Organizational Transformation with Managed Services

Organizational transformation with managed services.

Leasing as a case study in the Asean region Our speakers Moderator

Ronald Wong Adele Liew Michael Keeler David Byrne

Partner Partner CEO and Founder General Manager - APAC

Financial Accounting Financial Accounting LeaseAccelerator LeaseAccelerator Advisory Services Advisory Services

Ernst & Young LLP Ernst & Young LLP

• Introduction • Evolving strategic priorities of organizations • Overview of the shift from traditional financial oversight to long-term growth strategies • Introduction to managed services – benefits and challenges • Case study: Leasing as a managed service • Q&A Evolving strategic priorities of organizations Evolving strategic priorities of organizations

Automate and consolidate Business skills Retain in-house Commentator Business partner • Finance as commentator, explaining the • Acts as business advisor and business story in numbers integrator of the total business view and variances • Provides insights and robust New focus • Business recognizes the value of challenge and supports decision support available within commercial decisions Finance and requests support and • Takes ownership for and actively comment as required manages the drivers of value Process Direction delivery setting Score keeper Custodian • Role focused on bookkeeping • Role focused on leading • Efforts expended on transaction class governance processing and providing • Works with the business to monitor month-end result compliance and manage • Inward-looking culture effective controls • Custodian of assets and value protection Automate • Conscience of the business Old focus Accounting skills Consolidate support

© 2020 LeaseAccelerator Inc. Overview of the shift from traditional financial oversight to long-term growth strategies Shift from traditional financial oversight to long-term growth strategies Entities should evaluate different service delivery models and redesign the current finance function considering the various factors as follows:

Organization and location Processes People Technology Purpose

Centralization versus decentralization Outsourcing Data analytics and intelligent automation technologies

What is the most suitable model for your Does outsourcing bring more benefit or Does an external partner have competitive advantages organization? harm to your organization? due to specialized technology?

• Evaluate ways to leverage on data analytics to • Evaluate different models for delivering • Determine an outsourcing strategy, and drive operational excellence finance services evaluate activities to outsource • Consider potential adoption of automation • Allocate roles and responsibilities • Selecting a location and intelligence technologies between corporate and local finance for outsourcing • Set up a center of excellence • Identify services that can be migrated to shared services

Key takeaways Outsourcing decision matrix

1. Outsource non-critical activities Consolidate, simplify, and Competitive advantage Outsource all activities that do not contribute to standardize (seek efficiency) (seek effectiveness) the entity’s competitive advantage, even if they • Invest to perform internally if • Retain in-house and invest have internal competencies to perform the activity entity has strong internal to perform internally competencies and low implementation cost. 2. Focus on critical activities Outsource if otherwise Critical advantage Develop entity’s core competencies and allow specialized providers to perform other activities more efficiently and at lower cost Operate as a service provider Utilize specialists

Strategic importanceStrategic • Eliminate if activities are not • Invest to perform internally if necessary and outsource there is a lack of specialized if otherwise providers, low operating cost and 3. Lack of specialized providers critical - high cost of transition, and

Entity should keep activities in-house only when advantage

Non outsource if otherwise there are no specialized providers available and it is cheaper to perform the activities in-house than it is to transition them Low High

Impact on day-to-day operational performance

New challenges lead organizations to a vastly different set of questions

Increased investment Remediation Risk Transform Different solutions and in automation and programs management end-to-end full ecosystem from technology operations service providers to address regulatory systems to mitigate non-compliance exposures

Managed services enable organizations to focus on their core business, while we provide technology, talent and robust and highly automated end-to-end operations.

Managed services – challenges and solutions

Some examples to provide context

Increased investment Remediation Risk Transform EY lease accounting and in automation and programs management end-to-end contract management services technology operations to address regulatory systems to mitigate non-compliance exposures

1. Leverage EY 1. Advanced financial 1. Tax and 1. Cyber security as 1. Global mobility services technology, talent analytics services finance outsourcing a service and operations

2. P2P OCR/AI 2. Payroll operate 2. Third-party risk 2. Internal audit services 2. Mitigate risk of managed service non-compliance

3. Generate free cash flow

Managed services enable organizations to focus on their core business, while we provide technology, talent and robust and highly automated end-to-end operations.

Managing outcomes through….

Technology People Process

© 2020 LeaseAccelerator Inc. Case study: Leasing as a managed service a) Operating business-as-usual post adoption Case study: leasing as a with no challenges managed service b) Post adoption, working to optimize processes c) Already outsourced lease accounting

d) Starting the process to evaluate managed services Polling question 3 Where are you in the process of lease accounting adoption?

