Mastering Change: The Future Looking CFO

Transcript

Mastering Change: The Future Looking CFO

CBS news today have to deal with the phones to evolving landscape and macroeconomic pressures accurate full costing is really important and so using the breasts of data that's available to us to make quite a child choices about where we're investing in the context of what is a very long time and Barnes at the moment from a macroeconomic and geopolitical perspective digitization changes in climate agendas also creates an unclear outlook when this legislation changes you have to go through and assess what that means for each of those different client bases and at the moment we see in this huge amounts of regulation and legislation change impacts in the U. K. wakes mafia technologies to help analyze operational and financial performance is helping navigate on shore environments if you wanna simulate cost efficiencies cost structures way of optimizing your cost you need a baseline for them and then technology comes into play when Tom Parker and welcome to the next five pub const brought to you by the FD pompous Judea into series we ask industry expense account how the world will change in the next five years and the impact it will have on all day today in this episode we look at the role of the mountains CFO the decision making required and the technologies supporting today's future looking CF five in today's competitive landscape the responsibilities %HESITATION CFO's on doctors to find more than ever the phones paced digital revolution geopolitical uncertainty economic volatility and the environmental impacts of climate change means the mountains CFO must adapt to future proof the financial health of their organizations and while they were being longer term cyclical challenges the last five years has offered up a new environment for CAFOs to tackle which means that priorities have shifted I think it's changed hugely I'm particularly in my industry consumer this is on a man's EVP and CFO at Nestle so if you think about the events of the last five years and what consumers have being sorry and how it's changed that behavior close image we were all working from home we'll do different things we don't have supply chain disruption where the brands that we would normally buy when necessary available and so we changed our habits we then had enormous inflation and some real challenging Wells problems in a number of countries as cost of living challenges ready kicked in and again it's Chinese people to change their behavior so the macroeconomic geopolitical environment has always been volatile oil the pace of consumer changes increased and it's all coming together in a world where the tools that allow us to move much faster say Hey I and the ability to use big data again accelerate sings on top and if you're not on the leading edge of that you could get behind delivering on the consumer needs with pace the first CFO in today's world with a company like ours so you know justice contests were a hundred and eighty countries we are in at least ten caps agrees there's a loss of places where we could be investing and so using the breasts of data that's available to us to make quite agile choices about where we're investing in the context of what is a very volatile environments at the moment from a macroeconomic and geopolitical perspective using the data that we have to give us those lead indicators and hints as to where we should be investing in polarizing our investment for the short medium and long time is very important so a lot is changing and it requires us to have different capabilities as an organization to deliver against that so for a month and sapphire it makes for a genuinely fascinating environment the global businesses operating across multiple jurisdictions requires fleet of foot finance leaders to maximize them Longines drive profitability and increase operational efficiency according to PWC's October twenty twenty four poll survey forty six percent of CFO's said accurate forecasting is the number one challenge facing the Marlins are just described makes it hard to full cost not today and the legacy where the historic way of doing that is through a my case asking a hundred NATO countries to have a view on multiple categories and sort of aggregating all of that to have a view on on what the group is as a whole now with the data that we have today you don't need to what the White House with statistical full costing you can build an algo that actually learns pretty quickly and can give you a perspective not what an algorithm condos it called for C. consumer behavior change for an event that hasn't happened yet but it can give you data points to allow you to ask the question a different way no why is the boss from up the bottom up it's if this is the also the the the statistical full cost would give me I'm with sinking it something different why what is it missing what what do I need to be thinking about and how does it change how we operate so I would agree accurate full costing is really important and I would say that there are areas at the moment where we are in an environment where you cannot to be accurate you cannot be accurate because it's it happened before I mean you know going back in time if you think about kind of it it was impossible to forecast the uplift that we saw around pets adoption and the full pet food consumption associated with because of it and so I think as a CSR accurate forecasting is important but I've moved away from accuracy on a number actually accuracy around assumptions what are the assumptions that you are making and how could they be wrong and if they're wrong what do we do it because they are so loud as to be far more agile when we've got them home