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What Are Other CFOs Thinking – In Your Part Of The World And Globally? (Part 1)

Babak Ghoreyshi

Part 1 in a series

CFOs are excited and engaged, embracing their mandate to be key strategic players, and enthusiastically looking to the future. That’s the optimistic news coming out of a recent survey of over 1,500 finance executives, conducted by CFO Publishing and sponsored by SAP, from four regions across the globe.

Top SAP finance executives share regional perspectives

In a recent series of region-by-region podcasts, The Innovative Finance Function, four experts in financial trends discussed the survey findings and their own from-the-field perspectives.  Commenting on their respective regions:

  • In North America, Thack Brown, general manager and global head of SAP’s Finance line of business
  • In Latin America, Fernando Lewis, VP of sales for SAP S/4HANA in Latin America
  • In Europe, Henner Schliebs, SAP global finance audience marketing executive
  • In Asia Pacific Japan, Richard McLean, SAP regional CFO

Moderated by Chris Schmidt of CFO Research, each podcast posed six survey-related questions   to one of the regional experts. The following summarizes the responses to the first three questions from each financial thought leader, question by question, and pulls together cross-regional trends.

Question 1: Are you surprised that CFOs are overwhelming both pleased with their jobs and expect it to get better?
 

Survey Findings:

Question 1

North America AsiaPac/Japan Europe Latin America
Job Exceeded

Expectation

84%       82% 78% 89%
 

Expect Job to Get Better

89%       86%        81% 95%

None of the four executives was surprised about CFOs’ enthusiasm for their jobs or with their expectation of a continuing upward trajectory. All indicated that CFOs are being called upon more and more to expand their scope and responsibilities.

In North America, Brown noted, “Businesses are relying more on finance in turbulent times.” In Latin America, Lewis attributed the optimism largely to changes in technology that have helped CFOs move from “reactive scorekeepers to proactive partners.”

Schliebs called CFOs the “business partners of choice,” but added that the lower percentages of enthusiasm among European CFOs could largely be attributed to the recently troubled European economy. McLean pointed to the fact that CEOs in the Asia Pacific Japan region “expected more of CFOs.”

Question 2:  Research found that a number of CFOs expect information technology to fall under the purview of the finance department. Why do you think that is?
 

Survey Findings:

Question 2

North America Asia Pac/ Japan Europe Latin America
Expect IT to come

under finance’s purview

37%       40%    29% 40%

 

All four SAP executives pointed out that both IT and finance transcend the entire organization.

Brown said that, based on this enterprise-wide point of view, “It is very natural that IT and finance form a deep partnership.” Lewis echoed the logic of the two functions being spearheaded by finance, since “transforming data and information” will impact new business models, product mix, market share, cash share, and other P&L–related initiatives.

In Europe, Schliebs remarked, “There is a mandate for the finance department to drive changes that support corporate growth and expansion, with IT being the platform for driving digital transformation.” In McLean’s view, “Business processes are becoming more IT oriented, with CFOs being asked to be increasingly involved in a holistic way.” As a result, the CFO has to make sure money in IT is well spent.

Question 3: What are the three biggest challenges facing financial professionals today?
Although specifics differed among the SAP executives, three challenges transcend geographic boundaries: dealing with increasing business complexities, handling regulatory requirements, and providing “instant insight.” Here are the top challenges, according to the exec in each region:

North America:

  • Helping organizations build needed capabilities for a successful future
  • Dealing with complexity in its many forms: regulatory, global, informational, and processes
  • Developing “instant insight” for decision making related to areas like “currency, acquisition, adapting business models, and day-to-day profitability”

Latin America:

  • Dealing with governance and compliance while, at the same time, creating new business models: “keeping the lights on and driving change.”
  • Driving change in real time – which requires new skill sets and new attitudes
  • Engaging the entire company: The finance team needs to interact with the entire corporation, understanding not just finance, but the workings of the whole organization.

Europe:

  • Supporting changes to the business model and creating the organization of the future. “How do we outpace the competition?”
  • Managing complexity: Finance is drowning in complexities of process, regulation, and information. Complexity has to go, and the CFO has to lead the way to simplify.
  • Managing performance through instant insight: There is no longer room for periodic processes. How does the finance department get out real-time info as needed?

Asia Pacific Japan:

  • Transforming the organization to keep up with present and future business needs without compromising compliance or increasing costs
  • Expanding the scope of the finance function through collaboration and timely insights
  • Finding and developing the best talent in an environment where quality human resources are limited and competitive. The finance team needs to become entrepreneurial so they can transform the business.

In the next blog, we’ll look at the final three questions discussed in the podcasts and the similarities and differences across regions.

To listen to the podcasts:

North America with Thack Brown, click here. 

Latin America podcast with Fernando Lewis, click here.

