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Driving competitive eDge with intelligent operations

How intelligent are your operations?FDE’s Q2 London round table, produced in association with Genpact, gave attendees, many of whom were either CFOs or heads of operational finance and GBS (global business services), the chance to discuss what they think an ‘intelligent’ operating model is and the extent to which they are introducing smarter working across their business processes.

T he FDE event chairman Pascal Visée, a former Unilever chief enterprise support officer, now combining non-executive roles with advisory

work, began by defining an ‘intelligent’ operating model. In his view, it could be summarised as an operation’s ability to sense, act and learn. He then emphasises the important role of analytics.

“Increasingly, analytics capability is becoming an integral part of operations,” he says. And intelligent

operations are influenced by the latest technology developments, or the internet of things, as well as by recent developments in social media.

Co-host KP Santosh, SVP head of transformation services at Genpact, adds, “This is a central topic for today’s most successful organisations that are focused on re-imagining their operations by harnessing the value of process, technology and analytics.”

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Driving competitive eDge with intelligent operations

What is the daily reality in business? Are there businesses that embrace this approach of designing operational systems that are ‘truly intelligent’, able to learn, interpret, improve and report?

The answer, according to the finance leaders present, was “yes, but…”.

Google is perhaps the closest thing to a truly intelligent company as it now gives the individual insight and information that is relevant, based on what is done in the past and what someone is doing right now, and helps to get better outcomes for what is to be done next. However, the answer was also Amazon, because it simply reads what a consumer wants and customises a profile based on what that person buys.

The answers were revealing in that almost all those companies mentioned were firmly of the ‘new economy’ – technology, mobile and social media. Why, Visée wonders, were there no older, more established businesses mentioned as embodying the intelligent operation ethos? Opinions varied, but it was partly pinned on a lack of not just an investment in technology, but also a consistent commitment to that

investment, which will ultimately offer more choice to the consumer.

So if the new economy players have a built-in advantage brought about by the timing of their birth and the focus of their investment, how can others compete? Is aspiring to build best-in-class intelligent operations a fool’s errand, or are there ways in which long-established businesses can rid themselves of a legacy of inefficiency and upgrade themselves?

Visée himself has, since leaving Unilever, visited a range of companies across the world to look

at the challenges they face and understand how leaders – finance and otherwise – are responding. One of the critical issues was, he says, what is and is not core. Depending on the industry, brands are core or energy is core, or plants are core and the product that these are producing are also core.

“But operations is ‘only’ a supporting function,” he adds. “So operations are often neglected and, as a result, companies have underinvested for years. That is a good explanation for the fact that the general state of operations in many large companies is generally poor.”

But that can no longer continue, given the speed and rapacity of new entrants into the market that aren’t hamstrung by back-office complexity and legacy systems. Put simply, businesses must face this challenge or face being overtaken by upcoming competitors.

What are the tools that CFOs can equip themselves with to meet this challenge? Developing a better understanding of how the business manages, hosts, uses and analyses information is a good place to start. To think about resources in a company in terms of money, people, capital and information, nobody truly owns information.

Pascal Visée, event chair.

BAT’s Richard Bakker (centre) gets his point across to Trefor Rowlands from Unilever (right).

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Driving competitive eDge with intelligent operations

Finance often says ‘we own it’ but they'll have the other functions claim their part as well. So everyone and no one owns it, and, as a result, information and analytics are often not getting the leadership attention that they deserve.

Opinions vary, but one prediction made was that in five or ten years, the CIO, instead of being a mere technician, will transform into a true chief information and analytics officer, with technicians and information architects reporting in to him. But that’s not the case yet.

What is the role of global business services in all of this? Global business services (GBS) have been cited by many as the key to unlocking operational improvements while, at the same time, driving down costs. Are those who run GBS actually realising these benefits and getting their operations to a smarter level? So far, the signs are good. One thing that comes from GBS is that it ensures that operations get standardised and industrialised, so it goes from hundreds of different ways of doing things to doing everything the same way. With GBS, it's easier to move forward with one global way, so it’s a great benefit of doing things globally.

