Transform and disrupt – FDE briefing

29 November 2016

At a recent FDE briefing in Zurich, the discussion centred on how companies can best approach change and transformation. Keynote speaker Imran Nawaz, SVP finance Europe for Mondelez International, highlighted and shared the lessons learned since launching its own finance transformation programme in Europe. Meanwhile, the evening’s co-host, Cormac Costelloe from Dell Financial Services, the financing arm of Dell EMC, focused his presentation on why an increasing number of companies are currently going through a digital transformation.

Mondelez International is a global snacking powerhouse (with 2015 net revenues of approximately $30 billion) and a world leader in biscuits, chocolate, gum, confectionery and powdered beverages, with billion-dollar brands such as Oreo, LU and Nabisco biscuits; Cadbury and Milka chocolate; and Trident gum. It was founded in 2012 after the spin-off with Kraft Foods, the company that acquired Cadbury in 2009.

The executive heading up finance in Europe and the evening’s keynote speaker at the FDE briefing in Zurich, Imran Nawaz, highlighted the challenges of the company’s ongoing change journey. The transformation itself includes the outsourcing of transactional finance processes to third parties, the creation of centres of excellence (captive and outsourced) as well as the realignment of roles and responsibilities across the company.

Mondelez International is run out of four regions globally: North America; Europe; Latin America; and Asia, Middle East and Africa, with Europe representing more than a third of the company’s revenues. In Europe, the finance organisation is focussed on three principles:

  • the regional organisation drives operating results
  • global business services (GBS) provides world-class transactional services
  • the corporate function ensures that global standards and processes relating to topics such as tax and treasury are adhered to.

A better way to lead

Nawaz explained that regional leaders focus on driving the profit and loss, and being effective business partners. Transactional processes for Europe are now almost entirely managed out of internal centres of excellence and/or third-party service providers.

He outlined how the role of finance within Mondelez International is evolving as more transactional financial services such as US GAAP accounting are being outsourced. The core competence of in-house finance capabilities is moving away from processing and reporting towards enhancing business partnering roles; for example, analysing internal and external data to identify trends, turning finance teams into co-pilots of the business. This means evolving the role of finance so that they are at the heart of identifying and enabling decision-making that lead to growth opportunities, cost reductions and working capital improvements.

“We will continue to invest in technology and capability to get to more comprehensive insights. By working closely with our GBS partners; we learn from their respective digitalisation journeys,” he said.

Nawaz stressed that his finance teams, as key players in guarding shareholder value for the company, will continue to be experts in controllership and risk management. To him, transformation is a journey where employees are key to making it a success. “It’s tough to adjust to these new ways of working,” he continued. “The right mindset is essential. I am proud of how my team has managed our journey so far and impressed by the results they are delivering. Our employees have demonstrated the capability to work effectively with third parties by treating them as extensions of their own teams, and that was and will be critical to success.”

From his experience, the keys to success in transformation are clarity of goals, speed in implementation and employee engagement. He emphasised: “Make sure you keep your employees motivated, and continue to have honest and open conversations. Respect that it’s a tough journey and that not everything will go perfectly. Only together will you get through those tough times.

“More than anything else, finance employees need to be given clarity on their career paths in this new world. Developing our talent is a core responsibility of all our finance leaders. We have established comprehensive career frameworks, and have delivered training on analytical capability, and leveraging finance and non-finance data to enable business leaders to take well-informed decisions.” He is convinced that the finance employee of the future will add value to an organisation in a more strategic way than ever before. He stresses that equipped with a more holistic view of the business, finance professionals will profoundly shape performance-related conversations within an organisation.

Adapt and thrive

While Mondelez International is transforming itself to become more effective and efficient, other companies need to adapt operating models to compete with digital-savvy entrants to the markets. A recent Dell Technologies survey of 4,000 business leaders across 16 countries found that 78% of respondents felt threatened by digital start-ups, 45% fear that their business may become obsolete in the next three to five years and 48% of respondents don’t know what their business will look like in the next three years.

Cormac Costelloe, SVP and general manager of Dell Financial Services EMEA made reference to these findings and the phrase “digital Darwinism” coined by Evan Schwartz in 1999. As an extension to the Charles Darwin theory of evolution, when applied to global business, it is where companies that ignore the stampede of digital disrupters will become extinct.

“It is not the strongest of the species that survives or the most intelligent but rather the one that’s most responsive to change,” said Costelloe. “Make no mistake about it; this new industrial revolution impacts every business worldwide at some level. Start-ups are coming to the party with an infrastructure that they have designed for today. It gives them an inherent competitive advantage over legacy businesses running on inflexible, antiquated platforms as they can move with speed and agility to create the next killer app that is critical to their business.”

Costelloe went on to identify six stages of digital maturity, which went from the laggard category “business as usual” to the leader category “innovative and adaptive”, and encouraged companies to identify the category that best reflected their own business model as a starting point to ensure their digital survival. He then went on to talk about the importance of companies needing to invest emotionally and financially in finance transformation, and the growing trend of companies appointing a chief digital officer to their executive board in order to help progress to the next category of maturity.

Break through the barrier

One of the key barriers to digital maturity progression identified by Costelloe was insufficient budget and resources. He referenced a study that found 70% of CFOs would accelerate or increase the level of technology spend if they had access to the capital. He then highlighted the role of Dell Financial Services in addressing this capital  challenge and how his company’s nnew portfolio of flexible payment solutions, OpenScale, which enables companies to pay for new technology according to how much it is used. This is particularly appropriate for companies going through a digital transformation, experiencing fast growth or uncertainty on future volumes of business or even seasonal trading patterns.

Costelloe explained that in order for companies to digitally transform, they need to develop new applications, optimise IT infrastructure and have systems operational straight away. He added that paying upfront for technology however is often a challenge for budget-constrained companies. With OpenScale payment solutions, they can align payments with deployment, capacity use or business growth.

“Technology is one of the biggest investments a business will make, and CFOs together with their CIOs increasingly want to work with a financial service provider that understands the weight of the investment, and why it’s important to the business, and is adaptable enough to customise offers and not sell a one-size-fits-all lease or loan,” Costelloe said. “With the coming together of Dell and EMC, our technology footprint has grown exponentially. Dell Financial Services therefore has its finger firmly on the pulse of evolving technology, and we can give clients freedom to deploy the right technology solution right now, not when the budget allows.”

Imran Nawaz emphasises a point during a discussion.
Cormac Coselloe, SVP and GM, Dell Financial Services EMEA, talks about the impact of “digital Darwinism” in his supporting address.