A clear digital strategy and executives leading the way have made the finance function a front-runner when it comes to tapping into digital opportunities.
Peter Bang is an Aarhus University and Cranfield University graduate. He came to VELUX in 1994, and in 2002 he took seat as CFO.
You are the CFO of a large manufacturing company operating all other the world. If you look back over the past five years, what has changed the most?
“We have really globalised our finance function. We have gone from having around 50 companies with local finance functions to having a global finance function that has certain tasks handled by our Business Services partly in Poland and partly in India, certain tasks handled by outsourcing compliance and other services, and then of course our controllers who work locally with business optimisation of manufacturing, sales, etc. This has led to a finance function that utilises both global specialist capabilities and strong local knowledge of the business where it is operated. All in all, a much more agile and change-ready finance function.”
If we zoom in on the individual finance function – what has changed then?
”There are far greater demands on us to adapt if the market suddenly changes. We need to have a base and a stability that allow us to respond quickly and flexibly to unexpected turns. It’s really a question of agility, in the sense of combining speed and stability. You need to be flexible and fast, yet if everything is in play all the time, you lose your bearings.”
How does this affect the CFO role?
”Today, I play a more integral role in the business, in manufacturing and not least in IT. I believe that this goes for all CFOs. This means that completely different qualities are also needed now than in the 00s. You need to have much deeper insight into the entire business and the market you operate in, because the world is so changeable. Before, we used to draw up a large budget and work accordingly. Today, budgets are gone and have been replaced by rolling forecasting, because we need to stay ahead all the time.”
What new needs does this reality bring?
”For instance, previously a controller could hide in their office with the VAT accounts but that task has now moved elsewhere. So, what’s the controller’s job then? They need to get out of that posh office and down to the production floor. They need to get a better idea of reality, and they can’t do that using a spreadsheet. They need to go out and talk to people and understand what data really represent. This takes finance people who are good at communication and relationships.”
49% of CFOs in this year’s CFO Survey state that their company does not have a defined digitalisation strategy for the finance function. You have a strategy in place – could you briefly describe it?
“Our digitalisation strategy has three pillars. Firstly, we need digital solutions to make sure the finance function delivers up-to-date, easily accessible and consistent information to all internal customers. Secondly, we need digital solutions to optimise internal processes and to process large amounts of data, for example, by means of automation and analysis. Thirdly, the finance function needs to be a front-runner in the use of digital tools to collaborate internally and externally. To give an example, we are quite active users of Yammer, which is a sort of internal social media, to share technical knowledge globally.”
What are the biggest challenges in getting it rolled out?
”I strongly believe that digitalisation offers far more opportunities than challenges. However, if I’m to point out the biggest challenges, it would be balancing transparency with confidentiality when we make information more accessible to our internal customers. Also, I think that changing the finance function’s mindset and implementing the digital tools have been both the challenge and the success story for us in the finance function. Finally, a huge challenge lies in making sure that optimisations of internal processes generate value for money and are not just another new smart gimmick.”
Some of your digitalisation strategy aims at making the finance function the front-runner in using digital tools. How do you become that?
”If I’m to give an example, it could be digital knowledge sharing. Last summer, we held a conference for the top 50 finance managers from over 30 countries under the title “Finance in a digital world”. Here, Yammer was required to share knowledge. Two months before the conference, we gathered the participants in a closed group where we, the heads of the finance function, regularly published the information that much of the conference would otherwise have spent time on. And we had our finance people from all over the world comment and make videos about how they were working and their expectations in the conference. We set the tone from the top and got all participants on board with the idea.”
What was the outcome?
”There was lots of commitment and activity before, during and after the conference. All participants agreed that it had been the best conference ever because of the ongoing sharing of knowledge. But we used a closed group to get started and show the way. So afterwards, we set up a new group for all VELUX finance staff globally. It has taken a little longer to get everyone on board but now we use the platform every day. One example is the latest Yam Jam (ed.: digital brainstorm) we did. Here we got input for our strategy work from a series of countries that we would not otherwise have managed to join in. We share knowledge from all over the world, and this brings people together.”
There is much talk about the challenges of acquiring the right capabilities. What’s your experience?
”We are trying to build the necessary capabilities in our current staff. Especially, because most people want to grow. This also goes for myself and the other executives. We all need to stay sharp on digital developments to be able to keep up, otherwise you end up being the one standing in the print room, looking for the fax machine.”
Presumably, there are also some areas where it’s necessary to bring in new people. Do you consider this a challenge?
”It’s easier to bring in the right people if they can see that we’re making an effort to be ‘digital front-runners’ and that we are a global and modern organisation. But there may be areas where this is difficult, for instance, analysts and business intelligence people because there aren’t that many of them. For that same reason, we have also decided to enter into close partnerships with external specialists in this area.”
Couldn’t it also be the other way round? That you have staff holding some qualities you haven’t spotted before?
“Exactly! Yammer has actually supported that. For instance, a finance employee in Canada has shown that she really has a lot to offer in different contexts, and this has resulted in us moving some particular support tasks over to her. She was the best at them. This capability we would not have spotted without our digital and global knowledge sharing.”
There is much talk about new technologies changing the way we talk to our customers and the way we work with our suppliers. If you are to mention one technology that will help create value for your customers – which one would you point out then?
”The Internet of Things will be huge, I’m quite sure. For instance, we are launching a technology that can connect our windows with sensors that can measure air humidity and CO2 levels in a room and act based on that information. All of this can be controlled from your smartphone. The window is essentially unchanged, yet by hooking it up to sensors and algorithms, the consumer will get much more value out of the same product. We do sell daylight and fresh air, you know, and with the Internet of Things you will have more of that.”
What do you think is the biggest challenge for businesses chasing the potential of new digital technologies?
”VELUX is a large international company with the potential of implementing all state-of-the-art technologies to give customers as much value as possible. The question is which technology will give the greatest effect? We must not whine about customers not understanding some new digital solution, because in that case we are the ones not having prioritised correctly. We must always go for the technological solution that creates the greatest value for customers – even though, technically, it might not the most innovative solution.”
Our survey shows that CFOs in Denmark consider law and regulation (34%), customers’ willingness to use digital solutions (31%), and current employees’ capabilities to accommodate digital requirements (31%) to be the primary obstacles to the implementation of new technologies. Can you recognise that?
”We don’t see any problems in this. For a global company like ours, it is a given that we need to be agile and able to quickly adapt our business to local market conditions. Right now, the EU Data Regulation takes up much of our time where we are on our toes to make sure that our systems are well documented and comply with legislation. Our employees’ willingness to be digital front-runners has been remarkably high. In just one year, we have managed to create a digital culture of collaboration that embraces all geographies, capabilities and levels, so today we have a finance function where you share everything from strategic input to the financial strategy to more everyday challenges on Yammer, our internal social media platform.”