Corporate Strategy: Business Transformation

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Corporate Strategy: Business Transformation

by Angie Mak, 12 November 2010

topics:
Management Technology

tags:
analytics Colin Sampson Frederic Laluyaux SAP

In Part 1 of this interview, Colin Sampson, Senior VP and CFO for Asia Pacific & Japan, and Frederic Laluyaux (pictured), Global Vice President for performance optimisation and finance line of business, both of German software maker SAP, spoke to CFO Innovation’s Angie Mak on the role of the CFO post-crisis and talent management.

In this concluding part of the conversation, Sampson and Laluyaux discuss the importance of technology in business, the Asian markets that are ahead of others in analytics and other advanced business applications, and other issues.

How are Asian companies doing in terms of adopting technology-enabled systems?

Colin Sampson: If I look across the region, Australia tends to be a leader in technology. They adopt new technology, they want to have the technology, they’re often the first users of the new technology. I think Singapore is a good example in this region as well.

From my perspective, some of the laggards include Japan, which is slow to adopt ERP-type technology. Companies there are still very much still entrenched in their home-grown system that has developed over many years. The consensus nature of the way Japan operates means that they don’t make decisions very quickly, so they’re not easy to move into a new adoption area. Australia, you’ll find, is the opposite.

Frederic Laluyaux: When I was in China, I was surprised to learn that SASAC [the government body that oversees major state-owned enterprises] is asking SOEs to report their performance based on EVA [economic value-added]. That’s a KPI you see in Western Europe, North America or Australia. EVA is the most advanced way to measure performance and [China’s SOEs] are now required to report on a regular basis using that methodology. They are going from being a little bit behind to being advanced.

One state-owned organisation in the technology industry had the most advanced analytics that I’d ever seen. They have several PhDs in a room and they have created models around churn and predictability for revenues that are absolutely marvellous.

The last point is there’s obviously a lot of cost pressure right now. They know that this problem is going to grow. Labour costs, their currency fluctuating, putting more pressure on the import, costs and so on. We sense a sense of urgency with the Chinese CFOs to get equipped very quickly from the transactional system, all the way to the decision-making system, including EVA. That’s going to be a very interesting market.

Colin Sampson: The China market is changing rapidly. What we saw six months ago is not the same as a year ago, or 18 months ago. It’s exponential in its acceptance and its desire to use technology. It’s going to have to, because organisations are growing tremendously. There are some huge organisations there and if they don’t use this automation and embrace technology, they’ll get lost. They will not have the same competitive advantage that they’re all looking to get.

The other country that is embracing technology is India. It’s the whole technology evolution that they’ve had in their country over the last ten years, before the Wipros and the Tata, all those types of organisations. They do embrace technology. We’ve got some very happy customers in India, they love technology. They really do.

BUSINESS TRANSFORMATION

So the lesson for CFOs from the global recessions is the need to react faster to changes and that means moving towards automation?

Colin Sampson: They need to transform. There’s no question that they need to. Most CFOs will probably be pushed by their board anyway. It’s not something where you say, ‘We had a level of profitability and everyone’s happy with it.’

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