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Episode 24: How is the CFO’s Office Embracing Analytics as a Game-Changer?

Theo F Piletsky Theo F Piletsky

VP, Strategy & Business Consulting

EPAM Continuum

Madhurima Gupta Madhurima Gupta

Senior Product Marketing Manager

HighRadius

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Synopsis:

In this episode, join Theo F Piletsky, Vice President, Strategy & Business Consulting, EPAM Continuum as he discusses the need for advanced analytics for the office of the CFO. We’ll dive deep to understand why the CFO’s Office should focus on leveraging AI-based cash flow forecasting.

Transcript:

Madhurima Gupta:
Welcome to the midmarket CFO circle podcast powered by HighRadius. I’m Madhurima your host. We hear you midmarket CFOs, and we’ve got your back. Every Thursday. We bring you CFO circle podcast with your peers and we discuss the challenges you face and how you can leverage emerging technology to solve them today. We are going to talk with Theo F Piletski who is an expert in operational excellence, transformation and strategy. He has built high-performing global teams in various leadership roles, developed new business models and offerings and has increased new technology adoption delivered and launched products and executed global organization strategies. Currently, he’s working as vice president of strategy and business consulting at EPAM systems. His area of focus includes technology and operational due diligence, merger, and acquisition cycles, cost control, revenue growth, and strategic partnership for business growth and resilience. He integrates vision and execution to quickly move from strategy to reality by leveraging digitization, AI data, operational excellence customer experience consulting and automation. On that note, we’d like to welcome Theo to our podcast. Hi, how are you doing Theo?

Theo F Piletski:
I’m doing all right. Thank you. Thanks for having me.

Madhurima Gupta:
So Theo though, I have explained a little about you already. I wanted to know what has your journey been and one crazy thing that you’d like to share with our listeners.

Theo F Piletski:
Well yeah, the journey in technology space started a little over 15 years ago. And through that time I’ve seen a lot of transformations moving companies into digital adapting for mobile and video streaming across various domains. Most recently working a lot in automation space, data analytics, and of course, helping our clients to prepare for the world of predictive analytics, AI, and everything related to that. I’m based in New York. And I’ve been with my current company EPAM for a little 15 years. So it’s quite a journey and yeah, glad to be here today.

Madhurima Gupta:
Absolutely. I mean, you have risen up the ranks, you’re working as a VP right now, and you must have started very young.

Theo F Piletski:
In mean that too. The current company, I went through all kind of experiences from program, project management to client-facing the work to technology advisor, business consultants. So definitely, yeah, that’s the case for me.

Madhurima Gupta:
So Theo, today you know, we are gonna talk about how CFO offices can turn the table with analytics and in today’s disrupted operating conditions while we are trying to make the best possible decision in the shortest possible time. It’s historical data on which we typically rely less. We typically have relied less and which makes a lot of decisions, less relevant as drivers of digital strategy. It’s on CFOs to translate data analytics trends and their impact into must-make investments for the enterprise. So what is your opinion on that?

Theo F Piletski:
Today’s CFO are, as you said, becoming drivers of digital strategy, and it’s on them to analyze the data, translate the trends and their impact into strategic decisions and investments for the enterprise. And to do that and to drive this data analytics, innovation it must be deployed to leverage the opportunities, manage risks across the organization, and once in place CFOs and their roles, they must continuously practically monitor experiment with it and exploit the trends in a way revealed. So,there’re certainly their role is changing, right. And previously coming from someone who was looking at the historic trends focused on the reporting and the problems of today, modern day CFOs, they’re becoming drivers of solutions of tomorrow for their organization. So that’s kind in a few words, my opinion, how the role is evolving.

Madhurima Gupta:
And what do you, why do you feel that quickly evolving to changing market requirements is a very necessary thing on any CFOs play today?

Theo F Piletski:
First, like there are pure operational reasons where analytics assist CFOs in the day-to-day jobs, thinking of order to cash and predicting and forecasting the cash flow managing risks or putting in the reports for the board members and COs together. So that’s kind one track right. Of, of why is important. And the second one is as we explored a little bit in the first question, driving the strategic decisions, driving the global growth strategies let’s say mergers and acquisitions or thinking of what is the next product to put in investment behind. So, such things are also becoming extremely important and it’s better to be informed and decisions with the help of advanced analytics and predictive.

