At a recent FDE briefing in London, produced in partnership with Dell Financial Services, the financing arm of Dell EMC, keynote speaker Bill Castell, CFO of corporate banking at Barclays, gave a personal reflection of the opportunities digitalisation can provide the finance function. Kimberley Hackett reports.
The digital revolution has taken hold and finance leaders are taking on the role of harnessing new technology to keep ahead in the markets.
Looking at how this can be done was the very essence of Finance Director Europe’s roundtable discussion, ‘Dreaming Digital Finance, a CFO Perspective’, held in partnership with Dell EMC at Grosvenor House hotel on 3 November 2016.
15 finance leaders from some of Europe’s highest-profile companies, such as Unilever, Rolls-Royce, Diageo and Willis Towers Watson, attended the talk – the latest in a series of roundtables held by the publication.
The evening’s discussion revolved around the application of digital technologies to the finance function. Technologies discussed included artificial intelligence, blockchain, social networks, cloud, mobile devices, quantum computing and big data.
Marrying up the digital sphere with finance can be a challenge. However, as the evening revealed, with digital education, the CFO can bring the two together in order to benefit consumers and companies.
In his keynote speech, Bill Castell, CFO of corporate banking at Barclays, discussed the growing relationship between the CFO and the digital roadmap. He also highlighted the importance of the quality and use of the expanding volumes of data, the potential change in skill sets required within teams, and how he sees the CFO’s role evolving within digital finance.
“I began the journey in earnest six months ago, and started going to lectures and discussions on topics such as data, clouds, mobility, robotics, blockchain, cognitive analytics and artificial intelligence,” he said.
“I had been to about ten events, when I realised whatever was going on was moving quickly; even in those ten events over a six month period, the technology had evolved further.”
To reiterate his point, Castell used his Blackberry and iPhone 7 to explain the speed of technology advancement, and the importance of staying aware of its progression to enhance and deliver your finance function and wider business strategies. “History has shown you cannot be a digital laggard for too long,” he argued. He then highlighted three main points:
- Speed of technological change: the Blackberry, which he bought in 2007, had 256MB storage, whereas his iPhone 7 has 128GB and could easily have more. To put it in a further context, his iPhone has two million times the memory of the Apollo 11 guidance computer when it landed on the moon.
- Functionality: the Blackberry was developed to have emails, texts, calendar and a phone. Whereas today’s smartphone has taken it to a new level in hardware through its camera/video, but more noticeably in software through apps covering the spectrum of everyday life and beyond.
- Change with the times: when he purchased the Blackberry in 2007, the maker’s share price was $236; today, it’s around $8.
Ready, willing and able
With the speed that technology has evolved, are we equipped to handle it and use it to benefit the company? “Data has seen exponential growth,” Castell continued. “As companies are able to digitalise the front end, it has meant there is an exponential increase of consumer data. Although AI, big data and robotics are rightfully seen as transformational for the finance function, the early digital wins are still to get the basic enablers right: data cleansing, security, controls, quality and architecture.”
The CFO’s role in acquiring and promoting the use of technology is integral. “You can’t just pass it on for someone in IT to deal with. Technology is no longer a vertical silo but horizontal, touching every part of the organisation. This digital journey is an exciting time for finance; there is a real opportunity to add value,” he added.
Despite the digital movement, Castell isn’t yet ready to ignore the value of the human skill set. He said: “Some say, by 2020 you will no longer need accountants or technical expertise, given robotics and AI. You just need to be a data scientist. I don’t think we have got to that spectrum just yet, but it certainly is getting interesting [to see] how the talent pool may have to change over the next five years. It will be key that we bring everyone along on the journey; we also need to ensure that the people who have worked in the company for, say, ten, 20 or 30 years don’t get derailed by the change.”
Coming to the end of his talk, Castell rounded off by discussing where he saw the role of the CFO within the digital world. “As CFOs, we shouldn’t leave the digital finance path to others,” he said. “We will still need to be the stewards, the operators, the technical experts, but with the new digital tools available, we can maximise our access and use of data for the benefit of direct commercial outcomes, as a true business partner.
His final words were what he considered to be the critical success factors for a digital transformation: “To succeed, I believe you need to set a digital vision from the top, accept that digital cannot be siloed but rather owned across the organisation, and create an experimentation and change culture to embrace, not fear, the great opportunity that digital provides.”
Voices in the room
Co-host Cormac Costelloe, senior vice-president and general manager, Dell Financial Services EMEA, Dell EMC, echoed Castell’s view on the importance of being able to adapt in such a fast-changing market, quoting Darwin: “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.
“With the digitisation of businesses, the traditional view of IT inside companies must change,” he said. “The days where you just saw the IT guys if you had a problem with your laptop have gone. The capability of your IT function to embrace digitisation and advance the company’s digital transformation has become critical and, in fact, is inherently linked to the intrinsic value of an enterprise,” he continued. “We see the emergence of the chief digital officer role, in some cases, supplanting the role of the traditional CIO, as an example of how companies are thinking differently. So the pressure is now on to act, and we already have examples of industries where digitisation-driven disruption has changed the landscape beyond recognition with examples of new companies taking advantage of this change, such as Airbnb and Uber.”
Costelloe highlighted, from a number of C-level surveys, that companies cite their greatest challenge to advancing their digital transformation is budget constraints. He said: “Access to capital remains a big issue for most businesses today. Traditional approaches to IT procurement are changing, and the market is moving more to utility and pay-per-use models.” He talked on how Dell Financial Services had to refine its product offering to meet this changing customer requirement with more emphasis now on utility-type financing models versus traditional capital-expenditure financing models.
The evening concluded with attendees discussing their own digital journeys. All were in agreement that this voyage would never end because of how fast technology was changing – and that even with a three-year plan, it is unlikely the end destination will be reached, given that technology may have surpassed the intended vision.
Focusing on the here and now, the attendees realised the skills’ gap needed filling in order to make the digital journey a success.
Steve Dixon, VP of future finance for Unilever, said: “My immersion in digital has really enforced the importance of continued skills development in finance to be able to embrace and realise the opportunities from technology.”
James Davenport, finance director at Innocent drinks, said: “I wonder, when it comes to technology and transformation, should we be asking ourselves new questions. How do I make this easier and enjoyable for people to access? And make my job more fun? I think it’s quite interesting. I’m wondering if we are just complicating it a bit too much. Just ask simple questions. Then the digital team can work out the finer detail.”
The customer was also at the forefront of Sompo Canopius group CFO Paul Cooper’s mind.
“I just wonder if technology is enabling massive amounts of customisation. Its increasingly predictive and therefore increasingly intrusive. I wonder if there is a stage where people will start reacting against that and start saying it’s too much,” he said.
Craig Williams, a finance director at Diageo, recognised the importance of managing the digital changes throughout the company.
“The conversation around having a digital vision is front of mind in our business,” he said. “Expressions of digital and how we leverage it are found across the various areas of the business and within their strategies, whether that is supply, sales, marketing, legal or finance. The digital vision and what it encompasses continues to grow.”
The digital journey for the finance executive is understandably varied as each company has different audiences to work with. The discussion highlighted there is no one end goal for the digital sphere, but the CFO is positioned to take the reins and explore the routes technology can go down to propel all aspects of a company.