Digital, digital everywhere, but what about the finance function? It took a decade for accountants to make the seismic shift from Lotus 1-2-3 to MS Excel… so how much focus is our favorite business function putting on today’s advances in analytics tools, interactive and collaborative solutions, mobility and automation?
Can finance executives really embrace digital to break away from some of the legacy mindsets, processes and technologies that have plagued the function for decades?
Not too many people have been driving the digital agenda as aggressively with the CFO’s office than Genpact’s Shantanu Ghosh, with his firm’s own methodology “lean digital,” so we thought it high-time we caught up with him to get his viewpoint on the impact of digital o the finance function.
Phil Fersht, CEO and Industry Analyst, HfS: Shantanu, it’s been a couple of years since we’ve had you on here. Can you tell us a bit about what you’re up to in Genpact today?
Shantanu Ghosh, Senior VP & Business Leader – CFO Services and Consulting, Genpact: Actually, my remit remains pretty similar to what it was two years back. I lead the financial accounting, sourcing and procurement service lines, globally. I also lead consulting across Genpact.
But I’ll tell you, the complexities, the scale and the type of solutions involved in all three have changed pretty dramatically in the last two to three years. So it feels like I’m doing a new job every day, even though broadly the remit remains the same.
Phil: I’ve seen Genpact has been on a real tear, particularly over the last 12 to 18 months. I’ve seen a real uptick, especially in Europe, where you’re winning a lot of deals. What’s going on? What are you doing differently?
Shantanu: I think there are four things at play, Phil. One, I think it’s a result of there or four years of sustained investment in our domain capability and our front-end capability. Obviously, in this business it takes a little bit of time for that to result in winnings in the marketplace, because you have to start engaging with clients at a different level. Then you get into a virtuous cycle, because as you get engaged with more and more clients they see the differentiated value that you’re bringing to the table—and the advisors see that as well. You get involved in more dialog and, as a result, you get in on bigger deals.
Let me share a data point. Our big deals—deals that are worth at least $50,000,000 in total contract value—have gone up five to seven times over the last four or five years. Obviously, the growth, other than GE has been pretty robust.
We have really focused our attention on a few verticals and a subset of clients. So, in terms of mining our existing clients, we have focused on a few and we have gone deep with them. We’re spending far more quality time with them. And, therefore, we’ve been far more proactive in terms of solutions and business opportunities, than just reacting to demand that is coming out from the market.
The last thing is that we’re combining much more technology, analytics, traditional strengths of Lean and Six Sigma into our process solutions. That’s creating a differentiated view in the market, which we’re branding as Lean Digital. Lean Digital wasn’t done over night. The branding is more recent but we have been on this journey for the last three to four years.
Phil: What would you say is the secret sauce that you can share that differentiates Genpact? What do you think makes your culture unique compared to maybe some of your competitors in the market?
Shantanu: That’s an interesting question, Phil. I’m not so sure that it’s a really secret sauce. I think it boils down to three fundamental factors. One is the real focused investment and persistence in building deep domain expertise, in a few chosen verticals and a few chosen service lines. We’ve been extremely insistent and persistent on that for the last three to four years—to the exclusion of everything else. We go very deep, and create differentiated capabilities.
The second thing is the bundling, which we talked about. Our focus on leveraging new digital technologies and what you can do to leverage data and analytics, has gone up 10 times over the last three to four years. That’s obviously resonating very well with clients, because the value equation has changed from just cost to many things outside cost. Third, we come back to the cultural point that you’re making. There are some pieces that have been consistent for the last 15 years, which is the maniacal focus on customers. Our Net Promoter scores have continued to go up. Last year we ended at 67%, which is our highest level ever. So that’s been consistent.
I think what has changed in the culture is the level of experimentation that we’re able to now do, both in terms of solutions as well as commercial constructs—because of the confidence that we have built up in our vertical and service mind domain expertise, and in our capability to try really large fundamentally, transformational programs for our clients. I think it’s about our interest in experimentation, our co-innovation mindset with customers. We go out and put a stake in the ground and continuously push the boundary and commercial constructs in terms of getting paid for results and performance, rather than just for effort. I think that’s been a big change over the last few years. If you look at us five years back and today, I think you’ll see a pretty significant change.
Phil: So we did a recent study that looked at the impact of digital on finance. Were you surprised when we saw that three quarters of the finance professionals fundamentally view digital as changing the way the function operates? Where do you see digital impacting finance in the medium term?
Shantanu: No, Phil, I wasn’t surprised at all. Actually, I am surprised that more people didn’t say that. I would have almost thought 100% would say the same thing, but I’ll give you two different dimensions to this. I think most people think of digital as having a very, very significant impact in cost and cycle time. There are lots of stories on what’s happening on the financial services world with fintech, what’s happening with robotic automation and stuff like that.
I think what is less appreciated today is the level of flexibility or agility, that this is bringing to operating models in finance, one. Two, with a greater level of data leveraging, analytics, predictive modeling, and forecasting means you’re really becoming a better business partner. I think that’s under appreciated and possibly not viewed as a fundamental shift. So no, I’m not surprised. But I think if you dig down, you will find all the dimensions are possibly still to be discovered in their entirety.