Theo F Piletski:
And if I compare the time right now with, let’s say, 15 years ago specifically for order to cash, how do you feel the need and use both of them have accelerated in CFO’s office.

Theo F Piletski:
In general, like there’s no dramatic change of why cash flow is important, right? It’s, been important. It’s still important for most of the companies, but, and even in cases where the negative cash flow is built in the business plan, such as say, your software is start top, right? And in your, in cash, but controlling this board is the top priority for organization. It was always, it always was and still remains, but at the times like today when the demand fluctuation, seasonality economic conditions and stable political situations, but not basically anything that can affect cash flow and there’s beyond the CFOs and companies control putting analytics in and managing it effectively can help organization to improve cash flow quickly and identify issues. So in short, you put in analytics to track cash flow, accelerate in order to cash cycle, it could be the most significant and single most important step the CFO can take. And that could be done through the entire life cycle of order to cash from fulfillment reconciliation to reports in there are solutions today that allow automating the entire O to C process, highlighting manual bottlenecks, minimizing data errors, improvement information through the value chain. So if let’s say you’re a company who is trying to react quickly, let’s say you’re a retailer trying to react to items, being on stuck. You wanna be able to do it faster, right? You wanna be able to identify what the solution is, how it impacts your future revenue this quarter, next quarter and larger cycle. And once you’ll be able to track it all the way to the customer experience. And it’s very challenging to solve these tasks manually, right across departments. So having it in one place within the data platforms and using that’s the only workable solution these days.

Madhurima Gupta:
And you know, since you’re talking analytics, it’s also important to talk reports. Do you think it is practical today to be reliant and satisfied with using only spreadsheets? And let’s say ERP reporting

Theo F Piletski:
Some organizations, I’ve seen that some organization of course starts in right in their journey yet they might not be able to afford or have time, right. To roll out the guard, like put guardrails and best practices, but you wanna build your organization for scale and for resilience, right? And you want to be able to provide not only historic report and analysis, but real time data to your leadership team, and with increased numbers of integration points that are today within the finance organizations, spreadsheets sitting on someone’s desktop, or even worse in someone’s physical desk, in printed shape and form it really impedes this an agility, right. And does not allow organizations to react quickly. Now it’s again. And once again, I want to be cognizant of the fact, that’s understandable that there is a cost of reporting and dashboards and steering their organization from spreadsheets to visual and intuitive reporting. I get all that, but maybe like to balance that investments many firms are solving by rolling out self-service solutions, enabling their business users and finance users to build their own reports, to be able to access them remotely from their mobile devices, laptops desktops, 24/7. So with that kind self-service model, you kind of outset some of the cost of putting the reports together. And at the same time you benefit from the digital experience for your finance and business workforce.

Madhurima Gupta:
And in your experience, where are the midmarket CFO offices falling short in analytics and reporting?

Theo F Piletski:
I like this question and not to put midmarket CFOs in a bad light, I’d rather focus on what important trends in today’s world that are out there, right? And it’s like very expensive to have them ignored. And maybe in a sense, those are the ones that if you disregard them as an organization you may struggle, right? So again, to drive the strategic decisions in investments for enterprise CFO must be able to practically monitor experiment, exploit key data. And to do that, it has to be dynamic, right? So, so one of the trend and, and analytics and reports and that dynamic data and storytelling is replacing predefined dashboards. So you must be able to double tap at any data points at, in data point and understand what’s behind it. And you must be able to kind of crosscheck or multiple data sources augmented data management, like being able to plug in a different data once it’s becomes available to increase the quality. That’s kind of another trend and many organizations not to recognize that, but there are tools that come in out of the box, as well as tools like automation that allow to pull this data dynamically. And maybe like one more trend where some organizations are failing today. Most organizations have been accelerating their cloud transformations and their journeys but like doing it even faster and being able to get access to more quality data across their organization, even though they could decentralize, it’s also a huge benefit. And actually I thought of one more. So maybe like to build up on the second points, like the platforms that we interact and work with, and I’m pretty sure, like many listeners are familiar with the trend is that there is convergence of data and analytics and automation. So once you have the data and once you have it analyzed, you might want to be able to act on it, right. And right away. So like having this automation capability is part of your analytics portfolio is also extremely important.

Madhurima Gupta:
What do you think a modern day analytics dashboard should look like to meet CFOs expectation and their duty?

