Finance Transformation How-To: Continuing Finance Transformation Projects Despite Severe Cash Fluctuation

Digital, it is clear, is a must for long-term sustainability and cash excellence. Despite the fluctuating economy, we saw a majority of finance leaders adopting digital technology in the wake of the COVID crisis. This session sheds light on how to continue Finance Transformation projects regardless of significant cash fluctuation.
Robert Vettoretti

Robert Vettoretti

Managing Director, PwC
Shawn Ryan

Shawn Ryan

Partner-Working Capital, EY
Craig Henzel

Craig Henzel

Vice President, Partner - CFO Transformation Office, Genpact
 Vikram Gollakota

Vikram Gollakota

VP - Channels and Solution Engineering, HighRadius
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Session Summary:

Takeaway 1
Is running a digital transformation project in a period of economic uncertainty a bad idea?

Key Points

  • Redesign and leverage technology to manage the impact of disruptions and geopolitical events
  • Global pandemic enabled better connection and collaboration with customers
  • Since finance is seen as a cost center, long-term and short-term planning is needed during the transformation
Takeaway 2
How you should be thinking about your transformation project: Focus on the value without any distractions

Key Points

  • Finance transformation in the O2C process to effectively tap into customer data and improve revenue
  • Finance needs to stop measuring in terms of cost and headcount
  • Resonating with the leadership is key while approaching the office of the CFO during finance transformation
Takeaway 3
Does your finance organization need a digital transformation project if you are already outperforming your peers?

Key Points

  • Evaluate the organization’s maturity and how well the team can access all generated data
  • Check the organizations’ flexibility in the deployment of automation and workflow
  • Digital automation tools provide finance with added value during any complexities
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Vikram Gollakota: [0:06]
Hello, thank you for the long introduction. We have an amazing panel here today, and I have a lot of questions for them. Let’s start with the overall conversations that we’ve talked about yesterday, various topics we had yesterday about transformation from paper to digital. I think the first question that I have is why in finance? Why did it start in finance most of those SAP, for example, a lot of them started in finance. So in your perspective, what led to the increase need of automation in finance? Robert, you’re looking sharp,

Robert Vettoretti: [0:47]
as usual. Now, I think a lot of it had to do with historically, you know, finance, unfortunately, focused a lot on costs, and viewed as a back-office function as opposed to like a really strong business partner. And so because of the focus on cost, we’re looking to take out costs, and introduce automation is a great way to do that, at the same time going through a period of a lot of outsourcing. So playing the labour arbitrage type of role. And then companies realise when you go through some of that Labour arbitrage, you may be sacrificing quality. So it ended up kind of coming full circle to say, Well, how do we do more in house? And how do we leverage technology in order to provide some sort of platform for growth?

Vikram Gollakota: [1:29]
Understand. So Shawn, has COVID disrupted this trend?

Shawn Ryan: [1:38]
Yes, and no, I think what you’ve seen is the firms that were on their path have decided to go even heavier and invest into this, I think they’ve now recognised like you said, Rob, that this is just like a supply chain. The more you distribute your function, the more you rely on people, as opposed to automation, the more you are at the mercy of geopolitical events that you would never think would affect finance. If your Shared Service Centre in Bratislava has to work from home for the better part of six months, and they can’t come or go from the country, that creates a huge problem that you now have to overcome. Get Wi Fi to all of your resources in Monterrey, Mexico with reliable enough internet connections so they can at their home, do voice and video calls with your customers. So those firms have gone in much more heavily on redesign, redesigning, and leveraging technology to bring more of it home. So they’re less reliant on bodies in foreign countries.

Vikram Gollakota: [2:44]
Amazing, amazing. So some companies, if I remember, we’re downsizing, some companies were exploding. Do you think they were even prepared for this? Craig?

