New levers for a transformative CFO - hcltech.com · reference data management, data warehouses, reporting architecture (risk and regulatory), process controls, dashboards and analytics

WHITEPAPER AUGUST 2014

www.hcltech.com

big data & business analytics

New levers for a transformative CFO

AuthOr:

MAHESH SUBRAMANIANGlobal Practice Director, EPM & Finance Transformation,

Business Analytics Services

5 KEY TRENDS IN THE EVOLUTION OF BI TOOLS AND THEIR IMPLEMENTATION | AUGUST 2014

© 2014, HCL TECHNOLOGIES. REPRODUCTION PROHIBITED. THIS DOCUMENT IS PROTECTED UNDER COPYRIGHT BY THE AUTHOR, ALL RIGHTS RESERVED. 2

THE MULTI-FACETED ROLES OF THE CFOIt’s almost a given that, the CFO is the second in command during leadership transition, because of his/her intimate knowledge of the enterprise and the economic realities. The very virtue of this is from the traditional view that his/her office ‘owns numbers’ and is a ‘keeper of the books’.

Over the last few years, given the pace and turmoil of businesses, the CFO’s office has newer areas to help the enterprise and these are creating a composite and integrated role, which goes beyond the traditional accounting role into a truly multi-faceted role for the CFO.

Some of the old and new avatars of the CFO are outlined below:

CFO Facets Old Approach New Normal

Value Office Owning Numbers Sustainable profit management

Reliability Office Enterprise Reporting Trusted Data–Transparent, Reliable, Timely

Strategy Office Financial Strategy Performance driven, strategize for Business

Risk Office Risk and Compliance Exemplary corporate image

Innovation Office Conservative and Risk-averse Innovative Technologies, Operating Models

THE RISE AND RISE OF ENTERPRISE/ EMBEDDED ANALYTICSIn comes the rising age of analytics – Gartner calls this the Nexus of Forces (SMAC–Social, Mobility, Information/Analytics and Cloud) – and the Finance Department is seen as the biggest user of these forces in one or more capabilities.

In a key study by Gartner centering on the CFO/Finance Executives*, it was evident that the rising adoption of analytics – was primary among the Nexus of Forces. This gave a very powerful use-case for putting information to work and renovating around the IT core –common issues relating to aged systems and ineffective data (both for reliability and analysis).

While analytics and investments around it are reaching euphoric proportions, partly driven by vendor agendas and by the emergence of data scientists, the last few years were mostly about analytics capabilities and solutions or answers in search of right use-cases.

Consequently, analytics was pursued mostly in early adoption or PoC (Proof-of-Concept) projects - other than proven areas where it is industrialized e.g., Marketing and Fraud Analytics, Risk, Predictive Maintenance, etc., to name a few.

The trend this year seems to suggest the coming of age of Applied Analytics, which is seen as the first step in the industrialization of analytics in the enterprise.

The trends show that in terms of the most important technology investments, the #1 choice is for enterprise business applications, and the #2 choice is for Business Intelligence (BI)/Analytics. According to Gartner, “although this may appear to conflict with the first observation, many of the gaps in capabilities can also be



addressed through improvements in embedded analytics, which are being built into business applications….vendors are continuing to emphasize the expansion of analytic capabilities in their portfolios”.*

What this means for the enterprise is for a holistic industrialization of analytics at every level– strategic, tactical and operations. While the strategic and tactical levels of analytics are rightfully grounded in Finance, given that they are at a corporate performance level, the operational analytics or business analytics is likely to be embedded either at the top of the aggregation/corporate or transactional systems.

It should also be added that there would be a functional approach to embedded analytics as seen in Marketing or HR/Workforce, but also at tactical levels feeding off data from the transactional systems or collaborative data.

While this is all technology enabled and partly driven by the CIO, there is always a question on how this ties together and harnesses the power of analytics to make a real business difference.

A good pool of knowledge of borrow and lend would be the performance measurement frameworks laid down by the CFO’s Office incorporating the widely adopted key performance indicators, risk and information parameters. Analytics can now make them actionable, both for hindsight and foresight decisions with building on them beyond reporting into causal and predictive insights.

In terms of embedded analytics, the future is already here.

TRUSTED BUSINESS PARTNERAided by the power of analytics combined with traditional access to multi-dimensional reports, the Office of Finance is moving from a rearguard function to a vanguard function of the enterprise’s performance.

Here is a partial listing of various functions, which directly affect or influence corporate performance and measurement:

y Enterprise/business analytics

y Cost and profitability management

y Customer/Product profitability

y ROI (Return on Investment)/CAPEX (Capital Expenditure)

y Driver-based planning/budgeting/forecasting

y Alignment to corporate strategy/vision

y Monitoring of business performance management

y Service delivery costs

y Managing business risks/compliance

y Information consistency

y Trusted face of the corporation to external/internal stakeholders



y Business valuation/M & A

y Taxation management

With the exception of top-line management, sales/marketing, and some support functions, the footprint of the CFO in every other key enterprise function is evident and growing.

