Aggressive transformation across the board
The Deloitte CFO Survey indicates that Danish CFOs focus on digital transformation – but how do they use the digital technologies in practice?
Mega-projects worth billions that will change society, transparent transformation and digitalization out in the open: Banedanmark's Chief Financial Officer is on a razor-sharp journey.
You are the Chief Financial Officer (CFO) of a large public construction company with a dense agenda. What has changed the most in recent years?
The number of complex mega-projects that Banedanmark runs has grown significantly. In the past, we did not have such projects, those running between five and ten years and with a budget in the double-digit billions. Today, they have become part of our core business; thus, we are working on the Copenhagen–Ringsted and Ringsted–Fehmarn extensions, and on the signal and electrification programs.
What does this mean for the complexity of your organization?
Our level of complexity is growing significantly. The changes brought about by the mega-projects affect the entire business and the way we act. At the same time, our mega-projects are a prerequisite for other very large investments, so there is obviously a great deal of political awareness. For example, the electrification program is crucial for future train operations. It requires a special focus of the organization to handle so many community-changing mega-projects at the same time.
Download the Danish CFO Survey
Was it also the prospect of working with mega-projects that originally motivated you?
Definitely. It is hugely motivating to work on such large projects and programs, just as there is a problem-solving aspect to the work that is interesting. I have become keenly aware that you should not be afraid of problems when working as a CFO.
How has your current task composition affected the financial function?
Banedanmark achieved remarkably impressive streamlining throughout the '00s, but as the size and nature of our programs have changed, something new is required of the entire company to achieve the same level of efficiency. Today, the finance function has to be extremely business-oriented and possess a deep business understanding, because it must be a central part of the solution of our tasks. We have had to accept that the right solutions last year are not necessarily the right ones today.
How has that change been?
We have paid a lot of attention to articulating the new reality and trying to promote the right community culture, and to centralizing the finance function as a ’center of excellence’. It has been important for us to be an integral part of the project management process, so economics is not only about control. It must not be. We must be a part of the solution. We must not slip into just being the spreadsheet controller; we must be an active part of the steering committee.
Did you succeed with that?
We have had a good deal of success. Two years ago, I could not have imagined that the tasks and complexity we would face would be so great. It is no secret that our tasks, the complexity of the organization and the speed with which the transformations have happened have challenged us. However, we receive good feedback from every part of the business. Others notice that my people contribute positively to the assignments, which is a great gift for them, because we are always in a rush and things have to work.
What has challenged you most about the transformation process?
The speed and size of the transformation have been the biggest challenges. These are happening in almost all of our core areas simultaneously, such as the digitalization of traffic management, relocation, outsourcing and so on. In addition, there has been significant criticism of a perceived lack of financial management, and the fact that the trains have not been timely. For these reasons, customer satisfaction has fallen. It has challenged us. To reverse this criticism, it has been necessary for us to undergo an aggressive transformation.
How do you, as a manager, get the organization along in that situation?
The managers play a key role and, for those of us in charge, we are infinitely dependent on their proficiency and well-developed management skills. They are, and will continue to be, central to our success and whether we, as a firm, manage to build the right culture. The CFO alone cannot do this. It requires very strong management teams throughout the organization; therefore, management will always be a major focus. We cannot forget this in a time when technology and digitalization dominate the headlines.
What role does the firm’s public organization status play in the transformation?
Transformation takes place out in the open. Everyone can follow the process, whether it goes back or forth, or up or down. This is a prerequisite when working with other people's money; it is a framework condition. By contrast, in private companies, you may have the opportunity to be more closely guarded and only launch when done.
Who has driven your transformation forward?
Obviously, the financial function is highly placed, and managing the economy is a very special position. As the CFO, I am therefore able to take the lead in development and push the organization to move in the right direction. However, since I make the final decisions after many meetings, it is important to take responsibility for those decisions, too.
Does it apply to the entire digitalization area?
As a CFO, one can do a great deal of service by considering data as valuable in the context of good financial management. Data is gold, and it must be put into a business context to realize its full value. Therefore, data must never become a purely technical discipline. I can succeed with my financial management, digitalization and transformation efforts if I manage to use data well: it goes hand in hand. Data protection is, therefore, a core component of my strategic agenda.
Why is data so central?
If you want more and better digital processes, structured data is a prerequisite. We work with robots, and as long as the data is provided correctly, they can solve the tasks very well, but there is a huge demand for data quality. Advanced models and algorithms typically break down because their data are unstructured or inadequate.
How do you work with data governance and taking advantage of the opportunities it provides?
We have established a data and digitalization unit that reports to me. Their task is to centralize data protection and help spread digitalization projects throughout the company. They work extensively with pilot projects and digitalization models and are a place to test new digitalization ideas and efficiency opportunities.
Do you see the unit as a lasting feature, or can you get to the point where data use is a normal part of the business?
Yes and no. Just as businesspeople need to be educated to think about economics, they should also think of digitalization, and every director should have a digitalization strategy for his or her area of interest. This keeps us from shifting responsibility for thinking about digitalization out of the rest of the business and parking it centrally. Still, I always think there will be a need for a center of excellence that can deliver the crosscutting skills, even though the whole business is increasingly thinking about digitalization.
How will it reflect on the organization?
We will implement far more, and far larger, data-driven models. We will increasingly start making use of 'predictive maintenance', sensors and the ‘Internet of Things’ (IoT) to make even more data-driven decisions. The signal program will be the largest single IoT project in Denmark. As such, our divisions will experience a huge change in what it means to be a maintenance organization.
What meaning does public awareness have for the development of your smaller digitalization projects?
Our pilot projects have clear stopping points, so there is strict control over how much time and money we spend on them. Even though we are a public company, we must be willing to invest, because it is worth trying out new technologies in practice. We must allow ourselves to test things and write off smaller investments to see what a given potential really is and where the digitalization benefits truly are.
Curriculum vitae: Peter Jonasson is a political science graduate of the University of Copenhagen and has been Banedanmark’s CFO since 2016. Prior to that, he was a university director at the Copenhagen Business School.
Banedanmark is a state enterprise under the Ministry of Transport, Building and Housing with more than 2,000 employees. The company is responsible for ensuring that passenger and freight trains run around the country, that the track is maintained and that rail projects worth billions are being carried out. Banedanmark's head office is located in the Østerbro neighborhood of Copenhagen.
About the CFO Survey
Deloitte’s CFO Survey is a biannual report, published across 20 countries in the EMEA-region and covering the perceptions of more than 1600 CFOs. The survey provides insight into the CFOs’ views on various themes such as financial prospects and uncertainty, risk appetite, geopolitical changes, strategic prioritizing and digitalization of the financial function. In Denmark, we have chosen to put special emphasis on which role digitalization may play for the visionary CFO. Therefore, we have supplemented our data with relevant cases focusing on the processes of digital transformation and development of the financial function.
CFO’erne har talentmangel og digitalisering på agendaen
Deloittes CFO Survey viser, at danske CFO’er fortsætter digitaliseringen af finansfunktionen – men hvad betyder dette for CFO-rollen?