But achieving intelligent GBS systems doesn’t only involve designing new, better ways of working. It has to tackle the legacy issues.

Of course, there remains scepticism over what GBS can deliver in terms of specialised information and insight. Can a finance factory really provide that level of service?

Chris Ling from British Gas amuses delegates.

Delegates listen intently to Anglo American’s Johan Serfontein.

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Driving competitive eDge with intelligent operations

Discussions at the event then centred on the concepts of responsibility, accountability and expertise, and how they have to be central to any effort, allied to a willingness to redesign reporting lines to achieve the improvements. One example illustrated operating companies with a local CFO, where he had under his accountability a range of functions from control to audit, and risk to tax. It was then realised that it’s difficult for the CFO to be an expert in all these areas. As a solution, a concept was developed to bundle the tax units throughout the group and make them report to a single global head of tax, which would result in greater accountability and momentum in change, rather than the local CFO who has to be more generalist.

For the representatives of Genpact, it was clear that the assembled guests were committed to taking a lead on driving through improvements.

Genpact’s Santosh was clear: “There is certainly the will and the determination among the CFO community to understand how they can improve operations. Their next step is to fully understand what their businesses need, and how process, technology and analytics can enable intelligent finance operations.”

Pascal Visée is flanked by FDE’s Steve Dunekrley (left) and KP Santosh from Genpact (right).

Participants

Event ChairmanPascal Visée, non-executive and adviser

HostSteve Dunkerley, Finance Director Europe

Co-host KP Santosh, SVP, head of transformation services, Genpact

Genpact representativesn Chris Barney, Jon Davies,

Ali Macdonald and Mandeep Gill

Guestsn George Axiotis, director of risk control,

RWE npowern Richard Bakker, group financial controller,

British American Tobacco n Stephen Bolton, group financial

controller, Diageo n Robin Brown, CFO, United Biscuitsn Chris Davies, group financial controller

and treasurer, Inchcape n Gerry Hepburn, CFO O&P UK and

Petroineos refining, Ineosn Mark Lennon, head of financial control

and transformation, Whitbreadn Chris Ling, finance director, British Gas

Residential, British Gasn Clive Newman, head of business services,

Sealed Air Corpn Trefor Rowlands, finance director, global IT,

ETS, Unilevern Johan Serfontein, group head of finance

projects and systems, Anglo American

Genpact designs, transforms and runs intelligent business operations, generating impact for hundreds of clients including many of the Fortune Global 500.

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Driving competitive eDge with intelligent operations

How do you define intelligent operations?“Intelligent operations mean business processes that are as standardised and automated as possible, while ideally remaining

flexible and scalable. Being ‘easy to do business with’ is something we see as particularly important with our customers; it also affects how you can leverage the supply base. So as well as internal cost, information and time benefits from having processes well organised, there are corporate benefits if these processes interact well with the external world.”

Robin Brown, CFO, United Biscuits

“An operation that has embedded real-time analytics into transactional and operational processes, manages these processes

truly end to end and uses the timely insights gained from the analytics for rapid decision-making, driving real competitive advantage and differentiated customer satisfaction.”

Clive Newman, head of business services, Sealed Air

“Intelligent operations, for me, are the next stage of traditional business process management, but – taking it further to look at

analytics – [it is also] collaboration tools and, most importantly, mobile technology.”

Mark Lennon, head of financial control and transformation, Whitbread

“Using technology to drive improvements in a business process beyond the current business norm. From my

perspective, this goes beyond using the latest version of ‘standard’ business software (SAP, Oracle) and pushes into innovative space on using social networking and new IT solutions to create simple business processes.”

Gerry Hepburn, CFO O&P UK and Petroineos refining, Ineos

“I have never heard the phrase before, but if I had to say what I think characterises intelligent operations, it would be:

n as centralised as possible, but as local as necessary

n using technology to drive consistency, speed and control – not as an end in itself

n clarity over the output from the end of the process as much as the process in and of itself

n something that is not intrinsically linked to one technology –the process can survive technology change, for example

n something that can be replicated by a small number of reasonably intelligent people – not an army of consultants and technicians.”

Chris Davies, group financial controller and treasurer, Inchcape