Creig Hensel: [2:57]
You know, it’s a great question. I think a lot of companies have their business continuity plans, right? What if something comes off the rails? And no one’s thinking no global pandemic? No, people are thinking, what if there’s a power outage? What if there’s a hurricane that blows through depending on where you are kind of on the planet? But no one’s thinking? No, it’s a global pandemic, with multi variants of problems that you’re going to have with, you know, backup. As you’re talking about different pharmaceuticals that could be needed. I think it was an adjustment for all the companies that we work with. Some were quick, some were right out of the gate, someone to Shawn’s point, some of them have set up great connectivity for folks to be able to work from home. And what we actually saw was some of the customers that we were able to do work with, you know, if we were closing the books for them, you know, in eight days, we were then closing them and seven, because we were able to connect really well collaborate and kind of CO create on the solution, and actually did better than what they had expected, you know, gave them a little more time for analysis and scenario planning before they had to report out to the streets. So it really depended. And it wasn’t sector-specific, either that we saw. So I it was a leadership conundrum in, in my estimation, and the ones that lead really well lead from the front. They did the best.

Vikram Gollakota: [4:28]
Awesome. So there was a short term accelerator to a lot of these programmes. But back to you, Robert, what happened? What happened but long term planning and thinking, how will this intersect with that and how our companies thinking of continuing their transformation?

Robert Vettoretti: [4:45]
Yeah, I think, you know, there’s of course that short term blip where people kind of retrenched and got back to the basics etc. But it also shed light on you know, having those long term plans in place and not just prepared for some of the downside. But I thought it was a very quick shift to thinking long term say, what do we really want to do with finance? And are we you know, we’re way more than back office, we can provide tremendous amount of value. So what changes do we need to make now, so regardless of what happens, because even in a fast-growth environment, it’s also as painful as a, you know, a disruptive negative environment. So companies are, I think, investing a lot more wisely today. I just had a meeting on Monday with a big client in Atlanta. And they were talking about how they’re smarter about capital allocation within finance, like how am I picking my tech projects, people-oriented project, digitally upscaling them? And how do I use that? So when 357 years from now, you know, I am providing significant value to the business and the CFOs would say, you know, hey, this is great, or the head of sales of a business unit and say, you know, you’ve helped me do X.

Vikram Gollakota: [5:56]
So there’s a short term and the long term planning, given the accelerators that came in the last two years. So Shawn, what are the prerequisites for someone thinking about a transformation for the organisation?

Shawn Ryan: [6:09]
Quite honestly, I think that the money and in to the money point is creating that business case. And traditionally, because finance is viewed as a cost centre, you’re trying to eke out a little bit more. But a lot of firms, a lot of you here, have done a fantastic job of working down to the least number of people that you can do to do these functions. And so maybe I can get to three heads out through some automation, but that’s not going to do an ROI to pay for this product, or to help you transform. But when you stop and you take a step back, you’re functions in these finance shared service centres, especially in order to cash side, you have more customer data than anyone else in your organisation more than sales more than operations, you get direct feedback on what they like and what they don’t like. That is incredibly valuable. If you can turn it into a way to capture more revenue, be smarter about how you’re able to recapture deductions, be better at informing the business on where they’re losing money due to operational issues, from delivery. And tools like HighRadius make that incredibly easy to do with their ability to analyse all of that information and then share it throughout the organisation. So our business cases almost universally now are based on revenue enhancement, not cost takeout, because you’re just not able to do a transformation on those economics.

Robert Vettoretti: [7:35]
Yeah, I think finance just has to stop measuring itself on cost, and headcount. And I know that goes against the grain on everything, but to your point, you got to measure it some other way that really, you know, articulate what that value is. And the other part is true executive sponsorship. So if you have the money, great, but there’s project fatigue, people get tired of spending all the money, it’s gonna go over budget, it’s probably not going to go off on time, and people need to be conscious of, they’re gonna get 75% of what they really want. And it’s okay not to get it all and have that communication, dialogue with leadership. Otherwise, at some point, you’re going to realise, you know, whatever that transformation was, it’s probably going to underdeliver.

Vikram Gollakota: [8:18]
So, Craig, you guys do operations and consulting? Both aspects. So what is the one reason most of the finance teams hesitate from doing a project like this?

