Chief financial officers are often seen as finance gatekeepers. Their job is to ensure the company has the right financial reserves, a strong balance sheet, and the in-depth forecasts that allow their CEOs to take the right steps forward.
The pandemic changed this perspective. It shifted the finance role to the front and centre of organizations, with CFOs tasked to find the right steps forward in the absence of long-term forecasts. It also highlighted the value of resilience and agility for CFOs.
A recent FutureCFO roundtable series, organized in partnership with Oracle, examined the role of resilience and agility among CFOs and finance professionals in the region. The findings revealed how the pandemic has altered the finance role, including an increased reliance on digitalization and cloud-based technologies. It also showed that in many cases, CFOs are even driving innovation for business resilience.
Before the pandemic, many companies relied on manual controls and processes. Finance reports took time, forecasts and scenario planning were done on spreadsheets, the systems were mostly on-premise and hard to access remotely, and the data were in silos.
When the pandemic hit, finance professionals had to rethink. Many chose to quickly digitalize. For Yasmin Ramzi FCMA CGMA, head of service delivery at Tenaga Nasional Berhad GBS, it meant quickly adjusting the standard operating practice (SOP) and ensure all the processes continued smoothly for remote working. Running one of the largest shared service centres in Malaysia’s Government Linked Company (GLC), embrace change is the way forward.
“You still need to pay vendors, critical financial commitment and payroll on time, because otherwise, there will be a big chaos. Business processes that we may took for granted in the past because it is basic operation, now became very significant during pandemic,” she said.
One of the delegates acknowledged prior to the pandemic the company already recognised the need to use digital solutions to achieve operational resilience. The company’s reliance on actual signatures for approval slowed down the finance processes. The company quickly adopted digital signatures and standardized transactions while embracing automation.
“The pandemic is no excuse for us when it comes to our deliverables. So, we looked at automation,” said Mohd Izuddin Othman, senior manager at DRB HICOM.
Sai Weng Ho, executive director at Deloitte Consulting, noted that a shift to digitalization for resilience and agility was expected. “During the pandemic, CFOs found that a lot of their processes were very manual. Hence, they recognized the importance of having a digital finance system in place to make informed decisions in the new normal. They needed to be able to work from home especially during lock downs.”
Focusing on the golden triangle
The roundtable participants noted that the pandemic has widened their role within the organization.
Since finance processes impact business across the organization, their efforts to standardize, digitalize and automate directly impact an organization’s business efficiency — especially when operating in a new normal where remote working is standard.
One delegate noted that finance had to see finance transformation from three perspectives: people, processes, and technology – what some refer to as the “Golden Triangle.”
Some organisations have built centres of excellence to drive this Golden Triangle concept – providing a platform for upskilling the finance team by exposing them to data science work, reviewing and streamlining processes, and using technology to improve data management and visualization for better decisions.
Such an approach facilitates conversion of staff to become more business-oriented which in turn brings value to customers and management, and in turn agility.
The same approach also improves resilience.
At Tenaga Nasional Berhad, the effort to streamline people-process-technology had brought the company stronger to serve 9 million customers in Malaysia. This is in line with the Group’s focus to build a Better World and Brighter Lives.
Innovating finance for resilience, agility
Participants highlighted that finance is not just transforming for efficiency. In many companies, finance is also driving change and innovation for better business resilience and agility.
Take Summit Media, for example. The marketing company’s primary revenue stream from automobile advertisers was cut off during the pandemic. Their billboards were no longer effective, and besides, buying cars was not a priority in a lockdown. Advertising money trickled.
“So, it means that we need to innovate and think of services aimed at the other industries that are growing, like the online selling platforms and delivery for the supply chain. It was one of our main struggles at the very start, “said Lorie Paz Chavez, the chief financial officer at Summit Media.
The company embarked on a series of partnerships with different technology platforms. With all these relationships being built remotely and online, the company expanded its partnership ecosystem to Europe and their revenue streams. Now potential advertisers from other industries are approaching Summit Media to learn about new promotion ideas.
For Ritschl Dilla, the chief financial officer at Danone Universal Robina Beverages, Inc. demand for packaged water was down causing high inventory. The Company tried to push offrake via price offs in convenience stores, their primary channel for distribution. It helped cushion sales decline as government restrictions during the pandemic crisis affected consumer foot traffic. Priority on essentials added another layer of challenge particularly from consumers with limited income.
For instance, the company saw an opportunity on e-commerce channel. Online delivery platforms of brick and mortar grocery stores were a good start, allowing the company to display its product (B’lue) while getting closer to the end customers.
“There’s a trend right now where brick and mortar stores, like small grocery shops, are launching their e-commerce platform. We partnered with them to make B’lue available on their physical shelves as well as on their online platforms,” said Dilla.
“There has been more openness now for suppliers and customers to have these conversations and understand truly what is needed and how do you deal with the current scenario. We have seen partnerships right across various industries, whether in consumer goods, media, and advertisement, professional services, FSI, etc. A lot of open partnerships have come out, which I think is interesting and healthy for increasing the economic value right off of the industry,” said Sunil Wahi, senior director for JAPAC solution engineering in ERP & HCM at Oracle.
Partha Vedam, executive director at Deloitte Consulting, agreed. He concluded that the region is now seeing the rapid development of ecosystems. “I think the ecosystem part was missing in the past. Everybody worked against each other and had a silo mentality. Within these past six months, I have seen a huge spike in kind of ecosystem plays, and people are opening up to these new business models.”
Both Vedam and Wahi noted that this creates a new set of opportunities for CFOs as they look for ways to drive resilience and agility in their business models.