and I see it is this a lot of tools out there that help us use the data to better understand it but actually the human oversight at the ends to to look at those scenarios and might show that with the pad for them is very important so accurate forecasting is important but actually the agility associated with scenario management and the ability to manage change I think %HESITATION as important skills for modern finance people among businesses as I mentioned there are tools out there to better understand the data and ultimately help with forecasting if you want to do simulation if you wanted to forecasting how can you do this if you don't have visibility on your cost this is some of the Tory number today chief product and technology officer at Cooper in the CFO space looking at costs and optimizing costs you cons if you have not to the baseline on a digital way so to say where you have put your costs they tell to then analyze them so that's why if you wanna simulate cost efficiencies cost structure is there a way off optimizing your cost you need a baseline for them and then technology comes into place technology itself will and able then the value is what you want to achieve that's the obvious connection I see when you want to connect to this and to see if those needs and technology kuka community data is obviously D. asset of Khobar to dispense software because building on top of this data and this is what we are intensive working on it gently what's an agenda take a I. R. skilled conversational applications which she learned on the seven trillion transactional data we have this is basically the transactions between violence and supplier and everything you do is hosting events purchasing your vans invoices events whatever you have faith as review transaction workflows rules learning from this baseline reflecting into into a conversational skills agenda box which gives you back solutions which sold for you whatever you need and then distributes at all because trades is into the system so we call it maybe that's our agenda abroad that's where the power lies in and the second thing is all this he also you know transparency into data so the the way of doing analytic in the past will be basically more conversational analytics meaning you ask about to tell you how much spend over half of the supplier and how much of this band is compliant please check with my compliance rules which it just update it and then the bot will tell you %HESITATION well last you a hundred percent compliant you change now your compliance will because you're shopping dates into whatever direction you on a a two percent combined that's the twenty percent which I found I'm not complied I mean those things are just examples for when you use your data we have as in community data and then get them to a client to help processing and kept getting back to compliance just an example when it comes to companies that work with the public sector they're all the complexities that can make full costing Honda all market is very driven by recycling climate and environmental concerns this is Chris phone see a photo of the UK recycling and recovery on a French based utility company Suez that's really what our customers not public sector customers come looking for us to provide the expertise and support at the same time we're a private organization so we need to make a profit we need to be sustainable or not right I'm not sure it's the first sort of conflicts in the first paradoxes between the two one of the challenges if I have to try and reach is this transparency between being very clear on pricing and what that means in terms of things like affordability for our clients but also making sure that it's going for in today's room what the organization across vertically and its shareholders and it's not a straightforward line that CC for this effort to go through individual on that if we look at some of the clients that we have within the way society is on full forty minutes it becomes a major challenge for like the forty eight states if there is budgetary pressures that local forty receipt or legislation changes because again in the markets we have the separation for a public organizations between central governments and local government I haven't the objectives of central government might not always be aligned to local government and we're trying to operate in two different fields at and bring both parties together usually in the Nov H. it's a good idea to bring as a private organization that's about building trust unlike B. two C. companies like FMC Jeez so is this customer base means for costing him procurement analysis a different when it comes to working with our customers we have different bullfighters its clients we have a short term contract that can be twelve months to three years and that would be where as to the actions of recycling material or waste mainly from businesses we can go into our public sector sites which tend to be bigger and longer term relationships these tend to be around so seven years in length and that involves a lot more working with the clients through a pittance stage that can take upwards of three to six months we don't have longer term clients for treating related so when we build in significant infrastructure particularly our energy from waste concept which can be twenty five year contracts to nineteen take two to three years %HESITATION and paid him waiting and that involves a significant amount of investment firm internalization external at scenes in the devices that you need because you know we haven't Sir sure landed brat technologies new technologies new assets in different locations and you're never going to come and see how you're gonna get some projects and the process because