Challenges and opportunities for the CFO function in a highly regulated global environment The CFO must recognise the value of data submitted to the board of directors. Often the CFO is stuck using spreadsheets as a reporting solution rather than a technique for effective communications. • Strategic Issues -how does the CFO fit in and interact with the Strategic Pillars of the organisation? • Stakeholder management - employees, shareholders, regulators, customers -both existing and potential • Change- and Vendor management - processes, people and policies

1. Challenges and opportunities
for the CFO
R.Kannan
Hinduja Group
5th
November 2015
Copenhagen Compliance

2. Trends and Challenges
• Synchronised slow down in the Economic growth of developed countries.
• Pressure on corporates to improve the performance.
• Increased regulation on governance requirements of corporates and
banks and increased cost on compliance.
• Tax planning as a strategy is becoming ineffective.
• New decision rules adopted by authorities are introducing uncertainty .
• Tax arbitrage available to make a business more competitive is
diminishing.
• compliance requirements are becoming very stringent and the knowledge
about the new developments in regulatory aspects have to be updated on
a continuous basis.
• New developments including emergence of digital technologies are
challenging the robustness of present business models
• A performance of a corporate today is more influenced by developments
in the environment

3. Strategic Pillars of an organisation
• New Investments – In the fast growing and synergetic
businesses to sustain momentum
• Stream line, restructure the existing investments to ensure
financial stability
• Increase share holder value / Enterprise value to raise more
cost effective resources.
• Human Capital Management to achieve .very high employee
productivity.
• Role of CFO in managing all the above is crucial for survival of
the enterprise.

4. Employee Management
• Has to ensure the right people are in place in the Finance function.
• Help align the HR strategy in line with Corporate strategy by evolving a suitable
compensation strategy in line with the Industry standards.
• Apart from focusing on management of portfolio of Businesses and resources,
help the CEO to focus on Portfolio of Human resources.
• Support the initiatives with a good training budget for existing employees.
• Analyse the Human resources portfolio in terms of High cost – Low productivity,
Medium cost – Medium productivity , Low cost – High productivity in a 3* 3 matrix
and align the human resources in terms of the appropriate position.
• Ensure High cost goes with high productivity, medium cost with medium
productivity and low cost with low productivity. Help CEO to achieve the balance
through a detailed analytics.

5. Share holder Management
• Assess the expectations of share holders in terms of
expected dividend policy, bonus issues and
consistent and above industry performance.
• Bring transparency in communication with the Share
holders and seek their support for higher growth .
• Constant communication with the shareholder’s to
ensure that the company become’s a share holder
brand.

6. Regulators
• Keep updated on a continuous basis the regulatory
developments.
• Put in place a mechanism to adopt the new
regulatory requirements without any delay.
• Incorporate the requirements into the reporting / IT
systems.
• Always to stick to the regulatory aspects , without
fail and give lot of importance to compliance.
• Give a separate focus on compliance on priority.

7. Customers
• Many industries have become hyper competitive today.
• Customer acquisition cost is much higher than the customer
retention cost.
• Help Marketing understand the profitability of customer
segments and customers through analytics based on the
numbers available.
• Focus on profitable customers.
• Do away with customers who are not profitable.
• Allocate budgets for new product development/ innovation.
• Allocate budgets for R&D
• Allocate budgets for Customer Analytics.

8. Organisation change
• Today many companies in the world require change in
business model and restructuring.
• This involves organisation change.
• Which is a tedious and long term process.
• The drive for change has to come from Finance function
through the analytics.
• Growth is not only about acquisitions but also about exiting
from businesses which are no more attractive.
• The change process involves in Change in Strategy, Structure
of the organisation and Systems and processes.

9. Processes
• Digital technologies are enabling total visibility into enterprise and
consumer data.
• Digital technology will become the backbone of the organisation.
• The role of ERP will change and cloud based platforms will become the
main technology for reporting , planning , forecasting and analytics.
• There will be less need to spend precious time on creating spread sheet
models.
• The availability of online data on real time will drive the decision making
process.
• This will result in reduced complexity, increased productivity and
significant cost savings.

10. Finance Organisation
• By 2020, cross functional , integrated teams will deliver 80%
of traditional financial services.
• Finance staff productivity will increase by two to three times.
• Finance organisation costs will reduce by 40%.
• Finance will transform from traditional accounting function to
predictive analytics function which creates lot of value for an
enterprise.
• Cross functional , integrated business service model will
emerge.
• The focus on strategic management will increase.
• Three main competencies in finance will be Analytics,
Integrated business services , Communication and Control .

11. Vendor / Dealer Management
• Vendors have to be seen as an extended enterprise.
• What is happening to vendors and their business models will be
significant.
• Need to develop a strong relationship with vendors and make them part
of the total value chain of an enterprise.
• The relationship with IT vendors to be reviewed at regular intervals.
• Distribution reach provides a competitive advantage for an enterprise.
• Dealers have to be seen as an extended form of enterprise and all the
best practices of the enterprises have to be adopted at Dealer level.
• Apart from Risk assessment of the enterprise, the risks faced by Vendors
as well as Dealers to be reviewed at regular intervals.

12. Policies
• Finance has a overview of all the functions .
• Finance understands the impact of decisions implemented in
various functions.
• Finance in an advantageous position in developing growth
oriented policies and need to participate in development of
policies in all the functional areas.
• The cost benefit of policies have to be thoroughly analysed by
Finance and help in decision making of the CEO.

13. Way forward
• The new developments force corproates to review their present business
models and transform to sustainable , new , innovative business models.
Finance has to play a major role in evolving a sustainable , suitable
business model
• Finance has to play major role in introducing best Corporate governance
practices which leads to a professional management of an enterprise and
ultimately results in creation of good value.
• Focus on Compliance aspects and develop robust systems and
procedures for management of the enterprise which reduces the risk of
an enterprise.
• Measure and Monitor performance , once in a month.
• Increase the engagement in Strategy making. Provide inputs into
enterprise strategy.
• Adopt the digital management Strategy
• Develop the right talent in the finance organisation.

14. Thank You