Europe podcast with Henner Schliebs, click here.

APJ podcast with Richard McLean, click here.

To learn more about how finance executives can empower themselves with the right tools and play a vital role in business innovation and value chain, download the regional research reports which offer additional information and valuable insights.

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About Babak Ghoreyshi

Babak Ghoreyshi is a Solution Manager at SAP.

The Future Of Supplier Collaboration: 9 Things CPOs Want Their Managers To Know Now

Sundar Kamak

As a sourcing or procurement manager, you may think there’s nothing new about supplier collaboration. Your chief procurement officer (CPO) most likely disagrees.
Forward-thinking CPOs acknowledge the benefit of supplier partnerships. They not only value collaboration, but require a revolution in how their buying organization conducts its business and operations. “Procurement must start looking to suppliers for inspiration and new capability, stop prescribing specifications and start tapping into the expertise of suppliers,” writes David Rae in Procurement Leaders. The CEO expects it of your CPO, and your CPO expects it of you. For sourcing managers, this can be a lot of pressure.

Here are nine things your CPO wants you to know about how supplier collaboration is changing – and why it matters to your company’s future and your own future.

1. The need for supplier collaboration in procurement is greater than ever

Over half (65%) of procurement practitioners say procurement at their company is becoming more collaborative with suppliers, according to The Future of Procurement, Making Collaboration Pay Off, by Oxford Economics. Why? Because the pace of business has increased exponentially, and businesses must be able to respond to new market demands with agility and innovation. In this climate, buyers are relying on suppliers more than ever before. And buyers aren’t collaborating with suppliers merely as providers of materials and goods, but as strategic partners that can help create products that are competitive differentiators.

Supplier collaboration itself isn’t new. What’s new is that it’s taken on a much greater urgency and importance.

2. You’re probably not realizing the full collective power of your supplier relationships

Supplier collaboration has always been a function of maintaining a delicate balance between demand and supply. For the most part, the primary focus of the supplier relationship is ensuring the right materials are available at the right time and location. However, sourcing managers with a narrow focus on delivery are missing out on one of the greatest advantages of forging collaborative supplier partnerships: an opportunity to drive synergies that are otherwise perceived as impossible within the confines of the business. The game-changer is when you drive those synergies with thousands, not hundreds of suppliers. Look at the Apple Store as a prime example of collaboration en masse. Without the apps, the iPhone is just another ordinary phone!

3. Collaboration comes in more than one flavor

Suppliers don’t just collaborate with you to provide a critical component or service. They also work with your engineers to help ensure costs are optimized from the buyer’s perspective as well as the supplier’s side. They may even take over the provisioning of an entire end-to-end solution. Or co-design with your R&D team through joint research and development. These forms of collaboration aren’t new, but they are becoming more common and more critical. And they are becoming more impactful, because once you start extending any of these collaboration models to more and more suppliers, your capabilities as a business increase by orders of magnitude. If one good supplier can enable your company to build its brand, expand its reach, and establish its position as a market leader – imagine what’s possible when you work collaboratively with hundreds or thousands of suppliers.

4. Keeping product sustainability top of mind pays off

Facing increasing demand for sustainable products and production, companies are relying on suppliers to answer this new market requirement.

As a sourcing manager, you may need to go outside your comfort zone to think about new, innovative ways to collaborate for achieving sustainability. Recently, I heard from an acquaintance who is a CPO of a leading services company. His organization is currently collaborating with one of the largest suppliers in the world to adhere to regulatory mandates and consumer demand for “lean and green” lightbulbs. Although this approach was interesting to me, what really struck me was his observation on how this co-innovation with the supplier is spawning cost and resource optimization and the delivery of competitive products. As reported by Andrew Winston in The Harvard Business Review, Target and Walmart partnered to launch the Personal Care Sustainability Summit last year. So even competitors are collaborating with each other and with their suppliers in the name of sustainability.

5. Co-marketing is a win-win

Look at your list of suppliers. Does anyone have a brand that is bigger than your company’s? Believe it or not, almost all of us do. So why not seize the opportunity to raise your and your supplier’s brand profile in the marketplace?

Take Intel, for example. The laptop you’re working on right now may very well have an “Intel inside” sticker on it. That’s co-marketing at work. Consistently ranked as one of the world’s top 100 most valuable brands by Millward Brown Optimor, this largest supplier of microprocessors is world-renowned for its technology and innovation. For many companies that buy supplies from Intel, the decision to co-market is a strategic approach to convey that the product is reliable and provides real value for their computing needs.

