Digitisation can be used throughout a company’s processes and departments. Greater connectivity means more creativity, happier customers and ultimately better financial reports. Tim Pullen, finance director, technology and digital at O2, and the keynote speaker at the recent Finance Director Europe dinner briefing, shares his knowledge of digital transformation for the back office.
With all the new digital channels that have appeared, there is a lot of talk about digital transformation for customers. Beyond that, however, digital systems also improve back-office functions in finance and other sectors.
"We're at the forefront of digital transformation from a customer perspective, and our back office follows suit," says Tim Pullen, finance director, technology and digital at O2. "O2 invests over a billion pounds a year in technology. Making sure we spend it wisely is a big part of my job and my team's job."
At O2, technical innovation is seen as a huge competitive advantage, and also as the only way forward when digital technology changes as fast as it does. By monitoring the market and its competitors, O2 investigates interesting technologies. "Cloud services certainly stand out as the biggest current technical trend," says Pullen.
"We've had collaboration tools for a while, but the difference with cloud is you can securely access them from multiple devices. You can get to your account with your tablet, mobile or PC."
Pullen also notes that employees prefer bringing their own device to work these days. "Security has improved massively and there's great potential for efficiencies. People are using the same devices to manage their personal and their work life, and you can access that information anywhere."
This is moving O2 towards Microsoft's OneDrive, a current back-office project. The cloud-collaboration platform lets staff update and share their files from any location, and work simultaneously on documents with other remote colleagues. O2 rolled out OneDrive across the company at the end of 2015. Migrating finance's data to the new platform was the main challenge, but all files should be transferred by the end of Q2 this year.
"The finance function has lots of spreadsheets with lots of links in them," explains Pullen. "So it's quite a complex project to move from a legacy into a cloud environment, but better collaboration is already changing the way our people interact. You're not just sharing the screen but actually working together on documents during an online call.
"That will massively reduce email attachments and overall email traffic. It will also cut version control problems, error and waste. From a finance perspective, that's a big step forward."
In a smaller project, O2 is helping employees use their own mobile devices to submit expenses claims. Photographing a receipt and attaching it to a digital form is considerably faster and more convenient than using paper. "That lets staff be productive while on the move and use the technology they are comfortable with," says Pullen. "It also improves the service that we offer to employees and boosts our internal reputation."
Another major back-office project from O2 is its MicroStrategy implementation. The goal is to provide consistent reporting and analytics across the business via self-service dashboards. But rather than requiring a separate data warehouse as its data source, the reporting tool can pull data from multiple systems.
"People used to believe they needed to replace ERP and other systems wholesale to create very large central data repositories," says Pullen. "We've been there and done that; it is very expensive. They also take a long time to implement; so by the time you get there, you no longer have the best solution."
Single version of truth
In the MicroStrategy cloud implementation, the need to take data from multiple systems is a benefit. It removes the need for monolithic data warehouses, improves agility, reduces maintenance costs and eliminates the risk of being wedded to a single supplier. "You're getting best value for each project while still ensuring consistency," says Pullen. "It's quicker and it's cheaper.
The OneDrive and MicroStrategy implementations help give us a single version of the truth and that is another big benefit of digital transformation."
This single view is vital to ensure that marketing's reports are consistent with those in finance or sales. To ensure consistency, the "plumbing" of the data that flows between the different sources is extremely important.
The company's data governance programme guides who must produce and maintain data, and who is accountable at each stage. Finance's familiarity with challenges such as data definitions are really valuable here, helping ensure robust and reliable data. The approach meets the needs of ease of use and access, security and compliance to regulations.
"Finance has strong skills to help define, manage, reconcile and handle data transitions," says Pullen. "We're getting more involved in a broader set of data. It's not just about the numbers coming out of general ledger; it's about the broader operational KPIs and the customer data that we're gathering."
Rather than taking the traditional approach to managing technology projects, O2 prefers agile development for new digital investments. Staged, incremental investment across a portfolio of projects is the best way to try out new ideas in relative safety; finance's close involvement is vital to understanding ongoing investment risk and project value as projects progress.
"The traditional business case view of the world demands ROI up front, which implies you know what you need to spend and what benefit you'll get from it," says Pullen. "In the digital world, you often don't know the outcome at the outset, partly because some benefits are intangible and also because this is new technology and largely untested."