Lease Accounting accounting compliance software

Centralized Real estate leases * Real Estate (REI admin Balance sheet Design and deploy for the first time

Decentralized Equipment leases * Procurement Income * Operations statement

Embedded leases Decentralized Qualitative * Procurement disclosures * Legal

Lease Accounting accounting compliance software

Centralized Real estate leases * RE admin Balance sheet Design and deploy for the first time

Decentralized Equipment leases * Procurement Income * Operations statement

Embedded leases Decentralized Qualitative * Procurement disclosures * Legal

Lease Accounting accounting compliance software

* RE admin team Real estate In, changes, out Balance sheet * Procurement Equipment In, changes, out * Operations

* Procurement Embedded In, changes, out * Legal Income statement

Qualitative disclosures

Lease Accounting accounting compliance software

* RE admin team Real estate In, changes, out Balance sheet * Procurement Equipment In, changes, out * Operations

* Procurement Embedded In, changes, out * Legal Income statement Processes Controls New lease Lease versus buy Quarter end Invoice Qualitative Year end approval disclosures

Process audit Lease Accounting Manual accounting compliance tasks software

* RE admin team Real estate In, changes, out Substantive audit Balance sheet * Procurement Equipment In, changes, out * Operations

* Procurement Embedded In, changes, out * Legal Income statement Processes Controls New lease Lease versus buy Quarter end Invoice Qualitative Year end approval disclosures

Asset management Process audit ERP applications Lease Accounting Real estate Manual General accounting compliance ledger administration tasks software

IT asset Accounts management payable

Real estate In, changes, out Substantive audit Balance Fleet management sheet Equipment In, changes, out

Procurement Embedded In, changes, out Income ContractProcurement General Managementand sourcing statement ledger Processes Controls Procurement Contract New lease Lease versus Accounts &management Sourcing buy payable Quarter end Invoice Qualitative Year end approval disclosures

Asset management Process audit ERP applications Accounting Real estate General administration Lease lifecyle automation software compliance ledger

IT asset Accounts management payable

Real estate In, changes, out Substantive audit Balance Fleet management sheet Equipment In, changes, out

Procurement Embedded In, changes, out Income ContractProcurement General Managementand sourcing statement ledger Processes Controls ProcurementContract New lease Lease & Sourcing Accounts management versus buy payable Quarter end Invoice Qualitative Year end approval disclosures

Process audit ERP applications

Accounting General Lease life cycle automation software compliance ledger

Accounts Real estate payable

Real estate In, changes, out Substantive audit administration Balance sheet Procurement and sourcing Equipment In, changes, out

Embedded In, changes, out

Income General statement ledger Processes Controls

New lease Lease Accounts versus buy payable Quarter end Invoice Qualitative Year end approval disclosures

Manual à Automated

Disconnected à Integrated

Silos à Consolidated

Risks à Controlled

Costs à Savings

Overpayments à Free cash flow

Leasing portfolio Benefits realized

Savings from 2000 leases competitive bidding of 8% equipment financing US$450M

Reduction in size of lease portfolio 1/2 from retiring contracts Decentralized

asset level accounting Reduction in unplanned and unwanted SAP integration 50% evergreen fees

1 Initial setup Implementation of the EY methodology and technology assets based on the client finance’s organization.

Ongoing Modules EY services 2 Smart contract managed service Lease versus buy Proposal analysis and structuring or Competitive bidding Equipment lease sourcing services analysis ranking harmonization The solution can be Contract structuring Lease parameter delivered as end-to-end Contract evaluation Accounting memo Lease contract analysis advice optimization or EY can provide you with selected modules Data transfer from Automated or OCR/1st Data abstraction Multi-level data quality or activities. internal or external Data abstraction and data transfer level data abstraction reports review sources via API

Journal entry reports Parallel ledgers, e.g., IFRS, IBR calculation and Consistent application and GL and AP Lease accounting US-GAAP, GASB, statutory consistent application of accounting policies reconciliation

Evergreen or End-of-term Lessor consolidation Payment application Equipment lease contract management overpayment report management

Benchmark or scenario Smart contract services Reporting services Payment application Real estate lease contract management services

Robust build-in Automated workflow Documented audit and Audit and compliance support services accounting compliance to ensure SOC type 2 reports

Comprehensive process management review trail controls completeness

IFRS reporting (incl. Automated alerts and portfolio report Reporting disclosures and Performance reporting intercompany notifications (customized)

Forecasts Internal and market (e.g., cash flow, Scenario analysis Cost analysis Benchmarking and forecasts benchmarking renewals, KPIs 3 Flexible delivery Scope, timing and frequency of EY services can be tailored as per your needs.

Our speakers Moderator

Ronald Wong Adele Liew Michael Keeler David Byrne

Partner Partner CEO and Founder General Manager - APAC

Financial Accounting Financial Accounting LeaseAccelerator LeaseAccelerator Advisory Services Advisory Services

Ernst & Young LLP Ernst & Young LLP

LeaseAccelerator LeaseAccelerator @LeaseAccelerate LeaseAccelerator