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"CFO Needs To Optimize Capital Allocation To Maximize Returns From Business"
To get a better understanding of how companies are planning to acclimatize to these new conditions, BW Businessworld organized a roundtable discussion with CFOs from some of India’s most reputed companies.
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The ongoing COVID-19 pandemic has changed how the market will function in all facets for the foreseeable future. Some see it with a slippery slope yet some view it with a potential to emerge as a game changer. Perhaps no sector faces a more perplexing road ahead than the private sector. With everyone adapting to what is being described as the “new normal”, the future presents an uncertain road for businesses and companies as we adjust to the pandemic and attempt to resume moving forward.
To get a better understanding of how companies are planning to acclimatize to these new conditions, BW Businessworld organized a roundtable discussion with CFOs from some of India’s most reputed companies. The discussion posed some pertinent questions for the panellists regarding the road ahead, and their answers were enlightening:
V. Ramakrishnan, CFO, Tata Consultancy Services, emphasized agility and adaptability as the key ingredients for businesses in the post-covid world. According to him, “Resilience is really bouncing back from where you are. And it is a shade of ‘have you been able to bounce back’ with the same level of vigour as what you were before the pandemic. What goes along with resilience is adaptability. I can safely say that from an industry point of view, the key question on resilience was - were you able to provide services to your customers in the same manner as before when the lockdown started.” He further mentioned how the industry is accepting and adapting to the mode of ‘working remotely’ and how that might change to a hybrid model in the future. Besides that, he also mentioned how positive customer feedback is a great indicator of resilient operations in these times.
Mangesh Shirodkar, CFO, SRL Diagnostics whose organization has been working round-the-clock during the pandemic shared that keeping a keen eye on customer needs and requirements is very crucial to business survival in the current scenario. “We thought what needs to be done now since there is change in business dynamics. The type of business tracking we used to do before the pandemic and after the pandemic has changed substantially. We thought of how to re-calibrate our business in this pandemic. We integrated our lab IT system with logistics end-to-end.” Gracing the discussion with his rich market experience, he shed more light on changed customer behaviour. “People don’t want to walk-in to your labs and collection centres anymore. Home collection is the new mantra now. After 6-7 months this will be a normal course of everyone’s life.”
Mankiran Chowhan, Managing Director, India, SAP Concur gave some valuable insights on the business transformation steps we need to undertake to discover hidden areas of spend. According to her, “There is tremendous pressure on companies to emerge stronger and CFOs are therefore anticipating major redesign initiatives in the next 12 months. Most common reasons are reduction in costs and process inefficiencies. Most organisations today are still using fragmented applications to manage diﬀerent types of spending and that results in lack of visibility and control across ﬁnance, procurement, and supply chain. One of the things we firmly believe in is that it’s become critical to automate repeatable, transactional and enterprise wide activities to enable you to arrive at a single version of truth. Companies must deploy intelligent technologies to integrate varied spend management applications in order to get increased visibility of every spend across every category to make informed decisions.
Taking the discussion further, she added, “Unless we have an integrated view of business, we cannot allocate budgets to priority areas to ensure that adequate funds have been set aside for achieving corporate goals and for meeting budget planning and compliance requirements. CFOs are taking swift action in becoming enablers of technology and are focusing on two things – strategic financial planning for 2020 and beyond and in developing skills needed for the future of finance.”
Koushik Chatterjee, Executive Director and CFO, Tata Steel Limited critically explained how crucial the role of a Chief Financial Officer has become in businesses today. Discussing on how he is gearing up for the rest of 2020, on account of his personal experience, keeping in mind the different business functions. “There is no Playbook available in general because nobody had sense of this kind of change and yet one has to continue to ensure that the effectiveness and efficiency of the organisation is realigned to meet objectives. It is time for cutting out all gaps and working collaboratively across functions. It is important that every member of the organisation is alert on the objectives of the organisation. It is important for all and everyone in the organisation to orient themselves to collaborate on the same platform. This is a good experience and we should not let it go.” Adding more depth to how Tata Steel is keeping up with the ‘New Normal’, he said – “We have curated a digital platform where we use software to look at real time data. A lot of analytics goes behind it, and we then take decisions on a collaborative basis. I think it's important to be driven by objectives and that collaboration should be understood by everybody. There is a time when leadership maturity is reflected on decisions taken.”
According to, Vijay AM, Head Finance, Capillary Technologies, the role of finance has become more important and pivotal than it was in the pre-covid era. Realigning business objectives with the team and making all business decisions co-linear with the organisational objectives is a key to survive in these unprecedented times. “Finance in these times is not about saying no to everything. In our organisation cost and budget sits at business leaders level as they know what to deliver and how to function within that. Finance provides them with visibility into their spending, inflows, and helps them make the right decisions. We have adopted the OKR methodology over a couple of years. We have fine-tuned it and designed it for our own business. The leadership team sits together after every quarter and decide the objectives - how to work and what help we need from other functions because no function can run in a silo. OKRs ensure that there are multiple teams working closely on each objective.”
Deepal Shah, CFO, Allcargo Logistics shared his thoughts on the compliance perspective of the ‘Work From Home’ mode by bringing up the need for businesses to digitalize. “Companies that were resisting the move to go digital have been compelled to do so now. One of the biggest challenges we faced was to ensure that those who did not have the resources in terms of laptops, internet connections, etc. were enabled to work from home just as effectively by shifting their desktops and still maintaining zero compromise on data security. Our employees continue to operate from home with a similar set up and equipment that they have been using earlier. We work with a very secure platform, we have a VPN and everything is fairly well-controlled from a safety and customer-centricity point of view. We have been able to strike the right balance between implementing appropriate digital tools and applications to maintain controls while giving managers the freedom and flexibility to optimise the efficiency and effectiveness of their respective teams and performance.”
Rajeev Gupta, CFO, L & T Technology Services Ltd reflected on the required visibility of hidden costs. He stated that a CFO needs to become an enabler. “I call it back to basics. A CFO needs to use analytics to identify areas and set benchmarks for cost optimization at business unit and corporate function level, the accountability should lie with every business unit and function leader to achieve those targets. The current times also require looking at discretionary spend and ascertaining the value derived from such spend. Apart from looking at hidden costs, CFO needs to optimize capital allocation to maximize returns from business.” This reflects on how the role of a CFO is vested deeply in understanding the business functions, and not just limited to finance.
The road ahead is new for companies. They may not see overnight success but with a willingness to grow, change and adapt, businesses will be able to conquer this current scenario, and insulate themselves even better for the upcoming new normal, so that they can not only survive, but truly thrive.