Digitization Of Finance Offers Value Beyond Hype
In an exclusive interaction with CXOToday, Lokesh Aggarwal, VP- eFinance and Finance Innovation, EXL Service, explains how digitization is transforming the finance sector and the changing role of CFOs
Digitization is now a strategic goal for the finance function because of a range of technological advances. These include the widespread availability of business data; teams’ ability to process large sets of data and turn them into business insights. In an exclusive interaction with CXOToday, Lokesh Aggarwal, VP- eFinance and Finance Innovation, EXL Service, an operations management and analytics company, explains how digitization is transforming the finance sector, the changing role of CFOs and finance leaders and the areas finance companies should prioritize to stay ahead.
CXOToday: What according to you has been the impact of digitization on finance in the last 4-5 years? Which areas have EXL company truly gone digital?
Lokesh Aggarwal: So, in today’s world the finance function is changing very fast. There are reasons behind it. Because if you look at the way this whole, the world economy and corporate world is changing. So, clearly the operating models are changing today. The businesses are becoming more and more customer-centric. Everybody is putting customer in the center and trying to see as to how we can give a better service, better product to our customers and yet be profitable, yet be compliant with the global regulations which are also changing very fast. And I think, this whole transformation in the business side is putting a significant expectation on the finance function. Because finance function today is not only required to maintain the books of account, do the reporting but how you can bring intelligence into that. How finance can partner with the business in telling not only how they are performing but how they are expected to perform in their decision-making process.
At EXL, we realize it fast because we are in an industry wherein, we are supposed to provide services to our clients. So, we have undertaken a multi-year finance transformation program which is a mix of multiple things. We have set up a service center where we have invested heavily in technology, we have a data model in place, wherein as we acquire the new companies. We are compliant as far as the global regulations are concerned. And also how we can provide more insights or better insights to our business, how we can partner more effectively with the business in their business growth. With these expectations we have invested in technology with a very well thought of approach. So, we look at different elements of the whole transformation starting from the data because today whatever we do, data is important and the organizations generate a lot of data today. How you can use the data for your benefit? So, looking at the whole master data process, you know having a digital layer that we can put on top of our ERP systems to get more insights into the way we are performing and then using that basis for our forecasting.
We have made our processes automated more and more whether it is our customer billing or whether it is the way we define our contracts, the way we manage our accounts table, our procurement process, our tax provisioning, so you name it. We are currently working on automating tax provisioning.
CXOToday: So, what are the specific areas which you plan to automate?
Lokesh Aggarwal: The journey for automation will continue because as you automate the processes you also want to see how you can make the experience better. This is where technologies like artificial intelligence (AI) and blockchain can play a big role. So, some of the key trends that we foresee is that the process system of finance will become more and more autonomous in the times to come. So as far as transaction processing is concerned, there will be more standardized processes across the globe and within an organization that will eliminate significantly the effort that goes into doing the processing part of it.
Secondly, we see is that the information and the business insight is going to be the key. So, finance will be dealing with lots of data but I think the change would be finance will start owning up the data of the organization which traditionally finance will not do. And to use that data and to also look at that data externally as ‘macro-economics’ data to help business predict as to how they are going to perform basis on what decision they are taking.
CXOToday: How have the initial technology investments paid-off?
Lokesh Aggarwal: There’s a lot of clarity in what we do and as an organization we actually evaluate the investments very closely. There has to be a business case, we don’t make the investment for the sake of making an investment. What all investment we have made so far, they have been really helpful to us in ensuring RoI and we plan to do so in the future.
CXOToday: You have recently implemented Oracle ERP and EPM solutions. How do you think these solutions are adding value to your finance function?
Lokesh Aggarwal: We are one of the first adopters of Oracle in our industry. We implemented Oracle first almost 14 years back and we have grown exponentially since then. Oracle has still been supporting us. This has been a successful journey. Now as things are moving towards the cloud, we have also taken small steps in adopting emerging technologies in partnership with Oracle. We have adopted Supplier qualification management and project resource management modules of Oracle ERP/ EPM Cloud to enable finance to take a leadership role in the transformation of our organisation.
CXOToday: Privacy is a major concern in today’s age with every sector including finance reeling under widespread cyber attack. As a leader in digital finance in your organization, how do you distinguish between personal information and the company information and ensure data is protected?
Lokesh Aggarwal: EXL operates in a global environment, as we have operations across North-East America, Europe, Asia, Australia, South Africa, and therefore governed by the rules of the respective countries. But, we have a very clearly defined compliance process as far as data handling is concerned. And we have also established very clear, very stringent mechanisms to handle the data. So the data that we handle is in a secured environment. We don’t seek a data that is not required. There are people who are authorized to access the data that is given only by your role and not by your title. In the event of data breaches, there are in-built intelligence systems that can track and prevent any potential loss of data. And there are very strict penalties including termination of employee. At EXL, we are in the business of managing our client processes and our client data that is in our DNA and we take it very seriously. So, as far as our own data is concerned, all our applications, processes and technologies are compliant as far as data handling is concerned as per respective country requirement.
CXOToday: In your role, what are some of the challenges you are facing today and how do you plan to overcome it?
Lokesh Aggarwal: One of the key things is that technology is changing very fast today. And one must see as to what the point of entry for you is. Would you like to make a healthy entry or try to do experiment, or would you like to wait for the technology to kind of mature and then see when do you go for it? And that I think the decision would be driven by two things. One is what is your requirement. Because there could be certain technologies that you need to experiment today because we have unique business requirement. And, it is also driven by how you can establish your business case.
To me, in this digital disruption world, the decision or being able to have a road-map how do you really plan for adapting technology in the digital time that is going to be an important factor and a challenge as well. Because at the end of the day you cannot do multiple things right, but you would like to do few things that are going to be impactful and that can create a true value to the organization and for your customers.
You should be clear as to what is that you need for your business. Don’t be carried away by fancy words. And at the same time, you should be aware as to what these technologies are and how they are evolving. And, the system that you are using. How are they keeping pace with those technologies?
I think, the second challenge to me is going to be how do you have the right skills in the team to kind of continuously upgrade your own process system with this technology. And in today’s world, we must continuously look for the right talent and we have to see really how you re-skill your team, how do you embed more competencies, how do you retain people and how do you attract the talent.
CXOToday: What are your advice to leaders of digital finance?
Lokesh Aggarwal: I believe (Something I learnt from my CFO) is that, once you understand your customer, once you know what your customer wants, you can certainly find ways to perform better? The idea is to think about how your finance systems can give you the right direction to serve your customers better. So, if you keep your customer in the center and you are aware as to what are the compliance requirements that they adhere to, with the right atmosphere and the right team you can come out with solutions that can make your function digital.