6. Suppliers get to choose their customers, too

Increased competition for high-performing suppliers is changing the way procurement operates, say 58% of procurement executives in the Oxford Economics study. Buyers have a responsibility to the supplier – and to their CEO – to be a customer of choice. When the economy is going well, you might be able to dictate the supplier’s goods and services – and sometimes even the service delivery model. When times get tough (and they can very quickly), suppliers will typically reevaluate your organization’s needs to see whether they can continue service in a fiscally responsible manner. To secure suppliers’ attention in favorable and challenging economic conditions, your organization should establish collaborative and mutually productive partnerships with them.

7. Suppliers can help simplify operations

Cost optimization will always be one of your performance metrics; however, that is only one small part of the entire puzzle. What will help your organization get noticed is leveraging the supplier relationship to innovate new and better ways of managing the product line and operating the business while balancing risk and cost optimization. Ask yourself: Which functions are no longer needed? Can they be outsourced to a supplier that can perform them better? What can be automated?

8. Suppliers have a better grasp of your sourcing categories than you do

Understand your category like never before so that your organization can realize the full potential of its supplier investments while delivering products that are consistent and of high quality. How? By leveraging the wisdom of your suppliers. To be blunt: they know more than you do. Tap into that knowledge to gain a solid understanding of the product, market category, suppliers’ capabilities, and shifting dynamics in the industry, If a buyer does not understand these areas deeply, no amount of collaboration will empower a supplier to help your company innovate as well as optimize costs and resources.

9. Remember that there’s something in it for you as well

All of us want to do strategic, impactful work. Sourcing managers with aspirations of becoming CPOs should move beyond writing contracts and pushing PO requests by building strategic procurement skill sets. For example, a working knowledge in analytics allows you to choose suppliers that can shape the market and help a product succeed – and can catch the eye of the senior leadership team.

Sundar Kamak is global vice president of solutions marketing at Ariba, an SAP company.

For more on supplier collaboration, read Making Collaboration Pay Off, part of a series on the Future of Procurement, by Oxford Economics.

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Sundar Kamak

About Sundar Kamak

Sundar Kamak is the Vice President of Products & Innovation at SAP Ariba. He is an accomplished Solutions Marketing and Product Management Execuive with 15 + year's broad experience in product strategy, positioning, SaaS, Freemium offering, go-to-market planning and execution.

The CFO Role In 2020

Estelle Lagorce

African American businessman looking out office window --- Image by © Mark Edward Atkinson/Blend Images/CorbisThe role of the CFO is undergoing a serious transformation, and CFOs can expect their role to continue to evolve, according to a recent CFO.com article by Deloitte COO and CFO Frank Friedman.

In the futurist article, Friedman says one of the biggest factors that will contribute to the CFO’s significant change over the next five years is technology.

Digital technology is obviously expected to drive change in high-tech companies, but Friedman says it’s industries outside of the tech sectors that are of particular interest, as they struggle to understand how to grasp and harness the digital capabilities available to them.

Working with high tech in low-tech industries

Five years from now, a finance team may be defined by how well it uses technology and innovative business tools, regardless of what industry it’s in. The article outlines some examples of ways that digital technology will increasingly be used by CFOs in “non-tech” sectors:

  • Predictive analytics: CFOs in manufacturing companies can forecast results and produce revenue predictions based on customer-experience profiles and current demand, instead of comparing to previous years as most companies still do today.
  • Social media and crowdsourcing: You may not think CFOs spend a lot of time on social media or crowdsourcing sites, but these methods can actually expedite finance processes, such as month-end responsibilities of the finance organization.
  • Big Data: CFOs already have a lot of data at their fingertips, but in 2020 they will have even more. CFOs in both tech and non-tech sectors who understand how to use that data to make valuable, informed decisions, can strategically guide their company and industry in a more digitally oriented world.

To do this, Friedman says CFOs can lead the way by addressing some critical areas:

  1. Know the issues: Gather the key questions that leaders expect Big Data analytics to answer.
  1. Make data easily accessible: Collect data that is manageable and easy to access.
  1. Broaden skills: The finance team needs people with the skills to understand and strategically interpret the data available to them.

The tech-savvy CFO

The role of today’s CFO has already expanded to include strategic corporate growth advice as well as managing the bottom line. In 2020, Friedman says expectations placed on the CFO are presumed to be even greater, and CFOs will likely need a much more diverse, multidisciplinary skill set to meet those demands.

The article details several traits and skills that CFOs will need in order to keep up with the pace of digital change in their role.

  1. Digital knowledge: CFOs must be tech-savvy in order to capitalize on technical innovations that will benefit their company and their industry as a whole.
  1. Data-driven execution: CFOs will need the ability to execute company strategy and operations decisions based on data-driven insights.
  1. Regulatory compliance: Regulations continue to be more stringent globally, so CFOs will need to be proficient at working closely with regulators and compliance systems.
  1. Risk management: With the growing global economy comes increased cyber and geopolitical risks worldwide. The CFOs of 2020, especially those in large multinational organizations, will need to have the expertise to monitor and manage risk in areas that may be unforeseen today.