Theo F Piletski:
Another excellent question. And yeah. Can, we can be very creative here, right. But, but there’s no one dashboard. That fits all purposes, preferences in organizations. But in my experience, they typically serve two purposes. There, there are external dashboards, right. That CFOs and their offices build they’re focus on the board of directors regulators and, and so on. And they’re internal to finance organization, which is the other category. But either way, the data in them is business critical. And it has to generate kind insight for strategic decisions. I think it’s, it’s one important modern data or analytics requirements. So it has to be linked to like very tangible items, such as like sales or their fulfillment state of supply chain, customer demand, business performance, maybe like real time industry trends. And in my opinion, you know, like it also should be like easy augment and integrable with other tools with like robotics or advanced analytics and so on. So maybe like to sum up, you know, a, it should provide data visualization component to give user real time financial information to be able to act on and, and should be tailored to the different seniority levels. So you don’t want to serve same dashboard to your co and your department lead and people who like responsible for a chunk of your supply chain. And lastly, you know, like it needs to incorporate advanced analytics and, and decisions to be able to see previously seen opportunities. So that functionality is very important.

Madhurima Gupta:
And how can, I mean, given your experience with managing mergers and acquisition, it’s only fair if I, you know, pick your brains and how analytics can help CFO’s office to expand global growth strategies, including mergers and acquisitions.

Theo F Piletski:
By the way, I like the way this question is formulated a lot because people, again, often think of analytics as something for historical, right? But not for the decision-making. And mergers acquisition is like extremely important decision, right? For high-risk decisions for every organization. The good news is that analytics can indeed help identify and inform the MNA. And even though that the MNA can be driven by a wide range of organizational objectives from accelerating or the product adoption to defensive moves against competition to increasing your own company’s valuation, you can tailor and use analytics to serve that purpose. We’ve seen our clients using analytics In pre-closure and post-closure operational due diligence technology, due diligence to prove initial hypothesis, or even sometimes confirm assumptions about like what the synergy would be between two companies, what a savings, where is profitable growth resulting from MNA. So in that sense you really would like to be educated right, and informed upfront, or once the merger happens, you want to be sure that you see real metrics of whether it’s successful and maybe like lastly like anecdotal evidence from, to most listen, some companies, they can predict the demand in certain skills and infrastructure, and as a result, shortlist, potential MNA targets that would allow to boost these capabilities. And as an example, I’m referring to you think of company like Facebook and amid 20 10th, they were using analytics to identify the areas of fastest adoption of their product. And then they used analytics, like evidently, they found that like the products get adopted by a mobile faster than through other channels. So they targeted companies that are fastest growing mobile. First companies like Instagram, WhatsApp, maybe let’s famous snap to accelerate the adoption of its own platform. Cause this is analytics that works, that kind of resulted to immediate growth of your own company’s capability.

Madhurima Gupta:
My next question is on you know, the KPIs that are critical for CFOs to keep a track of at all the time. Right. So what would you say are the crucial KPIs that a CFO should you know, be looking at on regular basis to maintain businesses, financial health?

Theo F Piletski:
So, first of all, like we’re talking KPIs, we’re talking metrics. I think it’s very important to distinguish too because analytics data can be used for both, right. But metrics they’re more like dependent on their organization. So it probably could not apply to all companies out there in its very process-driven action. I think of number of transactions, customers, construction, renewal rates, something like fairly narrow for this particular department organization. And there’s no like generic list of either 10 metrics nor KPIs that companies should use or, or look at now. But with KPIs at the same time, it’s slightly easier because KPIs let’s see what should focus on like accuracy to margin, right? etc, like directly tied to the value to shareholders, which are more or less common for all organization being a private or public company. And the key when selecting KPIs financial dashboard. So it can really be used maybe like creating the previous points as a management tool, right. To track all truly relevant finance KPIs and allowing finance objectives such as cash management cost optimization, shareholder value to be met. So and maybe like in terms of like selecting the KPIs, I think as long they’re exer your company’s definition of value. Like what is the current problem and strategy in place. And as long that they are smart and, and tied to the, or high level objectives, there should be good to start with. And then of course there’s no like single bullet, they need to be revisited and monitored and put through the framework on if I stop tracking, like what will change, right. If I add another metric, like, will I really get additional insight? So it’s kind of dynamic environment when you put them into the dashboard. But I think like starting with the shareholder value profitability and very common things for every organization at a good point to start getting the value.