Creig Hensel: [8:35]
How much time do we have? Right, what’s, uh, give you the, probably the top two or three. And Rob and Sean did a great job kind of elaborating on the KPIs. Now in finance, we’re trying to shift them, you know, you can tighten your belt and tighten your belt and continue to do that, but no one’s gonna save their way into prosperity. So, okay, once you baseline that you’ve benchmark that, okay, in your pushing towards, you know, top quartile, maybe even top decile, you need to be careful, because what could happen is you end up cutting into the bone, and no one wants that. And I think some of the folks I’ve talked to over the last couple of days here at the conference, you know, have kind of seen and felt that there’s, there’s a tangible difference when you know, it’s automation is going to help you. But what you want it to do is remove that manual effort, that manual manipulation of data and spreadsheets, you’re pulling things down from one system, manually manipulating it and putting it back up into another system. And people don’t realise because in the beginning, when they first started doing the role, there was an a kind of an acute pain that you felt catches taking so long, and then it turns into a dull ache and this is what we do every close and we do this every week. And when we speak with different CFOs what we find is one of the things that rises needs the most with them, her or him, whoever it is, and their teams is the leadership piece of it, you realise that your people are spending 20 to 40% of their time on nothing related to their job description that they were hired for. Right? You were hired to do what-if scenario planning, analysis, modelling, things like that. And 20 to 40%, that doesn’t sound it kind of sounds like that’s a little bit here and there and kind of maybe adds up at one to two days a week. So what we found is when you when we’re approaching a CFO and her team, we approach it from kind of a 360 Surround Sound method, because there’s gonna be a number of things that resonate with her or him and their team. And so what we found is, we need to see what understand their strategy, as it cascades down. What’s going to really kind of hook them into understanding further that, you know, if you want to drive cash flow, you want to drive forecasting, you want to drive faster collections. We can do that with you, HighRadius, this guy’s got some great things. And it’s going to pay for itself over a short period of time. So you know, what, are you waiting for the next pandemic, you’re waiting for the next invasion? No, this global geopolitical thing have nothing to do with it, you need to stay the course and you need to push. So we found that multiple different thing resonates with different teams. No one projects and unlike a leadership conundrum, when presented that way, it removes the ones and zeroes and you get to the heart of the matter if you could give people one to two days back. What would that mean for

Vikram Gollakota: [11:42]
you? Yeah, that’s perfect, actually. So you made an interesting comment here about self-funding projects. So we’re continuing the finance transformation journey. So what role does the self-funding project play a role in the industry is that more appetite has that more appetising to the CFO and the

Creig Hensel: [12:05]
100% 100%? Rob mentioned it right, you’re going to run out of money at some point, if your prioritisation processes is solid, it’s strong. Where you draw the waterline, when you run out of resources, those self-funding projects, those things make their way above the waterline, because those are sought after, if you can, you know, if you’re talking about a two or three or a 10x, return on a little bit of money, that’s gonna then drive, you know better scenario planning, modelling, it’s gonna give people their time back, it’s like a win win, win win. Why aren’t we doing this now,

Robert Vettoretti: [12:41]
you just have to be careful not to ring-fence of self-funding ones too much, because what ends up happening is I’ll do these top five, and then I’m going to stop because they’re all self-funding, I’m not going to do the rest. So showing the interdependency between some of those projects is going to be critical. Otherwise, that kind of the, well, the money dries up a bit, and show that you know, some of these are necessary to enable those self-funding, and some are completely separate. And that’s okay. But you got to look at it as a portfolio of projects that get you from point A to point B, in that three to five-year time horizon, if they looked at too narrowly, then you could lose funding over time. And then, you know, again, don’t develop the capabilities that you think you want to have.

Shawn Ryan: [13:22]
Yeah, and that that’s where with these transformations, you got to have the guts and the executive sponsorship to go big because you’re gonna have some levers that will fund the whole programme for you CPG, folks, your deductions recovery could find everything from credit all the way through cash app, with what you get there for you in manufacturing, who are trying to go chase disputes and recover that, that could be a cost saver, that could then fund your collections team, because that’s not going to necessarily have ROI on its own. But if you run these ring, fenced-in small pilots or small cases, it’s gonna be very hard to get the rest of those brought on later. Because, frankly, when people look at their budgets, hey, I picked up a million dollars last year on this, I’m good now, I’m gonna go focus over here. And I’m not going to give any more investment to working on that finance transformation. So you’ve got largely one bite at the apple, do it as a crawl, walk, run, but do it all in one programme so that you can get what you need done and get it done in one shot.

Vikram Gollakota: [14:25]
So talking about these projects, digital is a big play in this project, right? I mean, there’s obviously process improvements and policy changes, but end of the day, it’s all wrapped on a system or a digital tool. I’m sure you’ve talked to so many clients out there, you probably do multiple times a day. So the digital maturity of these organisations, how do you compare them? Like how do you benchmark them to say you are digitally mature? You’re not there yet. So is there any scale that talks about the audit to catch the To do maturity of organisations?