SHARING THE SPOILS (AND THE RICHES) WITH THE CIOThe control of the CFO over budgets is increasing every year and according to a Gartner study, one-third of the projects are approved by the CFO and in terms of approving authorities, it stands second only to the steering committee of IT & Business.

It is understandable that the ROI on IT is still measured in terms of economic impact/pay-back periods. It is also based on budget approvals, which would fall under the purview of finance. Furthermore, the OPEX (Operating Expense)/run-the-business spends are still managed by the CIO and are significantly larger than discretionary spend. It is probably a healthy way to consider the fact that a CFO+CIO joint nexus would yield the right balance of getting the best out of technology as a business enabler and as a business transformation agent.

However, because of increased field-of-play in technology, the CFO also inherits a number of upstream and root-cause technology issues such as:

y Inconsistent data quality

y Disparate data sources

y Lack of enterprise golden sources

y Sub-standard external reporting

y Last-mile finance IT issues for data consumption

The upstream-downstream divide is already blurred by real-time technologies and the rising use of in-memory applications. As a result, sub-par transaction data cascades and affects downstream consumption, which has more fatality due to use in analytics and real-time decision-making process.

Given the new convergences of capabilities, technologies and business realities, one can summarize by asking some leading questions:

y What kind of architecture should underpin the next-gen Finance IT landscapes ?

y How does some of the legacy landscapes which were ‘built to last’ move to a ‘built to change’ paradigm?

y How does the existing BI architectures scale up for embedded analytics and also help in industrialize analytics at all ends of the enterprise – tactical to strategic ?

A summary consideration could be outlined as below:

y Finance technologies provide a holistic view to the larger enterprise performance and integrated architectures are more than the sum of its parts



y Analytics architectures should be considered at all levels – both with projects for foundational capabilities and built further on the BI landscapes

y From conceiving the function of finance as just numbers/reporting oriented, the increasing ask of the CFO is truly positioning the office as a trusted business partner or true business ally to the CEO/Board

y The CIO and the CFO have inherited the enterprise data problems and the information architectures. Therefore, there is a need to review it in a holistic manner and not just, as IT projects because the increasing adoption of analytics will only proliferate the data issues

y The CFO, CIO partnership should be strengthened by integrated architectures and using analytics to bring together long-standing silo data structures and drive direct business benefits

HCL’S ICFO FRAMEWORKHCL has been a choice transformation partner for many a client’s journey across the value chain – from front office (sales, marketing ) to middle-office processing to back-office information delivery and horizontal processes.

Having delivered a number of point solutions in Finance technologies through multi-year transformations, HCL now believes that an integrated transformation approach is needed to bring about the desired transformation benefits and calls for a partner who can bring in multi-faceted solutions in this journey – technologies, processes, people, engagement models – and business solutions.

HCL’s iCFO framework is based on the collective experience gained by delivering projects across the board for CFO and Finance IT landscapes, and for traditional build and run technology projects.

The framework reiterates sound IT architecture approaches that have been time-tested in various layers of technologies and underpins the Finance IT landscape in an integrated architecture.



iCFO framework underpins the Four I’s of a holistic Finance IT architecture:

Integrated: Adopt an integrated data/solutions/reporting/integration approach

Industrialized: Process-led and governance driven technology approach to ensure consistency

Insightful: Enable insight-driven data and enterprise performance, not just reporting

Innovative: Embrace newer technologies for lower cost and increased business effectiveness

HCL’s pedigree in transformation is now focused to deliver next-gen Finance IT landscapes bringing in finance-centric solutions built on industry leading stacks covering the entire portfolio across F&A systems, performance management systems, reference data management, data warehouses, reporting architecture (risk and regulatory), process controls, dashboards and analytics.

HCL brings the power of the entire enterprise with its industry leading performance in enterprise application services (build and run) like ALT ASM, benefits driven business operations services like EFaaS and traditional strengths in technology-driven solutions.

A global footprint of client experiences, industry acclaimed CSAT (Customer Satisfaction) and business solutions for the transformation are just some of what we bring to the table!

Reference

*Critical CFO Technology Needs – 2014 Gartner Finance Executives International Study



HCL EXECUTIVE BIOGRAPHY

Mahesh comes with over two decades of diverse, global experience and one-third of which he spent as a banker and user of technologies. He has spent the last 15 plus years in financial technologies across a variety of lead roles in consulting, products and projects.

He has worked in most of the technology areas in banking (retail, corporate, investment and buy-side) as a domain expert in solutions creation. His key experiences include large core banking transformations, end-to-end application management for large portfolios for investment banks, and consulting assignments with many global banks.

He was instrumental in creating a number of domain-centric frameworks in areas of EA, Business architecture, process engineering, target operating models (TOM), transformation roadmaps among others.

He is currently leading a strategic initiative for creating an end-to-end transformation framework for Finance IT transformation which brings together business solutions across various areas like EPM, finance warehouse, CFO dashboards etc., through integrated architectures.

MAHESH SUBRAMANIANGlobal Practice Director, EPM & Finance Transformation, Business Analytics Services

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New levers for a transformative CFO - hcltech.com · reference data management, data warehouses, reporting architecture (risk and regulatory), process controls, dashboards and analytics