again it becomes a a procurement process covered by pool for children regulations that also on that side that's where you tend to have the most significant cap ex investment and not to be two hundred three hundred million pounds to your invested into building these assets for that long term relationship external pressures like legislation around climate change initiatives the record is flexible collaborative interaction with multiple stakeholders can put pressure on the CFO %HESITATION to navigate the business through turbulent times because we have these difference pockets of customers in these different client base is that when this legislation changes you have to go through and assess what that means for each of those different client bases and at the moment with CNS you denounce of regulation and legislation changes impacting the U. K. wakes mafia and Suez we have things like emissions trading schemes this is something that particular leads to energy from waste for me and particularly rare for our customers all along the term public trust and sassy thanks for this is not to not spoil the carbon is being generated from the plans to create a fossil based carbon emission trading scheme is something that's been in place for a long period of time in the U. K. but it's now ever covered the energy from waste market that's a new addition to the ski three afterward of our clients to understand what that means for me to consider a financial markets that say things like carbon trading that's enough to that local authorities will start an agency that understands more because they will be allowances that would need to be purchased because of how much they can hello fission eighteen B. wave retention down the fossil content within the material tickets purchased by residents when it comes to reacting to your customer base and the challenges that affect them being a large multinational FMCG has its own nuances I think the history of finances been sometimes to look at the pay and I'll understand what we don't like in it and then reacts but if you're doing that you're looking at something off the performances already happened with the data and insights we have today we should be looking at what's going to happen and shaping it well before it hits the piano so let me give you an example we look at each of our markets category combinations and we're really looking to see across five indicators whether was set up to win so you guys five indicates is being do we have credit superiors he said does it taste better to be about a science where we priced versus the competitive set we price at the right level for the superior to we have where are we on distribution do we have the distribution we want and we have a share of shelf ones with that and then the last indicate treachery is a Cher voice said do we have %HESITATION media white bigger than our share of the market and it's a pretty simple thing to say but nowadays we have the data that allows you to monitor those things near enough real time and actually if you go to brown that's not performing having that detailed diagnosis is really important because if you put more marketing spend against a brand that isn't performing because for example it doesn't taste as good Ole it doesn't have the distribution you might be driving a consumer to the shelf to pick up something the other one when I try it doesn't taste as good as I'd like it to be or even it's not that so that source of capability you know if you if you're thinking I'm running the suppressor when Europe farm running infant nutrition in China stock clarity really really helps you make sure that you're focusing your time on the right things in the right order to deliver outcomes well before it shows up in the panel acumen analytics every key tool in the CFO's arsenal driving efficiency helping to understand your cost base and creating value creating valley through investment is what CFA zero about on the first way to create the capacity to invest is to look at the cost base and there is always opportunity and the cost base irrespective on today's tools allow us to guess at the opportunity hello foster and lot more accurately I give you two examples you mentioned procurement it's a great example you can imagine we're a hundred and eighty countries so the number of invoices we're guessing the weaker in the less often from the same supplier globally the fact that we now have a I. tools that can run over the top of all of that and understand whether one of the invoices that we might be receiving a consistent but the monster contracts on the checking for any inconsistencies it allows us to be far more efficient about picking up compliance to contract in a way that wasn't worth the investment to do when it required people so that would be one example that I think is really interesting another example nine times out of ten it might for its inefficiencies aw between teams in any organization is in the handoffs and as we become increasingly process leads which I think you see more more as the tolls increase you have more of those handoffs because prices is often cut across functions I mean if you think about in a purchase to pay you've got procurement functions you've got finance functions you've got a number of other functions are in that process some of the tools that we have today that really helps as mine that's ten two ends and make visible there is areas of inefficiency can really help you unlock not just cost a jealousy job enjoyment because we are different whenever there's an inefficiency I mean you know there is a generator the bits of the job that drive you nuts and so you had to guess to get those opportunities is ready when when when's the organization so today's world with the tools