Spend £20 million, barring maintenance and upgrades, and that pays for an ERP system. Coping with the changing pace of digital requires tools that evolve, and that requires continual investment. At each stage, O2 must decide what it will spend and the results that it wants to see.
Another difference with modern systems as opposed to their legacy counterparts is the feedback they generate. Information on efficiency and effectiveness can be fed back and examined at each project stage, producing an updated, intelligent risk assessment each time.
Pullen says that when it comes to a modular or sprint approach, the message is: here's an amount of money, go away for 30 to 90 days, build something and tell me what you've learned and what data has been generated. From this, Pullen says, a decision can be made as to whether development should continue.
A well-worn buzz phrase from Silicon Valley is 'fail fast'; this definitely informs the approach from O2. The company maintains a portfolio of projects and recognises that some will simply have to stop.
"Obviously we're not aiming to fail, but we do have an appetite for risk," says Pullen. "With the right checks and balances along the way, you will be able to make good decisions before you get in too deep. That's the only way you can really innovate."
All back-office projects involve crossfunctional teams from legal, procurement, finance, sales, service and potentially many others. Trying to see what works, learning from what doesn't and moving onto the next idea guide progress at O2, with finance constantly monitoring pilot schemes and seeing if staff and customers use them effectively.
Cloud systems are a natural fit for this approach, with the ability to quickly turn subscriptions on and off. However, Pullen says that the deployment method - cloud or in-house - is far less important than other project goals such as excellent data quality. This is because cloud services are secure.
"These days, everything is connected to the internet, so it's about getting the requirements right and implementing them correctly. You need to ask where your potential weak points are and how you address them regardless of the location of physical server," Pullen says.
At O2, the finance department sets project goals based on how these will affect customers, even with back-office systems. So rather than coming from finance's own functional needs for faster accounting or improved stock information, the department must ask if a new system will make it easier for customers to sign contracts and make their bills more accurate.
An approach focused on customers means that system availability is important; back-office and customer-facing systems are required all day every day. The company constantly monitors customers' lost hours and seeks to improve the user experience.
Indeed, many changes to the finance system are implemented using O2's 'Customercentric Design' and 'Lean Six Sigma' methodologies. A recent example of this is when O2 drastically cut the provisioning time required for new machine-to-machine SIM customers.
Demand is growing rapidly here as the internet of things becomes reality. "We can measure the traffic going through their SIM so we can bill them on the right tariff and update it as their use changes," says Pullen.
"The changes concerned process interactions rather than systems, and that makes lean useful." Running credit checks in-store is another good example, with multiple customer and back-office systems and processes working together. Stakeholders include customer services, compliance, third-party credit suppliers, marketing and finance.
Pullen's team works closely with the CIO and CTO to develop business cases. Every investment goes before the board as part of a quarterly prioritisation process to gain broad company buy-in. By enabling the company to make the right choices for its technology investments, finance is the lynchpin of digital transformation at O2.
Pullen has one final piece of advice: "You need to know the subject matter of your business partners and stakeholders. I have a real passion for technology and that helps me to talk the right language, understand what our stakeholders are collectively dealing with and help them make the right decisions."
In addition to being interviewed for the magazine, Pullen chaired an FDE Dinner Briefing in London on 17 March. The event focused on digital transformation, specifically the risks and rewards that it has brought and still may bring to businesses.
Sponsored by Amadeus - a leading transaction processor, and provider of advanced technology solutions for the global travel and tourism industry - and attended by CFOs, and finance and transformation executives from FTSE100 organisations such as Aviva, AstraZeneca, BT, Prudential, Shell and Vodafone, the briefing aimed to address the following topics: technology that has yielded the best results, the extent to which the finance function embraces the digital landscape, key risks and rewards when making digital investments, and how digital technology can help manage time and expenses effectively.
Pullen's key points
The existence of data in much more useful formats than ever before lends itself to an iterative approach to adopting digital transformation.
The risk of not investing is greater than investing as technology moves so quickly. Returns can be intangible, but it's not necessarily a financial return that a company is chasing.
The potential challenges of digital transformation were raised at the briefing, paying attention to cloud integration, its implementation, best planning for its adoption by the user base, removing legacy systems, security issues, and funding streams for digital transformation and robotic processes.