How CFOs can leverage F&A BPO to create value for global oil & gas companies

Wednesday, 02 November 2011

CFOs of global oil and gas companies face a unique set of challenges in these highly uncertain and troubled economic times. Their expectations go beyond managing company finances and formulating strategies to increase stockholder value. These companies operate across the globe and face challenges in standardizing and automating basic accounting processes, which include core operations such as accounts receivable/payable and value-added items such as legal reporting, treasury and tax accounting. An absence of a standard global model for accounting adds to the already high general and administrative costs of these companies.

Other areas to focus on
Apart from standardizing traditional finance and accounting processes, other challenges for CFOs include:

Aligning financial strategy to the overall business plan for the organization and providing actionable, strategic insights to the senior management. This involves process benchmarking across the organization and a rigorous self-assessment to determine if the company is meeting and exceeding shareholder expectations

Building a finance-driven road map which will encompass best practices such as outsourcing strategies, process and system standardization and adopting lean/agile practices to convert discrete, wide-spread operations to a more tightly knit enterprise-level governance model. This will help teams and business units spread across various geographies to work together in the pursuit of common business goals

Reducing financial exposure by incorporating risk management strategies and efficient tax/treasury models that will ensure access to capital at low costs. A highly uncertain global geo-political scenario resulting from wars and civil unrest in countries with surplus oil has resulted in several disruptions to the flow of crude oil. This has led to a renewed focus on strategic sourcing and cost management

Incorporating business intelligence processes and tools to aid decision-making at an enterprise level. This will lead to significant value creation and will help the management derive better insights from finance to make better business decisions

Opportunities through outsourcing

Findings from our recently released report on oil and gas outsourcing, titled “How is outsourcing fueling the oil and gas industry?” recommends initiatives that CFOs can undertake through partnerships with service providers in the oil and gas industry. We have learned that most of these challenges have come from rapid expansion of these companies across various geographies resulting in a highly, complex and diverse operating models. Service providers bring in industry leading capabilities and tools to help consolidate finance operations for these companies and aid in cost management. Apart from standard finance and accounting solutions, services such as energy trading and risk management help deal with rapid change and increased complexity and give a competitive edge to these companies. Enterprise asset management solutions help drive bottom-line results and strengthen the cost structure of the organization. As a result of implementing these solutions led by service providers and consultants in the field, companies will witness an improvement in service quality, compliance and control through simplification of financing and accounting processes.

If you found this topic interesting and would like to know more about outsourcing in the oil and gas industry, write to us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

- Sameer Murdeshwar, Analyst, ValueNotes Sourcing Practice

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