Tata Consultancy Services: CFOs need to reimagine and simplify their operation - Vijay Damle

As organisations change to keep up with the evolving business climate, CFOs are being seen as more than simple number-crunchers. Finance Director Europe talks to Vijay Damle of Tata Consultancy Services about staying agile and embracing new technology.

How have you seen the role of the CFO change over the years?

Vijay Damle: Perhaps the biggest ongoing issue that today's CFO and finance teams have to deal with is constraints from an ever increasing, and changing, complex regulatory environment. The second challenge is how a CFO can change the role of the finance function across the entire organisation, so that their enterprise has the right tools and set-up to make and execute business within the regulatory constraints. The third issue is process simplification.

The CFO's role today is focused on resource and capital allocation for profitable business. By trying to understand the way their global enterprises are structured, CFOs are building end-to-end visibility on product lines and revenues, profitability and cost.

How much of a need is there for an organisation to be agile?

Businesses need to be able to react very quickly to what is happening in the market. We see what happens to businesses not adapting fast enough to the changing business environment. Businesses are going into administration overnight. It's just one example of how important agility is. Another aspect is how changing technology enables an organisation to be agile. A CFO needs to validate whether the finance system is destroying added value, and chart how their organisation moves away from the legacy of how things used to be done.

What if an organisation needs to create a legal entity in a country in order to do business but finds the government has just changed the law? How can the finance function work on the company's cash position so that the right levels of finance are available to invest and grow? Answering these sorts of questions can help a company be agile, and address some of the complexity and high level of risk that is now inherent in today's global business environment.

Any business of significant size and scale will be working towards making its organisation agile. Some serious impediments exist in transforming an organisation to be agile. It requires a change in thought process, a change in the underlying technology architecture and a change in how to approach the market. The internal changes are what prevent organisations from adapting. However, any organisation of a significant size will likely have some form of agility-led transformation effort currently taking place in their business.

What role does technology play in making an organisation more agile and what are some of the pitfalls CFOs fall into when trying to introduce new technology?

With businesses realising the value of interconnectivity, technology plays a major role in the finance function. The finance organisation now has a role and responsibility to ensure that technology is not overly rigid and can quickly react to wider changes in the business environment. The CFO organisation needs to adapt the right platform, be flexible and build an architecture that allows for adding more technology or taking out some legacy systems in case the systems are hampering growth. However, the CFO needs to reimagine and simplify processes. Technology is just the tangible element of a really complex process.

The pitfalls tend to occur when the traditional structures within an organisation get challenged. This is because the structures around 'command and control' authority on outcomes become outdated. The organisation is not aligned with the changes in the market. Organisations are internally geared towards cost whereas, externally, the market is concerned with asset undermanagement. This creates dichotomies in the measurement process, the incentives process, the technology structure, the review structure, and the control and command structure of an organisation. These are either individually, or collectively, pitfalls that CFOs need to navigate in a changing environment.

To what extent do you think CFOs embrace the latest technology?

Previously, finance used to be the last place where you would see technological change. People just saw it as an overhead to be avoided. Today, the CFOs now recognise the need to keep abreast of what is happening in the world of technology. Reluctance exists - it is in the genetics of the finance department to be conservative. I do not see many CFOs saying 'I want to be the first person to try out this platform', but they are embracing technology as they learn that technology can help reduce costs and help organisations to make quick decisions.

I think CFOs, CIOs and CEOs in collaboration need to embrace technology across the spectrum. Technology is changing whether it's digitisation of processes, end-to-end ERPs, cloud or any form of virtualisation. The adoption rate remains low, but we are going to see a massive change in how CFOs adopt technology. My forecast is that a full-time employee (FTE)-driven finance function in the next three to five years will no longer exist. By that I mean, high automation will drive FTEs out of the finance function and they will only remain relevant in areas of control, strategic planning and budgeting. Transactional processes and FTE-driven finance functions will be taken over by technology.

To what extent do you think analytics should be viewed as part of the wider finance strategy?

Analytics are definitely an embedded part of the finance function and must never be considered separately. When I started working as an analyst 20 years ago, I spent far more time collecting data and far too little time actually analysing it. Today, simplification and digitisation has enabled CFOs to spend less time on gathering data and more on analysis. CFOs are able to gain insights through the analysis and make informed decisions to achieve business growth.

With the increasing availability of data, analytics need to be embedded in every part of the organisation. The finance organisation of the future will need to have analytics at each stage of the finance process. The amount of data that is becoming available allows organisations to make much more forward-looking decisions, particularly if people are able to look at the right sets of data. The number of options that analytics throws up is something that is increasing every day.

Vijay Damle of Tata Consultancy Services.
TCS subsidiary Diligenta’s office, Peterborough, UK.