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How chief financial officers perceive digital disruption

(From left) Ramesh Swaminathan, CFO and whole-time director, Lupin; Neeraj Athalye, VP (innovation and digital business), SAP India; Ramesh Subramanyam, CFO, Tata Power Co.; Leslie D’Monte, national technology editor, Mint; Bharat Moossaddee, CFO, Mahindra and Mahindra; Rajesh Prabhu, CFO, DBS Bank; Milan Sheth, partner (advisory services) EY India, at the Mint Digitalist Forum 2018 in Mumbai.

Mumbai: How do chief financial officers (CFOs) perceive digital disruption and how are they doing their bit in preparing their organizations to harness the power of digital? The CFO panel at the Mint Digitalist Forum 2018 by SAP, moderated by Leslie D’Monte, national technology editor at Mint, discussed such issues. The panellists were Ramesh Swaminathan, CFO and whole-time director, Lupin Ltd; Bharat Moossaddee, CFO, Mahindra and Mahindra Ltd; Ramesh Subramanyam, CFO, Tata Power Co. Ltd; Rajesh Prabhu, CFO, DBS Bank Ltd; Milan Sheth, partner (advisory services), EY India; and Neeraj Athalye, vice president (innovation and digital business), SAP India. Edited excerpts:

Swaminathan: Digital is certainly disrupting different industries. In the pharma industry, however, the pace is quite slow as it is a highly-regulated industry. We break the digital revolution in three parts: one relates to efficiencies within the company; the second is about enhancing customer experience; and the third part is about disrupting the whole business paradigm. While we have adopted measures for the first two parts, the third is still evolving as far as India is concerned.

In manufacturing, for instance, we have adopted data acquisition systems embedded in the machinery that is used in the factories. This machine-level data helps us in production efficiencies by enabling the understanding of downtime, capacity and the like. In terms of disruptive tech, we are looking at sensors such as those provided by a company called Proteus. These sensors can be ingested along with the medicines and a mobile app can be used to track the absorption rate of the tablets, the body’s metabolism, and other parameters.

Moossaddee: When we started our digital journey a year or so back, there was a lot of apprehension and, at the same time, a lot of excitement. But our journey now includes a lot of initiatives such as the AI (artificial intelligence) suite of technologies, blockchain and digital platforms where the auto industry itself is getting disrupted. So, to disrupt ourselves, we are doing several things—SmartShift, for one, which is a digital platform that is like an Uber of the goods industry.

We have created a similar setup in the tractor industry. M2All.com is another platform created for digitally selling all the products in the Mahindra network. Another major initiative for us is the use of big data for predictive analytics—prescriptive analytics now being a hygiene factor.

Right from pricing of new product launches to predicting the future pricing and future trends in commodities—we think we are doing things that are firsts in India and maybe globally as well.

Subramanyam:At Tata Power, we are looking at digitalization in four pieces: the customer end, the grid end, asset management and the overall management within the company. Because of the advent of solar (power), there is a whole lot of change that is going to happen in the industry—and we believe that the future of the power industry is very difficult to predict because it is evolving very fast.

A lot of technology (usage) is in the works. The customer and the grid will make a lot of difference to this industry. The key questions are: Who generates power? Who supplies it? Who owns the customer? Who runs the grid? How consumer choices would be controlled? And what kind of access to information will you have because we will have access to millions of consumers and their habits?

Prabhu:Whenever a business case for technology is presented, we try to put it into one of these three buckets: employee journey, the customer side, or something that can help us contain risk. On the employee front, we see whether the proposal can help us reduce TAT (turnaround time) and operational risk. And every time we save on costs, we can reduce pricing to make it attractive to customers.

On the customer side, we see whether any proposal can help us acquire more customers or in cross-selling or up-selling to them. In the third bucket, which is about risk, we look at whether the proposal helps us in better quality data—which helps us underwrite better—or gives us information on clients that can help in containing risk. From a digital perspective, we also see if it can help us reduce cyber threats and so lower cyber risk.

Athalye:Digital is no longer “good to have” but a “must have”. At SAP, we call this whole digital movement as the trend of an intelligent enterprise. For the past 30 years, we have spent a lot of time, money and effort—along with our customers—in automating a lot of processes. What we see as we get deeper and deeper into digital is that after the “automate” part, the next step in the journey is “assist”.

So, for instance, if I am doing sourcing and have automated the process of sourcing, is there something that can assist the millennial guy who I have hired to source better? Some of the things you heard around machine learning and artificial intelligence are essentially a flavour of “assist”.

And the third “A” of the digital journey is in the “act” part, and that is the toughest one. Once I have automated the processes and have the ability to look beyond business data to assist users, how can I act quickly? Or, while I am acting, how much can the AI capability help me do things better?

Sheth:Almost all global companies run their finance function in India and there is a lot of innovation possible in the CFO domain—working capital prediction, for instance. If you have a shipment going from Rotterdam to Chennai and it happens every month, you can actually develop a machine learning algorithm which can create the entire shipping document even before the cargo lands in Chennai. That will allow you to raise the invoices quickly and cut down on your working capital.

Another example is that of sales and operational planning and financial planning, and correlation between the two. Leading-edge work is happening in India. CFOs essentially do three things: efficiency, effectiveness and risk management or capital allocation depending on the industry. There is a great opportunity to use technology to ease financial work at the end of the month or quarter. Tech can indeed free up their time from mundane reconciliation work and allow them to be better business partners.