that we have something we should be going off to however the platforms only is good as the data that feeds them the other thing that I would call that tasty in the advances A. I. but %HESITATION so you you know some of the other big data capabilities that we have now is quality of data you know somebody once said and I wish it was may I will I was not clever but is surgery Hey I just allows you to be more confident the role if the dates are underneath it is wrong the more weight you seize brilliant souls I'm massively enabling it requires an absolutely rigorous level of data management and your understanding where there are risks with the human judgment I have a late so the way our learning from what we're seeing and correcting the data rather than reacting to wrong data I say in a few tickets to see if I was that's critical because those control processes are what make sure that we're using these tools while rather than dangerously but that's not the only challenge when it comes to technologies like AI I would say to come all the G. has one challenge obviously which is how quick is the technology may be outdated that's the I would say number one also a CFO's and CEO's by the way I say in the same in agreeing so that's why when it comes to death D. im service im having absolutely D. Clough I would approach meaning having SX %HESITATION saas solutions which by itself you know it as this is the you know the essence of a cloud solution is a good solution for it because with this you basically build on %HESITATION not outdated technology and the risks and the challenges might be lower but that's more the technology part of it so you know C. A. O. C. F. O. R. problems because even see if those often have also the CL department %HESITATION you know rolling up to them but I guess the other part is and this is always the difficult thing to balance how much is technology importance as it might also challenged me on changing my business process because that's what that often is being spoken in departments like Hey I wanna achieve as CFO S. C. B. O. S. certain business outcome why should align to any technology so that challenges than that suddenly technology stocks challenging business right A. I. X. eighty percent of May Day today it's A. I. S. E. P. T. O. are you better absolutely focused on this and we do our industry is absolutely you changing dramatically in I mean just in positive it's just a very very hot at one hundred eighty degrees a change of the bow direction because it is just so so magically changing this way of thinking how to implement products and how to develop products no that's all to the challenge and that's why I'm a starting list is because the challenge also for the CFO CPOs is what can I expect from a eyes so what this this ride many people I talking about and what can I expect I see the number one question there on okay I believe there is something but you know tell me the example and this is also where I see the challenge for CEOs CFO's CEOs to decide what is reading the exciting part of it hi I see there and affected the moment in the market that companies call things I which in past were just very intelligent rules management engines yeah that's a challenge to find out because you know it's not I mean I can find out maybe in one two hours of talking with somebody I can find out but he or she is telling me but you know it's not the expertise necessarily a fifty P. O. I had to understand what is this so and I think that's the challenge for us not necessary believing in it we should all believe in it but I think the challenge is distinguishing between I I call it nicely it really I am not there Hey but I think that's where the challenge comes the next five years for technology plans like Cooper who are trying to optimize the CFO's day today will mean plenty of innovation while I think let's stop of business in the next five years we will have an even more hire them on full costing for each function but away on sea level especially this will be our life in the next five years because we have so many every day there is a news which can disrupt something right I don't think that this will finish I think it will be just more and more especially for the businesses often CFO CPO CLO you know all this group I think he on responsibility this is just the bottom deck level to understand what happens often I have read this morning at breakfast that news you come to the office a okay can we assess what this means for us and that's what we'll continue more heavily down the road now what will also happen is that more and more was search for the right environment to get those answers quicker than they get them today %HESITATION because today it can even take you you know as less your inmate US lasted utilized you are as long as you will need to you know pull out all your axles and whatever you have and then get those simulations Tom that's number one I think what number two is you know going a little bit away from business more into a I and how will it look like I and I'm working in tents on this as a software %HESITATION provide %HESITATION %HESITATION was cool but but it will and much much more into the conversational AI bots which will talk to you and help you solving questions you have for help you working on processes which you needs to fulfill and meaning you won't continue over you talked about five years now it will end in an engagement letter which I at the end eighty percent only a friend bought hopefully working with each other knowing you know friendly bots like my navy being a friend with copilot and can you put those data which I just you know give me the top ten suppliers can you please put the data into the Microsoft power point and then the co pilots you