Shawn Ryan: [15:03]
I’ll start with that one. And then I’m sure you guys have very similar takes on this. I think everyone here who’s tried to do process transformation on their own, it’s probably got a binder sitting on a shelf, might even have one of our logos on it, that we helped output together, those don’t stick. So it’s making sure when you look at that maturity, it’s how well do I have access to all of this data that I’ve generated? For my team? How much flexibility and autonomy do I have in deploying automation and workflow with that? Do I have to go cost-justify every bot to it? Or do I have programmers with blue prism or admins with HighRadius who can do it in house? And then am I able to start advancing those analytics and do I have the authority with regard to the rest of the business to start deploying automated scripts, automated routing, automated approvals and write-offs so that I can be more efficient within my team, because the difference between success and failure where those binders on the shelf didn’t get things done, because people erode your team leaders aren’t able to keep up with everybody they’ve got, they’re too lean to follow up on all these processes, you need the automation to get that to make those processes part of your DNA. So those folks can focus on the higher-value work. And that’s when we measure the maturity, it’s how much of that process is represented in the technology. So those folks really can do that higher-value work? Yeah, I

Robert Vettoretti: [16:33]
think most Oregon, I mean, the digital transformation is still in its infancy. So I think most companies are low. And I think that’s fine. There’s a tremendous upside. And so again, go big, because it’s like, well, um, five out of 10, that’s bad, like, No, it’s not. That means there’s tremendous upside to, you know, make people’s jobs better and better enable tech. But there’s only, you can’t be ahead of the tech, like most people don’t understand AI, like, I don’t understand all those different algorithm alternatives. But people are starting to adopt it. And so there’s things people can do, and you take some of the small steps, but you need to have that long term view of where you’re really trying to go with it. And recognising being low on that maturity scale is actually could be a good thing.

Creig Hensel: [17:15]
Yeah, I would, I would add to that to great perspectives. Maybe over the last six years, I’ve worked with 3035 CFOs, in their teams, kind of globally. And what I found it’s it’s all over the map. Some people are just starting a journey with a large European implementation. Some have done the journey patted themselves on the back, and realised they have the snarled mess of legacy IT systems that are gonna be dragging them down for two years because they didn’t focus on it. Some have jumped out with digital in various pockets across maybe finance or across the organisation outside of finance, and their siloed approaches. And so when we go in, as Robin Shawn just described, and we’re able to baseline and then help benchmark a company, five out of 10 isn’t bad. Five out of 10 could be you’re actually in your sector in your industry, you’re actually leading. So give yourself a little bit of credit,

Robert Vettoretti: [18:16]
wellness constraints, people go through m&a all the time. Yeah, oh, yeah, ARP situation is gonna be the same in 20 years. Like, I mean, it’s a necessary evil buy and sell businesses, and all of that types of it doesn’t you can’t integrate those platforms and go onto one platform overnight. And so that complexity will be there and supplement it to your point around all these other digital tools, is, you know, where finance can really get some value

Creig Hensel: [18:39]
saw she mentioned it yesterday, just after lunch, right? And I think we all know, but it was good to see the data and some of the statistics, right? Change used to be it take takes 30 years to make a big change to go from manual record-keeping on a ledger where you’re writing it into the punch card type system. And that was a huge thing. You’ve been around a long time. I well, I knew Rob’s grandfather anyway. But then it was a 20-year cycle than a 10. And what was he saying yesterday is could take seven years and maybe

Vikram Gollakota: [19:14]
a lot of 2010 and then seven? Sure. So

Creig Hensel: [19:17]
we need to also, as we’re working with companies and different groups, make sure that they’re not too focused on kind of the microscope. But they’ve got the telescope out a little further understanding that things are going to change in three years, the landscape could be completely different the ecosystem of, of stuff that you have now, some of its going to be obsolete, so you need to be continuously planning for the future.

Vikram Gollakota: [19:43]
Awesome. So let me summarise self-funding projects. Number one, don’t stop transforming and pat yourself on the back for what you’ve done. That’s correct. Awesome. Thank you all for joining us today. This has been a very insightful great session. Thank you

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