Phil: Shantanu, I’m really starting to see a growing, stronger link between automation and digital in the back/middle office. You can’t really develop a strong digital capability without a smart, actionable roadmap. I’d almost go as far as saying we’ll even cease using this term RPA soon because it’s just becoming a core component of digitizing the business. So do you agree with this viewpoint? Are you expecting this robo hype to continue? Or do you think it’s just going to become mainstream in the offerings very quickly?
Shantanu: Two different questions, Phil, so I’ll answer this separately. One is, I 100% agree with your world view. In fact, our entire positioning of our solution structure and the whole lean digital platform that we have taken, is fundamentally based on the premise that a lot of digital disruption and innovation so far has happened in the front office—changing the way customers interact in a B2B environment or a B2C environment. However, one of the biggest learnings from that innovation in the front office is that after the initially hype it causes severe customer dissatisfaction.
And it causes severe business problems if the middle and the back office does not get streamlined, does not get digitized. So we have focused exclusively on making that middle office and back office transformation become real for our customers, ensuring that the front-end transformation that many of them are on is something that they can deliver and they can actually delight the customer. That’s my answer to the first point, which is in 100% agreement with your view.
We’re seeing the customers are getting into that mindset now, they’ve understood that linkage. While many of them started from the front end, now the focus is coming back to the middle and the back end. Obviously, the evolution of the technology and the platforms that are happening, are allowing them to get over the historical impediments of cost and inflexible systems.
To come to your second question on the robotic automation piece: I think the hype will morph from the concept of robo today, which is primarily mimicking of a human task, to the application of bundled digital technologies, which is robotics, plus machine learning, plus cognitive algorithms, plus visualization and stuff like that, that transforms a process very fundamentally. When robotics came in initially, it was really just making an inefficient more efficient. But it’s not a fundamental transformation, but it takes out human beings and just mimics what the human being was doing, even if the process was inefficient.
What we’re seeing is increasing application of purpose-built solutions across the whole value chain of a commercial operation, which has various pieces of bundled digital technology, to really great differentiation. Our entire focus on the digital element and the process solutions that we’re developing, is about bundling rather than focusing exclusively on robotics, which would cater to just the hype. .
Phil: I think that’s a very good point. I’ve had some interesting conversations about the term “digital labor”—so getting away from the term “robotics” because it’s a little toxic. But I take the attitude if you’ve taken a manual process and digitized it using robotics software, it’s no longer labor, it’s a digital enabler. So that’s one of the reasons why I think we’re going to start to get away from that term. It’s like outsourcing was the act of moving services to a third party, RPA is the process of moving certain processes into technology.
I have a final question, Shantanu, about the impact on talent, and this has come out hugely in some of our recent client group sessions. I think some clients are scared today, they’re worried about what’s going on and are they still relevant. How can they stay ahead of the curve and be successful? How is the workplace changing finance professionals? What’s your advice here in terms of how to handle a lot of this disruption, to many of your peers and colleagues and clients?
Shantanu: Phil, this is possibly the most common question I face when I interact with senior finance professionals across our clients and potential clients. So I’m exactly on the same boat as you are. So let me give you some reflections, but I’m not sure it qualifies as advice. I think if you look at traditional finance skill sets, there was a lot of emphasis on the technical aspect of finance, then grounding your experience in the operational delivery of finance. So the traditional management training to senior leadership model was you go through practice, you go through sales offices, you go through profit centers, you go through corporate offices and you learn how operational finance happened in each of those places.
Then you did it in treasury, you did it in this company, you became a CFO–for the people who made it, that’s really how you went through the pyramid. With what is happening in the fundamental finance operating mode of transformation and digitization of operations, three things are becoming more important. The first one is analytical literacy, and that’s different from visual literacy. So how do you use data to be a true business partner? Phil you and I both know, almost every research study done with finance professionals has always shown serious dissatisfaction on the potential to be a business partner and the reality.
I think that has fundamentally changed, given the sheer amount of data that gets spewed out of the systems—and what you can do with that data in terms of modeling, forecasting and stuff like that. So that’s one. Two, with that data comes the whole concept of risk management. Risk management is going from the static view of controlled definitions and one-time control set up, and then auditing to really far more dynamic risk management—and also multivariate risk management across the globe.
The third is really the mindset shifting from cost-to-serve and managing cost-to-serve and cycle time, to creating really agile and flexible operating models—not just in finance, but in the core supply chain and being a partner to that.
So if you think of those dimensions, traditional finance does not cater to that. So it is a very live issue and I don’t think I have a ready made answer. But as we go through a lot of this, the sources of the talent will possibly have to change. So the curriculum will have to change. So I think there are more questions out there than answers.
Phil: That’s has been a very rich discussion, Shantanu, and I look forward to sharing this with our audience and the network on the blog very soon. We really appreciate your time and the thought that you’ve put into this.
Shantanu: Thank you, Phil. It’s been my pleasure.
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