Madhurima Gupta:
You know, if we talk about cash flow a little more so the challenges that companies in B2B world face with regards to cash flow, they are in escapable and it equate cash. Availability is definitely one of the most significant components in growth trajectory for of any business. Do you think that CFO offices should definitely be leveraging AI based cash flow forecasting solutions

Theo F Piletski:
In short answer is yes. Right. But not just kind of for forecasting, but I also think to identify opportunities for revenue increase, right. Especially like with the company has this growth mindset, especially B2B companies use in analytics to at first, like look into the cash flow and maybe like another example so that people can relate look at this client a major retailer in Canada, right? That’s has hundreds of stores operated by dealers and their CFOs wanted to apply analytics to cash flow and forecasting to see how, how things are today. And they found that there is continuous revenue leakage and about 25% of stores, regular miss cutoff dates for promotions and placing orders, which causes revenue loss, the result to poor customer experience because like shelves are empty and so on. So think they looked at the forecasting, but find the real issue. And then like with the help of the analytics and automation, they were able to remediate it. So every time the analytics solution identifies that there is a risk of miss due date. And as a result, you know, miss revenue and, and lower cashflow, they would notify dealers and send automated kind reminders to place the order. They would process it using automation will allow people to focus on other tasks and hand, obviously as a solve benefits and will generate additional cash for their balance sheet. So to answer your question, yes, it should be and it’s used and in, and when AI and analytics is used, it’s way more powerful because it also kind of eliminates that manual component of it and enables people to think of the bigger picture not to deal just with errors reconciliations.

Madhurima Gupta:
And I wanted to ask one you know, one more thing lines of how because of changing economic environment, you know, how incredibly volatile and unpredictable a lot of businesses have become, and in such a case, or in such scenarios, do you think CFOs offices can rely on analytics, prediction and implement long term strategies?

Theo F Piletski:
Yeah, the interesting times, indeed. I think for the entire world, right. Doesn’t matter what region you are at or what industry domain. And we’re seeing that a lot. But I personally believe that the data analytics and automation, all three, like very powerful tools to deal with that uncertainty, right. And to drive the demand and services and revenue, especially kind environment and as a tool to spot early indicators and red flags and issues this is excellent. And when the times are unpredictable, I’d rather, you know, go with the informed decisions, empowered by analytics and prediction that helps you to tackle what you do not know yet. Right. Versus go in fully with gut feel and gut feels we know is based on our experience. Right. And what we already know and experience, whereas analytics is, you know, like being able to predict something that you have not experienced yet, but anyways, like not to go into philosophical track. But I think at the end of the day, it is CFO who makes a call obviously and human component, but it’s better to, for them to make friends with what current technologies and platforms, the analytics and predictive have to offer versus ignoring them. And if they still feel that it’s on them, you know, like to ignore it they’re free to do that. Right. But it’s better to look into the trends from the pragmatic lens as well.

Madhurima Gupta:
Theo with this we come to the end of the podcast, right. And before we part our ways, I wanted to ask you one last question, and the question is the parting thoughts that you’d like to share with the CFOs and finance executors that are listening to this podcast on what are the top three things that you would suggest that they should do with analytics and automation to overcome and prepared for a lightly recession.

Theo F Piletski:
One of the observation that I have across various domains and companies, and not just referring just to CFOs, but also CEOs of the organization, department heads. I think the ones that are most successful and resilient and report the highest return investment and not just today, but in the past, right, the previous uncertainties and pandemic-related or financial market collapses, like the ones that strived were those focused on performance management activities kind off today and tomorrow, and being aggressive enough to reduce the drag and organizational decision making. And what I mean by that is a company and removing obstacles from the teams to experiment with different technologies and solutions quickly, maybe not like whether or not this technology will be effective for our organizations or whether or not our data is good, whether or not, you know, the analytics truly, you know, value, but maybe like start in small and areas where they feel that could be like the highest return for investment, not necessarily a full fledge, you know, the analytics data automation programs, but starting well starting early. And when the time comes, you know and the company needs to think of survival, right. Or growth once the recession ends to be able to scale that solutions right in the mid-market, please customers reduce transaction turnaround times increase cash flow, and so on. So if it’s like, there’s one takeaway is just being in that state of kind of aggressive creativity and experimenting with all those technologies that the world has to offer today. So when the time comes, your organization is ready to wise.

Madhurima Gupta:
Thank you so much for sharing those thoughts with us today. We really appreciate your time. And for our listeners out there stay tuned, we’ll be back with more.

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