Finance as a catalyst for growth – FDE roundtable

31 July 2015

Competition and disruptive technologies have forced companies with outmoded systems and practices to step up a gear. A Finance Director Europe round table considered the extent to which finance has taken a leading role in this process.

The bigger and more robust a company, the greater its market power. However, as the world economy continues to confound entrenched philosophies, the companies that are best able to adapt to changing market conditions will flourish.

The concept certainly struck a chord with the guests at a recent Finance Director Europe round table in London, co-hosted by VK Raman, head of value business process services for Tata Consulting Services and chaired by Jamie Lyon, head of ACCA's corporate sector. One of the first discussion points was the extent to which finance executives from global businesses were coping with the increasingly competitive skills landscape.

A shared challenge

"The main question as we move eastwards with a shared service centre is how do you get the talent if you want to move up in terms of the skill levels of your teams?" asked Vodafone's Niall O'Sullivan "How do you get the people who are qualified to give that tough business insight?

"Our shared service centre is great on following rules, and very good at transactional stuff, but how do you get them to move up the value chain?"

This question provoked debate on how CFOs could deploy human resources efficiently in order to respond to changing economic conditions.

For Tata's VK Raman, the focus was on adaptability. "Organisations must evaluate what is 'global' and what should be the centre of gravity," he said.

Accommodating regional differences is also essential. "With some clients, we shifted functional leadership from the headquarters to some of their offshore centres, and the moment we started doing that, a different perspective was brought to the conversation," noted Raman.

"As a result, the availability of talent, the recognition of high-quality staff, and even investment in those resources started happening differently."

For the group financial controller of a FTSE 100 manufacturer, retaining valued staff was more important than ever.

"What we do quite effectively is build examples of success," he said. "When you find somebody with potential, encourage them, and then they'll move around the business. Then fuels somebody else to ask the same types of questions and have the same ambition."

No truly agile business will be able to respond to challenges without harnessing the latest technology, especially analytics. With the benefits of big data increasingly being trumpeted by vendors and technologists, collating, sifting and securing information will increasingly fall to finance. Are finance leaders ready to accept the challenge? "We've taken the view that finance must be heavily involved in controlling big data: you have to have one version of the truth and be able to say that the data source has been rubber-stamped by finance, otherwise you've got a problem," says Vodafone's O' Sullivan. "Let IT own it and they may miss the business context; let customer care, or somebody else own it, and the information will simply be collated, leaving finance to reconcile reports from different divisions. Vodafone is not sure on who the proper owner should be, but couldn't find a better answer than finance."

According to Shell's Doug Alexander, however, work must be done by the CFO and his team to ensure they have the credibility to own the data and the insights it generates if finance is to take on that role and serve its organisation.

"The leadership will go to whoever is delivering those insights. If it happens to be the finance person, then great; if it happens to be a strategy planner, then so be it," he said. "I wonder whether this conversation has a tendency to be a bit self-serving, though, because in my experience, the question concerns the credibility of whatever is brought to the table in the first place.

"Unless there is unique and credible contribution that the finance people make, we won't be listened to anyway, and the idea that someone should have the authority to do something just because they are in finance is flawed."

Turn down the volume

The associated risk, as David Cavanna of HSBC said, was that volume of data becomes valued over insight.

"Businesses often see reports that they like, but haven't really worked out what question they're asking," he said. "The first things to establish are the key decisions, how they are going to be made and what the outcomes will be."

Understanding the need for agility in handling data is critical. "Businesses often say, 'I need 15,000 reports', and we nod and say 'Here you go'," said Cavanna. "From the thousands of reports that we produce, businesses mainly use one number from 200 pages. I once saw a stack of reports a metre high, and when I asked how many of these pages were used, I was shocked to learn that it was only the last one. I immediately stopped that overnight print run.

"People quite often ask for volume, thinking it will provide insight: it doesn't. Whatever the volume of data available, the fundamentals apply: what are you asking? What decision do you need to take? What information do you need?"

Agility and responsiveness, Raman said, can be improved and achieved by adapting to new realities and technologies, some of which finance may have traditionally dismissed. "You may think that social media is not very responsive, and won't really change the world, but I just put a complaint on social media and within 36 hours somebody called me to say that they wanted to understand the problem."

Of course, it's not just big data that is changing the ways in which finance executives can influence business strategy. RPA (robotics process automation), which provides the tools that allow the automation of a growing range of transactions and processes via virtual shared service centre agents, has come to the fore in the last two years.

For Terry McConnell of BAT, a finance executive eager to embrace the new tools, the future is nearly here. "In a few years' time, there will be a different group of people sitting around this table, and I suspect they'll be saying the same things about RPA that we said about e-invoicing," he said.

"Ultimately, tools like that are commodities. They work, they give us scale, so what's the next new innovation we can look at?"

TCS's Raman pointed out that focusing exclusively on the marginal savings brought about by developments in robotics automation misses the point: "It would reduce costs a little, but it's going to make an impact through the benefits it brings to your agility. You should be asking how technology is going to make your business more agile."

For FDs and TCS representatives, the conversation confirmed the challenges and opportunities facing finance officers. Clever CFOs will use a range of tools to stay responsive: it's a lesson that savvy operators have already learned.

Other participants

Doug Alexander - EVP finance operations, Shell
Terry McConnell - group head of finance transformation, British American Tobacco
Rajiv Gatha - CFO UK & and Ireland, Cisco Systems
David Forth - interim finance director, Costa Coffee
Stephen Bolton - group financial controller, Diageo
James Welsh - CFO, DMG Media
David Cavanna - CFO, global banking and markets, Europe, HSBC
Jeremy Deeks - head of FP&A, Prudential
Clive Jennings - group finance director, Rank Group
Julian Fagge - group financial controller, Smiths Group
Richard Kerr - CFO, UBM Live
Niall O'Sullivan - group finance operations director, Vodafone
Rahul Guharoy - marketing lead Europe, TCS
Ateendra Dabas - general manager, finance and accounting, TCS

VK Ramen - co-host, head of value business process services, Tata Consultancy Services (TCS).
Jamie Lyon - event chairman, head of corporate sector, ACCA.
Responding rapidly to changes in today’s increasingly challenging market is essential.