Challenges and opportunities for
the CFO
R.Kannan
Hinduja Group
5th November 2015
Copenhagen Compliance
Trends and Challenges
• Synchronised slow down in the Economic growth of developed countries.
• Pressure on corporates to improve the performance.
• Increased regulation on governance requirements of corporates and banks
and increased cost on compliance.
• Tax planning as a strategy is becoming ineffective.
• New decision rules adopted by authorities are introducing uncertainty .
• Tax arbitrage available to make a business more competitive is
diminishing.
• compliance requirements are becoming very stringent and the knowledge
about the new developments in regulatory aspects have to be updated on
a continuous basis.
• New developments including emergence of digital technologies are
challenging the robustness of present business models
• A performance of a corporate today is more influenced by developments
in the environment
Strategic Pillars of an organisation
• New Investments – In the fast growing and synergetic
businesses to sustain momentum
• Stream line, restructure the existing investments to ensure
financial stability
• Increase share holder value / Enterprise value to raise more
cost effective resources.
• Human Capital Management to achieve .very high employee
productivity.
• Role of CFO in managing all the above is crucial for survival of
the enterprise.
Employee Management
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Has to ensure the right people are in place in the Finance function.
Help align the HR strategy in line with Corporate strategy by evolving a suitable
compensation strategy in line with the Industry standards.
Apart from focusing on management of portfolio of Businesses and resources, help
the CEO to focus on Portfolio of Human resources.
Support the initiatives with a good training budget for existing employees.
Analyse the Human resources portfolio in terms of High cost – Low productivity,
Medium cost – Medium productivity , Low cost – High productivity in a 3* 3 matrix
and align the human resources in terms of the appropriate position.
Ensure High cost goes with high productivity, medium cost with medium
productivity and low cost with low productivity. Help CEO to achieve the balance
through a detailed analytics.
Share holder Management
• Assess the expectations of share holders in terms of
expected dividend policy, bonus issues and
consistent and above industry performance.
• Bring transparency in communication with the Share
holders and seek their support for higher growth .
• Constant communication with the shareholder’s to
ensure that the company become’s a share holder
brand.
Regulators
• Keep updated on a continuous basis the regulatory
developments.
• Put in place a mechanism to adopt the new
regulatory requirements without any delay.
• Incorporate the requirements into the reporting / IT
systems.
• Always to stick to the regulatory aspects , without fail
and give lot of importance to compliance.
• Give a separate focus on compliance on priority.
Customers
• Many industries have become hyper competitive today.
• Customer acquisition cost is much higher than the customer
retention cost.
• Help Marketing understand the profitability of customer
segments and customers through analytics based on the
numbers available.
• Focus on profitable customers.
• Do away with customers who are not profitable.
• Allocate budgets for new product development/ innovation.
• Allocate budgets for R&D
• Allocate budgets for Customer Analytics.
Organisation change
• Today many companies in the world require change in
business model and restructuring.
• This involves organisation change.
• Which is a tedious and long term process.
• The drive for change has to come from Finance function
through the analytics.
• Growth is not only about acquisitions but also about exiting
from businesses which are no more attractive.
• The change process involves in Change in Strategy, Structure
of the organisation and Systems and processes.
Processes
• Digital technologies are enabling total visibility into enterprise and
consumer data.
• Digital technology will become the backbone of the organisation.
• The role of ERP will change and cloud based platforms will become the
main technology for reporting , planning , forecasting and analytics.
• There will be less need to spend precious time on creating spread sheet
models.
• The availability of online data on real time will drive the decision making
process.
• This will result in reduced complexity, increased productivity and
significant cost savings.
Finance Organisation
• By 2020, cross functional , integrated teams will deliver 80%
of traditional financial services.
• Finance staff productivity will increase by two to three times.
• Finance organisation costs will reduce by 40%.
• Finance will transform from traditional accounting function to
predictive analytics function which creates lot of value for an
enterprise.
• Cross functional , integrated business service model will
emerge.
• The focus on strategic management will increase.
• Three main competencies in finance will be Analytics,
Integrated business services , Communication and Control .
Vendor / Dealer Management
• Vendors have to be seen as an extended enterprise.
• What is happening to vendors and their business models will be
significant.
• Need to develop a strong relationship with vendors and make them part of
the total value chain of an enterprise.
• The relationship with IT vendors to be reviewed at regular intervals.
• Distribution reach provides a competitive advantage for an enterprise.
• Dealers have to be seen as an extended form of enterprise and all the best
practices of the enterprises have to be adopted at Dealer level.
• Apart from Risk assessment of the enterprise, the risks faced by Vendors
as well as Dealers to be reviewed at regular intervals.
Policies
• Finance has a overview of all the functions .
• Finance understands the impact of decisions implemented in
various functions.
• Finance in an advantageous position in developing growth
oriented policies and need to participate in development of
policies in all the functional areas.
• The cost benefit of policies have to be thoroughly analysed by
Finance and help in decision making of the CEO.
Way forward
• The new developments force corproates to review their present business
models and transform to sustainable , new , innovative business models.
Finance has to play a major role in evolving a sustainable , suitable
business model
• Finance has to play major role in introducing best Corporate governance
practices which leads to a professional management of an enterprise and
ultimately results in creation of good value.
• Focus on Compliance aspects and develop robust systems and procedures
for management of the enterprise which reduces the risk of an enterprise.
• Measure and Monitor performance , once in a month.
• Increase the engagement in Strategy making. Provide inputs into
enterprise strategy.
• Adopt the digital management Strategy
• Develop the right talent in the finance organisation.
Thank You