The future CFO’s well-rounded resume

By 2020, the CFO role will require much more than just an accounting background. According to Deloitte’s Frank Friedman, “CFOs may need to bring a much more multidisciplinary skill set to the job as well as broader career experiences, from working overseas to holding positions in sales and marketing, and even running a business unit.”

So if you’re a current or aspiring CFO, you have five years to round out your resume with the necessary skills to be ready for the digitally driven role of the CFO in 2020.

The above information is based on the CFO.com article What Will the CFO Role Look Like In 2020?” by Deloitte COO & CFO, Frank Friedman – Copyright © 2015 CFO.com.

Want to learn more about best practices for transforming your finance organization? View the SAP/Deloitte Webinar, “Reshaping the Finance Function”.

For an in-depth look at digital technology’s role in business transformation, download the SAP eBook, The Digital Economy: Reinventing the Business World.

To learn more about the business and technology factors driving digital disruption, download the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

To read more CFO insights from a tech industry perspective, read the Wall Street Journal article with SAP CFO Luka Mucic: Driving Insight with In-memory Technology.

Discover 7 Questions CFOs Should Ask Themselves About Cyber Security.

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Estelle Lagorce

About Estelle Lagorce

Estelle Lagorce is the Director, Global Partner Marketing, at SAP. She leads the global planning, successful implementation and business impact of integrated marketing programs with top global Strategic Partner across priority regions and countries (demand generation, thought leadership).

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

SAP_Disruption_QA_images2400x1600_3

qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

Fawn Fitter is a freelance writer specializing in business and technology. 

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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Internet Of Things: Where Is All The Data Going?

Tim Clark

The Internet of Things (IoT) is no longer happening in a galaxy far, far away. It’s happening right here, right now. It may be in your pocket, on your wrist, in your clothes – heck, it might even be helping you drive your car.

In fact, IoT is moving so fast, we’re actually on the third wave, according to a panel of experts who weighed in on the topic during a recent episode of Internet of Things with Game-Changers, presented by SAP.

However, a nagging questions arises when it comes to this third IoT wave: What’s going to happen to all the data that’s being collected?

Coping with IoT reality

Gray Scott, futurist and founder/CEO of seriouswonder.com believes serious questions remain around IoT data collection because technology is moving faster than we can cope with.

“The main thing I’m concerned with right now, is getting people to understand that the Internet of Things is already in their lives,” said Scott. “So if you look around your house, either your television, refrigerator, or some of your appliances – they are probably already connected.”

And because IoT is now permeating our everyday lives, it must provide tangible results to consumers and businesses, according to JR Fuller of HP Enterprises.

“It can’t just take our data and subject us to additional advertising, which is one of the ways that it pays for itself,” said Fuller. “It has to provide something to us. It has to provide convenience.”

Evangelizing IoT convenience

The conveniences of IoT, such as a refrigerator that breaks down and automatically alerts the manufacturer to send a repairman, needs to be evangelized during this critical time, said Ira Berk, Vice President of Digital Transformation Solutions, SAP. Making proper use of the massive amounts of data IoT generates also plays a critical role in evangelizing its benefits.

“Think about what happens when you start to mix and match different sources of information,” said Berk. “You start to understand the data behind the world around you. In your house, car, environment, earth, public transportation, smart cities and factories. What questions can you ask that you wouldn’t even imagine being able to ask before, because you can start to synthesize the information?”

Gray Scott believes synthesizing different data sources “is a continuum of everything,” a great example being traffic in urban areas. Apps like Waze and Google Maps help drivers circumvent traffic.

“It’s a physical thing that can grab a hold of data and literally rearrange our lives by changing the direction you take your car in,” said Scott. “This continuum is going to keep building on itself as we move forward into the future.”

Living in a post-privacy world

While the general populace may not want to admit it, we are living in a post-privacy world. Anything put online is made public and everything that can be hacked, will. The question is what do we do with all of that data? Can we rise to a higher state of humanity and not just use data for advertising purposes, but to make our lives more convenient?

“I think we don’t mind giving up some of our personal information if it benefits us,” said JR Fuller. “It makes for a very interesting time, especially companies that can add value to bridge the gap and help enterprises achieve the benefit that we know are possible with IoT.”

Internet of Things with Game-Changers, presented by SAP, is hosted by Bonnie D. Graham. Listen to this broadcast in its entirety here.

This story originally appeared on SAP Business Trends.

Top image: Shutterstock

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About Tim Clark

Tim Clark is the Head of Brand Journalism at SAP. He is responsible for evangelizing and implementing writing best practices that generate results across blog channels, integrated marketing plans and native advertising efforts.