know knows navy and navy talks to co pilot and you get the power point you know this this is the future at in the next five years if obviously as company you stopped quick and smart enough to invest into applications which are future proven and and are going in that direction so what does this all mean for a CFO over the next five years so I think we'll continue to see a changing geopolitical environment in the next five years I think we will continue to see an acceleration in the tools that we can use to run the business so the use cases for AI and the sophistication and we'll continue to see an acceleration in the tools that can seem as a able to use in our everyday lives I'm not going to change their behaviors wants and needs I we're gonna have to adapt to deliver on that what does that mean for me sitting as a CFO a couple of things firstly we've got to be really a change to the pace at which the consumers changing and make sure that we have to data and insights to be ahead of and we have the mechanics to be very agile in Y. with investing to make sure we're delivering said that secondly we need to build the capabilities around all the stats within the function and everything I've just described talks about an accelerated pace of change and change is a uniquely human saying and businesses are uniquely run by people so I think the most important thing around doing of this is is making sure our people are well equipped for that change journey said that they are able to drive it and enjoy it I hope not as a business we leverage the scale that we have to be at the forefront of that I make it a competitive advantage because if we can do this fast in the competitive set I'm way in a well positioned to we should navigate the changing consumer needs and our ability to deliver got some efficiently basah and then a full five years from now Beijing even bass a job for the consumers we serve and has either a well equipped empowers excited team delivering against that that would be my hype and does for companies like Suez who work with public organizations the next five years are exciting and challenging I think the next five years for the CFO site and technology for me is going to be on the top it's going to be exciting it's gonna be challenging I think it's gonna be very blunt part is on we get to the end of it zero and the reason for that is I think what we're seeing within businesses a hole and pretty much across the board now the integration of businesses the integration FC and how political school systems and the impacts of government song markets we're seeing changes in the geopolitical borders and or if the innovation and services they're coming through the %HESITATION they change on a global scale they will strings that let's see if I need to take into account and they will things that are constantly changing at that point that's what creates the volatility in the challenging side of it but it also makes it extremely excited at that point because it means that there's going to be new skills that need to be developed there's going to be new technologies that come through the work force is again %HESITATION Foles even as we just look at the requirements for new people entering the workforce compared to that is that that that he needs in the work force we see completely different objectives in a globalized plans for those people businesses that I need to have that Justin reflect those as well and it moved comes down to this ability to balance and this ability to be adaptable business point streak and the CFO is critical to that part to ensure that where building businesses that can adjust the businesses that can recognize opportunities and take a conscious businesses that can use data to support joint decisions but not to be constrained when the data isn't always that because it could be false data but ultimately if we can make sure we got a common purpose and that purpose is really clear for an organization that's a critical part for the C. F. Orr along with the rest of the boards as businesses at that point that strategy is to create that stretch she shared an extra stretchy it balanced and then scenes and employees can get behind it pretty much anything change is going great can be managed and that means that you can X. raised on the teams the see if I can use the technology to do that and then not using the sustainability approach with regards to how products and services impact clients but more importantly how it makes the business expandable from cash flows in from full stability that makes it incredibly excited and it means that businesses can really thrive on the technology and new environments the current and future business environment of political economic and regulatory uncertainty means accurate predictions are in some ways becoming harder and requires extra scrutiny from CFO's on spending understanding risk and regulatory compliance pressures and dealing with the shifting sands of sustainability and supply chains means CFO's must take on a more strategic outlook powers by transparency across external influences and internal systems in order to shape the future of finance how CFO's in successfully managing direct and indirect spend across an organization is crucial and this is where technology is playing a key role the vast amounts of data that large organizations must see understand and act on is only set to increase having transparency and accountability on the data and allowing for people within an organization to make informed decisions is crucial as is integrating technology into organizations growing a tech savvy talent culture and balancing the benefits and challenges of a on really what it all boils down to is that CAFOs have to be the monsters of change