Interview with Timo Ihamuotila - Group CFO ABB

Deloitte: What would you like to achieve as CFO during coming 12 months?

Timo Ihamuotila: Of course, first and foremost continued good performance for ABB. But there are a couple of things I would like to men-tion on a more specific level. First is regarding our ABB-Way operating model. The ABB-Way operating model defines how ABB operates in a decentralized set up – in line with principles of accountability, transparency and speed. During this year we will work further on creating an “ABB-Way booklet”. A clear and fun communications material, so that every employee at ABB understands HOW ABB operates to drive high performance with high integrity. With this we are really cementing ABB’s high performance, high integrity culture for the future.

The second important topic for me for the coming 12 months is to finalize our ABB Finance Transformation Program. With this program we harmonize and where necessary redefine all mandatory financial data in the company. It is a pro-gram for roughly three years from definitions to full global implementation that will come to an end in the second half of 2024. When we are done, all ABB financial data will be in the cloud, and we will be able to slice it in any dimension to analyze our business performance. We will also get to an almost real time closing of the books.

In addition, we would like to build on the success of ABB’s first Integrated Report that we published earlier last year where we naturally looked not just at our financial but also our sustainability performance. With our value creation model at the core, we want to continuously improve the way we report on the progress against our ambitions and demonstrate how we create value holistically for our stakeholders in the short-, medium- and long-term. With all of this, there are in-deed very exciting times ahead of us!

Deloitte: How do you assess potential from generative AI in the finance function, not least from perspective of shortage of labor?

Timo Ihamuotila: There are many tools to improve efficiency and effectiveness in the finance function. I don’t think we at ABB finance should at first instance look to generative AI regarding this. I mentioned the finance transformation program earlier. With that we will have a fully aligned consistent data model as the basis of our financial analysis and planning. That is the first priority for us for now. I consider it similar to having a very solid foundation on a house, before building some fancy interior. The transformation of our finance function will also allow us to harness efficiencies by process harmonization helping us on the labor shortage front.

For big companies generative AI has also some intellectual property and other issues which need to be looked into before implementing, so I think for us at ABB finance the use of generative AI is bit further out. On the other hand, and looking beyond our finance function, generative AI is becoming an increasingly important topic when it comes to the work we do for our electrification and automation customers. AI is embedded in ABB’s business and across the Group we currently have more than 100 projects in this area.

Deloitte: How will the role of CFO change in the coming years?

Timo Ihamuotila: My experience is that the CFO role is becoming more forward looking and strategic. It is very important that the CEO and CFO work well together, and that the CFO can provide the right tools as the basis of decision making in for example capital allocation and portfolio management. I also think the CFO’s role will increasingly be about making sure that a company operates in a systematic way to drive long term value creation. This means focusing more on an agile long-term planning process, supporting implementation of company strategy. Of course, traditional parts of the role in reporting accuracy and assuring financing at all times will continue to be important as well.

CFOs need to also become more deliberate on what kind of competencies are needed in the future. With good quality automated data available at all times, the focus will move more from reporting actuals to analytics. This will require more FPA (financial planning and analysis) competencies, and even data scientists in finance. To give a couple of examples. I think forecast accuracy will improve in the future when forecasting can be done based on data modelling and some top-down adjustments, rather than as a bottom up process involving a lot of people. This will improve both effectiveness as well as efficiency. Another area to mention can be internal audit, which will move more from making separate audits to-wards continuous data monitoring – and spotting anomalies from data, again improving both effectiveness as well as efficiency.

Deloitte: How do you think the interest rates will develop in the coming 12 months, and impact financing conditions for companies?

Timo Ihamuotila: We have seen a pause in interest rate increases in Euro and CHF and are probably close to peak, and rates may likely start to gradually moderate from here. And in the US we have also witnessed a change in tone although it remains to be seen what happens, as it is such a dynamic economy. Looking at it more broadly, zero interest rates forever was not a sound long term scenario, so I don’t think we go back there either any time soon. Overall financing conditions for large compa-nies continue to be good, there is good liquidity on the market, and I don’t see any issues in availability of financing for companies with good grade credit ratings. Asset prices have also moderated a bit with higher interest rates, which could give companies with solid balances opportunities for better risk return when thinking about inorganic growth.