adopt, enjoyable to use PCI Impeccable Industry References “After working with Sutherland for the past year I am extremely impressed with their ability to provide great talent and world class results. Sutherland has proven committed, reliable and greatly increased our efficiency.” Leading Global Software Solution provider “As a CFO, it is easy to be drawn into the day to day back office activities when I really need to be focused on our core competencies to grow the business, and our partnership with Sutherland allows me to focus more on strategy.” Leading Real Estate Firm

20. What CLARITY es Can Do for You • Lower TCO for ERP due to elimination of on-premise hardware costs • Greater control through “on-demand” reports across activities • Better planning leading to consolidated procurement and reduced indirect spend • Higher centralization eliminating regional FTEs • G&A reduction due to outsourcing of back office operations • Lean corporate office reducing FTE costs and associated overheads • Access to state-of-the-art technology

21. Thank You for Your Time & Please Download Our Most Recent Whitepaper David Kaminski—Moderator Senior Vice President, Client EngagementFinance & Accounting OutsourcingSutherland Global Servicesdavid.kaminiski@sutherlandglobal.com Saurabh Gupta—Speaker Vice President BPO Research Practice Everest Group • saurabh.gupta@everestgrp.com • The Paradox of FAO Adoption in SMBs: BPaaS Emerging as the Answer