Digital paves the way for simpler and smarter Finance

09 February 2016

How will the financial function change once the monthly closing process starts taking place virtually? How do we deal with a forecast that is constantly being updated? What happens if Excel become superfluous?

The world is changing at a rapid pace and our society is increasingly becoming faster and more digital. This digitisation has given rise to large companies like Airbnb and Facebook. This development has pulled the rug from under traditional sectors like logistics and financial services. Organisations must formulate an answer to these rapid and significant changes in the environment. Pages Jaunes in France has opted for an entirely new business model, various banks have simplified their operational process and retailers are focusing their attention on customer behaviour and experience.

Going digital entails numerous challenges when it comes to unlocking data, information requirements and financial decision making. It also offers opportunities in terms of efficiency, risk management and value creation, however. ‘How, as CFO, do you respond to the challenges and cash in on the opportunities offered by digitisation?’ ‘What implications does this changing world have for the role of Finance?’ Digital Finance provides an answer to this.

Chief Financial Officer

The seven certainties of the financial function
In our view, the foundation of the financial function consists of seven certainties. These certainties constitute the basis for the many new possibilities offered by Digital. Curious about what these seven certainties are? The CFO will always be the [1] financial conscience of an organisation and he must remain a [2] reliable partner into the future. In order to be able to safeguard this reputation, the CFO will also have to remain [3] in control in the new digital world. The organisation must be able to rely on the [4] accuracy and correctness of the financial reporting and decision making. The CFO must ensure financial [5] continuity in order to guarantee the growth and innovation of the business. This continuity can only be realised by maintaining an optimal [6] relationship with investors and other stakeholders. The last certainty of the financial function is the permanent [7] compliance with legislation and regulations. Actions must at all times be in accordance with laws and regulations.

Finance Operations
Because of the digital transformation, we see Finance’s core processes developing strongly in the direction of automation and cloudification. Whereas tasks and processes used to be outsourced, everything is now being automated in-house, or even robotized in some cases. In cash flow management, forecasting and monthly closing, we see that everything is moving towards cloud applications. This transition has an enormous impact on how work takes place. By gaining insight into how these core processes are developing, an organisation can take steps and transform together with its customers and society. What if the financial closing can be realised with one push of a button? What are the implications for decision making if my day-to-day S&OP planning is translated directly into an up-to-date forecast? How, as CFO, do you monitor the validity of decisions when management takes place on a day-to-day level?

Capgemini Consulting - Digital Transformation

Finance Insights
Being able to deal properly with data & insights, scenarios and real-time planning gives organisations a competitive advantage. This advantage enables them to operate more efficiently and better satisfy customer requirements. We see that at many organisations, there are big data initiatives that go beyond the financial function, however. We believe that the CFO must steer and give structure to these initiatives. Digital Finance also demonstrates that significant efforts must be put into data enablement, as well as into digital performance management and mobile reporting. Organisations must become data-driven, so that performance management can be set up much more digitally. As business manager you should be able to do your analyses and comparisons from the comfort of your home, glass of wine in hand. Digitisation and mobile go hand in hand. Mobile devices rule the world and the financial function must keep pace by facilitating the organisation with digital reports, forecasting and communication.

Digital Transformation
The CFO cannot hang back in giving an answer to the digital transformation of companies. Information must be faster, personalised and more secure. Digitisation helps with this. Digital Finance shows that we are growing towards a financial function that is ‘Simpler, Smarter and Safer.’ The first thing that is needed for this is a clear vision on Digital Finance from the CFO. This vision must inspire and reform. How are you going to realise this vision as CFO? How do you find the support to move your community forward in the reforms? Finally, the required skills and staffing of the future organisation must be examined. We advise CFOs to make a start as soon as possible on preparing their organisations for Digital Finance.

An article from Jaymi Cornelisse, Managing Consultant Finance & Performance Management at Capgemini Consulting, and Jasper Smink, Senior Consultant Finance & Performance Management at Capgemini Consulting.

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Four ways digitalisation is transforming car brands and dealers

16 April 2019

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”