Monday December 30, 2019

Harnessing The Potential Of Exponential Technology - Mumbai

Speaker:  Chandrasekhar Thyagarajan, CFO, IBM, South Asia

Speaker:  Tanushree Bagrodia,CFO & VP-IT, NRB Bearings

Speaker:  Sanjay Jain, Group CFO, Future Group

Three decades ago, Finance pioneered the adoption of technology as a means of driving efficiency and productivity improvements. Even today, it continues to lead tech adoption, not just within its own function but across the supply chain. Emerging technologies such as AI, predictive analytics (PA) and robotic process automation (RPA) bring tangible benefits such as cost savings, lower HR counts and reduced output delivery time. In this scenario, CFOs must assume additional responsibilities within the organisation – as drivers of growth and technology, change-agents and business partners. Today’s CFOs must also add value by driving change through the use of digitally-transformed business processes.

THE CASE FOR TECHNOLOGICAL TRANSFORMATION…

Technology can be an enabler of growth, efficiency, employee engagement and customer satisfaction

By leveraging the right technology, CFOs can help the organisation achieve faster, leaner, more efficient processes; integrate processes from end to end; and bolster employee engagement and customer satisfaction. IBM’s Finance transformation journey is a case in point. The process began with IBM realising that having each line function embedded in each country was not a scalable model. It built a common platform for data, systems and processes by centralising operations via Centres of Excellence (CoEs) which created significant synergies. Its accounting function in India is now handled by just 3 people, who cater to ad-hoc regulatory reporting requirements, while the rest of the department operates out of Kuala Lumpur.

Using past trends to predict future outcomes

Through its in-built tools, apps and technologies, IBM started embedding analytics into all of its data, including revenue and balance-sheet items, organisation-wide. With the help of a tool called ‘Perform’, it can use past trends and pipeline data to win new business, forecast quarterly growth, and provide business leaders with a heads-up of key focus areas, helping them meet shareholder commitments. It also enables spend and margin analytics, giving the global business important data points to work with.

…AND FOR BUILDING A ‘COGNITIVE ENTERPRISE’

Today’s ‘cognitive enterprise’ is the result of several converging forces…

…and is based on four broad principles

The convergence of the various technological, social, and regulatory forces at play today will shape not just how businesses operate but their very architecture. The ‘outside-in’ digital transformation of the past decade is giving way to an ‘inside-out’ approach that more fully leverages the potential of data. IBM calls this the ‘cognitive enterprise’ and it is based on 4 principles:

• The optimisation of workflows and data processes to help the organisation ‘sail fast’Digitisation
• Making technology omnipresent, thus ensuring that the company need not invest in infrastructure each time it adopts a new technology. This involves optimising the use of cloud-based resources.
• Process automation, which should yield integrated enterprise data, using tools like AI and ML.

Technology also helps CFOs manage enterprise risk…

…and the organisation as a whole to save money

The application of agile cognitive methodologies in Finance can, among other things, help CFOs better manage enterprise risk, both locally and globally. Using customised dashboards, they can identify key areas of risk. More broadly, other enterprise services, such as IT, procure-to-pay and HR can benefit from the productivity, efficiency and cost savings offered by technology. IBM has saved an estimated USD 8-10 billion over the last 10 years by deploying various cognitive solutions.

CASE STUDIES: DEPLOYING TECHNOLOGY AT IBM…

At IBM, two ‘squads’ have helped drive the use of technology

IBM has built two cross-functional, multi-disciplinary ‘squads’ that help guide it along its technology journey. The first is the ‘performance insights’ team, which identifies the standard reports required by the business and also caters to ad-hoc analytical requirements. With support from a group of data scientists, they support the second team, which is the ‘business outcomes team’. This works with business leaders and helps them interpret and correlate data with their own businesses, translating them into actionable measures.

New process efficiencies, such as with travel claims…

At a broader level, technology has helped streamline processes and drive new efficiencies. Earlier, for instance, IBM would have to manually investigate the huge volumes of travel expense claims it receives, but today, these are entirely handled by its Watson engine. Watson takes in vast amounts of data, and as soon as it identifies a ‘bad claim’ – one that is inconsistent with past trends for employees at a certain level or with a specific job profile – it displays an error. Such cases can then be verified manually.

…and India-specific processes around the GST

Specific to India, the introduction of GST required companies to calculate the amount of input credit they should claim. Since its business partners would use different data formats, IBM created a tool that could read invoices using optical character recognition, and convert it into a format that its systems could decipher. This helps IBM reconcile its own data with that in invoices updated by vendors in their GST returns, thereby helping it claim credits.

…NRB BEARINGS…

NRB has gradually automated several key areas and processes

Each company’s ‘digital journey’ will be different, depending on the nature of the industry, the scale of the business, and the affordability of tech adoption in specific instances. Without exception, though, it is the CFO’s role to lead this change. NRB Bearings, a traditional manufacturing business, systematically digitised key areas, including business analytics and MIS, process automation and control, and, finally, the shop-floor level, where it brought in robotics. It automated its capital-goods requisition process using a simple web-based portal. From the point of request through to the ROI calculation, everything is now done iteratively, reducing the approval time from 6 months to 60 days. Another initiative, which originated within Finance, was the creation of a dashboard with simple SQLs, graphs and revenue and inventory information, which is disseminated organisation-wide each week. This simple tool has helped check over-production and improved inventory planning.

…AND THE FUTURE GROUP

From centralising and automating ‘basic’ processes…

…and contributing to price discovery…

At the Future Group, Finance buckets technology adoption into three categories. At the most basic level, it has centralised and automated key processes such as commercial payments, yielding annual savings of close to Rs 45 crores. At the next level, it is using digitisation to improve pricing outcomes. Specific to its Food segment, it uses a platform (‘Agribid’) that allows for vendor selection and on-boarding through a reverse-auction process. So far, it has generated a 200-bps improvement in gross margins within this space.

…to using analytics to help maximise revenue

At the highest level, technology is allowing CFOs to help drive revenue maximisation. At Future Group, this is achieved mainly by increasing the ‘wallet share’ of existing customers through better customer engagement. By running data analytics on its various loyalty programmes, it is able to map and predict a customer’s purchasing behaviour. These insights feed into customised sales pitches and facilitate selling and cross-selling. For instance, while launching an in-house liquid detergent brand, it found that Eastern India is the most likely to ‘experiment’. It also found that, as a category, liquid detergent sells mainly through modern-trade formats. Keeping these factors in mind, Future was able, within a few weeks of launching the brand, to occupy 20% of all shelf space, displacing other brands in the process.