The FAO market opens up in 2008 to deliver higher value as adoption trends continue to shift.

by Lisa Maio Ross

As the market matures and more companies explore the FAO option, a shift is emerging in buyers’ approach to FAO. In 2008, FAO is being embraced as a transformational lever—to get costs, processes, compliance, and business strategies in line with operations. Cost reduction and process efficiency are still key drivers for FAO, but buyers are adopting a wider scope of contracted services upfront and are expanding existing engagements as their confidence builds and better-than-expected benefits are achieved.

We see many examples of FAO being contracted in a more strategic manner, with the “lift-and-shift/my-mess-for-less” mentality declining as the finance community grasps the value it can realize with FAO. Contracts are broader in scope than pure transaction processing, as buyers explore analytics, reengineering, and strategic planning. They are being used to facilitate consolidations, restructurings, and globalization initiatives.

Buyers finally seem to realize that finance is the backbone supporting all business operations, so its proper functioning affects every move that the pieces of its whole make—and FAO can help them succeed.

FAO Research has termed the latest generation of service adoption emergence as “FAO 2.0” differentiated from less sophisticated market demand for FAO, or “FAO 1.0,” as illustrated in Figure 1.

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Figure 2 shows the impact of FAO 2.0 in action at several companies that continue to embrace added value and operate in very different ways at much lower costs. The referenced engagements were nominated for our 2008 FAO Research Awards of Distinction. Each contract validates the achievement of dramatic, measurable business results companywide based on the impact of adopting an FAO 2.0 mindset.

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Companies that have adopted an FAO 2.0 mindset enjoy many benefits from a transformative approach to FAO. They create seamless partnerships with suppliers to get better customer service, more efficient operations, timely reporting and analysis, and decision support so they can come to market in a more successful way with lower operational costs. They realize the power of FAO to change the way they operate internally and bring their products/services to market more effectively, efficiently, and competitively. Their reliance on FAO 2.0 propels them to better understand their operational spend and, as a result, gain the flexibility to make more informed, innovative business decisions.