It was the morning after our annual party. We celebrated yet another successful book close. The Auditors seemed happy with what they saw. I got an appreciation note from the CEO. I am so very happy with myself and with my team. I feel elated. Right?
Wrong. The quarterly Board meeting that followed the year end led to an awkward conversation with the CEO. The annual plan numbers for the next year, which we drew up just a couple of months ago, were at a huge risk. Revenues were down, costs were up. I thought that this was something the Business Unit Heads needed to worry about. After all, I am just the ‘numbers’ guy! The CEO obviously did not think so. He made it clear that our (to be read as ‘your’) survival depends a lot on how the business and margins are kept growing; how our ‘shares’ are performing in the market; and how everyone, and especially the CFO, plays and MUST play a critical part in making ALL OF THIS happen.
The CEO went on to give us his feedback on the CFO Office.
- Business managers are of the view that the MIS we provided them with is inaccurate and not timely. I did try to tell the CEO that the data I present is the same data that the business managers give me. He countered that it is implicit that my office should clean the data.
- The CEO then said that these business managers consider my office as a mere ‘reporting’ factory. The business managers claim that the CFO Office reports do not give them any insights or forward looking models on how to ‘run’ the business leave alone ‘grow’ their business.
- The last cut is the deepest. The CEO received a few ‘notices’ from the Regulators citing inconsistencies in our recent filing. The CEO demanded an explanation on why we failed to comply with the recent guidelines. Not just that – the Regulators, and now the CEO, wanted to know the reason for the inconsistencies in our current filing versus our internally reported PL numbers. Though I had an explanation for both aspects, the damage was already done. .
In fact I am aware of a lot more aspects that beleaguer the CFO’s office:
- Even if I am miraculously able to sleep at night my nightmares are waiting for me - full of numbers swimming across spreadsheets, multiple access databases and numerous data sources and disparate systems. We manage to close our books every month on time only because of my hardworking team and the endless hours they spend reconciling data across multiple systems, statements, GL Accounts, etc. to come up with the magic that was the entire reason for the annual party last night!
- The easy solution is to consolidate, standardize and automate my processes to get rid of all these risks with manual processing. I cannot remember the last time I got an investment approval for standardizing/modernizing our financial systems. The CEO would always tell me: “YOU know how much money we have. YOU know that we don’t have enough money to even support our business plan. He then rubs it in my face that as per the Consultant “I” hired (one of the Big 4), our overall cost of Finance ownership is steeper than similar organizations by a mile.
- As per the same Consultant “I” hired it’s the same sad state of affairs on a long list of things: business metrics, DSO, customer satisfaction, revenue and costs, risk and compliance, etc.
These were CFO problems, my problems. I know the CEO did not want to know the difficulties that I as the CFO face (Three Regulatory changes in one month and an army of stressed and stretched accountants). The CEO wanted me to fix these problems that are threatening the very survival of our business.
It would be an understatement to say I was desperate for a solution. My Consultant (the same one from the League of the Big 4, who came up with this benchmark on my finance costs being very high!) agreed to introduced me to a couple of HCL leaders. And HCL moves FAST. Very FAST!
HCL came up with this utility model called EFaaS (short for ‘Enterprise Function as a Service’). Listening to them, it became apparent to me that this team understood our business, clearly laid out how they would take joint ownership for transforming my finance organization to make it more nimble and efficient, serving all key constituencies in the business effectively. They also offered to take ownership to standardize and modernize my financial systems. Here came the best part. They would do all of it in about 24 months and leave a huge net cost savings for the organization to reinvest in business (well over40%)!
I was concerned that this was complex and hence too risky. That is when they showed me in simple terms how a structured and tool based utility approach could help govern this whole journey and de-risk the potential pitfalls. They provided some excellent examples from globally diverse organizations where they were able to successfully execute the EFaaS utility model to help transform similar finance organizations. I really liked the way they integrated process and technology in an end-to-end global shared services model, embedded automated controls in the future process design and instituted the principle of global process ownership and service level standards.
It’s been a year now. Over the first 60 days (after the fateful annual party and the Board meeting that followed), HCL worked closely with my leadership team and me in a series of discovery workshops and due diligence sessions to refine their approach and road map to suit our organization. In the end we were convinced that this exercise to transform my finance function would work.
We started the journey to transform our business with HCL. We started with the CFO’s office and the finance function.
- I am beginning to see vast improvements in the quality of our internal reporting, close process, regulatory reporting and systems throughput.
- By leveraging HCL’s global shared services we were able to reduce the total cost of ownership by over 25% through organizational realignment that improved span of control, process and system optimization.
- HCL continues to provide thought leadership, execution teams and process transformation and technology experts.
- We are learning the true meaning of shared services, centers of excellence and continuous process improvement through Six Sigma/Lean, etc.
- Most importantly - my financial systems are getting a fresh make-over much to the delight of my business community. I just love the dash-boards with business metrics I can access even when I am travelling.
Of course, there have been challenges (mostly change management issues within our organization) and adjustments we needed to make, but the good news is that we are on top of managing them quickly and efficiently. I do realize that I am still in control and fully accountable to my Board. I am confident that I will be well prepared for the next annual party, and the Board meeting that will follow!