It’s true. The global economy is still not out of the woods. The major growth engines of the world - US, Japan and Europe are still amidst a liquidity crunch. The US has just projected a fiscal deficit of USD 9 trillion over the next decade (sounds quite scary). World economies have pumped in billions of dollars (cheap money) to avoid a financial meltdown and a great depression 2.0. Whether we like it or not, this is the backdrop in which CFOs have to operate in 2010 (and beyond). There seems to be no running away from it!
Now let me step into the shoes of one of the CFOs in South East Asia with whom we share a special rapport. He is directly in-charge of the books (P&L) of a business that has a run rate of close to USD 6 billion dollars with operations across 60 countries. His business spans across advanced nations such as U.S, China, U.K, Germany, Singapore, and also that of developing countries such as Indonesia, India, Thailand and Philippines. He also has business operations in third world countries such as Nigeria and Ivory Coast. This directly implies that he has to manage multiple finance organizations operating at various levels of maturity (capabilities, processes and cultures). In any given month, he needs to have both top down and lateral view of how his business performance across various business units and market segments. Based on this insight, he has to provide the right information to his CEO so that crucial decisions which can be made. This in turn can either make or break the business. How do you like to take his chair for a day?
But then our CFO is a real hero. He (along with his management team) has managed to grow the business at a scorching pace of 25% (CAGR) and has consistently been able to maintain profits at 39% levels for the past 4 years. In doing so, he has learnt the art of growing a profitable global business in such volatile business environment. This makes him a ‘resilient CFO’.
Now let’s dissect what we mean by the term ‘resilient’ from a CFO perspective. A resilient CFO does the following:
a) Provides a 360 degree of view of business across business units and market segments, at the right time, to his CEO.
b) Provides an effective and user friendly platform to his finance organizations (spread across multiple countries) to consolidate information. This platform should cater to teams with varying levels of maturity (process and capability).
c) Puts the right checks and balances in the system (and process) to mitigate risks
d) Meets statutory norms and compliances that are set forth by international accounting bodies
e) Does this month after month without fail
So how did our ‘Mr. Resilient CFO’ do it?
a) First, he put together a financial performance management strategy considering how he would like to consolidate and view his businesses. He also defined what were those 5 key metrics he would like to track (in a dashboard) to measure his business performance.
b) He defined how he will use SAP BPC, as the enabling platform, to cater to the needs of process centric divisions (in U.S, U.K, Germany) as well as less mature divisions (eg: Nigeria and Ivory Coast). He intelligently used the off-line features of SAP BPC to get this done.
c) He prudently balanced deploying security controls by not compromising on efficiency of the process.
So what did he achieve by doing this?
a) He now has real time access (let’s say near real time) to consolidated information from his operations in 60 countries (multiple business divisions). This helps him to take quick decisions and hedge his bets.
b) He has an intelligent and user friendly platform that allows him to get information from his businesses across the world without disrupting any of the underlying transactional system.
c) He is able to provide the right information to his management at the right time.
This makes him a smart CFO in these challenging times. Don’t we want to call him Mr. Resilient?
